John Healey's first Budget: A missed opportunity for radical change
Britain is not a poor country. It is an unequal one. That is why this Budget represents a missed opportunity.
The Chancellor was right to acknowledge the scale of the challenges facing the country.
Public services remain under immense pressure. Local authorities are on the verge of bankruptcy after a decade of austerity. The housing crisis persists. The cost-of-living crisis lingers for millions of workers. And with higher defence spending now firmly a government priority, the pressure on the public finances will only intensify.
Yet despite identifying these realities, the Budget failed to confront the most pressing question of all: who should pay?
For a government elected on a promise to put working people first, the answer should have been clear. The Prime Minister himself recognised that “in this country we over-tax people's work and we under-tax wealth.”
Healey’s first Budget could have begun to address that imbalance.
It could have looked at equalising Capital Gains Tax with Income Tax, raising an estimated £19.7 billion every year. Beyond that, he could have set out a roadmap towards a 2 per cent annual tax on assets worth more than £10 million, raising around £24 billion a year while affecting only the wealthiest 0.04 per cent of the UK population.
That would have been a statement of intent. A signal that Labour is prepared to tackle inequality at its root rather than simply manage its consequences.
A Labour government serious about putting workers first should endeavour to level that playing field. Instead, this Budget largely sidestepped the issue, despite the fact wealth inequality is a profound economic and democratic problem.
Today, the wealth of the richest fifty families in Britain exceeds that held by millions across the country. Such extreme concentrations of wealth do not simply reflect inequality. They reinforce it. They shape access to housing, education, investment and opportunity. They concentrate economic power in fewer hands. They weaken social cohesion and undermine confidence that the system works fairly.
When people see vast fortunes growing while public services and living standards stagnate, confidence in both the economy and democracy erodes. This reality undoubtedly has driven the alarming rise in racism and fascism on our streets in recent years.
The argument for taxing wealth is rooted in fairness.
Ministers should not be intimidated by familiar warnings about “millionaire flight”. Every time proposals for wealth taxes emerge, we hear predictions that affluent individuals will leave the country.
Yet many of these claims have proven highly questionable. Reports routinely cited as evidence of mass millionaire migration have been questioned, with campaigners and researchers challenging both their methodology and conclusions. Too often these warnings function less as evidence and more as political lobbying to preserve the status quo.
Meanwhile, around the world, policymakers are increasingly willing to ask difficult questions about concentrated wealth.
We need only look to California.
Home to a huge concentration of billionaires, California has witnessed growing support for proposals requiring those with the greatest fortunes to contribute more towards maintaining public services.
For years our political establishment has insisted that there is no alternative to asking ordinary households to absorb the costs of fiscal restraint. But a different approach is beginning to gain traction internationally: raising funds from extreme concentrations of wealth rather than relying on cuts and declining public provision.
That is the conversation this Budget should have started.
The challenge facing the Chancellor was never fundamentally one of scarcity. Britain has immense wealth. The challenge is one of redistribution.
If the government can find tens of billions to meet strategic priorities, if ministers accept the urgent need for investment in public services, housing and infrastructure, then surely it is reasonable to ask why communities that have already endured years of austerity are still being expected to shoulder the burden while extraordinary wealth remains largely untouched.
Labour was not elected to manage decline more fairly. We were elected to change whose interests the government serves.
That requires ministers to be radical, and challenge the assumptions that have dominated British political thinking for too long.
My party was founded to challenge entrenched privilege, not accommodate it. This Budget should have reflected that tradition. Instead, it missed an opportunity to begin building a system that puts redistribution at the forefront of its plans.
The Chancellor opened by declaring this was “a Budget for the working people of Britain”. The test of that claim is simple: when difficult decisions have to be made, whose pockets are ministers prepared to reach into?
Kim Johnson is the Labour MP for Liverpool Riverside.
