The Resolution Foundation recommends that Prime Minister Keir Starmer increase taxes on affluent households and eliminate the state pension triple lock, amid ongoing economic pressures affecting families with an average £550 reduction in living standards this year.
Economic Stagnation and Public Finances
Recent analysis highlights Britain’s struggling economy, with public services deteriorating despite £70 billion in tax increases and £84 billion in spending commitments. Working-age families face stagnant living standards, exacerbated by rising food and energy prices driven by global conflicts. Lower-income households suffer disproportionately due to higher spending on essentials.
The report emphasizes prioritizing growth and support for young people and working families, who have endured long-term economic challenges, over wealthier groups that benefited from decades of asset growth.
Proposed Tax Reforms
To address fiscal shortfalls, the think tank advocates several measures targeting wealth:
- Higher income taxes on top earners.
- Council tax adjustments that benefit most residents while increasing contributions from owners of high-value properties.
- Taxes on pension lump sums.
- Reforms to capital gains tax, including an exit tax for those leaving the country and closing the post-death exemption loophole.
- Elimination of the inheritance tax nil-rate band, subjecting all inherited assets to taxation.
Challenging the Pension Triple Lock
Introduced in 2012, the triple lock guarantees annual state pension rises by the highest of inflation, wage growth, or 2.5%. The report argues this policy is unsustainable now that pensions have reached adequate levels.
“This makes sense if the pension was deemed too low, but – logically – there must come a point beyond which it can no longer be defended,” the analysis states.
Government Response Amid Political Pressures
These proposals from the influential Resolution Foundation, whose experts hold key government roles, arrive as Labour addresses fallout from recent local election setbacks and internal leadership discussions. The recommendations aim to shift focus toward sustainable growth.
Ruth Curtice, chief executive of the Resolution Foundation, stated: “The Government’s appetite for a reset is being driven by terrible election results. But… it is in everyone’s interest for the country to change economic gear. The Government must ruthlessly prioritise what really matters – doubling down on growth and focusing on those who have lost out from economic stagnation such as young people and working families.”
