Starmer's former transport secretary calls for wealth tax

Telegraph

a day ago

Sir Keir Starmer's former transport secretary has called for Labour to break its manifesto promises and introduce a wealth tax to pay for higher spending.
Louise Haigh – who quit the Cabinet in November after it emerged that she had misled police a decade ago – urged her former colleagues to 'rip up our self-imposed tax rules and deliver a proper wealth tax'.
She said such a tax would provide 'the means to invest in the NHS, schools, and our communities'.
Ms Haigh's intervention – the most radical proposal yet from a senior party figure – is the latest call from the Labour Left for Rachel Reeves to raise taxes rather than cut spending as she grapples with a worsening fiscal crisis.
Speaking at a conference organised by Compass, a Left-wing Labour pressure group, she said: 'We must acknowledge that our tax system is perverse. It punishes earned income but barely touches the real driver of inequality, wealth.
'If we do that, we can finally move beyond a broken model where working people's wages are topped up by tax credits and benefits, leaving bad employers and landlords to profit. We can move from a system of handouts for the rich to real investment for everyone else.'
Labour is grappling with a worsening fiscal situation, backbench rebellions and tanking approval ratings as Nigel Farage's Reform UK surges in the polls.
Ministers continue to tussle with the Chancellor over potential cuts to departmental budgets as part of the spending review. The Treasury blocked bids for more money from a number of departments, including a request from Angela Rayner for a larger social housing budget.
Last month, the Telegraph revealed that, in a private memo to the Chancellor, Ms Rayner had called for a raft of tax rises before the Spring Statement, and internal pressure on Sir Keir has led to a U-turns on cuts to the winter fuel allowance.
In last year's General Election manifesto, Labour pledged not to raise National Insurance or income tax if it got into government.
At the October Budget, Ms Reeves raised National Insurance contributions for employers in order to raise £25 billion in taxes. The party claimed the move did not break its manifesto promise.
The Chancellor is now grappling with a further puzzle as the Government signalled that it would reverse, in whole or in part, both the cut to the winter fuel allowance and the two-child benefit cap. Such a move is projected to cost the Treasury up to £5 billion.
The Government is also facing a large backbench rebellion against planned cuts to disability benefits, which were intended to raise around £5 billion a year in revenue.
Any softening of the welfare cuts to appease Labour MPs would increase Ms Reeves's difficulties if she is to stick to her fiscal rules and keep her manifesto commitment not to raise taxes.