Labour exposes Osborne's tax cut for bankers

New figures from the party show that 643 bankers earning more than £1m a year will receive an average of £54,000 from the cut in the 50p tax rate.

After a week dominated by welfare cuts, an area where public opinion favours the coalition, Labour is hoping to regain the political advantage tomorrow when the 50p tax rate is officially reduced to 45p. Polls have consistently shown that the public, including Conservative voters, are overwhelmingly opposed to the move and an increasing number of Tory MPs (such as Jesse Norman and Robert Halfon) recognise that the decision inflicted permanent damage on their party's brand. 

Labour has dubbed tomorrow "Tory Millionaires' Day" after calculating that the UK's 13,000 income millionaires will receive an average tax cut of £100,000 a year (nearly four times the median salary of £26,500). Now the party's number crunchers have produced some equally potent stats on the gains that the top earning bankers will make. Labour has calculated that 643 bankers, working in the UK's five major banks and earning more than £1m a year, will receive a combined tax cut worth at least £34.6m per year - an average of £53,775 per banker. Millionaire bankers in the state-backed RBS and Lloyds are set to get a tax cut of over £7.5m per year - an average of £63,686 each. In addition, the 40 highest paid senior bank executives will receive a tax cut worth almost £4m - an average of £99,694 each.

Chris Leslie, the shadow financial secretary to the Treasury said:

People on middle and low incomes, who are paying more in higher VAT and seeing their tax credits and child benefit cut, will be totally appalled at the size of this government's tax giveaway to highly paid banking executives.

While the average family will be £891 worse off this year because of tax and benefit changes since 2010, it cannot be right for David Cameron and George Osborne to give a huge tax cut to millionaires this weekend.

Forcing millions to pay more while millionaires pay less is the act of a government that is totally out of touch and consistently stands up for the wrong people. Bankers are getting a bonus from David Cameron and George Osborne, while Britain's families pay the price for their economic failure.

For Osborne, who was careful in the Budget to emphasise that the banks would not benefit from the reductions in corporation tax, the figures are a political headache. The Chancellor's consistent line is that the 50p rate was ineffective because the rich avoided it (in fact, as I explained here, it raised £1bn in its first year and would have gone on to raise more) but to most voters that sounds like an argument for clamping down on avoidance (as the coalition claims it is doing), not for cutting taxes for the highest earners. 

People walk past the Royal Bank of Scotland building in London. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Ukip's Nigel Farage and Paul Nuttall. Photo: Getty
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Is the general election 2017 the end of Ukip?

Ukip led the way to Brexit, but now the party is on less than 10 per cent in the polls. 

Ukip could be finished. Ukip has only ever had two MPs, but it held an outside influence on politics: without it, we’d probably never have had the EU referendum. But Brexit has turned Ukip into a single-issue party without an issue. Ukip’s sole remaining MP, Douglas Carswell, left the party in March 2017, and told Sky News’ Adam Boulton that there was “no point” to the party anymore. 

Not everyone in Ukip has given up, though: Nigel Farage told Peston on Sunday that Ukip “will survive”, and current leader Paul Nuttall will be contesting a seat this year. But Ukip is standing in fewer constituencies than last time thanks to a shortage of both money and people. Who benefits if Ukip is finished? It’s likely to be the Tories. 

Is Ukip finished? 

What are Ukip's poll ratings?

Ukip’s poll ratings peaked in June 2016 at 16 per cent. Since the leave campaign’s success, that has steadily declined so that Ukip is going into the 2017 general election on 4 per cent, according to the latest polls. If the polls can be trusted, that’s a serious collapse.

Can Ukip get anymore MPs?

In the 2015 general election Ukip contested nearly every seat and got 13 per cent of the vote, making it the third biggest party (although is only returned one MP). Now Ukip is reportedly struggling to find candidates and could stand in as few as 100 seats. Ukip leader Paul Nuttall will stand in Boston and Skegness, but both ex-leader Nigel Farage and donor Arron Banks have ruled themselves out of running this time.

How many members does Ukip have?

Ukip’s membership declined from 45,994 at the 2015 general election to 39,000 in 2016. That’s a worrying sign for any political party, which relies on grassroots memberships to put in the campaigning legwork.

What does Ukip's decline mean for Labour and the Conservatives? 

The rise of Ukip took votes from both the Conservatives and Labour, with a nationalist message that appealed to disaffected voters from both right and left. But the decline of Ukip only seems to be helping the Conservatives. Stephen Bush has written about how in Wales voting Ukip seems to have been a gateway drug for traditional Labour voters who are now backing the mainstream right; so the voters Ukip took from the Conservatives are reverting to the Conservatives, and the ones they took from Labour are transferring to the Conservatives too.

Ukip might be finished as an electoral force, but its influence on the rest of British politics will be felt for many years yet. 

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