![Keir Starmer](/https/www.telegraph.co.uk/content/dam/news/2024/06/20/TELEMMGLPICT000382432249_17188780214210_trans_NvBQzQNjv4BqpVlberWd9EgFPZtcLiMQf0Rf_Wk3V23H2268P_XkPxc.jpeg?imwidth=680)
![Keir Starmer](/https/www.telegraph.co.uk/content/dam/news/2024/06/20/TELEMMGLPICT000382432249_17188780214210_trans_NvBQzQNjv4BqpVlberWd9EgFPZtcLiMQf0Rf_Wk3V23H2268P_XkPxc.jpeg?imwidth=680)
Income taxes won’t go up. Neither will National Insurance, or VAT. Over the course of the election campaign, the Labour leader Sir Keir Starmer and his Shadow Chancellor Rachel Reeves have repeatedly ruled out raising some of the main ways the state collects revenue.
Yet now it turns out that the pledge comes with very significant small print. Apparently, it only applies to “working people”. The mask has slipped. It is now clear that the Starmer administration plans an all-out war on wealth – and even the party’s new billionaire backers such as Sir Jim Ratcliffe and John Cauldwell won’t tolerate that for long.
The Labour Party may be enjoying a couple of very wealthy entrepreneurs switching to its cause, although as the Prime Minister Rishi Sunak pointed out, they can easily afford all the extra taxes it plans.
But it is hard to believe they have any real sense of what is coming. In a radio interview earlier this week, Sir Keir was pressed on what he meant by ruling out tax rises for “working people”. The Labour leader replied: “People who earn their living, rely on our [public] services and don’t really have the ability to write a cheque when they get into trouble”.
We can put to one side the point that the 22pc of the working age population that no longer have any form of paid employment are now mysteriously defined as “working”. The more important revelation is surely this. Labour has decided that any form of saving, or accumulated wealth, is fair game for higher taxes. It can be raided time and time again, with neither moral qualms, nor accusations of dishonesty.
It won’t be hard to find ways of taxing it more. A punitive increase in capital gains, from 20pc on financial assets, to 45pc the top rate of tax, now looks inevitable, and could go even higher. CGT could be applied to your main home, perhaps at more than £1 million, though this has for now been ruled out. CGT breaks for entrepreneurs, even though they are vital for growth, could be further reduced. A lifetime limit on ISAs, perhaps at £100,000, could be imposed. Who knows, perhaps we could see a full-blown wealth tax, disguised as a “solidarity levy”. The list goes on and on.
The trouble is, that will be a disaster for the economy. Although in the fevered imagination of most Labour activists the “wealthy” are a tiny elite living on inherited fortunes from slave plantations, the reality is very different. It overwhelmingly consists of money that people carefully have put aside over a working career to provide for themselves and their families. All that “wealth” fuels investment, either because it is put to work by a fund manager, or else reinvested in a family business (the vast majority of start-up funding comes from a close relative). It reduces demands on the state by enabling people to look after themselves. And it provides the capital that banks can use to fuel the credit that the economy needs to function effectively. The UK is a country that desperately needs to save and invest more, especially if we are to reboot growth in the way Labour claims it wants to. We will hardly achieve that by taxing money put aside into oblivion.
In the face of the coming onslaught, we can hardly be surprised that wealth is already fleeing the UK. According to the Henley Private Wealth Migration Report published earlier this week, the UK now ranks second in the world for exodus of millionaires, with 9,500 expected to leave the country this year, with the UAE and Singapore the top destinations. We are just behind China, and over the last twelve months have overtaken India, and, shockingly, Vladimir Putin’s Russia as well.
The mega-rich, such as Ratcliffe and Cauldwell, have always been hyper-mobile, but with the rise of digital nomad visas, and the ease of communications, it has become simpler than ever for the moderately wealthy to switch locations.
Labour’s war on wealth is going to backfire spectacularly – and will leave the UK worse off than ever.
Not even billionaires can endure Starmer’s war on wealth
Labour’s rumoured plans are going to backfire spectacularly