Keir Starmer faces Cabinet revolt over Budget tax rises as ministers fear Rachel Reeves has 'crossed a line'

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Keir Starmer is under threat of a Cabinet revolt over Budget tax rises, new reports have suggested.

The Labour Government is deeply divided over Rachel Reeves’ economic policy, with ministers fearing that the Chancellor has “crossed a line”.

 

Since the last Autumn Budget, reports of millionaires relocating from the UK have raised concern among senior politicians.

Ministers are now fearing that a similar tax raid could accelerate this process.

Ms Reeves has been consistently urged to change course if she is to have any hope of achieving growth, which the Chancellor claims is her primary goal.

Even within her own party, Ms Reeves has been said to have gone too far, The Independent reports.

They cited “anti-aspiration” measures such as the abolition of non-dom status and VAT on private school fees as key drivers of wealth away from the UK

They said the measures are “harming this country”, with further measures reportedly being considered, including a property tax on high-value homes and a new bank profits tax.

Watch: What it takes to run a successful economy – The Labour Party

Cuts and “efficiency savings” were suggested to plug a Budget black hole which could be as high as £50billion.

The Prime Minister’s reshuffle last month has “handed more power to the right of the party”, according to those on the left, pushing out the support for the more left-wing policies.

However, those of the right of the party believe the Government needs to rein in spending and be more ready “to reform the state in a Labour way”.

One minister told the publication: “The trouble is we have crossed a line in trying to encourage aspiration. The non-dom change and the VAT on school fees have sent the opposite message.”

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The Chancellor hiked taxes by £40billion in her first Budget after entering No11, mainly through raising employers’ National Insurance Contributions from 13.8 per cent to 15 per cent

They added: “It’s doing a lot of harm to the country.”

Another Cabinet minister said: “I just think the non-dom changes made no real sense. Why do we want people with money to move out of the country? It is really bad for London.”

In September, Ms Reeves confirmed she will unveil her second Budget on November 26 as Britons brace for potential hikes.

The Chancellor hiked taxes by £40billion in her first Budget after entering No11, mainly through raising employers’ National Insurance Contributions from 13.8 per cent to 15 per cent.

Confirming the Budget will take place on November 26, the Treasury said: “The Chancellor Rachel Reeves has commissioned the OBR to prepare an economic and fiscal forecast to be presented to Parliament alongside the Budget on 26 November 2025.”

Ms Reeves attempted to take on the narrative that Britain’s economy is broken in a video released shortly after the Budget date announcement.

After admitting that the economy “isn’t working well enough for working people”, the Chancellor added: “We need to bring inflation and borrowing costs down.

“We do that by keeping a tight grip on day-to-day spending and by enforcing my non-negotiable fiscal rules.”