Labour Conference 2024: Starmer hints tax rises are on the way

Reeves promises “a Budget to rebuild Britain”

In their conference speeches new Chancellor Rachel Reeves and Prime Minister Sir Keir Starmer both struck a careful balance between lofty ambition and managing expectations.

Reeves began her keynote speech on Monday by warning that, because of the legacy the Conservatives had left her party, “the road ahead is steeper and harder than we expected.” That would mean “tough decisions”, she continued, but these would not “dim our ambition for Britain”.

She said the 30 October Budget would be one of “real ambition”, which would “deliver the change that we promised”. It would be “a Budget to rebuild Britain”, but with every choice “within a framework of economic and fiscal stability”.

There was little new policy in the speech, or indeed at the conference as a whole. On tax the only new measures related to HMRC and improving tax compliance (see below). Reeves reiterated a promise to recoup money from Covid contracts, appointing a Covid Corruption Commissioner. She confirmed that the government will produce a new industrial strategy next year, with a green paper published alongside the Budget.

This theme of taking care with public money also found its way into Starmer’s leader’s speech on Tuesday, with the Prime Minister saying that his government “will make every penny work for you because we will root out waste and go after tax avoiders”.

More generally the themes of Starmer’s address were change, stabilisation and ‘national renewal’, though he stressed the challenges of achieving the latter. It would require a “long-term plan” based around Labour’s five missions to rebuild Britain, of which the most relevant to tax is ‘Kickstarting economic growth’. Reeves too referred to “the five missions that will comprise a decade of national renewal” in her remarks. Any idea that these missions may have been a campaigning tool rather than a guide for governing should be firmly put to bed by the focus on them during the conference (see ‘Kickstarting economic growth’, below).

In another speech light on new policies – unsurprising perhaps with the party’s manifesto less than four months old– probably the most noteworthy part was a section in which, after attacking the Conservatives for ducking difficult choices, the PM set out some of the hard trade-offs the country faces, in each case with a clear implication of the direction he intends to travel in: if we want to maintain support for the welfare state we’ll need to act against benefit fraud; if we want our children to be able to own homes we need to build them across the country; and if we want good public services we will need to fund them, was the gist.

Tax administration – minister takes chair to drive priorities

It was announced during the conference that Exchequer Secretary James Murray has been made the Chair of HMRC’s Board and that a Digital Transformation Roadmap will be published in the spring.

Speaking at a fringe meeting Murray explained that his taking on the post of chair was about getting HMRC focused on the new government’s agenda for the tax authority. This has three main strategic priorities: reducing the tax gap, modernisation (that is, digitalisation) and improving customer service.

On reducing the tax gap Murray noted that error and carelessness are two of the largest components of the gap and said that they should be a priority to tackle. Modernising how people interact with HMRC so people who want and need to do this can do it straightforwardly is important. On customer service he conceded that this is “not in a great place” but said it is not just about ‘throwing money at more call handlers’. Getting digitalisation right is the long-term way to improve the other two priorities, he suggested.

Arun Advani of the University of Warwick, speaking at the same fringe meeting, emphasised the importance of making better use of HMRC data, while Robert Palmer of Tax Justice UK said Labour deserved credit for taking tax administration seriously, referencing the party’s April 2024 ‘Plan to close the tax gap’.

Murray also spoke about the launch of a consultation on e-invoicing, announced alongside his appointment as Chair. This “will transform the ways businesses do invoicing, reducing errors in the system”, he said. The Treasury press release states that e-invoicing “can significantly reduce administrative tasks, improve cash flow, boost productivity, introduce automation, and reduce errors in tax returns – all helping to close the tax gap.”

Announced on the same day – to coincide with Reeves’ conference speech – was that new staff are expected to join HMRC’s training programme in November as 200 additional offer letters have been issued as part of the 450 letters already sent. This is part of HMRC’s plans to recruit an additional 5,000 compliance staff to help close the tax gap.

Additionally a new Digital Transformation Roadmap, to be published in Spring 2025, will set out HMRC’s vision “to be a digital first organisation underpinned by customer insight”. The roadmap will, the announcement assures us, include measures to ensure digital inclusion and support for customers who cannot yet interact digitally.

Reeves described the measures as part of a crackdown on tax avoidance and evasion, adding: “this government will not sit back and indulge the minority who avoid paying the taxes that they owe.”

Personal taxes – ministers maintain pre-Budget silence but rumours abound

There were plenty of calls at the conference for tax rises on the wealthy, but ministers gave little away. Meanwhile the government may be backtracking on plans to strengthen non-dom reforms.

Party members, union representatives and a handful of backbench MPs had plenty to say about the need to raise taxes on the well-off with a widespread expectation that the Chancellor will announce increases of some sort to capital gains and inheritance taxes in next month’s Budget, as well as tax treatment of pension contributions. (We speculated on these here.) These culminated in Wednesday’s vote in support of a wealth tax (see below).

Matt Wrack, general secretary of the Fire Brigades Union, told a fringe meeting that Rachel Reeves had been wrong to rule out particular tax increases. “Some have done very well and should pay more,” he argued, to applause.

At a separate meeting, Richard Burgon, an MP who was suspended from Labour after voting against the government over the two-child benefit cap, called for a wealth tax of two per cent on assets over £10 million, saying this would raise up to £24 billion a year.

Chancellor Rachel Reeves did not address the question of a wealth tax on the conference floor but dismissed the idea in a pre-conference interview with the Sunday Times, saying: “I’m not looking at creating some new tax or a wealth tax.”

At a fringe meeting on tax reform Robert Palmer (Tax Justice UK) expressed support for increases to capital gains tax (CGT) and noted that Reeves had historically called for these. Longer term it would be ‘great’ to see higher taxes on extreme wealth, he added. Arun Advani (University of Warwick) suggested government should increase the CGT rate but introduce an investment allowance and say it is only the bit above that which is taxable. New MP Yuan Yang, at the same meeting, said the challenge was that lots of people feel they are already paying more tax but getting less out of the system.

One change already promised by Labour is a strengthening of the legislation ending non-dom tax status. Reeves reaffirmed her commitment to “end the non-dom tax loopholes” in her conference speech, but the day after the conference ended rumours began circulating that she was planning to (in the Financial Times’ words)  ‘water down’ her plans in the face of Treasury fears that some of the measures may fail to raise any money. “We are looking at the details of our proposals,” said one unnamed government official quoted by the FT. “We will be pragmatic, not ideological. We won’t press on regardless, but we are not going to abandon this completely.”

The fears appear to relate to Labour’s two proposed major changes to the Conservatives’ plans, which involve removing protection from UK inheritance tax for foreign gains and income held in trusts, and scrapping a planned 50 per cent tax discount for non-doms bringing foreign income to the UK in 2025-26. Labour assessed in April that these would together raise an extra £1 billion plus a year.

Economy motion – Take from the rich, not pensioners, say delegates

On the final day of the conference, delegates narrowly backed a motion calling for the government to reverse its decision to means test the winter fuel payment and instead introduce a wealth tax.

The motion is not binding on the government but will embarrass ministers who had made a strong defence of their actions during the debate and elsewhere at the conference. Speaking in the debate, Liz Kendall (DWP Secretary) stated that cutting winter fuel payments on the poorest pensioners wasn’t “a decision we wanted or to expected to make”. However, she continued, the government has promised taxpayers that they can be trusted with their money, and action was needed as the Tories left a £22 billion black hole in the economy. She claimed that the Labour government has helped the poorest pensioners more in the last two months than the Tories did in the last 14 years.

The motion was proposed by the union Unite, whose general secretary, Sharon Graham, spoke in the debate. She questioned how the government could cut the winter fuel allowance for pensioners and leave the super-rich ‘untouched’. “I keep hearing the wealth tax is too difficult and would take too long, I say that is absolute rubbish”, said Graham. She described the decision as ‘wrong’, arguing that with the UK being the sixth richest country in the world, “we have the money”.

Alan Tate from the Communication Workers Union also supported the motion. He claimed that the work the government has begun has been “overshadowed” by the winter fuel cut decision. He stated: “The tough choice is not about switching off pensioners' heating this winter. The real choice is about picking up the phone of the tech giants like Amazon and ultra-wealthy and making them pay their fair share of tax”.

The motion (in full on pages 10-11 of this document) “resolves that Labour… will commit to”:

1. Reverse the introduction of means-testing for the Winter Fuel Allowance
2. End fiscal rules which prevent borrowing to invest
3. Commit to public services and infrastructure, ensuring any public expenditure gaps, at a minimum, are restored through taxing wealth and that there are no further cuts to welfare provision for working people and pensioners.
4. Introduce a wealth tax on the top 1%, an excess profits tax, equalise capital gains tax with income tax and apply national insurance to investment income
5. Deliver the investment necessary for a workers’ transition to Net Zero

Business taxes – a map but little movement

There was a huge presence from business representatives at the conference, but business taxes were hardly on the agenda.

At a fringe event Exchequer Secretary James Murray spoke enthusiastically about the promised business tax roadmap, saying it would help people make investment decisions.

A number of ministers talked about the government’s planned reforms to the apprenticeship levy. Economic Secretary Tulip Siddiq said ministers had felt it wasn’t being used properly. Keir Starmer promised to “give businesses more flexibility to adapt to real training needs” and said new foundation apprenticeships would be “the first step to a youth guarantee that will eradicate inactivity and unemployment for our young people – once and for all”. 

Corporation tax was little discussed at the conference. Matt Wrack of the FBU was a rare voice arguing it should rise, notwithstanding the government’s commitment – repeated by Rachel Reeves in her speech – not to push it above the current 25%.

Nor was there anything new on business rates. Reeves bemoaned “high street businesses punished by our outdated system of business rates” but we will have to wait until the Budget – or later – for news of the government’s plans in this area.

Much effort was made at the conference to dismiss the idea that the government has to choose between pleasing business and pleasing unions, with CBI and TUC leaders taking to the stage together at the Labour Business reception and Rachel Reeves telling the conference in her speech that Labour is “proudly pro-business and proudly pro-worker”.

Kickstarting economic growth

The centrality of growth to enabling the new government’s ambitions was emphasised across the conference in cabinet members’ speeches and an abundance of fringe meetings on the theme.

In a speech with 17 references to growth, Rachel Reeves told party members that: “Growth is the challenge. And investment is the solution.  Investment in new industries, new technologies, and new infrastructure.”

The forthcoming “new industrial strategy for Britain” will, Reeves said, be a strategy “for driving and shaping long-term growth in our manufacturing and service sectors”. It will be “[a] strategy to unlock investment, create jobs and deliver prosperity”, and “to help break down barriers to regional growth, speed ahead to net zero and clean power by 2030, and build prosperity on strong and secure foundations”.

Speaking at a fringe meeting Exchequer Secretary James Murray similarly emphasised that ‘boosting investment’ and ‘boosting growth’ would be the key for the Budget.

On the conference platform, Peter Kyle, Secretary of State for Science, Innovation and Technology, said that his key focus was on making the UK the most attractive place to invest, start, and grow businesses in the fields of science and technology. He emphasised that this was not only the most sustainable route to wealth creation but also the best way to secure employment and stimulate economic growth.

Ian Murray, Secretary of State for Scotland, also emphasised Labour’s commitment to economic growth, particularly through green energy initiatives, suggesting that GB Energy, which will be headquartered in Scotland, would create jobs and drive down energy bills.

On the fringe contributors queued up to talk about the priority that should be attached to growth and investment. Dr Lukasz Rachel, UCL Assistant Professor of Economics, said UK growth has been “very weak” since the financial crisis, and lags behind other G7 countries. “Growth is about change, so an environment that is conducive to growth is conducive to change. There’s plenty of scope to do that through reform to the tax system so people work more and work more productively,” he added. 

Former Financial Times and The Economist journalist Yuan Yang, who will be one of the lead MPs on the all-party parliamentary group (APPG) on responsible tax, added: “When we talk about growth we have to ask what growth are we looking for? Lots of growth hasn’t benefitted people in less well-off communities. We should be asking our communities and groups what we should be doing to support the essentials and we should be doing that through a fair and progressive tax and benefits system.” 

Emily Lydgate, co-director at the UK Trade Policy Observatory, said growth was fuelled by certainty, so welcomed the announcement that Labour has committed to a written trade strategy. Northern Ireland Secretary Hilary Benn added: “Political stability is crucial in encouraging business investment,” while Professor Anand Menon, director of UK in a Changing Europe, warned: “This government has a longer-term view of long term than other governments but it’s [still] hard to get them to think in anything more than medium terms.” 

How long-term is long-term? Dame Meg Hillier, the new chair of the Treasury Committee, talked about 10-year funding cycles. Mathu Jeyaloganathan, Chief Investment Officer of the London Borough of Camden’s Community Wealth Fund, said: “We need to work towards 50/100 year horizons, not a five-year term.”

Dan Norris, Metro Mayor for the West of England, warned against “growth for growth’s sake”, adding: “A baby born today will have seven careers in their lifetime, and four of them haven’t been invented yet.” 

John Keefe, Chief Corporate and Public Affairs Officer of Getlink Group, which manages the Channel Tunnel, said: “The one thing businesses ask for is clarity: where should we invest, employ, innovate? Just having clarity that this is the environment we would be operating in for a reasonable period of time.” 

Green taxes – might UK take a stronger role internationally?

As with taxing the wealthy, green taxes are an area where Labour activists and campaigners are pressing ministers for a more radical approach.

At a fringe event on taxing polluters, panellists encouraged the UK government to show leadership to inspire others. Liam Byrne, the new chair of the Commons Business Committee, hoped the UK could set a pathway to carbon taxes for the world. However he warned that raising some taxes in this space would be controversial – fuel duty for example. He also noted that pension funds have big investments in oil and gas, so taxes on them affect ordinary people. It will take a lot of political imagination to develop environmental taxes that can command public support, he said.

Avinash Persaud, an economist and banker whose roles include being Special Advisor on Climate Change to the President of the Inter-American Development Bank, wondered whether the minimum corporate tax initiative could be a model for an international minimum tax on oil and gas companies.

At a separate event, Barry Gardiner, an MP who served briefly as Shadow Climate Change Secretary, attacked what he called the ‘perverse subsidies’ the UK provides to the oil and gas sector. Without the windfall tax (Energy Profits Levy) we would have one of the most generous tax regimes in the world for these companies, he claimed.

The government of course plans to increase and extend the Energy Profits Levy, as well as going ahead with a UK carbon border adjustment mechanism by 2027. There is speculation they may also allow fuel duty to rise rather than continuing to cancel scheduled rises, as well as not extending the temporary 5p cut which runs out in March 2025. Ministers have so far been unwilling to comment on this.

In his keynote speech, Ed Miliband, Secretary of State for Energy Security and Net Zero, did not talk directly about green taxes. Instead he emphasised Labour’s commitment to clean energy, arguing that climate action is not just about environmental responsibility but also about “economic justice”. He criticised the Conservative government's handling of the energy sector, claiming they have left the UK vulnerable to global fossil fuel markets.

Conference news in brief

Keir Starmer promised “the biggest levelling-up of workers’ rights in a generation” in his speech, but are Labour’s plans on track? Notwithstanding promises that a ‘100 days’ deadline for action will be met, there are widespread reports of differences between ministers, business and unions over issues ranging from whether ‘day one’ rights will begin on the first day of employment or after a probation period, to whether some kinds of ‘non-exploitative’ zero-hours contracts will continue to be allowed.

Rumours that the government might scrap the single-person council tax discount were quashed ahead of the conference. The Telegraph reported on Sunday that Treasury officials had said that the Chancellor would not scrap the relief. However there are rumours that the government might announce an overhaul of council tax bands, which were last valued in 1991.

Hollywood actor Andy Serkis, best known as Gollum in the Lord of the Rings series, spoke at an event on the creative industries, discussing the need for the UK to nurture visual effects skills and facilities via tax reliefs to stop productions moving overseas. He said that after the principal photography stage of many productions, “the tax incentives aren’t there to go on to the next stage of the project,” adding: “We are at the forefront and we’ve got the potential, but we have to find ways of upskilling and educating.”

At a fringe event held by think tank Demos, Sir John Curtice explored Labour’s election objectives, one of which was to “avoid being seen as a high tax party”. “As a consequence,” he added, “the Labour party agreed to not one, but two cuts to National Insurance. I would have rejected the second NI rise on the grounds that it was unfunded.” Curtice said that tax policy was relatively unimportant with voters when compared to other issues, saying it correlated poorly with voting intention whereas people’s evaluation of the NHS “was very strongly related to whether they wanted to vote for the Tories.”

Organisations including HSBC, the Scouts and Young Enterprise took part in a fringe discussion on financial education. HSBC have worked with the Scouts to support Money Skills Activity Badges for Beavers and Cubs, and with Young Enterprise to produce resources for primary schools. The importance of involving young people in the planning and production of resources in this area was emphasised.

In his conference speech Shadow Science Secretary Peter Kyle stressed the importance of ensuring the benefits of technological advancements are shared more fairly across society, to reduce digital exclusion and promote economic equality.

In his conference speech, Ian Murray, Secretary of State for Scotland, criticised the Scottish government's fiscal policies, claiming that tax decisions in Scotland had “cost more than they raised” with working people “paying more but getting less”. He suggested that cuts to essential services have been made to cover for SNP’s “financial incompetence”. Anas Sarwar, Leader of Scottish Labour, shared this disappointment with the SNP's tax and economic policies, highlighting their ‘failure’ to address growing inequality in Scotland.

In her conference speech Eluned Morgan, the new First Minister of Wales, emphasised Wales's preparedness to work with the UK Labour government, suggesting that “we have a once in a generation opportunity to build a fairer, greener and more prosperous future for everyone”. Jo Stevens, Secretary of State for Wales, criticised the previous Conservative government for neglecting Wales and praised the Labour government for supporting Welsh steel communities, saying “a Labour government will always back workers and businesses whatever happens”.

New Treasury Committee chair Dame Meg Hillier told CIOT that she was looking forward to the other members of her committee being elected and very much hoped to have them in place by the Budget, to carry out the traditional post-Budget questioning of the Chancellor. The committee is expected to have seven Labour members, three Conservatives and one Liberal Democrat. However it is unclear whether the Conservative members of select committees will be in place before the Conservative leadership contest concludes on 2 November.