ANGELA Rayner pushed for increased taxes on the wealthy in a secret memo sent to Rachel Reeves, it has been revealed, signalling a split on economic strategy at the top of Government.
According to the Telegraph, Deputy Prime Minister Rayner sent a memo to the Chancellor in March ahead of the Spring Statement and proposed eight tax increases including reinstating the pensions lifetime allowance – which was abolished in 2023 by then Chancellor Jeremy Hunt – and changing dividend taxes.
She also suggested new raids on the million people who pay the additional rate of income tax and a higher corporation tax level for the banks.
The measures would raise taxes by £3 billion to £4 billion a year, according to estimates cited in the document.
The memo suggests a split on economic strategy within the Labour Government as it represents a direct challenge to Reeves' approach of using spending cuts rather than tax rises to fill the black hole in the nation’s finances.
The Conservative leader Kemi Badenoch (below) said at Prime Minister's Questions that Rayner was “on manoeuvres” and that Keir Starmer's Cabinet is in "open warfare" on taxes.
She said: "Look at the numbers this morning – as if inflation figures weren’t bad enough, we’ve also learned that the Deputy Prime Minister is on manoeuvres.
“He’s lost control of the economy, he’s lost control of his Cabinet.
“She’s sitting there staring at me. She knew exactly what she was doing when she briefed that into the papers. She is demanding eight new tax rises, as if we haven’t suffered enough."
The two and a half-page memo was stamped “official” and was submitted by Rayner’s team to the Treasury in mid-March.
It was titled “alternative proposals for raising revenue”. The first line stated that the policies “would be popular, prudent, and would not raise taxes on working people”.
It offered different ways to raise money, with increased taxes on the wealthy put forward instead of spending cuts.
One idea was reinstating the pensions lifetime allowance, which had placed a limit of just above £1 million on how much could be saved in a pension without incurring higher tax charges. This ended in April last year after it was abolished by Hunt.
Labour had pledged to bring back the allowance but dropped the pledge before the General Election.
The memo suggested reinstating the lifetime allowance at the same level could generate up to £800m in new tax revenues.
The memo also proposed scrapping the £500 tax-free allowance for dividends and increasing the tax rates paid on dividends by the most well-off.
Elsewhere at PMQs, Starmer announced he wants to partially roll-back the Winter Fuel Payment cut.
He told MPs that he wanted to make more pensioners eligible for the benefit, which was axed for all but the worst-off retirees in one of Labour’s first acts in government.
But under questioning from LibDem leader Ed Davey, the Prime Minister refused to be drawn on when the changes could be expected.
