Top Economists Snub Andy Burnham Over Wealth Tax Concerns

Lord Jim O’Neill has declined a formal role in Prime Minister Andy Burnham’s government, stalled by a deadlock over a potential wealth tax. The former Goldman Sachs executive remains in talks with Burnham, but according to reporting from City AM and London Insider, O’Neill will not commit to a position while the Prime Minister refuses to rule out the tax policy and O’Neill seeks to maintain oversight of his business interests and financial shareholdings.

A Vacuum of Economic Expertise

The administration is now operating without the high-profile economic weight Burnham’s allies promised before he became an MP. One month into the premiership, and with an Autumn Budget date already set, neither O’Neill nor former Bank of England chief economist Andy Haldane or ex-Office for Budget Responsibility chair Richard Hughes have accepted government roles, City AM reports.

The trio was widely reported to be advising the Prime Minister prior to the Makerfield by-election. According to London Insider, their perceived proximity to Burnham was credited with soothing investor nerves before he took office.

To bridge the gap in policy guidance, Burnham has reportedly retained Neil Amin-Smith, a former adviser to Rachel Reeves, according to City AM and London Insider.

The Battle Over the £10 Million Threshold

The recruitment struggle has laid bare a rift within the Labour Party over how to tax the rich. A faction of MPs who backed Burnham’s bid for the premiership—including Barry Gardiner and Dawn Butler—have pushed for a two per cent tax on assets exceeding £10m. They claim the measure would generate tens of billions of pounds, according to London Insider.

Moderate voices, including members of the Labour Growth Group who supported Wes Streeting, are pushing a different agenda. They advocate for a wealth tax designed to incentivize investment by equalizing capital gains taxes with income taxes while keeping specific allowances, City AM reports.

Andy Haldane warned against the risks of such a strategy, cautioning in an interview with City AM against using tax increases as a cash cow.

Internal Friction and Policy Chaos

The delay in appointments is triggering backlash from within the party. One Labour strategist expressed surprise that Burnham had yet to appoint economic advisers. Another went further, suggesting that Louise Haigh was running policy with ChatGPT, according to reports from City AM and London Insider.

The City Braces for Capital Taxes

While the government deliberates, the City of London is preparing for tax increases from Chancellor John Healey. Ruth Gregory, deputy chief UK economist at Capital Economics, stated that these rises could nearly equal the £26bn in revenue raised by former Chancellor Rachel Reeves last year.

Because of manifesto commitments to avoid raising income taxes, national insurance, or VAT, Gregory noted that the government may instead target wealth, capital, and income, according to London Insider.