Labour Members Push for Wealth Tax as Public Finance Crisis Deepens

Published: 15 August 2025 — The English Chronicle Desk

Prime Minister Sir Keir Starmer is facing mounting internal pressure to embrace a wealth tax as a growing financial shortfall threatens the stability of the United Kingdom’s public finances. Fresh polling reveals that an overwhelming majority of Labour Party members support higher taxation on the wealthy, calling on the government to adopt a markedly different approach to economic policy.

A survey conducted by Survation for the cross-party campaign group Compass, and shared exclusively with The Independent, found that 91 per cent of Labour members believe the government should increase taxes on the rich. The findings suggest deep frustration within the party’s grassroots over the leadership’s reluctance to pursue more progressive taxation, despite escalating fiscal challenges.

The pressure on the prime minister follows a leaked memo earlier this year in which Deputy Prime Minister Angela Rayner urged Chancellor Rachel Reeves to consider eight different forms of wealth taxes rather than impose further departmental spending cuts. Former shadow chancellor Anneliese Dodds has also weighed in, warning that spending cuts alone will not generate the fiscal space necessary to address the growing budgetary gap.

The economic stakes are high. The National Institute of Economic and Social Research (NIESR), a leading think tank, recently warned that the chancellor faces a £41.2 billion shortfall—described as a “black hole” in public finances—partly caused by a series of government U-turns and new spending commitments. Last month’s spending review already imposed cuts across multiple departments, leaving many analysts to predict that the government will have little choice but to raise taxes if it hopes to close the deficit.

In addition to backing a wealth tax, 84 per cent of Labour members surveyed want the government to scrap the two-child benefit cap—a policy that has grown increasingly unpopular among Labour MPs and which some in the party see as incompatible with its social justice pledges.

Former MP Jon Cruddas, founder of the Labour Together think tank, warned that the leadership risks becoming disconnected from both the party membership and the wider electorate. “These are exactly the ideas we tested at Labour Together and are the basis for winning and transforming the country,” he said. “The leadership should be listening to members—not out-of-touch factions.”

Neal Lawson, director of Compass, was even more direct, accusing Sir Keir of “fence-sitting” and imitating the rhetoric of Reform UK, the right-wing party led by Nigel Farage. “The government was elected on a promise of ‘a decade of national renewal’,” Lawson said. “So far they’ve cut welfare for disabled people and suspended the whip from MPs who disagreed. Without a big reset, the keys to Number 10 will be handed to Reform.”

The Labour leadership’s disciplinary approach has also drawn criticism. The poll showed that 74 per cent of party members believe MPs should not be suspended for challenging the government on controversial legislation. The backlash comes after high-profile expulsions last year, when seven MPs—including former shadow chancellor John McDonnell—lost the whip for voting against the benefit cap. More recently, MPs Rachael Maskell, Neil Duncan-Jordan, Brian Leishman and Chris Hinchliff were suspended for opposing welfare cuts.

John McDonnell described the poll as evidence that the prime minister is “starkly out of touch” and urged him to “start listening to people beyond the Westminster bubble” while taking decisive action to honour Labour’s principles. Maskell, who has been a vocal advocate for wealth taxation, said the results show party members are “attuned to the injustices in their communities” and expect the government to prioritise public services through progressive tax reform.

Richard Burgon, another MP stripped of the whip last year, warned that unless Labour changes direction, it risks losing support and paving the way for a Reform-led government. “Instead of ignoring members and punishing MPs who stand up for their constituents, the leadership should start listening—and urgently change course,” he said.

A Labour spokesperson declined to comment on the polling but defended the government’s record since taking office. “Our urgent task was to fix the foundations after 14 years of Tory chaos,” they said. “Through our plan for change, we have already boosted the minimum wage for three million of the lowest paid, rolled out free school meals, and begun delivering free breakfast clubs for primary school children. Our next priority is to create a fairer Britain for working people.”

The coming months are likely to be a decisive test for Sir Keir’s leadership as he balances the demands of the party membership, the realities of the UK’s fiscal position, and the political risks posed by both his left-wing critics and an emboldened Reform UK.