Allies of Rachel Reeves have claimed that Angela Rayner made an error in her maths in a leaked memo calling for tax increases. Economists have publicly questioned the deputy prime minister’s estimates since the document was leaked by The Telegraph last week. Treasury figures also showed that she would generate far less revenue than she suggested. Ms Rayner’s proposals, first circulated in mid-March, contradicted the Chancellor’s approach, who has instead aimed to raise money through spending cuts.

The memo detailed eight options for tax increases and estimates for the additional revenue that could be generated for most of them. It suggested that tax revenue could bring in between approximately £3 billion to £4 billion a year. However, Treasury insiders, appearing to defend Rachel Reeves, told the outlet they believed some of the figures cited in the memo were too high and, in reality, the proposals would generate less money than claimed.

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Treasury insiders have not pinpointed exact inaccuracies in the memo, but experts have cast doubt on Ms Rayner’s calculations.

Abolishing inheritance tax relief for AIM-listed shares (a sub-section of the London Stock Exchange) was referenced in the memo, which could potentially generate between £100 million and £1 billion annually.

However, tax expert Dan Neidle, of Tax Policy Associates, clarified that the actual figure would likely be at the lower end of the scale. He said: “We’d be looking at around £100 million rather than £1 billion.”

There has also been talk of reinstating the pensions lifetime allowance, abolished by then-Chancellor Jeremy Hunt in March 2023, which previously limited pension savings to £1,073,100 before incurring additional tax.

Reinstating the allowance at the same level could potentially lead to an £800 million a year boost, but pension experts have suggested that might not be the case.

Steve Webb, a former pensions minister during the Conservative-Liberal Democrat coalition government, said the move would raise less money than expected.

He argued that steps would need to be taken to protect those who had saved under the assumption that the limit had been abolished.

Labour had initially pledged to bring back the allowance, but changed their minds in the run-up to the general election.

Mr Webb said: “Bringing back the lifetime allowance would not be a quick revenue raiser. To avoid charges of ‘retrospective’ taxation, the Treasury would need to protect people over the new limit and spend time designing that arrangement. They would also need to avoid the risk of NHS consultants retiring early because of pension tax limits.

“This either means a higher lifetime allowance, which reduces the tax take, or a messy carve-out for doctors which many would see as unfair. It could take years to get serious money from bringing back the lifetime limit.”