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Keir Starmer and Rachel Reeves are ready for Deal sternly with leftists in the budget To buy time for themselves and prevent a leadership coup attempt by backbenchers.
Independent The Chancellor is reported to bow to pressure to scrap the two-child benefit limit altogether and unveil a series of wealth taxes to cover the spending shortfall in her budget.
Backbenchers and senior party members have been assured the tax raid will include a mansion tax on properties worth more than £2 million, a profits tax on gambling companies demanded by former Prime Minister Gordon Brown and a levy on bank profits.
Also Transport Secretary Heidi Alexander dismissed speculation that fuel duty could rise for the first time in 15 years and a new miles tax would be imposed on electric cars.
The minister was challenged on the issues by Sir Trevor Phillips on Sky News on Sunday morning and Laura Kuenssberg on the BBC.
Ms Alexander pointed out that the Government was reducing rail fares, but after being asked three times about fuel charges, she said: “You wouldn’t expect me to speculate on what’s going to be in the Budget next week.”
Information is also being given about this Ms. Reeves Would raise capital gains tax but fail to bring it equal to the level of income tax.
a minister told Independent: “The ink will certainly not be dry on this budget by Tuesday night but it looks like the PLP [parliamentary Labour Party] “He’s getting exactly what he wants…an end to wealth taxes and child benefit caps.”
However, the contents of the budget are now being linked to the future of Sir Keir and Ms Reeves and there is persistent speculation that the Prime Minister could be removed after accusing Wes Streeting of plotting to replace him at a Downing Street briefing.
Along with Mr Streeting, former Deputy Prime Minister Angela Rayner, Energy Secretary Ed Miliband and Home Secretary Shabana Mahmood have been the center of leadership speculation over the past fortnight.
A senior party source said Independent: “The Prime Minister and Chancellor are buying time for themselves. There will be elements of the media who hate these taxes but it will please members and the PLP.”
It has also emerged that the decision to scrap the income tax increase, breaking the manifesto commitment, also came after pressure from backbenchers.
One Labor MP said: “The message got across is that it is quite difficult for us to get a hearing at the door, but if we did [raise income tax]So the doors would have been closed to us and never opened again.
“People would have just said ‘You lied, we can never trust you again.'”
Another MP said recent interventions by Lucy Powell, the new deputy leader elected to replace Angela Rayner, on a platform criticizing the Starmer premiership, were “very much expressing the concerns of the PLP”.
Ms. Powell has spoken out against income tax increases, but has strongly supported a “fair tax system”, including the wealth tax.
It has already become impossible to cut welfare or other spending by significant amounts after the benefits revolt forced Ms Reeves and Sir Keir to abandon £5bn of cuts.
Furthermore, there is a perception that steps to get tough on asylum and reduce human rights will need to be balanced with more left-wing economic measures.
Another MP said: “There is a lot of unhappiness about us copying the reform with the asylum announcements this week, so it seems they are in a place where they have to listen to us on the economy.”
The bank levy, which is being heavily pushed for by the Trades Union Congress, could raise £30bn for Ms Reeves by 2029 if she sets it at 16 per cent.
Meanwhile, scrapping the cap on how many children in a family can qualify for child benefit would cost the taxpayer £3.5 billion a year.
The mansion tax was being suggested as a 1 per cent levy on properties worth £2 million or more, but it is expected it may be set much lower than the maximum of £5,000 due to concerns about the London housing market.
By some estimates gambling fees could raise as much as £3.2 billion a year, which campaigners such as Mr Brown believe will fund the end of restrictions on child benefits.
The Treasury revealed last week that the U-turn on raising income tax was due to better-than-expected estimates from the Office for Budget Responsibility, with the black hole in spending believed to be around £20bn, well below the initial estimate of £40bn.
But Ms Reeves still needs to ensure she has an economic buffer beyond the £10 billion she promised last year due to Donald Trump’s tariffs, uncertainty in markets and the possibility of further economic shocks after the impact of the war.
They also need to find cash to meet the defense spending target of 2.5 percent of GDP.
Economists warn that the only sustainable way to do this is to raise one of the big taxes – income tax, VAT or employee national insurance contributions.
However, the Chancellor is prepared to ignore this advice and insist on so-called wealth taxes instead.
He has already indicated that revoking non-dom status and imposing VAT on private school fees has brought in more money than originally anticipated, despite heavy criticism of both moves.
But critics warn that the measures would destabilize the tax system and alienate wealthy individuals.