Jess Phillips backs Lisa Nandy in Labour leadership race

Lisa Nandy's bid to win the Labour leadership race has received a fresh boost after former contender Jess Phillips said she was now backing her to succeed Jeremy Corbyn.

Ms Phillips announced on Tuesday that she was pulling out of the contest, saying she was not the right person to unite the party after its crushing general election defeat.

She said that while she would support both Sir Keir Starmer and Ms Nandy among the remaining four contenders, Ms Nandy would be her "number one preference".

"I've said that right now, I can't bring the party together and that's why I have withdrawn from the race," Ms Phillips said.

"I think both Lisa and Keir can unite the party and begin the process of winning back trust with the country.

"I'll be voting for Lisa and Keir, as I think that they can do that. Lisa will be my number one preference."

In a campaign speech at the Centrepoint charity in London, Ms Nandy said she would raise taxes in order to reverse Tory welfare cuts.

The Wigan MP said the party needed to go out and make the case that taxation was not "evil" but was essential to pay for public services.

"It cannot be right that the poorest can find themselves paying the highest marginal effective rate of tax – that bakers' bonuses are taxed more than bankers. The root is Universal Credit, and the cuts made in 2012," Ms Nandy said.

"I would immediately reverse these, paid for by cancelling the Tories' proposed changes to the national insurance contributions threshold, while we design a progressive tax system that works for the least well-off.

"We need to change the debate. Tax is not an evil. Tax is how we contribute to something bigger, better than ourselves."

Labour leadership candidate Lisa Nandy gives a speech on the welfare state at the the homeless charity Centrepoint in central London
Labour leadership candidate Lisa Nandy gives a speech on the welfare state at the the homeless charity Centrepoint in central London

She said she would use the tax system to penalise large companies which refused to pay their employees the living wage.

"For big employers who turn a profit and don't pay the living wage, we should ensure they settle their balance with DWP (Department for Work and Pensions) every year, before we consider anything else," she said.

Ms Nandy said the welfare system was in "real trouble" and that Labour needed to recover the ambition which led it to build the welfare state after the Second World War.

She said that while she did not want to "trash" the record of the last Labour government under Tony Blair and Gordon Brown, for too long it had accepted the Thatcherite economic consensus.

She said Mr Corbyn's rejection of the politics of austerity had been an "important moment" for the party.

In a BBC Radio 4 Today programme interview, she said: "I'm not going to trash the legacy of the last Labour government because things like the minimum wage were complete game-changers in towns like Wigan, and the investment that went into health and education was really important.

"But it is certainly true to say that the consensus that Thatcher built lasted all the way through the New Labour years."

Labour leadership election timetable
Labour leadership election timetable

Meanwhile Rebecca Long-Bailey, the favourite of the Labour left, has insisted she would take the party in "completely different directions" to Mr Corbyn.

The shadow business secretary dismissed claims the outgoing leader and his allies would still run the party if she won, and said it was "disrespectful" to say she is another version of Mr Corbyn.

In an interview with the Daily Mirror, Ms Long-Bailey, a frontrunner in the contest, said: "Insinuations have been made: 'Oh these men have been pulling strings in the background'.

"I've been proud to stand on the policy platform that we've had.

"That's not to say I'm not a completely different person from Jeremy because I am, and I'll be taking the party in completely different directions."

She previously gave Mr Corbyn a score of 10/10 on his leadership, but told the paper Labour has to recognise what it got wrong and "can't then get them wrong again".

Ms Long-Bailey added: "I would do things very differently. He didn't have an easy time."