Call to raising tax thresholds among union demands to Chancellor

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.”