Business
Starmer faces cabinet revolt over Budget tax rises driving wealthy away
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.”
In a landmark move set to reshape India’s labour landscape, govt notified the implementation of all four labour codes, bringing into effect one of the most ambitious labour reforms in the country’s post-independence history. The rollout marks the realisation of “One India, One Law”- a unified labour framework that replaces a century of fragmented statutes with a consolidated, modern regulatory system. The four legislations cover various aspects of wages, social security, occupational safety, health and working conditions and employee relations aspects.Together, these codes subsume 29 central labour laws into a single legal structure aimed at improving transparency, reducing compliance complexity and enabling uniformity across states. Under the earlier system, overlapping definitions, varying state amendments and multiple registrations created operational hurdles for both employers and workers. The new framework introduces standardised definitions, rationalised thresholds and digitised processes intended to streamline compliance across the country.While the codes are now in force nationwide, supporting rules under both central and state jurisdictions are still to be notified. The press release issued by govt clarifies that they would engage with the public and stakeholders in the development of rules, regulations, and schemes under the new codes. Additionally, to ease the transition, the release confirms that the relevant provisions of existing labour laws will remain in force during the transition period.Changes for industryThe implementation of the labour codes will fundamentally reshape workforce management across industries. By introducing a uniform definition of wages, organisations will face greater clarity in benefit calculations for gratuity, ESI, leave encashment, overtime and statutory bonus, reducing litigation risk but potentially increasing employment costs. This change demands a thorough review of salary structures and payroll systems to ensure compliance. Additionally, the broader definition of ‘worker’ will extend entitlements such as overtime, leave encashment, and retrenchment compensation to a wider employee base, requiring companies to reassess classifications and related policies.Changes for workersFor workers-particularly those in the unorganised, gig and platform sectors-the reforms mark an unprecedented expansion of protections. The code on wages ensures a statutory minimum wage for all categories of workers and prohibits gender-based wage discrimination. The Social Security Code extends benefits to gig workers, platform workers and fixed-term employees for the first time. A national database of unorganised workers and a dedicated Social Security Fund aim to enable targeted delivery of welfare benefits. The OSH Code enhances workplace safety norms, regulates working conditions and ensures portability of benefits for migrant workers.A new chapter for India’s labour ecosystemThe enforcement of the labour codes marks a pivotal moment in India’s economic reform journey. If implemented effectively, the unified framework promises greater transparency, stronger worker protections and a more predictable regulatory environment for businesses. While final state rules and clarifications are awaited, Friday’s notification marks the beginning of a new chapter – one where India’s labour laws, finally, speak in a single, coherent voice.(The writer is partner, people advisory services – tax, EY India)
new video loaded: What the Jobs Report Tells Us About the Economy
By Lydia DePillis, Claire Hogan, Stephanie Swart, Gabriel Blanco and Jacqueline Gu
November 21, 2025
A man experiencing homelessness said he hoped the government would focus on increasing accessibility to housing in its upcoming Budget.
Josh, 26, who is currently a resident at the night shelter Jimmy’s in Cambridge, said the availability of council housing and “move-on housing” – shared accommodation where people can receive support – was important.
Chancellor Rachel Reeves will deliver Labour’s second budget on 26 November.
Cambridge City Council received 1,139 homelessness applications between April 2024 and March 2025, which was a 13% rise on the previous year.
Josh said his focus was to get back into work after he completed his electrician qualifications, which he said were “just as hard as a degree in my opinion”.
He would like to see the Budget include more opportunities for continuing apprenticeships and more financial support for necessities such as course books.
Josh said he recently received a government grant to pay for essential job hunting equipment, such as a mobile phone, boots and suitable clothing.
He added that he would support a rise in taxes if they were spent on investing in public services, “especially the train lines into London”.
Andrew works in the security sector and lives in Peterborough in a home owned by the charity Hope Into Action.
The charity, which was set up in the city 15 years ago, owns 130 houses across the UK.
Andrew has beea living in one of the charity’s properties for two years, after experiencing homelessness for about “three or four months”.
“The charity saved my life,” he said.
He said renting in the private sector “can be expensive” but that people themselves have “got to budget as much as possible”.
Applications for housing to Peterborough City Council are also rising.
In 2024, it was contacted by 3,654 households facing homelessness, which was an 11% jump on the previous year.
And since 7 April this year, there have already been 2,333 approaches – an average of 70 a week.
The authority received nearly £1m last month to help tackle rough sleeping in the city.
Andrew said he recognised that public services needed to be paid for and that if tax rises needed to happen to pay for them then “you’ve got to make good” yourself.
HM Treasury was contacted for comment.
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