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Wednesday 10 April 2024 6:00 am  |  Updated:  Wednesday 10 April 2024 10:01 am

The Notebook: Afraid of the big bad wealth tax? You shouldn’t be

By: Neil Bennett

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Neil Bennett is global co-CEO of H/Advisors
Neil Bennett is global co-CEO of H/Advisors

Where the City’s top thinkers get a few things off their chest. Today , Neil Bennett, global co-CEO of H/Advisors, takes the pen to talk wealth taxes, the ONS, and why history’s the new rock and roll

How to get out of the fiscal black hole?

It may be the imminence of a new Labour government, but tax and spend has been coming up again and again. More specifically I have been discussing with political and policy friends how the new Labour government might possibly dig Britain out of the fiscal hole it is in and somehow find enough to invest in our crumbling public services.

So far Rachel Reeves, the shadow chancellor, has been long on rhetoric and short on policy, presumably to avoid scaring us all off. But if a new government is going to have anything to show at the end of five years, it needs to find significant sums to invest in schools, defence and of course the NHS. Simply imposing VAT on private tuition isn’t going to cut it.

The fact is, with government debt at £2.7 trillion, the public sector is broke. And additional borrowing risks sending the gilts market into another spiral.

One area that they could look to is personal wealth. Contrary to the doom-laden outpourings of the BBC, Britain’s ageing population is increasingly wealthy. These are all big numbers so I will approximate.
The net value of private housing (after deducting outstanding mortgages) has reached £7 trillion, more than 2.5 times national GDP. Private pension funds are worth around £3 trillion. And even total ISAs are worth around £1 trillion.

Add in some other investments, deposits, etc, collectively we have a net wealth of more than £12 trillion, because as individuals we have been as thrifty as our elected representatives have been wasteful.
It is hard, however, to impose a tax on housing wealth since few people have access to ready cash to pay it, and it would be deeply unpopular. But you could remove or partly remove tax relief on the sale of first homes (bad luck, Angela Rayner), which could raise a substantial annual sum.

More significant though is the wealth locked in pensions and ISAs. Imagine if the new government was to announce a one-off two per cent tax on all ISAs and pensions. That would raise around £80bn in one go, and it would be easy to collect. £80bn goes a long way, even in government terms.

Read more

Burnham refuses to rule out ‘exit tax’ as founders warn of wealth exodus

Andy Burnham with Labour MPs discussing party strategy at a conference setting

Now a two per cent investment tax wouldn’t be welcome, but it only represents one to two years of an annual management charge of those funds and could be quickly replenished with a rise in markets. Personally, I would be irritated rather than outraged, like many I suspect.

Sir Keir Starmer could present this as a new ‘national renewal fund’ that would go to rebuilding schools, hospitals and rebuilding our armed forces, as a way to quieten opposition. And he could make clear it was a one-off, just as Gordon Brown did when he imposed a windfall tax on the privatised utilities in 1997.

This is radical thinking and Labour will probably be too timorous to do it. But we need radical thinking to dig public finances out of the deep hole they’re in. Better ideas currently appear thin on the ground.

Glastonbury for history buffs

If history is the new rock and roll, as some claim, then it needs its own Glastonbury. And it has one in Chalke History Festival, which has grown from a modest start in 2011 into a vast extravaganza of the past. This year promises to be the biggest and extravaganzist of the lot.

Every hot historian I’ve ever heard of is doing a talk this year, from Antony Beevor and Max Hastings to Tom Holland and Dominic Sandbrook, and there are a few wild cards such as Michael Palin and James May, on the history of the car.

Day tickets go on sale on April 22nd – and at £20 are a lot cheaper than Glasto too.

ONS: OOO

Apparently civil servants at the Office for National Statistics are threatening to strike after being told to
work in the office at least two days a week. Hard cheese frankly. Remember these are the people that tried to sneak in our GDP numbers last year which showed we had never been the European laggard, as they had claimed for years. If they came into the office more often, perhaps their numbers would add up better.

Read more

An emboldened – or desperate – new government will look to wealth taxes

Andy Burnham speaking at a Labour Party event, addressing current political issues, with a focused and determined expression.

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