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Andy Burnham has been urged to take stronger action to reduce inequality in the UK, including introducing a wealth tax, providing free personal social care for everyone and bringing gas and electricity networks into public ownership.
The recommendations come from a report involving more than a dozen influential leftwing thinkers. Ahead of Chancellor John Healey’s first budget this autumn, the Compass thinktank has brought together 70 policy ideas from 15 contributors. The group says the proposals could help deliver the prime minister’s promise to move away from four decades of neoliberal economic policies.
The report, titled Ending Business as Usual, was introduced by Michael Jacobs, a former adviser to Gordon Brown, and Neal Lawson, director of Compass and a close friend of Burnham. They praised what they described as the prime minister’s “invaluable aura of authenticity”.
However, they also cautioned that despite the government’s ambitious plans, there is no certainty that it will have much more time to demonstrate results than its predecessor. The report argues that it is wrong to believe a British government can no longer pursue policies from the centre-left.
The proposals are described by Compass as “a menu of policy options, not a manifesto”. They include limiting political donations to £50,000, abolishing the House of Lords and introducing an immediate package of measures to ease the cost of living.
The report also puts forward several major tax reforms. One proposal is a wealth tax on net assets worth more than £10m, which Caitlin Boswell of Tax Justice UK estimates could raise around £24bn each year.
Another suggestion is to bring capital gains tax rates in line with income tax. Supporters estimate this could generate an additional £11.3bn annually, potentially providing enough funding to build 90,000 new social homes. However, the Institute for Fiscal Studies has warned that such a change could reduce overall tax receipts, discourage investment and encourage wealthy people to move their money or leave the UK.
The report also proposes replacing council tax and stamp duty, which it describes as “regressive, outdated and unfair”, with a proportional property tax. It acknowledges that such a reform would mean 23% of households, particularly those in London and the south-east, would face higher bills.
“If the new Labour government is serious about rebuilding public confidence and delivering material improvements to people’s lives, it must be prepared to address one of the structural causes of inequality: a tax system that favours wealth over work,” Boswell writes.
The report recommends several changes to social policy in England, including free personal social care funded through an additional income tax charge for people over 40 and a contribution based on housing wealth. Sebastian Rees of the Institute for Public Policy Research (IPPR) says the state should cover essential personal care, including help with washing, dressing and eating, while individuals and their families would continue to cover accommodation and normal living expenses. A similar system is already used in Scotland.
According to the report, a 1% income tax surcharge for people over 40 could generate between £8bn and £9bn. It also suggests that care costs could be secured against a person’s property and recovered when the home is sold or after their death. Rees says this would allow housing wealth to help pay for reforms without forcing people to sell their homes when they first require care.
Elsewhere, the report calls for universal free childcare, arguing that it could strengthen the economy, improve children’s development, support families and encourage greater gender equality.
Chris Hayes of Common Wealth proposes that government-owned companies should take responsibility for operating energy networks, alongside the creation of regional energy boards. Holly Brazier Tope, director of politics at Green Alliance, meanwhile, supports introducing a climate resilience standard for critical infrastructure.
Michael Jacobs, professor of political economy at the University of Sheffield, said Burnham and his chancellor should resist pressure to follow the “moderation and orthodoxy” that he believes contributed to the end of the tenures of Keir Starmer and Rachel Reeves.
“There are a wealth of alternatives,” Jacobs said. He added that the public is increasingly disillusioned with politics and frustrated with politicians, meaning Burnham has limited time to demonstrate that his promise to end “business as usual” represents a genuine change in approach.
