The letter insist that Reeves ‘must find additional tax revenue at the coming Budget’
The Chancellor has been told she must go after the wealth of wealthy pensioners and homeowners to stop Britain sliding further into the red.
In a hard-hitting letter to the Chancellor, former Treasury chiefs and leading economists have warned that the UK’s finances are “not on a sustainable path” and called for a radical shift in both tax and investment policy.
The group – which includes Lord O’Donnell, the former Cabinet Secretary, and Lord O’Neill of Gatley, a former Treasury minister – demanded that “better-off older people, especially those with substantial property and pension wealth, make a much larger contribution” to cover the soaring cost of the NHS, pensions and social care.
The letter praises Ms Reeves for earlier decisions to boost growth by cancelling planned cuts to capital spending – a move that unlocked £113billion of extra investment in the current Parliament.
It said: “This provided a crucial boost across the fundamental infrastructure that forms the bedrock of our economy, from research and development to schools and hospitals.”
The letter insisted that Reeves “must find additional tax revenue at the coming Budget” (Image: Getty)
But it added: “While this represents a useful first step in addressing the investment gap that has held back growth and prosperity for over a decade, a much bolder approach is required to meet the economic, environmental and geopolitical challenges we face as a country.”
The signatories warned that ministers have been too focused on “arbitrary, short-term targets determined by highly volatile forecasts” rather than tackling long-term risks such as climate change and an ageing population.
They wrote: “The only route to fiscal sustainability lies in finding a more sustainable growth model for the economy as a whole.
“This will not be achieved without a significant further increase in public investment. On the current trajectory, public investment is set to remain flat as a share of GDP… substantially lower than both the OECD and the UK’s own post-war averages.”
The letter insisted that Reeves “must find additional tax revenue at the coming Budget”, making clear that the axe cannot fall only on working families.
They wrote: “There are progressive, pro-growth options available if the government is willing to undertake more fundamental reforms to the tax system.
“Above all, the tax and pension system needs to be rebalanced so that better-off older people… make a much larger contribution to addressing the fiscal pressures.”
Other recommendations include adopting IMF-backed reforms to Britain’s fiscal rules, moving to just one assessment a year to avoid constant tinkering, and taking greater account of long-term risks.
“The fiscal constraints that the UK faces are real, but they are not inescapable,” the letter concluded.
“We have set out the elements of a credible strategy to boost economic growth and prosperity, strengthen fiscal sustainability, and enhance business and investor confidence.”
The intervention piles fresh pressure on the Chancellor as she prepares for a November Budget expected to reveal a £20–40billion shortfall.
Having already ruled out increases to income tax, national insurance or VAT, critics believe Reeves has little choice but to turn to wealth and property taxes.
