Labour’s leadership is facing mounting internal calls to introduce a wealth tax after new polling suggested overwhelming support among party members for higher taxes on the richest households.
The Survation survey, commissioned by the campaign group Compass and shared with The Independent, found the vast majority of members back measures to raise revenue from wealthy individuals rather than cutting public spending.
The findings come as the National Institute of Economic and Social Research (NIESR) warns the government is staring at a £41bn gap in the public finances, driven by spending commitments and a series of recent policy U-turns.
Rayner Memo Urged Alternative Taxes
Earlier this year, a leaked memo from deputy prime minister Angela Rayner to chancellor Rachel Reeves outlined eight possible tax measures targeting high earners and large businesses. The proposals were presented as an alternative to departmental cuts, a move aimed at protecting frontline services.
Former shadow chancellor Anneliese Dodds has also voiced support for a wealth tax, warning that spending cuts alone will not “deliver the kind of fiscal room that is necessary.”
Members Want Welfare Policy Change
The same survey indicated strong support among members for ending the two-child benefit cap, a policy brought in under the Conservative government. This welfare limit has faced growing criticism from Labour MPs, many of whom argue it deepens child poverty.
Former MP Jon Cruddas, founder of the Labour Together think tank, warned the party risks being “out of step” with its grassroots on core economic and social policies.
Discipline Concerns
Polling also found a significant share of members believe MPs should be free to challenge the government on contentious legislation without facing suspension from the parliamentary party. In the past year, several MPs have lost the whip for voting against the official Labour line on welfare policy.
Left-wing MP Rachael Maskell, a prominent advocate for progressive tax reform, said members are “attuned to the injustices they see in their communities” and want the government to “invest in public services and community priorities.”
Political Pressure from All Sides
The wealth tax debate is also being shaped by political forces beyond Labour’s base. Reform UK and the Conservatives have seized on the issue to accuse Labour of planning “punitive” taxation that could deter investment. Meanwhile, the Liberal Democrats have called for a broader review of the UK’s tax system, including changes to capital gains tax and council tax bands.
Inside Labour, the pressure is not only ideological but strategic. Senior figures privately warn that failing to deliver a clear plan to close the fiscal gap could undermine the party’s claim to economic competence a key factor in its recent electoral success. For others, a bold wealth tax could signal a decisive break with the cautious centrism of Starmer’s early leadership.
Economic Stakes
Economists are divided on the impact of a wealth tax. Supporters argue it could raise billions without affecting the majority of households, especially if targeted at assets over a high threshold. Critics say such taxes are difficult to administer and risk prompting capital flight, as seen in some European countries that later abolished them.
The NIESR has urged ministers to adopt a balanced approach, combining revenue raising with targeted investment to boost productivity. Without such measures, the think tank warns, the UK could face slower growth and prolonged pressure on public services.
Grassroots Momentum
Campaign groups have already begun mobilising around the issue. Compass has pledged to push for a parliamentary debate, while grassroots activists are circulating petitions calling for tax reforms to fund housing, healthcare, and climate action. This momentum could make it harder for Starmer to sidestep the topic as Labour heads into its next party conference.
Political analysts say the next 12 months will be crucial. If the government fails to close the fiscal gap in a way that satisfies both its members and the broader electorate, it risks alienating key voter groups on both the left and the centre a balancing act that could define the remainder of Starmer’s premiership.
Government Stands by Economic Plan
A Labour spokesperson declined to comment on the polling but defended the government’s record since taking office:
“Our priority has been to fix the foundations after 14 years of Tory chaos. We’re now working to create a fairer Britain for working people boosting the minimum wage, rolling out free school meals, and delivering breakfast clubs for primary school children.”
The combination of a yawning budget shortfall and strong grassroots backing for taxing the rich has intensified pressure on Labour’s leadership. While the party has so far resisted committing to a wealth tax, critics within its ranks warn that ignoring these demands could deepen divisions and risk electoral fallout.
This debate isn’t just a Westminster talking point; it speaks to a bigger question many people are asking: how can we make the UK’s tax system fairer, simpler, and work better for everyone? That’s where companies like Pie Tax are part of the wider conversation. By helping people understand what they can claim, manage their finances in real time, and keep on top of tax rules without the stress, Pie.tax is already showing how better tools and transparency can put more money back into people’s pockets.
