Labour’s Rachel Reeves has announced a bold plan to crack down on tax avoiders, pledging to raise £5bn to fund essential services such as free school breakfast clubs and additional NHS appointments. This move comes in response to Jeremy Hunt scrapping the non-dom regime to finance tax cuts, leaving a gap in Labour’s spending plans.
Reeves warned households and businesses that Labour is prepared to take tough measures to tackle tax fraud and non-compliance. She criticized Hunt for hampering HMRC’s ability to collect tax due to budget cuts that limit the number of compliance officers and tax investigators.
The plan aims to reduce the tax gap, which has increased by over £5bn in the past year, back to previous levels. Reeves also plans to raise £2.6bn by closing loopholes in the government’s plans to abolish exemptions for non-doms.
Labour’s proposal includes investing in more compliance officers at HMRC, improving productivity, and focusing on offshore tax compliance. The party aims to raise a net £700m in 2025-26, increasing to £5.1bn annually by the end of the parliament.
Reeves emphasized the importance of holding tax dodgers accountable, stating, “At a time when working people in Britain are being asked to pay more in tax because of the Conservatives’ economic failures, it is wrong that a minority continue to avoid paying what they owe.”
In response, Laura Trott, chief secretary to the Treasury, defended the Conservative government’s efforts to clamp down on tax non-compliance, stating that over 200 measures have been introduced. The Conservatives aim to strengthen the economy to cut taxes and put more money in the pockets of the average worker.
The announcement comes after calls from the TUC general secretary and businessman Julian Richer for tougher government action to catch wealthy tax dodgers. With billions of pounds going uncollected, Labour’s plan seeks to ensure that everyone pays their fair share to support vital public services.