A prominent think tank advises Prime Minister Keir Starmer to impose higher taxes on affluent households and eliminate the state pension triple lock, amid a £550 drop in living standards for families. This comes as Labour MPs challenge his leadership following poor local election outcomes.
Economic Challenges and Public Finances
The economy continues to falter despite £70 billion in tax increases and £84 billion in spending boosts. Public services deteriorate, while working-age families experience stagnant living standards. Rising prices from global conflicts deliver an average £550 hit this year, hitting lower-income groups hardest due to higher spending on food and energy.
Targeting Wealthier Households
The recommendations prioritize young people and working families over wealthier groups that benefited from decades of asset growth. Officials should focus on growth and shift resources from pensions and healthcare, which dominate state spending.
Proposed measures include higher income taxes, council tax adjustments that benefit most residents but increase contributions from owners of high-value properties, and taxes on pension lump sums. Changes to capital gains tax feature an exit tax for emigrants and closure of post-death exemptions. Inheritance tax reforms eliminate the nil-rate band, taxing all inherited assets.
Overhauling the Pension Triple Lock
The triple lock, in place since 2012, raises state pensions by the highest of inflation, wage growth, or 2.5%. The think tank argues this policy suited low pensions initially but now requires revision as payments rise substantially.
Resolution Foundation chief executive Ruth Curtice stated: “The Government’s appetite for a reset stems from poor election results. But a shift in economic direction benefits everyone. Leaders must prioritize growth and support those impacted by stagnation, including young people and working families.”
