BRITAIN’S ramshackle Tory government now resembles a “business entering administration,” shadow chancellor John McDonnell said today as figures showed the economy contracted by 0.4 per cent in April.

“The whole country is hurting while the Tory leadership candidates compete on tax cuts for higher earners,” he said.

Mr McDonnell said that leadership frontrunner Boris Johnson’s proposals to raise the 40p tax band threshold from £50,000 a year to £80,000 “reveals how out of touch the Tories are” at a time when “our schools, care for the elderly and our police services [are] at breaking point.”

Former foreign secretary Mr Johnson said that national insurance contributions could rise to pay for the cut to income tax — shifting the burden onto lower earners.

The plan prompted anger from the Scottish National Party, which pointed out that as income tax is a devolved matter but national insurance is determined at Westminster, Scots would disproportionately fund a tax cut for high earners in England and Wales.

SNP MSP Angela Constance said old Etonian Mr Johnson’s “wheeze” had more to do with “appealing to Tory MPs than meeting the very real challenges facing the UK.”

Mr McDonnell said Labour would “put the responsibility for repairing our public services on the top 5 per cent and corporations, not add to the handouts the government has already given the richest.”

He said Labour plans, including the national transformation fund and a minimum wage of £10 an hour, would “turn this ailing economy around.”

Health Secretary Matt Hancock, another Tory leadership hopeful, took up the £10-an-hour minimum wage pledge today, using the misleading “national living wage” terminology used by his party, which is lower than the real living wage calculated by the Living Wage Foundation.