‘To end austerity, wealth taxes are a moral and economic necessity’

The UK is at a crossroads. This government inherited the dire legacy of a lost decade of cuts, austerity and underinvestment. The 2010s saw average real pay fall: the first decade in which this has happened since before the Second World War. Meanwhile, since 2010, billionaires have sat back and watched their wealth more than double. 

What do we have to show for this? Crumbling public services, rising child poverty, stagnant wages and sluggish growth. 

Governing in the state that the Conservatives left us in was never going to be easy. But anyone paying attention to the mood of the country can only conclude: this government needs to dramatically change its approach to turn things around.

Breaking out of this economic doom loop demands bold ideas from beyond the normal playbook. It’s why myself and many parliamentary colleagues, including former Shadow Chancellor Anneliese Dodds, as well as Nobel prize winning economists, unions, NGOs and more are calling for wealth taxes on Britain’s super-rich corporations and individuals to unlock billions for public investment and finally close the door on the era of austerity.

That means looking seriously at bold ideas that reach outside the normal playbook. It’s why myself and many parliamentary colleagues, including former Shadow Chancellor Anneliese Dodds, as well as Nobel prize winning economists, unions, NGOs and more are calling for wealth taxes on Britain’s super-rich corporations and individuals to unlock billions for public investment and finally close the door on the era of austerity.

READ MORE: ‘Winning like Mamdani: why Labour needs to get obsessive about the cost of living’

‘If we do not tackle inequality, this will create an opening for other parties’

Why wealth taxes? Our society has always been unequal but inequality in the UK has exploded in the last 30 years. Today, there are two Britains. The Britain of the ultra-wealthy. Of billionaires like the Duke of Westminster, who inherited £9 billion tax-free aged 25. Billionaires who added £35 million to their wealth every single day last year, but currently pay an effective tax rate of close to 0.3% of their wealth. Of corporations like Thames Water who pay their CEOs eyewatering salaries as they pump sewage into our rivers and hike our bills. 

Then there is the Britain most of us live in, where we have seen the longest hit to living standards on record. Where 1 in 3 kids now grow up in poverty and the dream of home ownership is out of reach for millions. 

Voters feel this. Polling from YouGov, commissioned by Green New Deal Rising as part of their PAY UP campaign, found that 58% of Brits believe this Government’s economic policies currently best serve wealthy individuals (40%) and large corporations (18%) compared to UK businesses (3%), the working population (3%), and ordinary British people (2%). There is a clear need to show people that this government is on their side and willing to challenge an unfair economic status quo which has allowed the rich to get richer than ever whilst most of us face declining wealth and living standards.

We have to tell this story. If we do not, we can be sure that other parties will. Recent analysis by Persuasion UK found that while Reform UK poses a threat to 123 Labour constituencies, far more (250) Labour constituencies are at risk from the Greens and Lib Dems. If we do not tackle the issues we have inherited: from skyrocketing wealth inequality to the housing crisis, this will only create an opening for other parties.

READ MORE: ‘Labour’s real challenge is fixing Britain’s story, not just its problems’

‘The moral and political case is overwhelming’

The moral and political case for wealth taxes is overwhelming but they are also simply a practical necessity. Delivering change doesn’t come cheap. We urgently need to find new revenue streams to avoid more politically disastrous, life-threatening cuts and fund investment in communities. A wealth tax of just 2% on net wealth above £10 million would raise £24 billion per year. We can no longer afford to ignore such a large source of revenue. 

Despite predictable right-wing media reports to the contrary, we also know that the UK’s super rich are staying put and the vast majority do not move due to tax changes. Their lives, families, businesses, and communities are here. Overwhelmingly, they want to stay and give back to the country which has given them so much.

Most claims to the contrary are based on a single study by a firm that sells golden passports to the ultra-wealthy. This study was the source of 30 articles every day last year claiming millionaires were leaving in their droves in response to tax policy changes. 

In reality, the report actually found just a 0.31% rate of migration for UK millionaires. Even this tiny figure was derived using highly questionable methodology, with Henley and Partners basing its estimates on where millionaires say they work on social media; not where they actually reside. A far more reliable measure of the validity of this argument is the just 0.01% of richest households that relocated after wealth tax reforms were introduced in Norway, Sweden and Denmark.

Subscribe here to our daily newsletter roundup of Labour news, analysis and comment– and follow us on Bluesky, WhatsApp, X and Facebook.

‘Pursuing further cuts or raising taxes is politically and morally untenable’

The truth is that none of the choices before us are easy. Like any other major policy, a wealth tax would need to be carefully designed, learning from other countries and using the brightest minds in public taxation to make it work.

Pursuing further cuts or raising taxes on ordinary people is politically and morally untenable. So let’s be bold. Wealth taxes aren’t a silver bullet but they are a crucial piece in the puzzle, helping raise the money needed to deliver real change and signal to the public that we are on their side. This budget is a crucial opportunity to show we have listened. It is one of our last chances to introduce policies which have time to bed in and show their benefits before the next election. Let’s not miss it.

• SHARE: If you have anything to share that we should be looking into or publishing about this story – or any other topic involving Labour– contact us (strictly anonymously if you wish) at [email protected].
• SUBSCRIBE: Sign up to LabourList’s morning email here for the best briefing on everything Labour, every weekday morning.
• DONATE: If you value our work, please chip in a few pounds a week and become one of our supporters, helping sustain and expand our coverage.
• PARTNER: If you or your organisation might be interested in partnering with us on sponsored events or projects, email [email protected].
• ADVERTISE: If your organisation would like to advertise or run sponsored pieces on LabourList‘s daily newsletter or website, contact our exclusive ad partners Total Politics at [email protected].