As borrowing rises…
Rachel Reeves has refused to rule out introducing a wealth tax despite being warned that it would persuade see many of the UK’s wealthiest individuals to relocate their tax base out of the country.
The Chancellor is considering the plan as a means of tackling a gap in the government’s spending plans and a surge in borrowing.
Ms Reeves has seen her plans scuppered by lower than expected growth and the u-turns on plans to trim the welfare budgets.
She is now targeting the country’s asset-rich individuals with support from those on the left who have been angered by the Labour government’s raiding of the less well-off in society.
The Tax Policy Associates has said claims that it could raise £10 billion were “implausible”. It said 80% of the potential revenue came from just 5,000 people, and 15% from just ten people. “A handful changing residence or valuations could remove billions,” its report said.
The Chancellor was speaking to the Lords economic affairs committee as figures showed the government borrowed a higher than expected £20.7bn in June with an overspend of £6.6bn.
Reeves said the government was prioritising economic growth as the best way to reduce the debt.
“One in £10 of spending is spent servicing government debt,” she said. “I’m a Labour politician. I don’t think there’s anything progressive about spending £100 billion a year, often to US hedge funds, when I’d rather spend that money on the health service, or on our defence or on better schools for our children.
“That is why I am going to stick to those fiscal rules so we can bring down the costs of servicing that debt.”
Ms Reeves urged peers to back the government’s planning reform to speed up the building of infrastructure, saying she cared “more about getting a young family on the housing ladder than I do about protecting some snails”.
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