Sir Keir Starmer’s cabinet is deeply divided over economic policy, with senior ministers fearful further measures to target the rich in next month’s Budget could accelerate the wealth exodus from Britain.

Cabinet ministers have told the The Independent they believe Rachel Reeves has already gone too far with measures targeting the wealthy and businesses, and have urged the chancellor to change course if she is to have any hope of achieving growth.

They cited “anti-aspiration” measures such as the abolition of non-dom status and VAT on private school fees as key drivers of wealth away from the UK, saying they are “harming this country”. Further measures reportedly being considered include a property tax on high-value homes and a new bank profits tax.

Ministers have instead urged the prime minister and Ms Reeves to consider “efficiency savings” and cuts to fill a Budget black hole estimated to be between £30bn and £40bn.

Those on the left in Labour have noted that the recent reshuffle has “handed more power to the right of the party” while left-wingers who support wealth taxes have been demoted or pushed out.

But a powerful group within cabinet on the right of the party believes the government is failing to rein in spending and needs to be more ready “to reform the state in a Labour way.”

One minister said: “The trouble is we have crossed a line in trying to encourage aspiration. The non-dom change and the VAT on school fees have sent the opposite message.”

Noting the record number of millionaires leaving London in particular, the minister added: “It’s doing a lot of harm to the country.”

Another cabinet minister said: “I just think the non-dom changes made no real sense. Why do we want people with money to move it out of the country? It is really bad for London.”

Ms Reeves is currently refusing to budge on the manifesto promise not to raise VAT, income tax or employee national insurance contributions, but is facing mounting pressure is mounting there too.

However, one of her firmest allies in sticking to this pledge is new welfare secretary Pat McFadden, who has warned colleagues that “election wins are hard to come by and that manifesto promise was key to achieving it”.

He is in charge of trying to revive welfare reform after the government’s plans to slash disability payments were derailed by a massive rebellion by Labour MPs before the summer.

However, there is another faction within the cabinet that is backing growing calls from unions and Labour members for wealth taxes to plug the hole in the nation’s finances, such as a property tax that would hit those who have high-value homes.

There are others who are supporting the TUC’s campaign for a new bank profits tax and to hit the super-rich with a wealth tax.

One minister said: “It only seems fair that the rich carry the burden.”

However, question marks have been raised over whether so-called wealth taxes can fill the Budget black hole or would do more damage.

Professor Stephen Millard, deputy director of the National Institute of Economic and Social Research (NIESR), has warned that Ms Reeves will eventually have to break her manifesto promise not to raise any of the big taxes – VAT, income tax or employee national insurance contributions.

The NIESR estimates that the black hole will be above £40bn, and Prof Millard warned: “It is likely that, absent any change in policy, the chancellor will have a large gap to fill to meet her fiscal rules; a reduction in spending would be hard to achieve given we’ve just had a comprehensive spending review.

“It is likely that any change to the rules enabling the chancellor to increase borrowing would result in an adverse market reaction; so the chancellor will need to raise taxes.

“Given our estimate of the extent of the gap, we do not think that the Chancellor will be able to fill it by ‘tinkering’ with lots of changes to the non big four taxes; so we think she will have to raise either income tax, NICs or VAT.”

Isaac Delestre, senior research economist at the Institute for Fiscal Studies (IFS), warned: “If the Office for Budget Responsibility (OBR) forecast deteriorates and the chancellor wants to stick to her fiscal rules she will either need to deliver spending reductions or tax increases.”

The FTSE 100 closed slightly lower on Monday, below new best levels, and despite gains by gold miners as the yellow metal hit a new high.

The FTSE 100 index closed down 12.11 points, 0.1%, at 9,479.14. The blue-chip index had earlier hit a new all-time best level of 9,516.83.

The FTSE 250 ended down 97.88 points, 0.4%, at 22,099.74, and the AIM All-Share declined 0.89 of a point, 0.1%, at 795.63.

In European equities on Monday, the CAC 40 in Paris closed down 1.4%, while the DAX 40 in Frankfurt ended unchanged.

The CAC 40 tumbled after prime minister Sebastien Lecornu resigned.

President Emmanuel Macron appointed Mr Lecornu, a former defence minister, to the post last month, the third prime minister appointed since snap parliamentary elections in the summer of 024.

But the largely unchanged cabinet Mr Macron unveiled late on Sunday to work with Mr Lecornu sparked fierce criticism across the political spectrum.

Mr Lecornu’s allies in the centre-right Les Republicains indicated they could withdraw from his government because of the number of ministers planned to be included from Mr Macron’s Renaissance party.

“Lecornu was already expected to face a difficult confidence vote later this week but President Macron’s cabinet appointments, which were largely similar to the past government sealed Lecornu’s fate,” said Marc Chandler, chief market strategist at Bannockburn Capital Markets.

Barclays said Mr Lecornu’s resignation now leaves President Macron with two main options: appointing a new prime minister or dissolving the National Assembly.

Financial services took the brunt of the falls, with Societe Generale down 4.2%, BNP Paribas down 3.2%, AXA down 2.3% and Credit Agricole down 3.4%.

But losses were widespread. Car maker Renault fell 1.6%, Gucci owner Kering dipped 1.8% and retailer Carrefour declined 1.7%.

The yield on French 10-year bonds rose six basis points to 3.57%, while the euro traded lower.

The euro stood at 1.1706 dollars at the time of the London equity market close on Monday, compared with 1.1741 dollars on Friday.

Kathleen Brooks, research director at XTB said once again, France is “rudderless” politically speaking, which is also weighing on the stock market.

“While the political situation may not directly impact these companies, the fact that France’s largest and most prestigious companies are getting sold off today is a sign that investors are offloading French assets on a broad basis, and the risk is that this causes contagion elsewhere,” Ms Brooks said.

The pound was quoted slightly higher at 1.3471 dollars compared with 1.3469 dollars on Friday. Against the yen, the dollar was trading at 150.07 yen, higher compared with 147.43 yen.

Stocks in New York were mixed at the time of the London close. The Dow Jones Industrial Average was down 0.1%, the S&P 500 index was 0.3% higher and the Nasdaq Composite 0.5% to the good.

The yield on the US 10-year Treasury was quoted at 4.16%, stretched from 4.11% on Friday. The yield on the US 30-year Treasury stood at 4.76%, widened from 4.70%.

Advanced Micro Devices soared 27% after it announced a deal with OpenAi which could see the ChatGPT maker take a 10% stake over time.

Under the agreement, San Francisco-based OpenAi has agreed to purchase graphics processing units from AMD with a total power consumption of six gigawatts.

The first 1GW deployment of AMD Instinct MI450 GPUs is set to begin in the second half of 2026.

As part of the agreement, AMD has issued OpenAI a warrant for up to 160 million shares of AMD common stock, roughly 10% of the firm, structured to vest as specific milestones are achieved.

On London’s FTSE 100, Mondi plunged 16% as it revealed profitability dwindled in the third quarter of this year thanks mainly to softer volumes and weaker prices.

The Weybridge-based packaging firm saw its underlying earnings before interest, taxes, depreciation and amortisation drop 19% to 223 million euros for the third quarter of 2025 from 274 million euros in the second quarter, but was flat compared with the third quarter last year.

Jefferies said this was 11% below its “already cut” forecast of 250 million euros and implies 10% reductions to 2025 Ebitda forecasts.

“The profit warning was worse than we had expected,” analysts at Jefferies wrote.

A fresh surge in the gold price boosted Fresnillo, up 1.2%, and Endeavour Mining, up 2.8%.

Gold traded at 3,957.68 dollars an ounce on Monday, breaching 3,900 dollars an ounce mark for the first time, and up against 3,885.67 dollars on Friday.

The yellow metal was lifted by safe-haven demand as investors braced for a protracted US government shutdown.

Brent oil traded at 65.43 dollars a barrel on Monday, up from 64.61 dollars late on Friday, supporting BP, which rose 2.1%.

On the FTSE 250, Aston Martin hit reverse, down 10%, as it reported a lower full-year outlook for 2025, hurt by US tariff uncertainty and weakened demand.

The Warwickshire-based luxury car maker now expects total wholesale volumes for the full year to decline by mid-high single-digit percentage from 6,030 in 2024.

In addition, Aston Martin expects adjusted earnings before interest and tax “to be below the lower end of the range of market consensus … driven by the weaker volumes and pressure on the gross margin per vehicle”, the minimum estimate currently being a £110 million loss, “and no longer expects positive free cash flow generation in (the second half)”.

“Reduced 2025 expectations may clear the decks for a better 2026, but this remains a show-me story for investors,” analysts at Citi said.

The biggest risers on the FTSE 100 were Prudential, up 28.5p at 1,039.0p, Endeavour Mining, up 86.0 pence at 3,198.0p, BP, up 9.05p at 432.8p, Admiral, up 62.0p at 3,330.0p and Glencore, up 6.0p at 353.7p.

The biggest fallers on the FTSE 100 were Mondi, down 167.4p at 879.6p, Kingfisher, down 6.0p at 301.7p, BAE Systems, down 39.0p at 2,016.0p, Diageo, down 33.5p at 1,760.0p, and IMI, down 40.0p at 2,310.0p.

Tuesday’s global economic calendar has the Halifax house price index in the UK and trade figures in Canada.

Tuesday’s UK corporate calendar has full year results from veterinary services provider CVS Group, and half year numbers from fishing tackle and equipment retailer Angling Direct.

Contributed by Alliance News.

The Conservatives have said they would cut energy bills by 20% by axing the carbon tax and abolishing wind farm subsidies.

Shadow energy secretary Claire Coutinho claimed these two policies would save the average family £165 a year.

Speaking at the Conservative Party Conference, Ms Coutinho told members that scrapping the carbon tax would “instantly” cut bills by almost £8 billion.

She said: “The next Conservative Government will axe the carbon tax on electricity generation.

“When Ed Miliband blames gas for high energy bills, what he doesn’t tell you is that over 30% of what we pay for gas power is not to pay for fuel, but to pay for a carbon tax that the Government chooses to impose.

“Now, we know that we’ll need gas to keep the lights on for decades, so it just adds extra costs to our bills for no reason.

“But here’s the rub: the carbon tax inflates the cost of almost all other types of electricity too.

“So, all the wind and solar farm owners pocket those higher prices as higher profits…

“Axing the carbon tax would cut bills instantly by almost £8 billion a year.”

Ms Coutinho branded wind farm subsidies “the biggest racket going” as she promised her party would scrap them if they won the next general election.

She said: “We’ll scrap Ed Miliband’s old rip-off wind farm subsidies.

“Back in 2008, Ed Miliband in his infinite wisdom chose to double the subsidies on offer for wind farms.

“That means when the wind blows, there are wind farms getting up to three times the market price of electricity, and you’re paying for that through your bills. It’s the biggest racket going.

“We closed the scheme when we were in office, but we’ll go further and say we must scrap those subsidies for good.

“Our energy system is not here to prop up the profits of multimillion-pound wind developers at billpayers’ expense. It’s here to deliver cheap, reliable energy for the country.

“Together, our policies to axe the carbon tax and scrap Ed’s rip-off wind subsidies would cut people’s electricity bills by 20%.

“The average family will save £165 a year off their electricity bill.”

Ms Coutinho also told members that the Conservatives would scrap Great British Energy, branding it energy secretary Ed Miliband’s “vanity project”.

She said that Mr Miliband promised that Great British Energy would lead to a “mind-blowing” reduction in bills, but that this has not come to pass.

The shadow energy secretary said: “Only Ed Miliband could launch an £8 billion energy company that won’t produce any energy.

“Let’s call it what it is: a vanity project that won’t cut bills. So we will scrap it.”

Ms Coutinho reiterated the Conservatives’ pledge to repeal the Climate Change Act, claiming it is their “duty” to change the law, as it is “not working in the national interest”.

She also emphasised that a Tory government would scrap the ban on new oil and gas licences, reverse the energy profits levy and “back the North Sea”, saying: “As long as we need gas, as much as possible should come from Britain.”

The shadow energy secretary also hit out at Reform UK, saying their claim that abandoning net zero could save households £1,000 per year is “garbage”.

She said: “The average bill is only £850. What’s he going to do, go round writing people cheques?

“If you think any politician can promise you electricity for free, then I’ve got a bridge to sell you.”

Responding, a Labour Party spokesperson said: “The Conservatives simply want to repeat the same failed energy policies which saw the worst cost-of-living crisis in a generation happen on their watch.

“Their anti-growth, anti-jobs, anti-investment stance on cancelling clean energy investment would make Britain more reliant on insecure, expensive fossil fuels, keeping bills high for generations to come.

“And just last week their pledge to scrap the Climate Change Act united a remarkable coalition of business bosses, workers, faith leaders, and even Conservative politicians in opposition to their plans.

“It’s the same old Tories, with the same old policies. They didn’t work then and you can’t trust them now.

“Only this Labour Government is delivering record investment in clean, homegrown renewables and nuclear that will help bring down bills for good.”

Dr Simon Cran-McGreehin, head of analysis by the Energy & Climate Change Unit (ECIU), argued that renewables reduce the overall cost of electricity by pushing gas power out of the market.

He said: “People may not realise it, but their bills would be higher today without the increasing role that wind and solar farms running on free sunshine and wind are playing by reducing our dependence on gas power.

“This also means things could have been even worse during the peaks of the gas crisis, had it not been for renewables – indeed, anything that avoids gas generation helps to limit prices, including interconnectors and our old nuclear power plants.

“Prices can spike when wind is low and gas power plants come on, but this is more than made up for by the overall savings on prices that wind farms deliver the rest of the time.”