“This confirms that we are still living with the Labour Party of Jeremy Corbyn. At the very highest level, Labour ministers are debating which taxes to increase next.”
Angela Rayner has been caught red-handed pushing for a £4 billion tax raid in a bombshell memo sent behind closed doors to Chancellor Rachel Reeves.
The Deputy PM, who has never run a business, set out a secret wish list of eight tax hikes, targeting pension pots, dividend income, and even ramping up taxes on banks.
The explosive document, exposed by The Telegraph, includes a proposal to bring back the pensions lifetime allowance, axed by the Tories, and whack dividend taxes for high earners.
She also took aim at 1.13 million top-rate taxpayers and wanted to hit banks with a 30% corporation tax bill, up from 28%.
According to the Telegraph, the 2.5-page memo was marked “official” and dropped on the Treasury’s desk in March, just days before Ms Reeves’ Spring Statement.
Rayner’s camp insists the measures would raise between £3bn and £4bn a year, but no full costings were included.
Critics say it’s a direct challenge to the Chancellor’s approach of cutting spending rather than hiking taxes to fix the gaping black hole in Britain’s finances.
A Treasury insider tried to play it down, saying Reeves “welcomes contributions from all Cabinet colleagues”, but made clear: “As Chancellor, she decides tax and spending.”
DIVIDED WE TAX?
The memo is the clearest sign yet of a rift at the top of Labour over the party’s economic direction, and comes as cracks widen on the Left over welfare cuts and scrapping the universal winter fuel payment.
A source close to Rayner says she’s fed up defending brutal spending cuts in public, and is fighting back in private.
Meanwhile, Ms Reeves hinted on Tuesday that she might U-turn on the winter fuel payment plans, saying she would “listen” to concerns.
At a fiery meeting of Labour MPs on Monday night, Keir Starmer himself was grilled on plans to slash support for the disabled.
One Labour rebel fumed: “This is not what we were elected to do.”
Rayner’s plan is now being seen as the blueprint for a Left-wing push in the autumn Budget, as Reeves faces mounting pressure to raise taxes thanks to gloomy economic forecasts.
CORBYNITE COMEBACK?
Tory Shadow Chancellor Mel Stride didn’t mince his words, saying:
“This confirms that we are still living with the Labour Party of Jeremy Corbyn.
At the very highest level, Labour ministers are debating which taxes to increase next.”
Rayner’s “alternative proposals for raising revenue” were pitched as being “popular, prudent, and would not raise taxes on working people” — a nod to Labour’s manifesto pledges.
But among her top targets were middle-class savers, investors, and businesses.
Her suggestions included:
- Reinstating the pensions lifetime allowance, scrapped by Jeremy Hunt, to claw back up to £800m a year.
- Abolishing inheritance tax relief on AIM-listed shares, worth around £1bn a year.
- Scrapping the £500 dividend allowance and hiking tax on top dividend earners.
- Freezing the 45% income tax threshold beyond 2028 — dragging more into the top tax band over time.
- Hiking corporation tax on banks to 30%, raking in up to £700m a year.
- Stamp duty clampdowns on those using companies to trade property.
Many on the Left see such moves as fair, targeting the wealthy instead of hitting the vulnerable. But not everyone’s convinced.
Rayner and Reeves, two of the most senior women in Government, could hardly be further apart politically.
Rayner cut her teeth in the trade union movement and is still close to the Left, while Reeves is a proud Blairite, inspired by New Labour’s glory days.
The memo didn’t sway Reeves, who ditched the tax hikes and instead backed £5bn in welfare cuts and a huge foreign aid squeeze to pay for extra defence spending.
She told the Commons in March:
“As I promised in the autumn, this statement does not contain any further tax increases.”
But with over 100 Labour MPs signing a private letter demanding a rethink on disability benefit cuts, Starmer could soon face his biggest rebellion yet.
And as Rayner gears up for battle this autumn, one thing’s for sure, the Labour Left aren’t going quietly.
Read more in The Telegraph here.
