By Dominic Penna
Lord Kinnock has urged Rachel Reeves to bring in a wealth tax at the autumn Budget.
The former Labour leader called for a 2 per cent levy on assets of more than 拢10 million and suggested ministers would be 鈥渨illing鈥 to explore the idea.
It comes after Sir Keir Starmer wiped out 拢5 billion in savings by watering down his welfare reforms in the face of a major Labour rebellion.
Lord Kinnock, the Labour leader from 1983 to 1992, said the fiscal rules and tax pledges drawn up by Ms Reeves gave the appearance that the Government was 鈥渂ogged down by their own imposed limitations鈥.
He told Sky鈥檚 Sunday Morning with Trevor Phillips: 鈥淭here are ways around that, ways out of it, pathways that I think people are willing to explore and actually would commend themselves to the great majority of the general public.
鈥淭hey include, for instance, asset taxes in a period in which for the last 20 years in the United Kingdom like quite a lot of western economies, earned incomes have stagnated in real terms while asset values have zoomed, they鈥檝e just gone through the roof and they鈥檝e been barely touched.鈥
Lord Kinnock added: 鈥淵ou wouldn鈥檛 have to touch assets of under 拢6 million or 拢7 million, so people鈥檚 houses would be secure, obviously. But even going for an imposition of two per cent on asset values above 拢10 million, say, which is very big fortune, the Government would be in a position to collect 拢10 billion or 拢11 billion a year.
鈥淣ow that鈥檚 not going to pay all your bills, but it does two things […] One is to secure resources, which is very important, revenues, but the second thing it does is say to the country, 鈥榳e are the government of equity鈥.鈥
Many European countries to introduce wealth taxes have ended up repealing the levies owing to an exodus of top commercial talent and high administrative costs in return for little revenue.
But Lord Kinnock insisted such a policy would make a 鈥渟ubstantial difference鈥 to the economy.
鈥淭his is a country that is very substantially fed up with the fact with whatever happens in the world, whatever happens in the UK, the same interests come out on top unscathed, all the time, while everybody else is paying more for gutted services,鈥 he said.
The UK is expected to lose more millionaires than any other country this year after Ms Reeves launched a wide-ranging tax raid on taking power, which included abolishing the non-dom status.
About 16,500 millionaires are predicted to quit Britain in 2025, up from 10,800 last year.
Lord Kinnock also warned Labour鈥檚 鈥渃ommendable and absolutely essential鈥 policy programme had been 鈥渂arely noticed鈥 by voters because of major about-turns on welfare and the winter fuel allowance.
Bridget Phillipson, the Education Secretary, admitted on Sunday that there was still 鈥渇rustration鈥 among voters who supported Labour in the hope of seeing change.
Ms Phillipson told Sky: 鈥淲hilst I do think we鈥檝e achieved a lot in that first year there have undoubtedly been challenges along the way.
鈥淲e haven鈥檛 got everything right, of course we haven鈥檛, and now going into the second year, it鈥檚 about how we take that forward, how we really drive through and deliver on what I hear loud and clear people want.鈥
She also agreed with Jonathan Reynolds, the Business Secretary, that she would give her party鈥檚 first year in office a 鈥渟even out of 10鈥.
Asked whether Sir Keir鈥檚 climbdown on welfare would harm the chances of lifting the two-child benefit cap 鈥 another major demand of Left-wing Labour backbenchers 鈥 Ms Phillipson said: 鈥淭he decisions that have been taken this last week do make future decisions harder.
鈥淏ut all of that said, we will look at this collectively in terms of all of the ways that we can lift children out of poverty.鈥
Admitting the changes to the welfare Bill would 鈥渃ome at a cost鈥, she insisted Ms Reeves would have the final say on the two-child benefit cap.
Sir Mel Stride, the shadow chancellor, said imposing Lord Kinnock鈥檚 idea of a wealth tax 鈥渨ould be the worst thing to do鈥.
鈥淲e鈥檝e also seen around 10,000 to 15,000 high net worth individuals leave our country as a result of this government鈥檚 policies,鈥 Sir Mel said.
鈥淪ome people 鈥 the socialists 鈥 might say 鈥榳ell, who cares about that?鈥 Well, the problem is that the amount of tax that those people have been paying requires about a third of a million people on average earnings, to cover that lost tax that鈥檚 just gone straight out of the door.
鈥淪o the last thing we want to be doing now is piling further taxes on the wealth creators. We need to be, if anything, getting those taxes down, and empowering them to go out and do what they do best, which is creating jobs and creating wealth and prosperity for our country.鈥