Receive free UK tax updates
We’ll send you a myFT Daily Digest email rounding up the latest UK tax news every morning.
The UK should levy a wealth tax to address “rampant” inequality, according to the head of the umbrella body for Britain’s trade union movement, in an implicit riposte to the Labour party, which last week ruled out such a policy.
In an interview with the Financial Times, Paul Nowak, general secretary of the Trades Union Congress, called for a “national conversation on taxing wealth and windfalls” against a backdrop of soaring executive pay and average real wages still lower than in 2008.
“With living standards plummeting, public services on their knees, and rampant wealth inequality blighting every corner of the country . . . fair taxation must be a key part of a wider set of policies to help reset the economy to work for working people,” he said.
Ahead of the start of the TUC annual conference in Liverpool on Sunday, Nowak cited research by polling company Opinium showing strong public support for higher taxes on capital gains and “excess” corporate profits, with 61 per cent of people wanting wealthy people to pay the exchequer more.
Only 4 per cent of those polled thought the well-off should pay less tax, while 72 per cent said capital gains tax should be lifted to at least match income tax.
Labour, which receives large donations from most of the big trade unions, last week ruled out introducing wealth taxes if it defeats the ruling Conservative party in the general election expected next year.
Shadow chancellor Rachel Reeves’s pledge was the latest indication of leader Sir Keir Starmer’s attempt to rebuild the party in a “centrist” style similar to that of Tony Blair, the last Labour leader to win power in 2005.
Nowak said he welcomed some of the party’s tax plans, such as its promise to abolish non-domiciled tax status and end the VAT exemption for private schools, but that a “wider conversation” was still needed.
“Any incoming Labour government will need to get to grips with the need to repair and renew public services . . . by growing the economy . . . but also by the effective taxation of wealth,” he said, noting that there was precedent for even a Conservative chancellor, Nigel Lawson in 1988, to equalise capital gains tax with income tax.
“People are buying £300,000 bottles of whisky and our members can’t pay the bills. Something’s got to give.”
In July, Labour’s national policy forum watered down the party’s package of employment measures as part of a broader effort to woo corporate leaders.
Among other changes, it diluted a 2021 pledge to create a single status of “worker” for all but the genuinely self-employed, with Labour now due to consult on the proposal rather than introducing it immediately.
Unite the union, Labour’s largest long-term donor, has also criticised the party for clarifying a pledge to ban zero-hour contracts so that it will crack down on “exploitative” forms of the casual contracts only.
Nowak said he was phlegmatic about that change, noting some workers — including in the creative industries — were happy to have flexible contracts so long as they were not “exploitative”.
He added that Labour’s proposed New Deal would still be “transformative” for workers if it delivered a ban on coercive “fire and rehire” practices, full employment rights from the first day of work, and a new framework to negotiate sector-wide standards on pay and working conditions.
Unions have spearheaded a historic wave of walkouts over pay in the past year, especially in the public sector, but some groups such as teachers have recently agreed deals with ministers.
Nowak signalled that unions would be determined in the coming months to secure pay rises in line with or above inflation next year.
He pointed out that unions only won improved deals because members had voted for action, took action and “moved the government’s position”.
“So people will say, as we look ahead to the public sector pay next year . . . we can’t afford another year of real-terms pay cuts . . . the ball will be in the government’s court,” added Nowak, arguing that more real-terms pay cuts would exacerbate recruitment and retention problems in schools and hospitals.
Senior government figures have insisted that they will have to stick to frugal pay offers for 2024 given the straitened public finances.
“They tried to be frugal last year . . . I wouldn’t expect the government to say anything else,” said Nowak.
