Ms Rayner and the Labour leadership’s decision to oppose a rise in corporation tax could stymie the party’s chances at the ballot this May and in the future, Express.co.uk was told. It comes as the party faced further division after Shadow Tourism minister Alex Sobel described business as “the enemy”, later apologising for the comment. Leader Sir Keir Starmer has fought hard to rebrand Labour as the pro-business party, something which appears to run in stark contrast to the ideology of its more left-wing members.

Labour hopes to beef-up its presence on the political landscape this May in the local, mayoral, Scottish and Welsh elections.

However, Paul Embery, a leading trade unionist and Labour member told Express.co.uk that the continuing divide between the left and Sir Keir, especially seen over the Government’s Budget announcement, could “damage” the party both inside and out.

He said: “There were clearly big divisions over corporation sense.

“As a broad principle there was a lot of common sense in what both Starmer and Anneliese Dodds (Shadow Chancellor) were saying, which is that when you’ve got a faltering economy you shouldn’t be looking to raise taxes or cut unlike spending.

“The problem is that the optics with corporation tax makes things very difficult – if you’ve got a Tory Government willing to increase tax, and Labour is saying don’t do it, then there’s an inversion of both parties’ fiscal traditions.

“There are some arguments to say that properly targeted tax rises like corporation tax could actually work and deliver benefits.

“Labour should have just gone along with it because the potential damage of saying ‘We’re not going to support a rise in corporation tax‘ while the Tories are just doesn’t present itself particularly well to the public.”

Although, he added: “We shouldn’t be ultra critical of Starmer on this because tax rises at a time of a faltering economy are not usually advisable – and I think that’s probably where he’s coming from.”

JUST IN: Growing by 16.9% and 1.3% in last 6 months of 2020 – ONS

Many of the Labour left reacted furiously to the news both in the run-up and after Sir Keir had officially established his position.

Richard Burgon, the former Shadow Justice Secretary under Jeremy Corbyn who was sacked by Sir Keir, demanded that he rectify his stance.

At a rally organised by the Labour Assembly Against Austerity, with MPs and trade union general secretaries, Mr Burgon said: “We can’t just sidestep big debates when they happen.

‘The tax debacle of the past few days shows that if we continue to do so, then our party will be outflanked by the Tories with their phoney rhetoric of levelling up.

DON’T MISS

Boris ordered to shut UK borders amid fears Europe wave may expand [REPORT]
UK ‘true friend’ of Ireland, not EU! Irish leaders warned about bloc [INSIGHT]
‘Easter’ and ‘egg’ dropped from chocolate treats as PC goes mad [ANALYSIS] 

“We can win the argument for a progressive tax system – but only if we make the case.”

Others, like former Shadow Chancellor John McDonnell, called for a Covid windfall tax instead.

Steven Fielding, Professor of Political History at the University of Nottingham told Express.co.uk that while Sir Keir’s opposition was understandable, it could prove an “inconvenience” to his leadership.

He said: “This corporation tax thing is an inconvenience in the sense that everybody in the Labour Party thinks tax rises good, tax cuts bad.

“Starmer’s position, currently, is quite sensible economically, but that doesn’t mean many people in the Labour Party will get on board.

“Certainly those who want to cause trouble will do that.

“The people that have piped up are the alienated, hyper-Corbynites – they’re the ones currently attacking him.

“But they’re going with the grain of what most people in the Labour Party think: That any tax rise is good in any circumstances.”

Meanwhile, Sir Keir is believed to be considering a reshuffle of his cabinet after May’s elections.

Reports suggest that Ms Dodds could be removed, who Sir Keir’s allies say has failed to communicate the party’s vision effectively, according to The Sunday Times.

Rachel Reeves is believed to be in the running to replace Ms Dodds.

Shadow Foreign Secretary Lisa Nandy is also in the frame.