Keir Starmer told to 'explore' wealth tax on super rich

Sir Keir Starmer is facing mounting pressure from Labour grandees and powerful trade unions to impose a wealth tax on Britain's richest. Former Labour leader Lord Kinnock yesterday said the Government should be "willing to explore" slapping a 2% annual tax on assets above £10 million, raising up to £11 billion a year to plug holes in the Treasury's finances.

Backing the idea were five of Labour's biggest union paymasters - including Unison, Usdaw, and the Fire Brigades Union - who claimed such a move would be more 'equitable' than cutting welfare or raising income tax for ordinary workers.

But Sir Keir and Chancellor Rachel Reeves appear resistant to the idea - amid fears it would hammer the economy, scare off wealthy investors, and repeat the economic damage seen from previous attempts to tax high earners.

Lord Kinnock told Sky News that a tax on wealth above £10m would be popular among the majority of the general public.

Referring to soaring asset prices among the wealthy, he added: "They've just gone through the roof and they've been barely touched.

"Now, you wouldn't have to touch assets of under £6 million or £7 million, so people's houses would be secure, obviously. But even by going for an imposition of 2 per cent on asset values above £10 million, say, which is a very big fortune, the Government would be in a position to collect £10 billion or £11 billion a year."

He claimed the super-rich were going "unscathed" and said such a tax would be "a substantial gesture in the direction of equity".

On Sunday, five trade unions told The Telegraph they would formally pressure Downing Street to introduce the tax - intensifying internal party splits over how to plug Labour's growing fiscal black hole.

Christina McAnea, general secretary of Unison - where Deputy Prime Minister Angela Rayner once worked - said: "A wealth tax would be a much fairer way of raising revenue to invest in public services and grow the economy."

Paddy Lillis, head of shop workers' union Usdaw, said: "We know wealth in this country is with a small number of people. It is one way of raising money quickly."

Steve Wright of the FBU added: "Introducing a wealth tax to fund public services, a generous welfare state, and workers' pay must be a priority in the second year of a Labour government. There's overwhelming support for that approach within the Labour Party, trade unions and the electorate."

Unite, Labour's largest donor, claimed: "A 1% wealth tax on the richest 1% would generate £25 billion."

Matt Wrack of teaching union NASUWT echoed the call: "Part of addressing these issues is the immediate introduction of a wealth tax, a measure which has very significant public support."

Collectively, the five unions gave Labour nearly £800,000 in the first three months of this year alone - and hold significant influence over the party's ruling National Executive Committee.

Number 10 is reported to be resistant to the idea. A spokesman instead pointed to Sir Keir's remarks earlier this year: "We have raised money - the energy profits levy, taxing non-doms and air passenger duty on private jets - but this isn't a bottomless pit and we must kick-start growth to get the economic stability that we need."

Reports last week also revealed that Liz Lloyd, Sir Keir's senior policy adviser in Downing Street, has privately warned that recent levies on the wealthy could already be undermining the PM's mission to grow the economy.

Economists and tax experts have warned that the wealth tax proposals are economically risky and unlikely to deliver the huge sums claimed.

Dan Neidle, founder of Tax Policy Associates, dismissed the idea as "fantasy politics" and said: "A wealth tax of this kind has never been tried. It amounts to a bet that a small number of very wealthy, very international and very mobile people will stay put and pay up."

He added: "This idea did not seem very plausible."

A previous study by the Wealth Tax Commission suggested around 20,000 people would be hit if the threshold was set at £10 million - but warned that nearly one in five of the taxed assets could be moved offshore, with thousands of millionaires likely to leave the UK.

Tory MPs accused Labour of chasing "magic money" to fill gaps in its spending plans. Sir Mel Stride, the shadow chancellor, said: "I think it would be the worst thing to do."