Rachel Reeves Urged to Address Wealth Inequality in Upcoming Budget

Rachel Reeves, the UK’s Shadow Chancellor, faces increasing pressure to address the growing wealth gap in the upcoming Budget. A new report from the Fairness Foundation reveals that the disparity between the richest and poorest segments of society has significantly widened, raising concerns over the potential societal implications of deepening inequality.

According to the report, the absolute ‘wealth gap’ between the richest and poorest 10% of individuals in the UK increased by 54% from 2011 to 2021. This rise is largely attributed to the escalating value of assets, particularly property. The report highlights that inheritance and gifts have doubled over the past two decades, reaching an estimated £100 billion, and are projected to double again by 2040.

The wealthiest 10% of families in the UK continue to hold just over half of the nation’s total wealth. In stark contrast, the poorest 10% of households possess a total net worth of £15,400 or less.

Will Snell, a representative of the Fairness Foundation, articulated the urgency of the situation, stating, “Without effective policy intervention, Britain will become steadily more unequal, and as a result more socially divided, economically unproductive, and politically disengaged.” He urged that bold action is necessary, advocating for a more equitable taxation of wealth to help rebuild the social contract.

In light of this situation, Chancellor Reeves is reportedly considering both tax increases and spending cuts in her forthcoming Budget. Experts from the Institute for Fiscal Studies estimate that she needs to address a fiscal black hole of £22 billion to ensure financial stability.

Reeves has acknowledged the need to focus on the wealthiest individuals, recently commenting that “those with the broadest shoulders should pay their fair share.” However, she appears to be resisting pressure for a dedicated wealth tax. Speaking during a visit to Saudi Arabia, she emphasized that growth would play a crucial role in the Budget, stating, “Growth will be a big part of that Budget story, in a way that, frankly, I think growth has been neglected as a tool of fiscal policy in the last few years.”

Despite Labour’s manifesto pledge to protect working people from increases in national insurance, VAT, and income tax, speculation is rife regarding whether Reeves will adhere to her party’s commitments. Over the weekend, she refrained from ruling out a potential rise in income tax but assured that she would strive to keep taxes low for working individuals.

As the government prepares for the Budget announcement, the call for addressing wealth inequality intensifies, underscoring the critical need for effective economic policies that foster inclusivity and resilience in a fluctuating financial landscape.