Sir Keir Starmer is facing intensifying pressure from his own backbenchers to introduce a wealth tax to address the growing black hole in public finances, with new polling revealing overwhelming support among Labour party members for taxing the rich.
A survey by Survation for think tank Compass, shared with The Independent, found that 91 per cent of Labour members believe the Government should increase taxes on wealthy individuals, with former senior advisors warning the move is necessary “to head off Reform.”
The polling also revealed that 84 per cent of Labour members want the government to end the controversial two-child benefit cap, a policy that has become increasingly unpopular among Labour MPs and threatens to spark further rebellions.
Former shadow chancellor John McDonnell, who lost the Labour whip last year for voting against the government, said the survey “confirms how starkly out of touch Keir Starmer is” with his own party membership.
The MP for Hayes and Harlington delivered a scathing assessment: “It’s time for Keir not just to start listening to people beyond the Westminster bubble but also taking some decisive action. All people are saying to him is to behave like a Labour Prime Minister should.
A former policy coordinator for Ed Miliband told The Independent: “The danger now is that the leadership are way out of step with the membership and potentially the country in terms of the policies needed to head off Reform.
The pressure comes as Chancellor Rachel Reeves faces a £6.25 billion funding gap following recent U-turns on welfare and fuel policies, with the possibility of further tax hikes looming despite Labour’s manifesto pledges.
During a recent Prime Minister’s Questions, Tory leader Kemi Badenoch pressed Starmer on whether he would introduce a wealth tax after calls from trade unions and former Labour leader Lord Kinnock. The Prime Minister notably refused to rule out the possibility, saying only that “no prime minister is going to write the budget in advance.
The wealth tax proposals being pushed by backbench MPs would see a 2 per cent levy on assets over £10 million, which supporters claim could raise up to £24 billion annually – enough to reverse planned disability benefit cuts and address funding shortfalls.
Greater Manchester Mayor Andy Burnham, a prominent Blairite figure, has also backed calls for wealth taxation, arguing that society has fundamentally changed since the 1980s and 1990s. “The gap between rich and poor is astronomical now,” Burnham said. “We over-tax people’s work and we under-tax people’s wealth. I am not sure the balance is right.”
The revolt over wealth taxation coincides with growing anger over the government’s proposed disability benefit reforms, which aim to save £5 billion annually by 2030 through stricter tests for Personal Independence Payments and cuts to Universal Credit provisions.
Richard Burgon MP has launched a petition calling for a wealth tax to replace the disability cuts, warning that the government faces “the mother of all rebellions” if it proceeds with the welfare reforms. Some Labour MPs estimate that 250,000 people could be pushed into poverty by the changes, including 50,000 children.
Lee Barron, Labour MP for Corby and East Northants, expressed his opposition: “I didn’t get into politics to impoverish people, I got involved to bring people out of poverty. We can’t cut the benefits of people who can’t work and impoverish them.”
The leadership’s resistance to wealth taxes comes despite polling showing strong public support for such measures. Previous Compass research found net 34 per cent support among the general public for greater taxes on wealth, alongside backing for other progressive policies like public ownership of water utilities.
Starmer’s approval ratings have plummeted to record lows, with YouGov polling in May showing 69 per cent of voters holding an unfavourable view of the Prime Minister. More troubling for Labour, half of the party’s own voters now view him unfavourably – a 17-point increase in just one month.
The disconnect between the Labour leadership and membership extends beyond taxation policy. A March Survation poll found that 49 per cent of Labour members believe the party is heading in the wrong direction, despite its landslide election victory less than a year ago.
As Reform UK continues to lead in national opinion polls under Nigel Farage’s leadership, Labour strategists fear that failing to adopt more progressive economic policies could leave them vulnerable to populist attacks from both the left and right.
The government has so far resisted calls for new wealth taxes, with Chancellor Reeves committed to maintaining fiscal discipline within existing tax frameworks. However, with growing pressure from MPs, members, and unions, the question of wealth taxation looks set to become a defining battle for Starmer’s premiership.
Follow for more updates on Britannia Daily
Image Credit (Shortened):
Keir Starmer walking the staircase at 10 Downing Street (5 July 2024) – by Simon Dawson / No 10 Downing Street, licensed under OGL v3.0, via Wikimedia Commons.
