Imposing a wealth tax which hit London hardest is a matter for Chancellor Rachel Reeves, says a minister as the Government seeks to balance the public finances.
Education minister Stephen Morgan stressed that decisions on tax would be “assessed in the round” at the autumn Budget after a Labour revolt on welfare reforms dealt a £5 billion blow to the Treasury’s spending plans, on top of the £1 billion U-turn on winter fuel payment cuts.
On a wealth tax, he emphasised that Labour values included that “people with the broadest shoulders” should carry more of the tax burden.
But he also said that the Government did not want to damage the aim of growing the economy, which he insisted was its number one priority despite the highly controversial “jobs tax” of hiking National Insurance on employers.
Ms Reeves has not ruled out new tax rises and reportedly warned the Cabinet last week that the welfare rebellion which forced the Government to abandon benefit reforms meant tax rises were now more likely and would be harder to find than in her first Budget.
Amid the row, former Labour leader Lord Kinnock has raised the prospect of a wealth tax which he claimed could raise up to £11 billion for the Government.
Such a move would inevitably hit London hardest given it has the greatest number of wealthy people in the country, partly due to high property prices.
Asked whether he backed a wealth tax, Mr Morgan told LBC Radio: “Obviously , tax is a matter for the Chancellor and will be assessed in the round in the autumn Budget.
“Look at some of the actions that we have already taken that demonstrate Labour values... on the jet tax, on the profits for energy companies.
“We think that people with the broadest shoulders should pay more.”
But pressed whether he supports a wealth tax, he added, seemingly referring to the welfare revolt: “Our relentless focus is on growing the economy and obviously there are cost implications for all decisions that Parliament makes.”
Lord Kinnock, who led Labour from 1983 to 1992, told Sky News that a “cloud hangs over the accomplishments of the Government”, as Sir Keir Starmer marked a year in office this weekend, with its policies “barely being noticed” and “obscured” by rows over welfare and winter fuel.
He said there are things the party could do that “would commend themselves to the great majority of the general public” and that these included “asset taxes”.
“By going for an imposition of 2% on asset values above £10 million, say, which is a very big fortune, the Government would be in a position to collect £10 billion or £11 billion,” he argued.
Shadow chancellor Sir Mel Stride said he thought a wealth tax would be “the worst thing to do” and opposed the idea of “piling further taxes on the wealth creators”.
Sir Keir has seen his party’s popularity plunge, averaging 24% in polls in the past month, down 10 points from 34% in the weeks following the 2024 July election.
It is common for political parties to experience a slide in the polls after taking power, it has happened to every UK government bar one in the past 40 years , but a drop of this size is unusual.
The last time it was in double digits was 1992/93, when the Tory administration led by former prime minister John Major saw its poll numbers fall 12 points, from an average of 43% in the weeks after the April 1992 election to 31% a year later.
This article was written by Nicholas Cecil from The Evening Standard and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.
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