Andy Burnham’s tax agenda could be terrifying so brace yourselves (Image: Getty)
A 50% top rate of income tax, a mansion tax, a fresh tax blitz on buy-to-let landlords and tougher taxes on inheritances may only be the start as Labour looks set to take a sharp lurch to the left. Many fear what will happen if net zero zealot Ed Miliband is made chancellor. But whoever Burnham appoints, they will face relentless pressure to do the one thing Labour MPs always want: hike spending and find somebody to tax to pay for it. They will pretend only the rich will pay, but as we’ve seen, in practice working people and pensioners typically end up footing the bill.
Burnham is surrounded by hard-left cronies who want to extend the state into every corner of our economy, crushing businesses, profit and growth in the process. It’ll take us straight back to the 1970s, when the unions ran amok and Labour chancellors boasted about taxing the rich “until the pips squeak”. We could soon find ourselves looking back fondly on the days of Chancellor Rachel Reeves. Even though she hit us with £70billion of tax rises, borrowed another £300billion and drove national debt towards £3trillion.
That could be just a taster unless Burnham reins in the zealots. Unfortunately, he looks in danger of unleashing them instead. We will find out soon. George Buckley, economist at Nomura, said Burnham’s fiscal approach will be signalled by his choice of chancellor. “Does he choose someone from the party’s right-wing, or someone who is more widely considered to be spendthrift from the party’s left?”
Ed Miliband is today’s frontrunner, with his odds jumping from 19% to 28%, according to betting platform Polymarket. Miliband is desperate for the keys to Number 11 and has already starting to feed ideas to Burnham’s team. Cabinet figures Shabana Mahmood, Pat McFadden and John Healey are also said to be in the frame, along with pensions minister and Torsten Bell, another tax zealot who has previously drawn up a list of 20 taxes he’d like to increase. Reeves has been working down that list, with his enthusiastic help.
Given that Burnham’s personal advisers including hard-left figures such as disgraced former transport secretary Louise Haigh and Peckham MP Miatta Fahnbulleh, there are serious reasons for concern. Fahnbulleh has no business background, like almost everyone else in Labour. Instead, she spent her career in left-wing activism, including running think tank the New Economics Foundation. Like Miliband, she backs an accelerated net zero transition, and supports tax rises on income, National Insurance, capital gains, inheritances and landlords. Plus a minimum basic salary for all and four-day week to boot.
She’s also backed nationalising banks, restricting lending to companies with high greenhouse gas emissions, and forcing businesses to direct money into worker-controlled funds. She means union-controlled. If this is the company Burnham keeps, we should be terrified. It would turn the UK into the Soviet Union.
But even Labour’s supposedly moderate figures are demanding more tax rises. Former health secretary Wes Streeting wants to increase capital gains tax rates in line with income tax bands and replace inheritance tax with a tougher lifetime gifts tax. He’s also talked of increasing corporation tax, despite businesses already being hammered by Reeves. Unemployment is soaring as a result, yet Labour still wants more blood.
Other ideas being floated include a wealth tax alongside an exit tax to stop people emigrating with their assets. Critics warn this would destroy entrepreneurship, investment and growth while expanding our unproductive state. Moderate figures such as former business secretary Jonathan Reynolds may struggle to get a look in. Dan Coatsworth, head of markets at AJ Bell, said Reynolds’s views may not align with Burnham’s. “A year ago, Reynolds said a wealth tax was ‘daft’.”
That kind of plain-speaking common sense won’t take him far in today’s Labour Party. Simply talking about a wealth tax and exit tax could trigger capital flight and scare away billions in investment. But deranged Labour-backing think tanks won’t shut up about it.
So what can you do to protect yourself? Acting on speculation is always risky. Even under Burnham, not every tax idea will become reality, and certainly not all at once. But the uncertainty ahead of the autumn Budget is growing. That makes it more important than ever to use existing tax breaks, including ISA allowances and pensions tax relief. Buy-to-let landlords and second homeowners also face difficult choices. Anyone already planning to sell may want to consider acting before the Budget, but again, that’s a tough call to make.
Before Reeves’s two horror Budgets, pension savers rushed to take their 25% tax-free cash, fearing the tax break would disappear. Reeves left it untouched. This is a time for careful decisions, not panic. But it’s hard not to be worried given what might be coming our way. Whatever it is, we certainly didn’t vote for it.
