Downing Street has signalled the possibility of introducing a new wealth tax as the Labour Party struggles to fund its promises. During a press briefing on Monday, the Prime Minister’s spokesperson stopped short of denying the move. Instead, he repeatedly stated that Sir Keir Starmer believes “those with the broadest shoulders carry the greatest burden”.
This response has fuelled speculation that Rachel Reeves may be contemplating a fresh tax on the wealthy to address the financial black hole caused by the recent Government backtrack on welfare reductions. On Sunday, several major trade unions, including Angela Rayner’s old employer Unison, were reported to support a wealth tax. A union insider told The Telegraph of their intentions to bring up the issue with the Prime Minister and influence Labour MPs.
Collectively, the five unions gave Labour nearly £800,000 in the first three months of this year alone, and hold significant influence over the party’s ruling National Executive Committee.
Former Labour leader Lord Kinnock also said the Government should be “willing to explore” a 2% annual tax on assets above £10 million, raising up to £11 billion a year to plug holes in the Treasury’s finances.
This sparked outrage from Shadow Chancellor Mel Stride, who accused Labour of launching an “attack on business and wealth creation” in order to finance their “costly U-turns”.
He wrote on X: “Labour are refusing to rule out a punishing new tax on pensions and savings to plug the hole they have created in the public finances.
“Labour’s attack on business and wealth creation has already seen scores of wealthy taxpayers leave the UK. Now they appear to be gearing up for fresh tax raids to pay for their costly u-turns.”
When quizzed on Monday about Sir Keir’s stance on a wealth tax, his spokesperson added: “We have repeatedly said that those with the broadest shoulders carry the greatest burden, and the choices we’ve made reflect that… But as you know, I’m not going to write the next Budget for you right now.”
He continued: “The Government is committed to making sure the wealthiest in society pay their fair share of tax. And that’s why the Chancellor announced a series of reforms in the last Budget to help fix the public finances in as fair a way as possible.”
Lord Kinnock told Sky News that a tax on wealth above £10m would be popular among the majority of the general public. He claimed the super-rich were going “unscathed” and said such a tax would be “a substantial gesture in the direction of equity”.
Sir Keir and Ms Reeves appear resistant to the idea amid fears it would hammer the economy, scare off wealthy investors, and repeat the economic damage seen from previous attempts to tax high earners.
Reports last week also revealed that Liz Lloyd, Sir Keir’s senior policy adviser in Downing Street, has privately warned that recent levies on the wealthy could already be undermining the PM’s mission to grow the economy.
