Prominent figures including Chuka Umunna, Luciana Berger and Chris Leslie dramatically announced their decision at a press conference in Westminster on Monday morning, which came after widespread speculation of a Labour split.
Ms Berger said the party is now “institutionally antisemitic”, while Mr Leslie accused the party leadership of undertaking a “betrayal” over its policy towards Brexit.
Angela Smith MP, who told how she was born into a Labour working-class family, attacked the left-wing intellectuals she claimed now dominate the party and its leadership.
Other Labour figures involved included Gavin Shuker, Mike Gapes and Ann Coffey, with the MPs now opting to sit as an independent group in the House of Commons.
The announcement is another sign of the deep and powerful undercurrents coursing through British politics and constitutes the first major split of a party since the SDP broke away from Labour in 1981.
Ms Berger initially introduced herself as “the Labour Party MP”, before correcting herself and saying: “I am the Member of Parliament for Liverpool Wavertree”.
She said: “This morning we have all now resigned from the Labour Party. This has been a very difficult, painful, but necessary decision.
“We represent different parts of the country, we are of different backgrounds, we were born of different generations, but we all share the same values.
“From today, we will all sit in Parliament as a new independent group of MPs.
She went on to say that she could not remain in a party on which she has “come to the sickening conclusion is institutionally antisemitic.”
Nottingham East MP Chris Lesie said: “British politics is now well and truly broken and in all conscience I cannot look you in the face and honestly urge you to support a Jeremy Corbyn-led Labour government.”
A website for The Independent Group was also launched and promoted by several of the MPs, under the banner “Politics is broken. Let’s change it”.
Mr Umunna called on MPs from Labour and other parties to “leave the old tribal politics behind” and join the new independent group.
He said: “It is time we dumped this country’s old-fashioned politics and created an alternative that does justice to who we are today and gives this country a politics fit for the here and now, the 21st century not the last one.
“We’ve taken the first step in leaving the old tribal politics behind and we invite others who share our political values to do so too.
“You might come from a Labour background but you might come from other political traditions. Yes, it’s a difficult decision – make no mistake about that.”
Mr Gapes, a former chairman of the Commons Foreign Affairs Committee, told the press conference Labour is now a “racist, antisemitic party”.
He went on: “I am furious that the Labour leadership is complicit in facilitating Brexit, which will cause great economic, social and political damage to our country.
“Jeremy Corbyn and those around him are on the wrong side on so many international issues – from Russia, to Syria, to Venezuela. A Corbyn Labour government would threaten our national security and international alliances.”
Ms Smith launched a stinging attack on Mr Corbyn and the team around him, which points to a widening gap between the leader’s party and Labour’s working class support base.
She said: “For my parents, working-class pride was not about enjoying poverty and wearing it as a badge of honour. It was about self-respect and believing that we could do better, that there was nothing wrong in getting on in life.
“This is one of the values that has underpinned my political affiliation all my life. I believe in aspiration and know that people do not want to be patronised by left-wing intellectuals who think that being poor and working class constitutes a state of grace.”
Labour leader Mr Corbyn said: “I am disappointed that these MPs have felt unable to continue to work together for the Labour policies that inspired millions at the last election.”
London mayor Sadiq Khan said he was “deeply distressed” over the split, but said he believed the divide will make it more difficult for the party to be elected to govern.
Mr Khan said: “History tells us that when the Labour Party splits, it leads to the Conservative Party winning the next election and the one after that and the one after that.
“What people I care about need is a Labour government. One thing that’s going to make that more difficult is Labour splits.”
Shadow foreign secretary Emily Thornberry posted on Facebook that Labour “should not and will not be distracted and divided” by the defections of seven MPs.
She said: “If you criticise or abuse these individuals, if you impugn their motives, and if you encourage any others to join them, you are helping them not hurting them, because you are taking your eyes off the prize and allowing our movement to be distracted and divided, which is exactly what they want.”
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