Labour’s biggest union backer is demanding that Rachel Reeves imposes a wealth tax on the richest 1 per cent to give public sector workers a pay rise.
Ahead of the Chancellor’s first Budget in October, Unite has put forward a motion at the Trades Union Congress to demand the levy to raise billions for public services.
The motion from Unite, which gave Labour almost £2 million in the year up to the election, says such a tax would raise £25 billion a year and could be used “to give public sector workers a 10 per cent pay rise”.
The Accord union, which represents workers in banks and the financial services sector, has called on Ms Reeves to bring capital gains tax in line with income tax. It also urged her to close inheritance tax loopholes and extend National Insurance.
Another group of unions has called for a widespread programme of nationalisation. Unison, PCS, RMT and Aslef urged the Chancellor to bring about the public ownership of energy, water, transport, mail, broadband, education, health and social care. Usdaw, the shop workers’ union, called on her to abolish the two-child benefit cap.
The motions will be discussed at the TUC next month.
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On Thursday, Kwasi Kwarteng, the former Tory chancellor, predicted that Labour would bring in a wealth tax by the next election to pay for public sector wage increases.
He told GB News: “I think there’ll be more and higher wage settlements, which will be paid for by higher taxes, and that’s what the Treasury are clearly spinning and suggesting what’s going to happen.
“And my question is, what taxes are they going to put up? They will probably try and tax the rich. So I strongly suspect that before the end of the Parliament we’ll have some form of mansion tax, a wealth tax.”
Ms Reeves has opened the door to tax rises, having accused the Tories of having left a £22 billion black hole in the public finances.
Last month, she told MPs it was time to “level with the public” about the difficult decisions that may be needed, including public spending cuts.
It is believed she could try to claw back money by closing inheritance tax loopholes and aligning capital gains tax rates with those of income tax.
The demand for a wealth tax on the richest 1 per cent has received the backing of Jeremy Corbyn, the former Labour leader, who is now an independent MP.
On Thursday, he wrote on X: “Austerity has decimated our communities and pushed millions of people into poverty. It would be a catastrophic mistake to repeat this failed economic experiment.”
He referred to a claim by an Oxfam report that the richest 1 per cent in the country hold more wealth than 70 per cent of Britons, adding: “Stop cutting our services and tax the rich instead.”
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The Unite motion states: “Congress believes that waiting for money from growth alone will not deliver the investment needed to fix our broken economy and restore living standards to public sector workers. Different choices will need to be made, including on taxation, further borrowing and collective bargaining.
“Congress notes that a wealth tax on the richest 1 per cent could restore local authority funding to pre-austerity levels, or give public sector workers a 10 per cent pay rise and fill current NHS vacancies. Congress demands a wealth tax on the richest 1 per cent to raise £25 billion per year for our public services and the NHS.”
The union also called for the return of collective bargaining to drive up workers’ pay, and the automatic right to trade union recognition.
The RMT motion said Labour could not rely on the hope of economic growth to fund public service improvements.
“There is an urgent need for Labour to deliver a significant real-terms increase in public spending and investment, both as an immediate necessity and as part of a longer-term economic strategy for sustainable growth,” its motion said.
“Congress therefore agrees that the General Council will urgently agree a high-profile and constructive public campaign to strongly make the case for a more radical, progressive and credible economic strategy for national renewal.
“This campaign will include making the case for reforms to the unnecessarily restrictive and arbitrary fiscal rules as well as reforms to taxation, introduction of wealth taxes, and a redistribution of wealth. This campaign to be launched as soon as possible to influence the next and forthcoming Budgets and to include lobbying of MPs and the Cabinet.”
Accord called for a “fair” tax system in its motion, saying: “Congress calls upon the TUC to make the case for a more progressive taxation system, including equalising capital gains tax in line with income tax, so that all income is taxed equally regardless of whether it comes from wealth or work.”
Other changes advocated by Accord include closing inheritance tax loopholes, including allowances for agricultural and business land and special treatment of alternative investment market shares.
The union also demanded applying National Insurance to investment income so that all income is taxed at the same level.
Usdaw’s motion calls for an end to the “two-child limit”, which removes certain benefits for third and subsequent children. Its motion said: “Congress calls on the Labour Government to positively promote properly funded social security and employment reform as an integral part of a functioning modern society.
“As a first step, Congress calls on the government to urgently convene a taskforce that sets out a timeframe for introducing measures that address the injustices and flaws within the current system… The task force must commit to removing the five-week wait and abolishing the two-child limit.”
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