Diane Abbott says a wealth tax of 2% on people with assets over £10m would raise £24bn a year
Good morning. “You want me to cut £1bn. Shall I take £100 each off 10 million people, or £1,000 each off 1 million people?” The former Tory chancellor Ken Clarke is credited with coming up with this explanation of what big number spending cuts actually mean, but every chancellor has probably thought the same.
Tomorrow the government is expected to announced disability cuts said to be worth at least £5bn. You can work out the maths. That is more than three times as much as the £1.5bn saved by cutting the winter fuel payment, the single policy decision that as done more than anything else to make the government unpopular. So it is not hard to work out why Keir Starmer is facing Labour turmoil over this decision.
Diane Abbott, the Labour leftwinger and mother of the Commons, has said urged the government to impose a wealth tax as an alternative to cutting disabilty benefits. In an interview on the Today programme, asked what she would do instead, Abbott replied:
I would introduce the wealth tax. If you brought in a wealth tax of just 2% on people with assets over £10m, that would raise £24bn a year. That’s what I would do.
Andy Burnham, the Labour mayor of Greater Manchester, has joined those expressing concerns about the plans. In an article for the Times, he says:
I would share concerns about changing support and eligibility to benefits while leaving the current top-down system broadly in place. It would trap too many people in poverty. And to be clear: there is no case in any scenario for cutting the support available to disabled people who are unable to work.
Abbott has said that opposition to the government’s plans for disability benefit cuts is not just coming from the left. In her interview on the Today programme, she said she agreed with what Burnham is saying, and she said she also agreed with Ed Balls, who said last week that cutting benefits for those most in need was not something Labour should be doing. Abbott, Burnham and Balls were three of the candidates in the 2010 Labour leadership contest. A fourth, Ed Miliband, is also reported unhappy about the cuts, although as a cabinet minister he has not spoken out publicly.
Emma Reynolds, a Treasury minister, has said the government is “for the time being not going to come forward with a wealth tax”. She said this in an interview on the Today programme, when asked if the government would be following Abbott’s advice. Reynolds said the government had already raised taxes affecting wealthy people.
Reynolds urged Labour MPs and others to wait for the details of the plans before coming to a verdict on them. In comments implying the final proposals might not be as draconian as some of the pre-briefing has implied, she said:
Some colleagues are jumping to conclusions about our plans before they’ve heard them. So I just urge them to be patient.
She said there would always be a safety net for those most in need. She said:
We’ll set out further details, but the severely disabled and the most vulnerable will always get support, and there will always be a safety net.
The Resolution Foundation thinktank has said that the government’s proposed disability cuts are likely to fall disproportionately on the poor. In a statement it says:
The government is reportedly focusing on cutting incapacity and disability benefits to stem rising spending and support more people into work. But while the system needs reform, Ministers appear to be focused on cutting personal independence payments (Pip) – a benefit that isn’t related to work.
The foundation warns that cutting Pip by £5bn in 2029-30, for example by raising the threshold to qualify for support, could see around 620,000 people losing £675 per month, on average. The Foundation adds that 70 per cent of these cuts would be concentrated on families in the poorest half of the income distribution.
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