The Labour Growth Group has drafted a report proposing a major tax overhaul, including cutting income tax and abolishing national insurance, aimed at incentivizing work and addressing the cost of living crisis. The blueprint, under review by several cabinet ministers and potential Labour leadership contenders, is set to be published after the May local elections, a critical moment for party leader Sir Keir Starmer.
Report Targets Tax System Reform to Boost Work Incentives
The report, co-produced with the Good Growth Foundation, calls for a redesign of the UK tax system to reward hard work, entrepreneurship, and small business initiatives. It criticizes the current marginal tax rates faced by workers, such as nurses and small business owners, compared to institutional landlords. The authors argue the plan will confront vested interests profiting amid the cost of living crisis and shift Labour’s economic strategy and messaging.
Funding options outlined in the report include aligning capital gains tax rates with income tax in specific sectors, council tax reform, and imposing new taxes on landowners.
Potential Impact on Labour Leadership and Policy Direction
The report has drawn attention from advisors to prominent Labour figures including Health Secretary Wes Streeting, Angela Rayner, and Greater Manchester Mayor Andy Burnham, all considered possible successors to Starmer if leadership challenges intensify following poor local election results.
Labour’s parliamentary chair of the Growth Group, former YouGov pollster Chris Curtis, leads over 100 MPs involved with the initiative. The group focuses on removing barriers to economic growth amid concerns that forecasted GDP growth by the Office for Budget Responsibility (1.5% annually from 2027 to 2030) may not translate into improved living standards.
Devolution and Fiscal Powers Also Recommended
Alongside tax reforms, the report advocates for expanded devolution, recommending greater fiscal authority for regional mayors to tailor economic policies locally. The draft is provisionally titled the “Beveridge Report,” referencing the historic welfare reforms initiated by Sir William Beveridge.
Labour Growth Group director Mark McVitie emphasized the need for practical solutions beyond diagnosing the crisis, focusing on “rewarding work and taking initiative” as central to Labour’s next economic approach.
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