Lord Jim O’Neill, the former Goldman Sachs executive, has declined to take a formal role in Andy Burnham’s government due to opposition to a potential wealth tax.
O’Neill remains in ongoing talks with Burnham over a possible position but has not committed, according to reports from City AM.
His reluctance stems from Burnham’s failure to rule out a wealth tax and O’Neill’s desire to retain oversight of his business interests and shareholdings in financial groups.
Before the Makerfield by-election, O’Neill, former Bank of England chief economist Andy Haldane, and ex-Office for Budget Responsibility chair Richard Hughes were all widely reported to be advising the Prime Minister.
City AM revealed that none of the three had taken formal government roles a month into Burnham’s premiership, with an Autumn Budget date already announced.
The absence of high-profile economic advisers has left Burnham without the expert credibility his allies promoted before he became an MP.
Reports of the three economists’ proximity to Burnham had previously been credited with soothing investor nerves ahead of his premiership taking shape.
Burnham is reported to have retained Rachel Reeves’ former adviser Neil Amin-Smith to assist with economic policy in the meantime.
One Labour strategist expressed surprise that Burnham had not appointed any economic advisers, while another suggested Louise Haigh was running policy “with ChatGPT.”
The situation has exposed underlying divisions within the Labour Party over how far to push taxes on the wealthiest households and asset holders.
Many MPs who pledged allegiance to Burnham had called for a two per cent tax on assets over £10m, arguing it would raise “tens of billions” of pounds.
Signatories to a letter supporting the measure included Barry Gardiner and Dawn Butler, who both publicly backed Burnham’s bid for the premiership.
More moderate Labour figures, including those from the Labour Growth Group who backed Wes Streeting, advocated instead for a “wealth tax that works.”
Their preferred approach would involve equalising capital gains taxes with income taxes while preserving allowances designed to incentivise investment.
In an interview with City AM, Haldane cautioned that a tax hike should not be used as a “cash cow.”
City economists are braced for Chancellor John Healey to raise taxes and target households in the forthcoming Budget.
Capital Economics deputy chief UK economist Ruth Gregory said tax rises could nearly equal the £26bn in revenue raised by former Chancellor Rachel Reeves last year.
Given manifesto commitments not to raise income taxes, national insurance, or VAT, Gregory said taxes could be geared towards capital, wealth, and income instead.