The Sir Keir Starmer cabinet is deeply divided on economic policy, and the upper ministers fear that additional measures to point to the rich in the budget next month can accelerate the exodus of wealth of Great Britain.
Cabinet ministers have told the Independent They believe that Rachel Reeves has already gone too far with the measures aimed at the rich and companies, and have urged the chancellor to change course if he has any hope of achieving growth.
They cited “anti-aspiration” measures, such as the abolition of the State No Dom and VAT in the rates of private schools as key promoters of wealth far from the United Kingdom, saying that they are “damaging this country.” According to reports, additional measures include a property tax on high -value housing and a new bank profit tax.
Instead, the ministers have urged Prime Minister and Mrs. Reeves to consider “efficiency savings” and cuts to fill an economic black hole that is estimated to be estimated between £ 30 billion and £ 40 billion.
Those of the left in labor have noticed that the recent reorganization “has delivered more power to the right of the part”, while the leftists who support taxes on wealth have been degraded or expelled.
But a powerful group inside the cabinet to the right of the party believes that the government is not managing to control the expense and must be smarter to reform the state in a labor way. “
A minister said: “The problem is that we have crossed a line when trying to encourage aspiration. Non -domestic change and VAT in school rates have sent the opposite message.”
Observing the record number of millionaires who leave London in particular, the minister added: “He is doing a lot of damage to the country.”
Another cabinet minister said: “I think the changes that are not in domain had no real sense. Why do we want people with money to take it out of the country? It is really bad for London.”
Mrs. Reeves is currently being given to yield in the promise of the manifesto of not increasing VAT, Income Tax or Employee National Insurance Contributions, but also faces growing pressure there.
One of his strongest allies to continue with this promise is the new Secretary of Welfare Pat McFadden, who warned colleagues that “the victories of the elections are difficult to achieve and that the promise of the manifesto was key to achieve it.”
It is in charge of trying to relive the welfare reform after the government's plans to reduce disability payments were derailed by a massive rebellion by labor parliamentarians before summer.
However, there is another faction within the cabinet that supports the growing calls of unions and members of the tax work on wealth to connect the hole in the finance of the Nation, as a property tax that would affect those who have high -value homes.
There are others that support the TUC campaign for a new bank profit tax and reach the super rich with a tax on wealth.
A minister said: “It only seems fair that the rich carry the load.”
However, interrogation signs have been raised on whether the so -called wealth taxes can fill the budget black hole or make more damage.
Professor Stephen Millard, deputy director of the National Institute of Economic and Social Research (NIESR), warned that Mrs. Reeves will eventually have to break her promise of evidence of not increasing any of the large taxes.
The NIESR estimates that the black hole will be above £ 40 billion, and Professor Millard warned: “It is likely that, in the absence of any change in politics, the chancellor will have a large gap to fill to comply with its fiscal rules; a reduction in spending would be difficult to achieve it since we have had a comprehensive review of expenses.
“It is likely that any change in the rules that allow the chancellor to increase loans would result in an adverse market reaction; so the chancellor will need to increase taxes.
“Given our estimation of the extension of the gap, we do not believe that the chancellor can fill it 'tinking' with many changes in non-Big-Big four taxes; so we believe we will have to increase the income tax, the NIC or the VAT.”
Isaac Delstre, senior research economist of the Institute of Fiscal Studies, warned: “If the prognosis of budget responsibility of the office deteriorates and the chancellor wants to comply with its fiscal rules, will need to offer reductions in expenses or tax increases.”
