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5 hours ago
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Cabinet ministers have been studying a blueprint for Labour to radically overhaul its economic offer and messaging, including devolving tax powers, abolishing national insurance and major property tax reforms.
Passed around dozens of MPs, the paper argues that without a major rethink, the failure to tackle the discontent on the cost of living will hand the next election to a hard-right government. There is also increasing concern that the war with Iran – pushing up prices of fuel, energy, food and mortgages – will fuel further mass public anger.
The report, which has the draft title of the Beveridge Report for the Economy, will say the current British economy rewards grifters and exploitation rather than hard work and that the current voter anger is fuelled by the belief that hard work and “doing the right thing” leaves many feeling shafted.
Several potential Labour leadership candidates are understood to have requested to see the report, which was prepared as part of a partnership of the Labour Growth Group of MPs once considered loyal to Keir Starmer and the thinktank the Good Growth Foundation.
Many MPs said they have been frustrated with the current communications strategy to brand both Reform and the Greens as extremists or simply impractical.
“The problem with the answers coming from the populists isn’t that they’re ‘not sensible’, it’s that they’re not radical enough,” one Labour source said.
“Price controls and handouts actually accept the premise that things can’t be fundamentally changed. The truly radical thing is taking on why the system is broken in the first place. Why can’t we build homes? Why is energy so expensive? Why do many workers pay a higher marginal tax rate than a landlord?
“Voters aren’t turning to Reform and the Greens because they’re becoming ‘extreme’. They’re, fairly, concluding that the mainstream offer is managed decline and they’d rather roll the dice. The answer is to put forward something genuinely bolder that really changes things for them.”
It is understood that advisers to Wes Streeting, Angela Rayner and Andy Burnham have read and engaged with the work over recent months, with some feeding back their own ideas to its authors.
Several serving cabinet ministers have also read the paper, with some requesting copies, as well as ministers in the Treasury, Department for Education, Cabinet Office and Ministry of Housing, Communities and Local Government.
The paper is expected to be formally launched after the May elections at a time when Starmer may be facing a leadership challenge. It will say that Labour must redesign the tax system to explicitly confront those who make money from taking advantage of people or creating scarcity in the economy – and instead reward both hard work and taking initiative.
“People in my constituency work hard, play by the rules, but increasingly feel like the system isn’t on their side,” the Rossendale and Darwen MP Andy MacNae said. “This is one of the most creative and serious attempts I’ve seen to actually remake that system, so work and initiative pay again while taking on the vested interests profiting from the status quo.”
The work on the paper has been led by the Growth Group’s director, strategist Mark McVitie, but drawing heavily on contributions from Labour MPs such as the group’s parliamentary chair, Chris Curtis. Several Treasury ministers were previously senior figures in the group, including Dan Tomlinson and Lucy Rigby.
The paper will say there should be a vastly expanded fiscal devolution for mayors, including business rates and borrowing powers, and that the centre should not be administering or micromanaging local projects but be focused on the biggest structural and geopolitical challenges.
It will also propose an overhaul of the tax system – abolishing employee national insurance, reforming council tax and moving towards a land value tax, and a greater taxation of areas of the economy that profit from scarcity rather than value creation.
But it will argue there should be significant tax breaks for founders and entrepreneurs, which could encourage new companies to grow rather than sell up to bigger ones.
It will also suggest significant reforms to the machinery of government, including abolishing the Cabinet Office and creating a larger department for the prime minister as well as a larger number of political appointees of external experts to set direction in departments.
The Growth Group’s members have been more closely associated with Streeting’s wing of the party – though many are also close to Burnham.
But several MPs who spoke to the Guardian also said they were struck by the similarity of what the report was arguing with Rayner’s speech on Monday night at a reception for Mainstream, another internal Labour group vying for influence.
She warned Starmer that he “cannot go through the motions in the face of decline … The change that people wanted so desperately needs to be seen, it needs to be felt. And we have to show that it is a Labour government that will deliver it.”
