Shadow Chancellor calls for unity as MPs label tax policy '˜unworkable'

Shadow Chancellor John McDonnell has admitted he must make more of an effort to reach out to other wings of the Labour party, as he set out an alternative economic plan he claimed even his biggest critics would support.

Shadow Chancellor John McDonnell

Speaking ahead of next week’s spring Budget, Mr McDonnell outlined a raft of new policy proposals, including service-specific taxes to boost investment in the public sector and a requirement on high-earners to publish their tax returns.

The London MP also used the opportunity to address speculation about growing divisions in the party, as he argued that Labour members are uniting behind a “common agenda” despite last week’s by-election defeat.

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But his claims that even the leadership’s arch-critic Lord Mandelson would approve of his policies failed to convince, as MPs in the moderate wing of the party labelled his proposals “unworkable”.

At the core of today’s speech was an attack on the Conservatives’ “unsustainable” approach to NHS funding and historic under-investment in the regions. Setting out Labour’s response, Mr McDonnell described plans for a crack-down on tax evasion and the introduction of hypothecation – raising taxes for specific purposes – to fund services like the NHS.

Crucial to this is a proposal to force everyone earning over £1 million a year to publish their tax returns. Explaining the reasoning behind the policy, Mr McDonnell argued it formed part of wider efforts to “create a culture where people are proud of the taxes that they invest in our economy”.

Taking questions after the speech, the shadow frontbencher and Corbyn ally was asked to clarify his claims last week that some members of the party are conducting a “soft coup” against the leader. He replied that at the time he had been annoyed by interventions from Tony Blair and the Labour peer Peter Mandelson, but stressed he has since made fresh efforts to unify the party.

Reflecting on the fall-out from the Copeland by-election, he went on to acknowledge that the party leadership has “got to learn the lessons”, and that at times he has been guilty of a “pugnacious” approach. But he said he was determined to reach out and “[visit] people on all wings of the party”, insisting that Labour is “united... on a common agenda”.

Asked whether this olive branch extended to critics like Lord Mandelson, Mr McDonnell stated that he would be inviting the peer to share his thoughts and ideas on the future of the party. He added that he did not believe the Blairite former Business Secretary would be “as critical” of his pre-Budget speech as some journalists had suggested “because there are elements in here that he would want to support”.

But despite his attempts to downplay talk of further division, his proposals have already faced criticism from so-called moderates within the PLP. Speaking to the Yorkshire Post yesterday, the Penistone and Stockbridge MP Angela Smith described his tax transparency plans as “unworkable” and likely to result in legal action. “We need to focus on securing a whole economy approach to Brexit and the UK’s relationship with the single market,” she said. “Our economy faces a huge problem with productivity and in the face of Brexit this is something we must now urgently address.”

Another senior Labour MP described the policies set out in the speech as a “completely inadequate response” to the challenges facing the country. “This does not talk to our voters in any shape or form,” they said.