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Welsh Labour MP defends Chancellor’s decision to rule out wealth tax

05 Oct 2024 4 minute read
Swansea West MP Torsten Bell. Photo Richard Youle

A Welsh Labour MP, regarded in some quarters as one of the rising stars of the new intake, has defended Chancellor Rachel Reeves’ decision to rule out a wealth tax against the richest.

Swansea West MP Torsten Bell, a former Treasury official and chief executive of the economic think tank Resolution Foundation, said a wealth tax would not raise “significant revenues”.

Ms Reeves has previously rejected calls for a tax on the country’s wealthiest even though she has claimed there is a £22 billion black hole in public finances.

Supporting the Chancellor’s position, Mr Bell said it was not helpful in the wealth tax debate to compare the UK with the US, as the US has far more billionaires.

‘Fashionable’

“On the tax side it is very fashionable on the left to say ‘let’s just have a wealth tax’,” he said.

“For some of us who have spent 20 years working on tax policy, I think that is something that is exciting for them to write in books and not very useful in terms of helping govern the country. There are two reasons why that is.

“The short reason why that doesn’t work in the UK is two words, Jeff Bezos. He does not live in the UK.

“And, yes, we do have some very rich people. But our wealth is nowhere near … we don’t have the globally rich people that the US, particularly, has lots of.

“You will have a brand new wealth tax and you are not going to bring in really significant revenues in the UK.

“Secondly, doing it is really hard. I am fed up of people saying Government should do this then not getting remotely interested in the hard job of getting homes built… taxes that actually raise money.”

Director of policy

Mr Bell, who was elected in July and was the Labour Party director of policy under Ed Miliband’s leadership, also criticised successive Conservative governments for failing to deliver.

“There has been enough game play over the 14 years,” he said during an event at the Cheltenham Literature Festival to promote his new book, Great Britain? How We Get Our Future Back.

“It’s hard to do, and if you can’t overcome the hard job of doing it well, so it is just a bit of virtual signalling, I’m afraid you can get stuffed and shouldn’t be in politics at all.

“It does matter when things are hard. That’s why for 14 years the Tories promised to build homes and didn’t.

“I’m fed-up of politics of the like of Nigel Farage, who says it is easy. That was also the problem with Boris Johnson – boosterism – saying Britain is a world beater is the way we make it a world beater.

“We have got to get serious and grow as a country, doing the nitty gritty and actually do things.

“If you want to grow taxes on the wealth side we have got a lot of wealth taxes already, like inheritance tax, capital gains tax, stamp duty.

“Sort out those taxes is the first way you officially start taxing wealth, stop dreaming of your wealth tax because you are just going to waste years.

“I have spent 20 years in this business. In the middle of the last decade, I watched the left wander off for years discussing the value of the universal basic income and how robots were going to take all our jobs. That was fun for them at their conferences.

“There was no investment happening in Britain, we didn’t have any robots happening at all.

“There is no plausible way of delivering universal basic income and at the same time poorer households have seen the poverty rate go up.

“How about we actually focus on what’s happening rather than what you enjoy talking about?”

‘Tough decisions’

Ms Reeves is due to deliver her first Budget on October 30 and used her conference speech last month to warn of “tough decisions”, but rejected a return to austerity.

“Yes, we must deal with the Tory legacy and that means tough decisions, but I won’t let that dim our ambition for Britain,” she said.

“So, it will be a budget with real ambition, a budget to fix the foundations, a budget to deliver the change that we promised, a budget to rebuild Britain.”


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David
David
27 days ago

Pensioners are an easy target for Labour – so they think!

Amos Johnston
Amos Johnston
27 days ago
Reply to  David

There are only two ways to make Johnson’s wellard Brexit work. One is mass non-European immigration. The other is to reduce the huge burden retired people put on the economy. The Cons chose the first option because so many of their voters are retired. For Labour, mass immigration is more important to their voters. And to be fair, over 65s were the only demographic to back Brexit with a supermajority. As long as they look after the least well off coming for the olds is the least worst route to Brexit success.

J Jones
J Jones
27 days ago
Reply to  Amos Johnston

I’m neither over 65 nor a Brexiteer, but a shocking fact that I believe came out recently is that a higher proportion of over 65’s pay tax than under 65s. A generation who’ve done their bit and saved to support themselves, effectively subsidising people of prime working age who evidently have no desire to work or contribute to society.

Amos Johnston
Amos Johnston
27 days ago
Reply to  J Jones

25% are millionaires according to the Telegraph. And someone has to pay for Brexit.

J Jones
J Jones
27 days ago
Reply to  Amos Johnston

Considering increasing inflation and costs of living, £1m could be seen as the recommended amount for anyone to enjoy a long and happy retirement. Well done to the small minority who have achieved this and in a way to avoid ongoing excessive taxation. Meanwhile, younger generations decide to do a non job or no job, blow all their money by the weekend on various weird traits just to get the attention of others, then try to blame everyone else for the longer term mess of their lives. Millions of pensioners didn’t vote for Brexit, whereas millions of young Farage Rioter… Read more »

Amos Johnston
Amos Johnston
26 days ago
Reply to  J Jones

I didn’t vote for it so it wasn’t my choice. But, someone does have to pay for Brexit and 60% of over 65s voted for it. Of course that’s unfair on the 40% who didn’t but that’s democracy.

To avoid bankruptcy we either reduce the cost of retirement to absorb the 5% Brexit hit on the economy, or we increase migration to have more people working and paying tax. But the Cons lost the last election by putting retirees before migration. The people have spoken.

Migration or retirees. That’s the only choice unless we rejoin the single market.

CapM
CapM
26 days ago
Reply to  J Jones

Isn’t this and your previous comment just a form of the – age raging at youth – cliche.

Karl
Karl
22 days ago
Reply to  J Jones

Nasty comments about the young their. Awful stereotyping makes you look bad. Wales had no riots, so why even mention them in a Welsh press outlet. The young are screwed by the voting of the old. It’s quite obvious as triple lock and no student debt and affordable houses, takes a pensioner into a bubble far away from some of reality.

Lyn E
Lyn E
26 days ago
Reply to  Amos Johnston

A selective and misleading statistic. The ONS paper from which is is taken shows 22% of over 65s have wealth of more than £1 million (much of it unaccessible) compared with 31% of 55-64 year olds.

The intergenerational picture hides the reality that wealth inequality has increased across all age bands.

Amos Johnston
Amos Johnston
26 days ago
Reply to  Lyn E

Most of the wealth is from years of house price inflation so can be accessed by downsizing. Let’s not forget this is not legitimate wealth earned through hard work or entrepreneurship. It’s come about through decades of poor government policies that have enabled home owners, which inluded the decisionmakers, to effectively steal that wealth from the next generation.

Lyn E
Lyn E
26 days ago
Reply to  Amos Johnston

Most homeowners are not that wealthy, although some of course are. ‘Downsizing’ is not simply a financial transaction but can be difficult for older people. Children sometimes return, there may no suitable properties nearby, or the stress of selling/buying/moving can just be too much for someone with health problems or whose powers are declining. Treating working class people as thieves just because they happen to own a small home, bought when they were younger and it was affordable, is contemptible. Why will you not put the blame where it belongs? On the truly wealthy who have gained immensely over the… Read more »

Amos Johnston
Amos Johnston
26 days ago
Reply to  Lyn E

Where did that wealth come from? It’s the next generation that has to take out far more debt and work harder to pay for the exact same property. It’s not individual theft, because there wasn’t any reasonable way individuals could’ve avoided it. But it’s absolutely intergenerational theft. Those that do choose to release that distorted value and move to somewhere cheaper such as Spain to retire are enjoying lifestyles beyond their true means that young people are paying for. Of course it was government policy to blame. After Thatcher closed the real wealth creating industries they needed something to replace… Read more »

Lyn E
Lyn E
26 days ago
Reply to  Amos Johnston

This really is drivel. I can only explain it by seeing it as a deliberate attempt to divide working class people in order to disguise the true sources of inequality and protect the wealth of the richest.

What are you proposing as policy? Depriving those just above the poverty level of the money to heat their homes.

Why not some serious policy, like LVT or integrating tax/Ni to remove discrimination against those who work?

Amos Johnston
Amos Johnston
26 days ago
Reply to  Lyn E

It has nothing to do with class. Anyone who’s held a property asset for a long time has acrured wealth they didn’t earn. It’s not appropriate to tax that gain on a main home when moving home because it would trap people in inappropriate homes, but that CGT exemption on a main home is no longer necessary or justifiable after death if those inheriting the property already have a main home. In short, the family home should be subject to CGT as well as IHT in probate.

Last edited 26 days ago by Amos Johnston
Lyn E
Lyn E
26 days ago
Reply to  Amos Johnston

It has everything to do with class, understood as capital versus labour. The intergenerational aspect is incidental. I strongly favour increasing taxation from property rather than from labour. So I have no objection in principle to CGT on a family home at death. There are some practical difficulties in assessing how much of the increased monetary value of a home reflects a capital gain rather than return to a homeowner’s cost and effort in maintaining and improving their property, expenses which a business could claim. Taxing the value of land, through both an annual levy and capital gain on transfer… Read more »

Amos Johnston
Amos Johnston
25 days ago
Reply to  Lyn E

The practical difficulties are easily solved. Most people will have a record of the work done, if only photos of how it used to look. A surveyor could assess what’s been done and calculate the cost to make the same changes today to determine any relief. There will be winners and losers in this approach. Someone who built an extension 40 years ago will benefit from having that work valued at today’s standards. Someone who did a lot of work themselves will benefit from having that costed as professional work. But someone who changed their kitchen three times would only… Read more »

Lyn E
Lyn E
25 days ago
Reply to  Amos Johnston

The practical difficulties would be harder than you think. Most people don’t keep records of work over decades. Photos were once expensive. As you say, allowance would be needed for inflation, and that would generate arguments over indices. Etc. This doesn’t mean that it shouldn’t be done, just that it’s not straightforward. Taxing the land value increment could be a decent approximation to adjusted-CGT on owner-occupied homes. I agree with you on the principle of doing this. The politics of either CGT or LVT are harder than the accountancy. With the new government having thrown away its credibility at record… Read more »

Old Curmudgeon
Old Curmudgeon
25 days ago
Reply to  Amos Johnston

So 75% are not millionaires. What percentage of the working population are millionaires?

Amos Johnston
Amos Johnston
25 days ago
Reply to  Old Curmudgeon

The working population didn’t back Brexit with a supermajority.

Old Curmudgeon
Old Curmudgeon
24 days ago
Reply to  Amos Johnston

My question had nothing to do with who voted Brexit. (Incidentally I didn’t think that Brexit was backed by a supermajority)

Amos Johnston
Amos Johnston
24 days ago
Reply to  Old Curmudgeon

The point is about who and how Brexit should be paid for. The economy has been shrunk by 5% thanks to the self-sanctioning so we don’t have the money to pay for the largest bill the government has – retirees. The choice is clear. More migrant workers to pay for retirees or reduce the cost of retirees.

Mawkernewek
Mawkernewek
27 days ago

You refer to him as a ‘Welsh’ Labour MP? I thought he was parachuted in. Also he only seems to talk about Britain rather than Wales.

A.Redman
A.Redman
27 days ago
Reply to  Mawkernewek

What was or is his connection to Labour exactly?

Ap Kenneth
27 days ago
Reply to  A.Redman

Ed Millibands director of policy 2010-15, then CEO of thinktank Resolution Foundation a left leaning organisation.

Jack
Jack
27 days ago
Reply to  Mawkernewek

‘Welsh Labour MP’ is obviously shorthand for an MP in a Welsh constituency, don’t be picky…

J Jones
J Jones
27 days ago
Reply to  Jack

‘Welsh’ means ‘outsider’, so it describes him well, though he’ll never be regarded as from Cymru.

Amos Johnston
Amos Johnston
27 days ago
Reply to  Mawkernewek

If he’s smart he’ll make sure policy works for Wales before proposing it for the UK. The only route to growth is by boosting all the regions and nations so they all make a bigger contribution to the UK economy. The days of only worrying about London and drip feeding crumbs from their success to the rest of the so-called union must be over.

Valley girl
Valley girl
27 days ago

Wales’ MP’s are under strict instruction to mention UK, Britain. Their job is to keep the UK (or what’s left of it) together at all costs. Beware of anyone with a knighthood , they are just as bad. Be true to yourself and ask why Cynru remains in a poor state after 50 years despite different governments? Isn’t it time trust Plaid? 🏴󠁧󠁢󠁷󠁬󠁳󠁿❤️🏴󠁧󠁢󠁷󠁬󠁳󠁿

Ap Kenneth
27 days ago

While I am loath to admit it I have to agree with him on this. A wealth tax would be very inefficient in the UK as so much of the wealth is not held here in the UK and would need updating yearly with long accounting arguments as to the exact value of assets, far more efficient is restricting reliefs and allowances – see Richard Murphy’s Taxing Wealth Report from June this year – https://taxingwealth.uk/

Richard
Richard
27 days ago
Reply to  Ap Kenneth

A land value tax wouid probably be better. That is one asset you cannot hide or take out of the countryside

hdavies15
hdavies15
27 days ago

Yet another apologist for the “squeeze the poor, protect the super rich” Labour Party. They claim socialist roots, now looking more like national socialists, you know, the sort Adolf organised !

Amos Johnston
Amos Johnston
27 days ago

It’s smarter to focus on fairness than wealth. When Mr Sunak pays an effective tax rate ten percent below Mr Starmer, it’s clear there’s a fairness gap to close. It’s much harder for the right to weaponise a message of fairness than a message of punishing wealth.

Amos Johnston
Amos Johnston
26 days ago
Reply to  Amos Johnston

Do the downvoters really consider themselves the champions of unfairness? A strange position to take. There are lots of ways to raise more from the wealthiest under the guise of fairness. Clawing back the profits of house price inflation, which is not a legitimately earned gain, before it’s inherited is one example.

Howie
Howie
27 days ago

So he thinks UBI is a non starter what’s he doing in Wales where WG are running a pilot. He was same about 2 child cap, wrote a big policy doc on dropping it then towed line for a Welsh seat.
Starmer starting to lose elections, 11 councillors since Sept 16th in by-elections.

Robin Huw Crompton
Robin Huw Crompton
27 days ago

Britain’s super rich are allowed to hide their wealth in tax havens overseas. This can be, and should be made illegal. Just as a UK citizen can be stripped of nationality for marrying into ISIS these people should have the choice of keeping their wealth in UK or losing their UK citizenship and being banned from entering UK again. It can be done and should be done.

Amos Johnston
Amos Johnston
27 days ago

This takes global cooperation. The EU was gunning for the aggressive tax avoiders which is why the super rich sponsored Brexit.

Mab Meirion
Mab Meirion
27 days ago

good point

Ap Kenneth
27 days ago

While I agree, it will never happen as the UK overseas territories aka tax havens are central to how the City of London now works recycling money and making massive profits.

Ernie The Smallholder
Ernie The Smallholder
27 days ago

Cymru, Scotland, NI and England are becoming incompatibile political, social and economically and will need different solutions to proceed to what their populations require. They cannot be in the same monetary policy or union. Unless the UK becomes a confederation of independent nations there will be no future progress or growth for any of the nations within the union. The current centralised politics and economy with decrees handed down from London won’t work: The USSR system tried this and that didn’t end well. Scotland and NI already have governments that demand more power on decisions relating to their countries are… Read more »

Ernie The Smallholder
Ernie The Smallholder
27 days ago

As I have said:
We need our own financial system.
We need The Cymru sovereign wealth fund as Norway created from their Oil revenues.
We have this opportunity with wind, solar and tidal power.

It does help when your Labour government is holding onto our coasts with their ‘crown estates’ ?????

Cymru must have control of its coasts, land and have its sovereign wealth, financial and tax system accountable to our Senedd.

Nia James
Nia James
27 days ago

Cheltenham Literature Festival! That is his natural home as he’s a fish out of water in Swansea. This guy is an ultra-Loyal who will not rock the Labour Brit Establishment boat under any circumstances. A future Chancellor of the Exchequer who will pump money into the M25 bubble. When will people in Swansea and across Wales wake up?

Amos Johnston
Amos Johnston
27 days ago
Reply to  Nia James

If London Labour don’t rock the boat they’ll leave the coast clear for the libertarian extremists living in the past to take back control in five or ten years time. Blair’s second biggest mistake after Iraq was leaving SW1 wide open for their return instead of completely and irreversibly modernising government, the economy and the constitution so it was unrecognisable to the relics of the 19th century.

Last edited 27 days ago by Amos Johnston
Lyn E
Lyn E
26 days ago

A shame to see Torsten Bell transform himself from a critic of austerity into a Labour hack. He once wrote a good paper explaining how the two-cap limit increased child poverty but voted for it under Starmer’s orders.

Plenty of options exist to raise government revenue while reducing inequality, including a land value tax or ending subsidies to commercial banks through interest payments on balances held at the Bank of England.

CapM
CapM
26 days ago
Reply to  Lyn E

If people vote for the Labour and Unionist Party they contribute to getting a government guided by Conservative and Unionist Party principles.

Thatcher claimed Blair was her greatest success.
Who apart from Labour and Unionist Party voters will claim Starmer as their greatest success.

Lyn E
Lyn E
26 days ago
Reply to  CapM

You are genuinely obsessed by ‘Unionism’.
It is Starmer/Reeves adherence to Thatcherite principles that explains their persistence with austerity. A Corbyn-led government would not have done so.

Mab Meirion
Mab Meirion
26 days ago
Reply to  Lyn E

If I opened my door to that ‘smile’ I’d close it pretty quick…

Old Curmudgeon
Old Curmudgeon
25 days ago

This is the man who called for the two-child benefits limits to be abolished, because, “far from making families have fewer children, it has just made them far poorer”. (Ref: his book Great Britain? How We Get Our Future Back.) Then is prepared to vote against his own advice to further his career and we are supposed to take him seriously as a representative of the people who voted for him? If what he’s learned over his 20 years of being in his business is to spout waffle and change his beliefs to fit in with his boss he’ll go… Read more »

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