Labour has indefinitely delayed plans to tax private school fees and is reviewing two other major tax proposals in a significant policy shake-up, just weeks before the upcoming budget. These changes come as Labour faces internal struggles and attempts to stabilise its government after a rocky first few months in power.
The party had planned to impose VAT on private school fees, close a loophole for non-domiciled foreigners, and increase taxes on private equity profits. Together, these measures were expected to raise £4.8 billion. However, officials now say these policies are under review amid concerns they may end up costing more than they generate.
Keir Starmer has also replaced his chief of staff, Sue Gray, in a bid to regain control and improve political strategy. Gray’s departure followed growing internal tensions and complaints about her leadership. She will now take on a new role as Starmer’s envoy to the devolved nations and regions, while Morgan McSweeney, who led Labour’s election campaign, steps into her previous role.
Defence Secretary John Healey praised Gray’s contributions but acknowledged that she had become a “distraction” for the government. He emphasised the need to refocus on delivering Labour’s manifesto commitments, which are now in question due to the uncertainty over key tax policies.
The delayed tax plans have raised concerns about how Labour will fund its ambitious pledges, including hiring more teachers and expanding NHS services. As Chancellor Rachel Reeves prepares for the budget on October 30, she may need to find alternative revenue sources to fill the £22 billion hole in public finances.
The shake-up at Downing Street has prompted questions about Starmer’s ability to manage his government effectively after promising change and stability.
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