𝓤𝓷𝓲𝓽𝓮𝓭 𝓝𝓮𝔀𝓼

A former cabinet minister has urged Rachel Reeves to explore new ways to plug the holes in the nation’s finances. Anneliese Dodds, a former shadow Chancellor under Keir Starmer who served as international development minister until February, called for “an open conversation” on tax ahead of the budget in the Autumn.

She told The Guardian: “It’s important that we have a longer-term approach. That does mean asking and confronting difficult questions around our fiscal position, around taxation. But if we’re open and honest about the nature of the challenge that we face, we cannot duck that.”

The former minister, who quit her role earlier this year in response to the Prime Minister’s decision to slash the foreign aid budget to fund an increase in defence spending, has urged the Chancellor to look to amend her fiscal rules to allow a hike in defence spending rather than drawing funds from further cuts.

She added: “Now is a time when we’re seeing forces outside our country’s control impacting on our security.

“It’s important to have an open conversation with the public and say that means we will need to change when it comes to tax.

“That needs to be done in a way where those with the broadest shoulders take more responsibility.”

Whilst Dodds stopped short of explicitly calling for a wealth tax, she did implore the Treasury to “look carefully” at the work of economist Arun Advani, who has written extensively about one off levies on millionaire households to raise revenue.

The idea has long been discussed within Labour circles, although there is fierce debate over how such a tax would work and whether assets, earnings or a combination of the two would be subject to tax.

Critics have argued that the imposition of a wealth tax would lead to “capital flight” with wealthy Brits and residents opting to move out of the country to avoid the tax, potentially taking investment and employment with them, costing the country more in the long term.

Earlier this year, business secretary, Jonathan Reynolds dismissed proposals for an annual 2% tax on assets over £10m as “daft”.

Dodds continued: “There’s no silver bullet here, and I’ve been quite cautious about claims in the past that there’s one single change to tax that could suddenly, immediately inject enormous amounts of money into the government coffers without any further implications.

“That’s simply not the case. There will be consequences.”