Angela Rayner arriving at Downing Street (Image: Getty)
Angela Rayner’s full memo to Rachel Reeves which was leaked earlier this week has been released in full. It provides all the details of what was being proposed by the Deputy Prime Minister behind closed doors.
The memo with a string of proposals was submitted in the middle of March before the Chancellor unveiled her spring statement on March 26. The Telegraph, which obtained the documents, said there were 10 proposals were made in the text – including eight tax rises and two benefit changes.
1. Raises bank surcharge to 5%
Ms Rayner suggested raise the bank surcharge to 5%. When corporation tax increased in April 2023, the previous Chancellor cut the banking surcharge paid by banks on profits from 8% to 3% as an offsetting measure.
A surcharge to 5% could still raise £500-700m a year and take the rate of tax paid by banks on their profits back to the 2008 levels of around 30%.
2. Remove inheritance tax relief for AIM shares
Sir Keir Starmer’s second in command called for the removal of Inheritance Tax (IHT) Relief for AIM Shares completely.
Shares designated as ‘not listed’ (notably AIM shares) receive 50% relief (reduced from 100% relief at Autumn Budget).
Removing the relief completely for AIM shares could raise between £100million to 1 billion per year.
3. Remove dividend allowance
The memo also called for the removal of the dividend allowance. Tax is not paid on dividend income that falls within a person’s income tax Personal Allowance. There is also a £500 dividend allowance each year.
It was reduced from £2,000 to £500 over the past few years but removing it altogether would be worth £325 million a year.
4. Freeze income tax threshold
Ms Rayner also called for a freezing of the additional rate income tax threshold. The additional rate of income tax (45%) applies to income above £125,140.
The Chancellor announced that income tax thresholds will remain frozen until 2028 before being uprated.
5. Increase annual tax on dwellings
The memo made another point of an annual tax on enveloped dwellings.
It said: “The Annual Tax on Enveloped Dwellings could be increased. Our main arguments to increase this tax are that (i) we are leaving money on the table by setting it too low, potentially c.100-200m a year; and (ii) the people who pay it are nearly exclusively living in big homes in exclusive London postcodes (over 8 in 10 are in London and over 7 in 10 in Westminster or Kensington and Chelsea).”
6. Close stamp duty loophole
The sixth point was to close the commercial property stamp duty loophole. The memo suggested closing it could raise up to £1 billion a year from the commercial property market. It added that it was “an obvious loophole” that is “impossible to explain to the public”.
7. Bring back pensions lifetime allowance
The list added moving higher and additional rate Dividend Taxes closer to Income Tax and reinstating a pensions lifetime allowance.
Forer Chancellor Jeremy Hunt in March 2023 announced the abolition of the pensions lifetime allowance.
The memo is believed to have said: “The lifetime allowance was a limit on the total value an individual’s private pensions could reach before high tax rates were applied. One option would simply be to reinstate the lifetime allowance at around its previous level of £1,073,100. Costing such a reform is difficult, but given that the OBR’s assessment was that abolishing the allowance cost £800 million a year, reversing it might be expected to raise almost as much. Another option would be new higher lifetime allowance, for example the last Labour government set the lifetime allowance at £1.8 million in April 2010, although that would raise less than the 800m.”
8. Reversing Child Benefit charge
Two other proposals put forward for potential consideration but would be more contentious and take longer to deliver included reversing the changes to the High Income Child Benefit charge and tightening migrant access to the welfare system.
Rachel Reeves slammed for ‘leading ideological charge’ against nature with growth blitz
Rachel Reeves has been slammed for breaking nature promises (Image: Getty)
Rachel Reeves has been accused of “leading an ideological charge” against nature since coming into power. The RSPB and The Wildlife Trusts warned the Government’s Planning and Infrastructure Bill undermines its commitment to protect the natural world.
Craig Bennett, chief executive of The Wildlife Trusts, said: “Before the general election, Labour promised to restore nature. “Under a year later, the Chancellor is leading an ideological charge against the natural world despite it being the very foundation of the economy, society and people’s health. Promises have been broken, and millions of people have been betrayed.
“The Government’s Planning and Infrastructure Bill, in its current form, fundamentally undermines its commitment to protect nature.
“The so-called Nature Recovery part of the Bill is a Trojan horse – it’s a misnomer because, in reality, it is a licence to destroy.
It replaces vital nature protections with a weaker substitute, and has been described by the Government’s own nature watchdog as ‘environmentally regressive’ because it puts irreplaceable habitats and threatened species at risk.”
The Bill, which finished committee stage on Thursday, was introduced in March, following months of claims from the Chancellor that nature protections were a blocker on development and pledging action to spur on growth.
But the Office for Environmental Protection has declared that the Bill will cause environmental regression.
It overrides existing habitat and nature protections, which the Government considers to be a barrier to housebuilding and economic growth.
Green groups have warned that any commitments required of developers to restore and improve nature will not be guaranteed to benefit the communities who lost their local natural spaces.
Compensation could take place miles away or even in another county.
The groups said places such as the New Forest, Surrey Heaths, Peak District Moors, Forest of Bowland and rivers such as the Itchen in Hampshire will no longer be as strongly protected from development.
Beccy Speight, RSPB chief executive, said: “Despite engaging in good faith with the UK Government for many months, it’s now clear that the Bill in its current form will rip the heart out of environmental protections and risks sending nature further into freefall.
“The fate of our most important places for nature and the laws that protect them are all in the firing line. The wild spaces, ancient woodlands, babbling brooks and the beautiful melody of the dawn chorus – it’s these natural wonders that delight people all over the country and support our physical and mental health that are under threat. That cannot be allowed to stand.
“The evidence clearly shows nature isn’t a blocker to growth. The government has identified the wrong obstacle to the problem it’s trying to overcome, and that has led it to the wrong solutions. With no meaningful amendment in sight, the complete removal of Part 3 of the Bill is the only responsible option left.”
A Government spokesman said: “We completely reject these claims. The government has inherited a failing system that has delayed new homes and infrastructure while doing nothing for nature’s recovery, and we are determined to fix this through our plan for change.
“That’s why our Planning and Infrastructure Bill will deliver a win-win for the economy and nature by unblocking building and economic growth, and delivering meaningful environmental improvements.”
