Labour Party spokesperson Rachel Reeves is under pressure to focus on taxing the wealthiest individuals in the upcoming Budget after studies revealed a significant increase in the wealth gap between the richest and the poorest in the UK.

According to researchers, the widening wealth inequality poses serious risks to society, including potential social unrest, challenges in addressing the climate crisis, economic stagnation, and threats to democracy. A recent report by the Fairness Foundation highlighted a 54% growth in the wealth gap between the top and bottom 10% of the population from 2011 to 2021, largely attributed to the appreciation of assets like property.

The report also noted a doubling of inheritance and gifts over the past two decades, reaching £100 billion, with projections indicating a further doubling by 2040. The top 10% of families consistently hold more than half of the total wealth, while the poorest 10% of households have a combined net worth of £15,400 or less, including assets like work pensions, vehicles, and household items.

Will Snell from the Fairness Foundation emphasized the need for decisive action to address the escalating wealth inequality, suggesting that effective wealth taxation and redistribution could help bridge the gap and rebuild societal cohesion.

The Chancellor is contemplating a mix of tax increases and spending cuts in the upcoming Budget to navigate potential economic challenges, with estimates from the Institute for Fiscal Studies indicating a £22 billion budget shortfall that needs to be addressed.

While Rachel Reeves has indicated a focus on taxing the wealthiest individuals to ensure fair contributions, she is hesitant to implement a specific wealth tax. Labour’s manifesto promises to shield working individuals from increases in national insurance, VAT, and income tax, but speculation is mounting on potential deviations from these pledges.

Despite hints of a possible income tax hike, Reeves reiterated her commitment to supporting the working population by keeping tax burdens as minimal as possible. The upcoming Budget is expected to prioritize economic growth and fiscal stability while navigating the complexities of wealth disparity and taxation policies.