Lord Kinnock urges Reeves to bring in wealth tax

Telegraph

2 days ago

Lord Kinnock has urged Rachel Reeves to bring in a wealth tax at the autumn Budget.
The former Labour leader called for a 2 per cent levy on assets of more than £10 million and suggested ministers would be 'willing' to explore the idea.
It comes after Sir Keir Starmer wiped out £5 billion in savings by watering down his welfare reforms in the face of a major Labour rebellion.
Lord Kinnock, the Labour leader from 1983 to 1992, said the fiscal rules and tax pledges drawn up by Ms Reeves gave the appearance that the Government was 'bogged down by their own imposed limitations'.
He told Sky's Sunday Morning with Trevor Phillips: 'There are ways around that, ways out of it, pathways that I think people are willing to explore and actually would commend themselves to the great majority of the general public.
'They include, for instance, asset taxes in a period in which for the last 20 years in the United Kingdom like quite a lot of western economies, earned incomes have stagnated in real terms while asset values have zoomed, they've just gone through the roof and they've been barely touched.'
Lord Kinnock added: 'You wouldn't have to touch assets of under £6 million or £7 million, so people's houses would be secure, obviously. But even going for an imposition of two per cent on asset values above £10 million, say, which is very big fortune, the Government would be in a position to collect £10 billion or £11 billion a year.
'Now that's not going to pay all your bills, but it does two things [...] One is to secure resources, which is very important, revenues, but the second thing it does is say to the country, 'we are the government of equity'.'
Many European countries to introduce wealth taxes have ended up repealing the levies owing to an exodus of top commercial talent and high administrative costs in return for little revenue.
But Lord Kinnock insisted such a policy would make a 'substantial difference' to the economy.
'This is a country that is very substantially fed up with the fact with whatever happens in the world, whatever happens in the UK, the same interests come out on top unscathed, all the time, while everybody else is paying more for gutted services,' he said.
The UK is expected to lose more millionaires than any other country this year after Ms Reeves launched a wide-ranging tax raid on taking power, which included abolishing the non-dom status.
About 16,500 millionaires are predicted to quit Britain in 2025, up from 10,800 last year.
Lord Kinnock also warned Labour's 'commendable and absolutely essential' policy programme had been 'barely noticed' by voters because of major about-turns on welfare and the winter fuel allowance.
Bridget Phillipson, the Education Secretary, admitted on Sunday that there was still 'frustration' among voters who supported Labour in the hope of seeing change.
Ms Phillipson told Sky: 'Whilst I do think we've achieved a lot in that first year there have undoubtedly been challenges along the way.
'We haven't got everything right, of course we haven't, and now going into the second year, it's about how we take that forward, how we really drive through and deliver on what I hear loud and clear people want.'
She also agreed with Jonathan Reynolds, the Business Secretary, that she would give her party's first year in office a 'seven out of 10'.
Asked whether Sir Keir's climbdown on welfare would harm the chances of lifting the two-child benefit cap – another major demand of Left-wing Labour backbenchers – Ms Phillipson said: 'The decisions that have been taken this last week do make future decisions harder.
'But all of that said, we will look at this collectively in terms of all of the ways that we can lift children out of poverty.'
Admitting the changes to the welfare Bill would 'come at a cost', she insisted Ms Reeves would have the final say on the two-child benefit cap.
Sir Mel Stride, the shadow chancellor, said imposing Lord Kinnock's idea of a wealth tax 'would be the worst thing to do'.
'We've also seen around 10,000 to 15,000 high net worth individuals leave our country as a result of this government's policies,' Sir Mel said.
'Some people – the socialists – might say 'well, who cares about that?' Well, the problem is that the amount of tax that those people have been paying requires about a third of a million people on average earnings, to cover that lost tax that's just gone straight out of the door.
'So the last thing we want to be doing now is piling further taxes on the wealth creators. We need to be, if anything, getting those taxes down, and empowering them to go out and do what they do best, which is creating jobs and creating wealth and prosperity for our country.'