Keir Starmer set to block fresh wealth tax raid | Personal Finance | Finance

Sir Keir Starmer is preparing to resist mounting calls from Labour MPs for new taxes on the super-rich, amid warnings they could do lasting damage to the economy.

The Prime Minister’s director of policy delivery, Liz Lloyd, is understood to have raised alarm bells in No.10 about the impact of scrapping non-dom status – a move that is claimed to have triggered the departure of wealthy individuals from the UK looking to dodge resulting taxes.

This week’s reversal of welfare reforms has left Chancellor Rachel Reeves with a £5 billion hole in the public finances. But despite growing pressure from the Labour left to slap a 2% levy on assets over £10 million – a measure they claim would raise £24 billion – Sir Keir is said to be leaning against raids on wealth.

A debate appears to have broken out inside Downing Street, with Ms Lloyd said to be gaining the upper hand over more left-wing voices such as Stuart Ingham, who heads the Prime Minister’s policy unit and has advised Sir Keir since 2016.

Sir Keir, who has repeatedly warned that taxing the rich is not a “bottomless pit”, is understood to be moving to bolster his grip on economic policy by appointing a new political economic adviser to No.10.

The move follows criticism that the Treasury has been setting too much of the domestic agenda while the Prime Minister has been preoccupied with foreign affairs.

The job has been vacant since the departure of Ravinder Athwal, co-author of Labour’s election manifesto. Huw Leslie, a civil servant, is temporarily covering the brief but is barred from policy-making.

A former government adviser told the Telegraph: “There is always a concern that the Treasury holds all the cards in budget negotiations, meaning they set the rules and terms of engagement. If No.10 has a political appointee as an economic adviser, they can counter that.

“It has worked well in the past with other prime ministers, as it means No.10 plays an active role and budgets are aligned with prime ministers’ priorities.”

Sir Keir has insisted he remains “in lockstep” with Ms Reeves following her emotional appearance in the Commons earlier this week, but he is clearly wary of allowing the Treasury to launch any new tax raids on high earners.

Ms Reeves has refused to rule out tax rises in the autumn Budget, telling the Guardian: “I’m not going to, because it would be irresponsible for a Chancellor to do that.

“We took the decisions last year to draw a line under unfunded commitments and economic mismanagement. So we’ll never have to do something like that again. But there are costs to what happened.”

In the background, the fallout from the abolition of non-dom tax status continues. One forecast suggests 16,500 millionaires will leave Britain this year – more than any other country in the world. However others argue claim talk of an exodus has been overblown.

Last year, Sir Keir appointed two figures from the left-leaning Institute for Public Policy Research – economist Carys Roberts and public services expert Rachel Statham. However, it is claimed they have been increasingly marginalised since Ms Lloyd’s arrival in January.

Asked for the Prime Minister’s stance on wealth taxes, a No.10 source pointed to Sir Keir’s remarks in Parliament earlier this year, where he said: “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.”