Labour’s biggest donor turns on Reeves

Labour’s biggest union donor has launched an attack on Rachel Reeves’ Budget for breaking promises to workers.

Sharon Graham, the general secretary of Unite, told The Telegraph that the watering-down of the Employment Rights Bill (ERB) meant that working people were now “unable to trust Labour”.

She warned that her members had noticed the “underhand continuation” of the “shameful stealth tax” represented by the freezing of income tax thresholds.

The Chancellor used her Budget to raise taxes to pay for a huge increase in the benefits bill including an end to the two-child benefit cap.

Ms Reeves has also been accused of misleading the public over the state of the country’s finances.

The Office for Budget Responsibility (OBR) published a detailed account of its discussions with the Treasury on Friday, which showed that the Chancellor and her officials had falsely exaggerated the fiscal shortfall she faced, preparing the ground for her to raise taxes and welfare spending.

Unite has more than a million members and is the second-largest union affiliated to Labour. It donates £1.5m a year from its membership fees to the party.

Ms Graham has previously threatened to pull the plug on its funding, accusing the party of tacking too far to the Right.

“The Budget was the defining moment for Labour,” she said. “The Chancellor’s stealth tax increase has hit ordinary workers such as health workers, engineers and tanker drivers while city bankers and billionaires have been left unscathed.

“The stealth tax is a tax on workers pure and simple. A promise broken to workers.”

The union leader said the watering-down of the ERB, which would have introduced the right to sue for unfair dismissal on day one, showed that “workers have been told one thing only to find promises are not kept”. The news of the about-turn came in the aftermath of Ms Reeves’ Budget.

Ms Graham said: “Workers were promised stronger rights, particularly the outright ban on fire and rehire, an end to zero hours contracts and day one right.

“Those promises which were campaigned on, have failed to be delivered. Broken. Workers have been left unable to trust Labour.”

She added: “The broken promise on workers’ paying the price through higher taxes and the watering down of the ERB undoubtedly has left workers scratching their heads and asking what the hell is Labour doing? Are they Labour at all?

“These latest decisions form part of a long list, which began with the attack on pensioner winter fuel payments, continued through proposed disability cuts, now stealth taxes and crucially underpinned by Labour’s failure to tackle the cost of living crisis.”

Ms Graham also hit out at the “sham decisions in relation to net zero”, including the closure of two oil refineries in a year. “Ed Miliband is clearly not the man for the job,” she said.

She added: “The Budget was not a workers’ budget; it will result in workers paying more as income thresholds have been frozen.

“One in four workers, many of them Unite members, face paying higher tax rates in the future, while also struggling to keep their heads above water.

“If the Chancellor thinks workers are not noticing the underhand continuation of this shameful stealth tax, she is wrong. It’s a tax on workers. It’s clear.”

Treasury insiders briefed newspapers for weeks with suggestions that the Government was facing a shortfall of up to £30bn in the public finances.

Sources close to Ms Reeves used this alleged hole to justify drawing up plans for a massive tax raid.

However, in a letter to the Treasury committee, which emerged after the Budget, Richard Hughes, the OBR’s chairman, revealed that Ms Reeves had “at no point” faced a shortfall of more than £2.5bn.

Mr Hughes also confirmed that on Oct 31, the OBR had upgraded its forecasts and told Ms Reeves that she in fact had a £4.2bn surplus, even after taking into account a significant downgrade to productivity.

[Source: Daily Telegraph]