‘Tackling poverty should be the legacy of Keir Starmer’s government’

Poverty in Britain has become so familiar that it risks fading into the background. Food banks on high streets. Children arriving at school hungry. Working families choosing between heating and eating.

Scrapping the two-child benefit cap should help lift nearly half a million children out of poverty. But that will still leave child poverty levels at 28 per cent — double what the rate was in the 1970s.

A staggering 4.5m children — 14 million people in all — are living in relative poverty in the UK. And one in five people in poverty are in work. This is not happening in a poor country, but in one of the wealthiest economies in the world.

Recent events and personnel changes in Number 10 have given Keir Starmer a chance to reshape his government and his priorities. He has an opportunity to truly tackle long-term poverty and set his government’s own legacy for the 21st century.

READ MORE: Starmer the class warrior? PM pivots focus towards ‘class divide’

This week, Taxpayers Against Poverty published The Nicolson Report: Poverty Benefits No One. 

The report’s central conclusion is clear: poverty on this scale is not inevitable, but the result of political and economic choices. For years, governments have claimed that tackling poverty is simply too expensive. Public finances are stretched, we are told. The evidence assembled here shows this claim is wrong. It actually makes economic sense.

Poverty benefits no one

Poverty is estimated to cost the UK more than £75bn every year, through lost output, higher health and social care spending, and reduced tax revenues. It damages health, places enormous pressure on the NHS, weakens productivity, and blights children’s life chances.

The UK’s economic system actively sustains this failure. At its heart sits an outdated and unbalanced tax system that over-taxes work and under-taxes wealth.

Most people rely on wages and pay income tax and National Insurance on every payslip, and VAT on most of what they spend. Meanwhile, large amounts of wealth — from property, capital gains, and inheritances — are taxed lightly, inconsistently, or not at all. In some cases, the poorest households pay a higher proportion of their income in tax than the richest.

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This is not accidental. It is structural. Wealth in Britain has not been created in isolation. It has been built on publicly funded education, healthcare, infrastructure, legal stability, and social cohesion. These shared foundations made prosperity possible. Yet today they are underfunded and overstretched, while wealth continues to concentrate at the top. If we are serious about reducing poverty, this imbalance must be addressed.

Tax reform is not about punishment or envy. It is about sustainability, fairness, and funding the systems that allow a modern economy to function. The Nicolson Report sets out a practical “white paper” for this Labour government, if it wants to truly tackle long-term poverty. With an economy struggling for growth, it recommends several simple, cost-effective reforms to the UK tax system, including:

• a 2% wealth tax on assets over £10m, raising £25bn annually and enjoying strong public support
• aligning capital gains tax with income tax
• applying National Insurance to investment income
• closing income tax loopholes focused on large accumulations of wealth
• reforming council tax and replacing it with a proportional property or land value tax

Taken together, these reforms would raise substantial revenue. But more importantly, they would rebalance the system so that it no longer entrenches poverty. Research shows these policies already have popular support. A wealth tax, for example, has the backing of Labour Party members, the wider public and even those most likely to pay the tax, millionaires. 

Alongside such tax reform, the report calls for a stronger welfare safety net, action on wage inequality, and sustained investment in health, education, social care, and infrastructure to make lasting progress on poverty. This matters because tax reform is not abstract. It is what enables the government to ensure social security covers the essentials of life; to make work a reliable route out of poverty; to invest in public services; and to reduce the regional inequalities that leave entire communities behind.

The public understands this far better than politicians often assume. What is missing is not consent, but leadership. And that’s where Keir comes in. Preventing poverty is not only morally right; it is economically rational. And truly tackling it is an opportunity this Labour government can and must seize.

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