Labour to oppose personal allowance freeze just days after claiming it would back the policy

Harry Yorke
·2-min read
Lisa Nandy 
Lisa Nandy

Labour will oppose the Government's decision to freeze the income tax personal allowance just days after the shadow chancellor claimed it would not “stand in the way”.

In a major U-turn, Lisa Nandy, the shadow foreign secretary, on Sunday said the party would vote against the “stealth” tax raid because it was “absolutely the wrong time” to be squeezing lower and middle income workers’ earnings.

However, in a later interview, she refused to rule out raising the top rate of income tax if Labour won power, stating only that “we’d look at that closer to the time.”

Confirming the latest reversal on Sky News, Ms Nandy said Labour had been “really concerned when those plans were announced” because the freeze to personal allowances would hit the incomes of workers a year before corporation tax is due to increase.

“We think that now is absolutely the wrong time to be targeting low and middle income earning families for tax hikes and squeezing their incomes, not least because if you do that it means that they're not going out and spending on the high streets and the economy,” she added.

It came just three days after shadow chancellor Anneliese Dodds claimed the party would not oppose the policy because it would be more targeted at “better off people”.

"In the future we’re not going to oppose change to that personal allowance,” she said on Thursday last week.

“When that takes place it’s going to have more of an impact on better off people than worse off people.”

Mr Sunak announced on Wednesday that the personal allowance and higher rate threshold for income tax would rise in April to £12,570 and £50,270 respectively, before remaining frozen until 2026.

A series of other personal allowances will also be frozen, with the freeze on income tax thresholds raising £19bn for the Treasury over four years, as more people are dragged into higher rates of tax as wages rise.

A number of economists and respected think tanks have described the freeze as “fair” and “progressive”, adding that the greatest burden will fall on wealthier earners.

But after a backlash from hard Left MPs over Ms Dodds’ comments, Ms Nandy said on Sunday that the party would now vote against the freezes.

Speaking to Times Radio later in the day, she repeatedly refused to say how Labour would raise the £19bn to help pay down the spiralling debts accumulated during the pandemic, stating only that those with the “broadest shoulders” should pay the most.

Asked if Labour could reintroduce the 50p higher rate of income tax, she said: “We’d look at that closer to the time. The time right now is a time for helping the country through what is still a crisis.”