Wes Streeting pledges wealth tax as he prepares for Labour leadership bid

Sophie Wingate, Press Association Deputy Political Editor

Former health secretary Wes Streeting has set out plans for a wealth tax that would see capital gains tax equalised with income tax.

Mr Streeting, who had made clear he intends to stand in any leadership contest to replace Sir Keir Starmer, said the current system is not fair and penalises work.

The MP’s intervention comes a day after he warned in his resignation speech that Labour must change course or risk handing Reform UK power, and after he quit the Cabinet last week calling on the Prime Minister to go.

Mr Streeting said: “A member of my family is a cleaner in Lancashire. She pays a higher tax rate on her salary than her landlord pays for the growing value of the home she lives in.

“She slogs her guts out, he puts in far less effort, yet the state rewards him more than her.

“And we wonder why people are angry.

“The system is penalising work. It’s not fair and it’s bad for our economy. We need a wealth tax that works.

“A pound made from simply owning assets should not be taxed less than a pound made from a hard day’s work.”

Capital gains tax is a levy on the profits made after selling investments or assets, such as second homes or shares.

The annual amount of profit taxpayers can make before owing tax is £3,000, with anything above this taxed between 18% and 24%.

Under Mr Streeting’s proposal capital gains tax rates would be aligned with the three bands of income tax rate: 20%, 40% for higher rate taxpayers and 45% for additional rate taxpayers.

He vowed to do it alongside measures to protect real entrepreneurs – with lower capital gains tax rates for those taking risks building companies – and long-term investment to boost economic growth.

The package would also close the loopholes he said people use to disguise income from work as capital gains, such as establishing personal service companies or taking pay in shares.

The plan could raise up to £12 billion a year, he said, pointing to calculations by the Centre for the Analysis of Taxation.

A spokesperson for Mr Streeting denied a report in The Times quoting unnamed allies of the former minister saying he could drop his leadership bid and back Andy Burnham if the Greater Manchester mayor wins the June 18 Makerfield by-election.

The spokesperson said: “Wes couldn’t have been clearer: he wants Andy to win Makerfield, wants him in the battle of ideas we need in Labour, and Wes will be a candidate in the coming contest.”

Mr Streeting did not launch an immediate challenge following his resignation last week.

Explaining the move on the BBC’s Political Thinking podcast, Mr Streeting said: “If we had been plunged straight into a leadership contest by me or for that matter, anyone else, I think it would have been seen as a deliberate attempt to get ahead of Andy Burnham’s potential return.

“And if there’s one thing that we need to do coming out of a change in leadership, it is to bring the tribes of the Labour Party together, to unite around one leader as one team, drawing on Labour’s different political traditions to unite progressives and beat Reform.”

Asked about Mr Streeting’s wealth tax plan, Chief Secretary to the Treasury Lucy Rigby told BBC Radio 4’s Today programme: “We already tax wealth in this country.

“The Chancellor introduced a host of measures in her first budget, and then further measures in the last budget as well, that try and make sure that tax is as progressive and fair as possible.”

Helen Miller, director at the Institute for Fiscal Studies, said on X: “We’ve long made case for wholesale CGT reform.

“Important: raising revenue and avoiding reducing investment requires reform of tax base.”

She also said: “Simply raising rates would not raise big sums of revenue (it could easily lose money) and would reduce investment.

“It’s unclear to me what this would mean in practice; ‘reward genuine entrepreneurship, with lower CGT rates for those who take real risks building companies and creating job’.

“A key difficulty is that it’s very hard to know in advance who the ‘genuine entrepreneurs’ are.”