Labour Party Chancellor John Healey is considering a windfall tax on banks and windfall tax on oil companies in his first Budget, according to reports. The Telegraph understands Mr Healey, who replaced Rachel Reeves in the role in Number 11 Downing Street, is discussing both policies.
Mr Healey, Labour Party Prime Minister Andy Burnham and HM Treasury officials are mulling over the plans in a bid to find ways to plug a £4.7bn hole in the public finances.
A source close to discussions told The Telegraph: “The Treasury position has never wavered – that there is less money to play with than we would like and we have to be really careful about spending taxpayers’ money.”
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The source said: “There is an inter-Whitehall war going on between those who have to make the sums add up and the rhetoric.”
Mr Healey will deliver his first Autumn Statement on October 28, but the Telegraph reports the former Defence Secretary is “understood to want next month’s Budget to be framed as low-key” and “to make sure that inevitable tax rises are much lower than those pushed through” under Ms Reeves.
Mr Healey plans to slap companies with taxes – while shielding one group: individual taxpayers.
The source explained that the water industry “needs a huge amount of investment and it is operationally very stressed”, adding that the Treasury “knows that it is not a good use of taxpayer money. It is a very risky investment. The Treasury is holding firm”.
“This Government is looking at how we can give the public more control and help keep bills as low as possible,” they added. “We’re bringing in tougher regulation, stronger enforcement and greater accountability, so water companies deliver for customers and the environment.”
Mr Healey has yet to commit publicly to spending 3% of GDP on defense by 2030, up from around 2.6% currently. Meeting that level would require at least another £10 billion.
The landmark fiscal address in the Commons in under two months’ time will be Mr Healey’s first major fiscal test since entering No11.