Unions who donate to Labour will meet John Healey on Thursday to press home their demands ahead of next month’s Budget. Unite, the UK’s second biggest union, has called for a reversal of the freezing of tax thresholds, that see the lowest paid drawn into paying tax. The union’s leader, Sharon Graham, said she told Andy Burnham that the cut to the winter fuel allowance, carried out under former Prime Minister Sir Keir Starmer, was a “disgrace”, adding: “What to you need to do is winter fuel in reverse – something that says to everyday people I am on your side.” The call is one of a number of policy proposals unions are taking to the chancellor, including increased taxes on tech companies. Unions say they believe Healey’s first budget will define Andy Burnham’s direction of travel as prime minister.
Unite took legal action against Sir Keir’s government when the winter fuel payment was restricted to the poorest pensioners, and Graham believed this policy – which was not in Labour’s manifesto – was politically poisonous. Burnham said the freezing of tax thresholds had come up on the doorsteps when he was campaigning to return to Westminster as MP for Makerfield. In her last Budget, then-Chancellor Rachel Reeves froze tax thresholds until 2031. The basic rate of 20% is paid on annual earnings between £12,571 and £50,270.
The higher rate of 40% is paid on earnings between £50,271 and £125,140. By not uprating those rates in line with inflation, more lower paid people have paid tax for the first time and more better-off workers, including public service workers such as senior nurses, police officers and teachers, are now paying tax at the higher rate. Graham said: “We must see things happen immediately. I told him [Burnham] that you have to make working class people believe their best days are in front of them.
“That tax threshold of around £12,500 – if that hadn’t been frozen for the past few years it would have moved up to over £16,000 now. People at the lower end are paying eye-watering amounts of tax.” Faisal Islam: Chancellor’s attempts to boost vibes may limit tax rises Burnham rejects ‘tax and spend socialist’ comments Why the Budget means many will pay more tax The country’s biggest union Unison is calling for the chancellor to increase tax on large tech companies to finance public sector investment and the transition to green energy. It is also calling for the Treasury to commission research into whether the balance of taxation needs to move from income to wealth. The union’s general secretary Andrea Egan is not expecting dramatic change from Healey straight away at the Budget, but is expecting a new direction to be mapped out.
Her union is demanding that Labour makes clear it too is under new leadership and isn’t just “continuity Starmer” with a more affable face. The third biggest union, GMB, also has significant financial links to the Labour Party. Leader Gary Smith has long advocated raising revenue from the oil and gas industries by approving the new Rosebank and Jackdaw fields in the North Sea. A decision on whether these will go ahead seems unlikely until after the October by election in Sir Keir’s former seat in north London – though the government maintains the timing is out of its hands as it is a quasi judicial decision.
Smith said: “The government really needs to get on with this. “We are going to need oil and gas for generations to come. Rosebank and Jackdaw are good for jobs, good for the economy, but also good for the environment as we won’t have to import so much from abroad as that is carbon intensive.” Smith also wants to see confidence building measures for the construction industry in the Budget. He said: “We have half a million bricks stockpiled in this country – enough to build two Kidderminsters – and factories are being mothballed because we are not getting on with the house building programme.
They have to cut through the red tape.” In the next couple of weeks, TUC officials and representatives of those unions which don’t donate to Labour will also meet the chancellor. TUC leader Paul Nowak told me his main demand was for Healey to reverse the last government’s cut in the surcharge paid by banks to raise around £9bn to subsidise energy bills. But he also wants to see the remit of the independent Budget watchdog, the OBR, revised, so it takes into account the value of long term investment and not just short term book-balancing.
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