Political reporter

DEPUTY Prime Minister Angela Rayner has said Labour must raise taxes instead of making further cuts during a Cabinet rift over economic strategy.

Ms Rayner outlined her plan in a secret memo to hard-line Chancellor Rachel Reeves, leaked to the Telegraph newspaper.

It is understood that Ms Rayner, the leader of the Cabinet’s “soft left” faction and a candidate to succeed the flailing Sir Keir Starmer, is exasperated having to defend Ms Reeves’s unpopular programme of austerity redux.

Instead, she advocates for a range of tax reforms designed to raise at least £4 billion per year, including by reinstating the pensions lifetime allowance, closing a commercial stamp duty loophole, raising the bank surcharge to 5 per cent and removing some inheritance tax reliefs.

The measures would be “popular and prudent,” Ms Rayner told the Chancellor in the memo.  

They would not break Labour’s election pledges not to raise income tax, VAT or employees’ National Insurance.

The plans were backed by left MP Jon Trickett, who called for a reassertion of Labour values, and said: “The leadership’s fiscal strategy is a stale version of Treasury orthodoxy.

“Attacks on poor communities, pensioners and working people should never be a part of Labour’s armoury.”

Fire Brigades Union (FBU) general secretary Steve Wright said: “Angela Rayner was right to push for higher taxes on the wealthy in the Chancellor’s Spring Statement.

“It’s clear from the deputy Prime Minister’s intervention that the government has an alternative to making Thatcherite cuts to the welfare state.

“There’s still time for Rachel Reeves to abandon the disastrous austerity that will leave pensioners in the cold, plunge disabled people into poverty, and drive living standards down even further.

“Instead, the Chancellor must tax the rich to end austerity and properly fund public services and pay. It’s time for a wealth tax.”