Labour urged to launch six billion pound tax raid on pensioners and landlords

Pressure is mounting on Chancellor Rachel Reeves to execute a £6bn tax raid targeting pensioners, landlords and the self-employed, as advocated by the highly influential Resolution Foundation. The think tank, known for its close ties to Labour’s top economic advisers, recommends slashing employee National Insurance by 2p and shifting this burden to income tax, broadening the tax base whilst minimising the impact on working people that Labour has pledged to protect.

With the Budget fast approaching and a £20bn hole in the public finances, Treasury officials are studying proposals that would raise tax on individuals whose earnings are not subject to employee National Insurance—predominantly pensioners, landlords and self-employed workers. The Resolution Foundation argues this adjustment could raise £6bn, affecting around 8.7 million pensioners already paying income tax and 4.3 million self-employed nationals across the UK.

The move is one strand in a suite of proposals generated by the think tank to bolster the government’s fiscal buffer after welfare reforms failed to materialise. The urgency comes amid concerns in global markets regarding the sustainability of the UK’s £2.9tn national debt and a sharp increase in borrowing costs.

The Resolution Foundation has developed a reputation as the engine room of Labour economic policy. Senior Treasury ministers including Dan Tomlinson and Budget architect Torsten Bell are former associates, underpinning the intellectual crossover between the think tank and government strategy. Even No 10 has deepened its links, with Baroness Shafik—who previously chaired a major Resolution Foundation commission—now acting as economic adviser to the Prime Minister.

Adam Corlett, a leading economist from the Resolution Foundation, argues that tax rises are now essential to reassure markets about the government’s grip on the national finances. “Shifting from employee National Insurance to income tax brings in revenue from a much broader base and avoids another direct hit to workers’ take-home pay,” he explains.

The think tank further suggests freezing income tax thresholds for two more years, potentially netting an extra £7.5bn annually. This approach would maintain Labour’s promise of not raising the headline rates of income tax, even as it increases revenues from the wealthier and those less reliant on regular employment income.

However, the proposals have triggered a backlash. Former pensions minister Baroness Altmann warns that such measures unfairly target non-employees and could strain inter-generational relations. Industry leaders in retail also caution that extra taxes on business premises will fuel food price inflation, impacting high street shoppers already squeezed by the cost of living crisis.

Despite this controversy, the pressure on Chancellor Reeves persists. Economic strategists and Whitehall insiders agree that difficult decisions and “political courage” will be required to shore up public finances and avert even higher borrowing costs. The next two months will be pivotal in shaping the fiscal path ahead for both Labour and the wider UK economy.