Budget: Labour backs personal allowance reforms

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Labour interim leader Harriet Harman has backed Chancellor George Osborne’s plans to cut taxes for working people but cautioned that Britons will still be worse off.

Responding to Osborne’s Summer Budget today, Harman said Labour would support the Chancellor in his efforts to raise the personal allowance to £11,000 and increase the 40p threshold to £43,000.

She said: “But we will look at the detail to make sure he is not up to his usual trick of giving with one hand and taking away with the other.”

At the same time, the Labour leader warned the Chancellor’s raft of welfare cuts would mean the burden of savings is being borne by the poorest in society.

“When it comes to tax, the burden of deficit reduction should be borne by those with the broadest shoulders. Instead, he has chosen to put the heaviest burden on low paid working people.

“He’s claiming to have found £12bn in welfare cuts, but only aiming to get half that from tax avoidance.”

Instead, Harman called on the Chancellor to focus on improving the UK’s productivity as the route to boosting wages.

She said: “That is the route not just to raising living standards, but the route to getting down the deficit. When it comes to productivity, this Chancellor’s record is poor.

“It’s not as if people aren’t working hard. But the things that turn their work into high productivity – skills, investment and infrastructure – are not there for them.

“That’s why we in the UK we produce on average 30 per cent less per hour than workers in Germany, France and the US.

“Output per hour in this country is 17 per cent below the average for the G7 – the lowest we have been in the productivity league table since 1992. It’s not enough just to publish a productivity plan. It’s about doing it.”