Starmer urged to introduce wealth tax instead of cutting disability benefits

The Guardian

17-03-2025

Good morning. 'You want me to cut £1bn. Shall I take £100 each off 10 million people, or £1,000 each off 1 million people?' The former Tory chancellor Ken Clarke is credited with coming up with this explanation of what big number spending cuts actually mean, but every chancellor has probably thought the same.
Tomorrow the government is expected to announced disability cuts said to be worth at least £5bn. You can work out the maths. That is more than three times as much as the £1.5bn saved by cutting the winter fuel payment, the single policy decision that as done more than anything else to make the government unpopular. So it is not hard to work out why Keir Starmer is facing Labour turmoil over this decision.
(To be fair, the winter fuel payment was an immediate cut. The figures briefed about how much money the government wants to save by cutting disability benefits seem to refer to savings by the end of the decade. But we don't know the details at this point. Last week the New Economics Foundation, a leftwing thinktank, claimed that cuts could be worth as much as £9bn by 2029-30.)
Hard facts might be in short supply this morning, but comment isn't. With 24 hours to go before one of the biggest announcements of the Keir Starmer premiership, lots of people are staking out positions. Here are some of the key developments.
Diane Abbott, the Labour leftwinger and mother of the Commons, has said urged the government to impose a wealth tax as an alternative to cutting disabilty benefits. In an interview on the Today programme, asked what she would do instead, Abbott replied:
I would introduce the wealth tax. If you brought in a wealth tax of just 2% on people with assets over £10m, that would raise £24bn a year. That's what I would do.
This is broadly similar to what the Green party was proposing at the last election.
Andy Burnham, the Labour mayor of Greater Manchester, has joined those expressing concerns about the plans. In an article for the Times, he says:
I would share concerns about changing support and eligibility to benefits while leaving the current top-down system broadly in place. It would trap too many people in poverty. And to be clear: there is no case in any scenario for cutting the support available to disabled people who are unable to work.
He says Greater Manchester's Live Well initiative is a model for how people who are ill can be supported back into work.
Abbott has said that opposition to the government's plans for disability benefit cuts is not just coming from the left. In her interview on the Today programme, she said she agreed with what Burnham is saying, and she said she also agreed with Ed Balls, who said last week that cutting benefits for those most in need was not something Labour should be doing. Abbott, Burnham and Balls were three of the candidates in the 2010 Labour leadership contest. A fourth, Ed Miliband, is also reported unhappy about the cuts, although as a cabinet minister he has not spoken out publicly.
Emma Reynolds, a Treasury minister, has said the government is 'for the time being not going to come forward with a wealth tax'. She said this in an interview on the Today programme, when asked if the government would be following Abbott's advice. Reynolds said the government had already raised taxes affecting wealthy people.
Reynolds urged Labour MPs and others to wait for the details of the plans before coming to a verdict on them. In comments implying the final proposals might not be as draconian as some of the pre-briefing has implied, she said:
Some colleagues are jumping to conclusions about our plans before they've heard them. So I just urge them to be patient.
When it was put to here that she was saying some of their concerns might be addressed when they read the actual proposals, Reynolds said there had been 'a lot of speculation about what we might or might not do'.
She said there would always be a safety net for those most in need. She said:
We'll set out further details, but the severely disabled and the most vulnerable will always get support, and there will always be a safety net.
The Resolution Foundation thinktank has said that the government's proposed disability cuts are likely to fall disproportionately on the poor. In a statement it says:
The government is reportedly focusing on cutting incapacity and disability benefits to stem rising spending and support more people into work. But while the system needs reform, Ministers appear to be focused on cutting personal independence payments (Pip) – a benefit that isn't related to work.
The foundation warns that cutting Pip by £5bn in 2029-30, for example by raising the threshold to qualify for support, could see around 620,000 people losing £675 per month, on average. The Foundation adds that 70 per cent of these cuts would be concentrated on families in the poorest half of the income distribution.
Here is the agenda for the day.
9.30am: Rachel Reeves, the chancellor, is meeting the heads of regulatory agencies in Downing Street to discuss their plans to boost growth. Later Reeves is recording broadcast interviews.
11.30am: Downing Street holds a lobby briefing.
Noon: Nigel Farage and other Reform UK MPs hold a press conference to make what they call 'a special announcement'.
2.30pm: Liz Kendall, the work and pensions secretary, takes questions in the Commons.
After 3.30pm: David Lammy, the foreign secretary, is expected to make a Commons statement about Ukraine.
After 4.30pm: MPs start debating the remaining stages of the children's wellbeing and schools bill.
5.35pm: Kemi Badenoch gives a speech at the CPS's Margaret Thatcher Conference on Remaking Conservatism. Other speakers earlier in the day include George Osborne, the former chancellor, who is doing a Q&A at 3.35pm.
Early evening: Keir Starmer meets Mark Carney, the new Canadian PM, in Downing Street.
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