McDonnell: super-rich have misunderstood Labour's tax plans

John McDonnell has defended Labour’s claim that billionaires in the UK have benefited from £100bn in tax cuts and giveaways as he said super-rich people threatening to leave the country over Labour’s tax plans had misunderstood their proposals.

Before a speech in London on Tuesday, the shadow chancellor restated his party’s claim that billionaires had enjoyed perks of a tax system that had led to “gross inequality”, and this was something his party planned to change.

He urged billionaires such as the Phones 4u founder John Caudwell, who said he might leave the UK if there was a Labour government, to meet him so he could explain Labour’s plan for an economy that he claimed would support entrepreneurs.

The Institute for Fiscal Studies has said Labour’s £100bn figure is incorrect because the government has rolled out a raft of anti-tax-avoidance measures at the same time as corporation tax cuts.

“My view is we need to tackle the grotesque levels of inequality that we’ve got. That’s the main thrust of Labour going into government,” McDonnell told the Today programme.

“Most of us will think, on the one hand, you have got 150 billionaires in this country and on the other hand you have got people queueing up at food banks and actually, yes, people sleeping rough, unfortunately dying on our streets.”

When it was put to him that higher earners paid more tax than ever before, McDonnell responded: “Look at the giveaways though. I’m saying the £100bn has been given away in tax cuts, and where has it gone to? Corporations, over £85bn; it’s gone on cuts to capital gains tax; it’s gone on cuts to inheritance tax; and again cuts in the income tax rate. That has benefited corporations and the wealthy.”

He said Labour would tackle society’s “grotesque levels of inequality” by introducing “a fair taxation system, make sure we can fund our public services, make sure actually everyone pays their taxes as well so we do tackle tax evasion and tax avoidance”.

Talking about “extremes” of wealth and poverty in society, he said: “That level of inequality … I think [voters] will think that’s unfair and actually not the sort of society we want. So we want to create a society where everybody has a decent quality of life and we overcome these grotesque levels of inequality.”

Research from YouGov has shown that the public overwhelmingly back increased taxes on the super-rich in the UK, and four in 10 believe an increase in billionaires is a sign society is getting worse.

The battle over tax and spending between the two parties raged throughout Monday after the Tories released their own dossier on Jeremy Corbyn’s economic plans and how they would affect pensions.

They claimed that his intended reforms, which include nationalisation of services, would mean 10 million savers potentially losing an average of over £11,000. They also suggested people could be forced to delay retirement by almost three and a half years.