Wages weren’t keeping pace with inflation, rents skyrocketed, and energy price hikes left people choosing between heating and eating (Picture: Hollie Adams/PA Wire)
The upcoming Budget marks yet another crossroads for Labour, as we are grappling with the disarray left by successive Conservative governments.
Fourteen years of austerity have wrecked our economy. Our public services, starved of funds, are failing those who need them most.
Wages weren’t keeping pace with inflation, rents skyrocketed, and energy price hikes left people choosing between heating and eating.
Meanwhile, the urgent task of getting Britain to net zero was left to languish by the last government – leaving us way off track to meet the targets we desperately need to hit if we are to avoid the worst consequences of the climate crisis.
It’s a pitiful legacy that the Tories have left us, and one voters likely will not forget. But the question we face now is: how do we respond?
With our first Budget tomorrow, two things are clear.
Firstly, those most vulnerable should not bear the cost of these failings.
In the 2010s, the Conservatives attempted to balance the books on the backs of the poorest through austerity.
Instead of departments being told to make cuts, Chancellor Rachel Reeves should introduce taxes on the ultra-wealthy (Picture: JUSTIN TALLIS/Pool via REUTERS/File Photo)
This caused untold damage to our society, including people who paid with their lives, with one study linking over 330,000 excess deaths to the impact of public spending cuts. Under a Labour government, there can be no return to the era of austerity.
Secondly, we have to realise that trying to repair our broken economy without investment is like trying to start your car with the brakes on.
This Budget needs to recognise the transformative potential of fiscal policies that redistribute wealth.
Instead of departments being told to make cuts, Chancellor Rachel Reeves should introduce taxes on the ultra-wealthy.
This country is crying out for funding that will get the economy moving, bring our public services back to world-class standard, and create secure, well-paid jobs for all those who need them.
As well as restoring much of the funding cut from departments since 2010, we need a mass programme of insulating homes and retrofitting heat pumps, more investment in buses and trains, and a huge expansion of social housing.
Studies suggest that we need to invest £50billion a year in the climate transition by 2030, in order to keep us safe from disastrous climate impacts and unlock the economic opportunities of a green future.
Asking millionaires to pay their fair share in tax would raise tens of billions for urgently needed public investment (Picture: Stefan Rousseau/PA Wire)
Some capital spending could be funded by the additional billions released through changes to the rules on public debt, but the real change the chancellor should make is to our tax-system.
For far too long, our outdated tax system has chronically under-taxed the super-rich. Asking millionaires to pay their fair share in tax would raise tens of billions for urgently needed public investment.
It’s popular, it’s effective, and it would provide the cash injection the Treasury needs.
Taxes on the ultra-rich affect a tiny number of people. For instance, setting a 2% tax at a threshold of £10million a year is estimated to impact just over 20,000 of the UK’s wealthiest individuals but raise an estimated £24billion.
Equalising capital gains tax (which is levied on income from investments) with income tax rates could raise a further £16.7billion annually.
And it makes good economic sense. Sluggish economies like ours don’t recover if all the money is sitting in the bank accounts and assets of a tiny minority.
For me, this is a no-brainer (Picture: Ollie Millington/Getty Images)
An LSE study that analysed the economic effects of major tax cuts for the rich across five decades in 18 wealthy nations found that the rich got richer but there was no meaningful effect on unemployment or economic growth – it was further proof ‘trickle down economics’ simply doesn’t work.
Instead, by redistributing some of that wealth, the government can invest in the services and infrastructure that are vital for growth, and put more money back in ordinary people’s pockets to spend in local businesses and in communities.
For me, this is a no-brainer. Alongside 29 other MPs and peers, I wrote to the Chancellor calling for modest changes in the tax system to fairly tax extreme wealth.
And the public overwhelmingly agrees – over 72% of those polled indicated support for a 1-2% tax on assets over £10million.
Labour was elected on a promise of change – a platform I was proud to stand on at the election.
We promised to restore our NHS, to bring dignity and security back into work, and to make sure this country plays its part in tackling the climate crisis.
Many of the Bills already introduced take steps in this direction, but I recognise that we need to go further and I share the disappointment that many of my constituents feel about decisions to cut the Winter Fuel Payment and keep the two-child benefit limit.
I believe we can still deliver the change we promised – but the boldness of our actions needs to match the scale of our ambition.
That means huge public investment in building a stronger, fairer economy that keeps us all safe from the climate crisis.
Tinkering around the edges will not be enough. We need a transformative programme of government backed up by the mass public investment our economy needs; stopping our tax system giving the ultra-wealthy a free ride is the first step towards unlocking that investment.
The tax policies I’ve outlined would solidify our commitment to delivering economic change, so I sincerely hope we will see them in the Budget.
But even if we don’t, the movement for wealth taxes is growing. If inequality continues to widen and public finances remain tight, these calls on the government will only grow louder.
And I’ll be making this calls as loud as anyone.
Do you have a story you’d like to share? Get in touch by emailing jess.austin@metro.co.uk.
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