Government facing key Budget votes as Labour tensions surface

The Government is facing key Budget votes as Labour tensions on how to deal with the financial package set out by Chancellor Philip Hammond continue to simmer.

MPs will conclude their Budget debate on Thursday as ministers appear confident of support after the DUP signalled it would back the Tories.

After shadow chancellor John McDonnell said Labour would end the working-age benefit freeze if it gained power, the party is set to table Budget amendments calling for income tax rises for high earners.

It is understood Labour will put down amendments to the Budget resolutions demanding a hike in income tax to 45% on earnings above £80,000, and 50% for those above £125,000.

The expected move follows a heated row in Labour ranks after Mr McDonnell said the party would not oppose Tory tax cuts for the middle class.

The Labour leadership has said the party will not attempt to force a vote on the personal allowance changes – effectively abstaining.

Under Mr Hammond’s Budget plans the personal allowance, which is the maximum amount someone can earn before paying tax, will rise to £12,500 from £11,850.

The higher rate threshold, the income at which someone becomes liable to pay the 40% tax rate, will rise to £50,000 from £46,350 at the same time.

A number of prominent Labour MPs have called on the party to oppose the changes as they say they disproportionately benefit the better-off.

Labour MP Chuka Umunna told ITV’s Peston: “No, I don’t think these are the right kinds of things to be basically making a set of income tax changes which primarily benefit high earners. That’s obviously wrong.”

Mr McDonnell said Labour would not oppose the tax cuts as they would also benefit low and middle-income workers.

On ending the benefits freeze, Mr McDonnell told ITV’s Peston: “We will lift the freeze and we will make sure that from then-on people get a proper cost-of-living benefit on the freeze themselves.

“What we said is that we will lift the freeze and that from then-on people will get proper cost-of-living increases.

“When we get into the next election we’ll set out our manifesto and we’ll set out a costed programme like I did last year as well.”