Rachel Reeves urged by Labour MPs to prioritise wealth tax over benefits cuts
Labour MPs have urged Chancellor Rachel Reeves to do “something different” by introducing a new wealth tax rather than making cuts to benefits payments.
Diane Abbott, the Labour MP for Hackney North and Stoke Newington, led the calls for a 2% tax on people with assets worth more than £10 million, claiming such a policy could raise more than £24 billion.
Brian Leishman, the Labour MP for Alloa and Grangemouth, added the public “don’t want cuts, they don’t want austerity” following the Tories but instead want an “annual wealth tax on the very wealthiest in society”.
Treasury minister James Murray suggested Mr Leishman “hasn’t read the budget very carefully” if he believes the Government is imposing austerity.
The Government last month announced a tightening of eligibility for the main disability benefit personal independence payment (Pip) and changes to the sickness element of universal credit.
Ms Reeves also used her spring statement to confirm that universal credit health benefits for new claimants will be halved in 2026 and then frozen until 2030.
An impact assessment estimated a £500 million cut in carers’ benefits by 2029/30, with around 150,000 people not receiving carer’s allowance or the carer element of universal credit as a result of the changes.
Pip
Speaking at Treasury questions, Ms Abbott told the Commons: “It’s all very well for the minister to talk about helping people into work, but is he aware of the many millions of people on Pip who rely on that Pip to work and yet it is the Pip that is going to be slashed as a consequence of the spring statement?
“And is he aware also that there are very many people that would prefer the Government rather than balancing its books on some of the poorest and most vulnerable in our society, why is it rejecting a tax of just 2% on people with assets over £10 million, which would raise over £24 billion?”
Mr Murray replied: “At the autumn budget last year the Chancellor announced a series of reforms to fix the public finances in as fair a way as possible, making sure the wealthiest in our society pay their fair share of tax.
“The welfare reforms announced at the spring statement are principled reforms to help get people back into work because work is the best way out of poverty whilst also providing that support for those who need it and making sure the system is sustainable for the future.”
Mr Leishman said: “For 14 years we have seen austerity that has ripped the heart out of communities and then we had a global pandemic where inequality was accelerated, and we still are feeling the effects of a cost-of-living crisis that is making ordinary people poorer.
“The public don’t want cuts, they don’t want austerity, what they do want is an annual wealth tax on the very wealthiest in society.
“Isn’t it time that we had a government that does something different, gives people what they want and is willing to redistribute wealth to the benefit of many in society and improve living standards?”
Mr Murray replied: “I politely suggest to my honourable friend that if he thinks we’re imposing austerity he hasn’t read the budget very carefully.
“There are increases to revenue spending in all departments, across the public spending envelope there is an increase in capital investment, we’re making sure we’re building for the future whilst protecting our fiscal rules.
“And let me be clear, those fiscal rules are not a nice to have addition to the way which we approach the economy, fiscal irresponsibility has a huge cost as we saw under the previous government.”
Detrimental
Labour MP Neil Duncan-Jordan (Poole) earlier told the chamber: “Analysis from a number of disability groups shows that the Pathways to Work green paper will have a detrimental effect on over three million people.
“Polling from Oxfam shows that 77% of the public would rather the UK Government increase taxes on the very richest rather than cut the benefits of the poorest in society.
“Shouldn’t we therefore be looking at raising funds from those with the broadest shoulders?”
Mr Murray reiterated the Government has “made changes to make the tax system fairer and make sure the wealthiest pay their fair share” before again labelling the welfare reforms as “principled”.
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The Cons are desperate for the left to introduce a “wealth tax”. It’s a political elephant trap that’s completely unnecessary when there are plenty of fair ways to raise more revenue from the wealthy. Unfortunately Rachel won’t be told about these because Treasury officials might lose out themselves.
That’s a fair point about wealthy senior civil servants and advisers ” steering” policy away from anything harmful to their vested interests. I still think that a small tax increase on high incomes say over £75K and a bit more on over £150k would be a not too painful start. Then a modest wealth tax possibly around the 2% mark on cash and equity holdings over say £5m and on properties over £1.5m. What’s so unreasonable about that ?
The super wealthy don’t pay income tax so dialling up the top rates or adding extra bands does little more than gifting the opposition an “anti-success” narrative that resonates, weirdly, with voters that’ll never be affected. The answer is surely to get rid of the other ways of taxing income (or avoiding tax) like dividend tax, CGT, gifts, loans not being repaid, IHT and treat anything that increases the bank balance as ordinary income, massively simplifying everything making tax avoidance and tax effiency arrangements much harder. We learnt last election that Mr Sunak paid an effective tax rate 10% lower… Read more »
MP’s could also loose out if the threshold included them as they earn over £90K and ministers substantially more. That does not include all the expenses they can claim.
I’ve never understood why Westminster isn’t treated as the “normal place of work” by HMRC and all those travel and second home expenses subject to income tax.
Mr Murray,
A bright young chap from Ealing
whose smile is most appealing
shining bright in Rachel firmament
but lacking in any empathy
it is most revealing…
One more ‘Homo Superioris’, a keen signator to add to the account of misery that they issue us with daily…
The problem with wealth tax is that it drives wealthy people away. A lot have already left for places like Italy where taxes are more moderate. There is less and less to attract wealthy people to live in the UK at the moment. Taxation on private education is a bad idea for a number of reasons. It also drives wealthy people away.
Isn’t the point of being wealthy that you live the lifestyle you want to live. Picking a place to call home solely for slightly cheaper taxes seems backwards. Italy has many other attractions that could swing someone with fingers in lots of global pies. Weather, food and EU membership.
Now tax free Monaco is a different matter, and I assume you don’t propose that for the UK.