If you thought alumni from Eton and Harrow or management consultancy McKinsey and investment bank Goldman Sachs really ran Britain, think again. As the dust settles on Keir Starmer’s ministerial reshuffle, it’s clear who’s really calling the shots ahead of November’s Budget.
The Prime Minister has effectively sidelined Rachel Reeves and handed control of key decisions to graduates of the Resolution Foundation, a Left-leaning think-tank that advocates for taxing ‘unearned’ wealth rather than ‘earned’ income to plug a hole of up to a £50 billion in the public finances. That means those who own property, have a pension or are expecting an inheritance are in the crosshairs.
The Chancellor has ruled out increasing taxes on ‘working people’ such as income tax, VAT and employee national insurance, but that leaves the door open to higher taxes on inheritance, capital gains and pensions.
Several of the think-tank’s ideas were adopted in her disastrous maiden Budget last year. These included the abolition of inheritance tax (IHT) relief on family farms and bringing unused pensions into a dead person’s estate, making them subject to IHT. The measures provoked fury among farmers and savers respectively. But these were just for starters.
The foundation has drawn up plans for even bigger tax raids – and now has the people in power to implement them.
In charge: The Prime Minister has effectively sidelined Rachel Reeves and handed control of key decisions to graduates of the Resolution Foundation (above)
The key players
Sir Clive Cowdery
The foundation was created in 2005 by insurance entrepreneur Sir Clive Cowdery to focus on improving living standards for low and middle-income households.
It is best known for calculating the real living wage, a voluntary hourly pay rate which is above the legal minimum. Cowdery hit the jackpot last year when he sold his Resolution Life insurance business to a Japanese rival for £8.3 billion. The size of his windfall was not disclosed.
Torsten Bell
The foundation’s most high-profile alumnus, Torsten Bell, a former Treasury civil servant, ran the think-tank from 2015 to 2024 before being parachuted into the safe Labour seat of Swansea West at the last general election.
A recent promotion saw him take a lead role in preparing the Budget and handling economic policy, meaning his fingerprints will be all over November’s update.
Bell has previously called for the state pension ‘triple lock’ to be axed and said the tax system is ‘a dog’s dinner’ and should be tilted towards taxing wealth.
Dan Tomlinson
Another ex-Treasury official, Dan Tomlinson worked at the foundation between 2015 and 2022, becoming its senior economist.
He went on to win the Chipping Barnet seat for Labour last year and was made Treasury exchequer secretary in the reshuffle. In a 2022 report for the foundation, he said not targeting wealth with new taxes while incomes were squeezed was ‘indefensible’.
Minouche Shafik
A former Bank of England deputy governor, Baroness Minouche Shafik is now Starmer’s economics guru. She has no experience of business, having spent much of her career in academia, the civil service and at the International Monetary Fund, where she oversaw its response to the 2009 eurozone debt crisis.
With Cowdery, she co-chaired a recent foundation report that said wealth needed to take ‘more of the strain’ of the tax burden.
Vidhya Alakeson
Starmer’s deputy chief of staff, Vidhya Alakeson was Bell’s number two at the foundation between 2011 and 2014.
Like Bell and Tomlinson, she also worked in the Treasury as a senior policy adviser. Following Starmer’s latest reset, she has taken on an extra role overseeing policy and delivery in Downing Street.
Their Budget Wishlist
The think-tank will set out its recommendations later this month, but there are already clues about what it could be planning.
Inheritance tax
The foundation has previously called for the IHT system to be ‘ripped up’ and replaced with a levy on recipients, not an estate.
Currently, the first £325,000 of an estate’s value is tax-free, after which IHT is charged at 40 per cent. This threshold can increase to £500,000 if you give your home to your children or grandchildren.
Bell presided over the think-tank’s previous modelling of how a recipient-based wealth tax could almost double the amount that IHT raises. Proposals included a lifetime tax-free allowance of £125,000 as well as a basic rate of 20 per cent up to £500,000 and a 30 per cent tax on more than £500,000.
While it does not expect IHT to be scrapped in the Budget, the foundation has called for the £325,000 tax-free limit to be removed.
Pensions
Having brought retirement savings into IHT from 2027, and given Bell’s ministerial brief, a raid on pensions seems inevitable.
This could involve further restricting how much tax-free cash can be pulled from pension pots, which is capped at £268,275.
Another target could be tax relief on pensions. Savers enjoy tax relief at their higher marginal rate, but the foundation wants to rebalance this relief ‘towards low-to-middle earners’.
NI for landlords
The Treasury is reportedly considering a tax on landlords. Rental income is exempt from national insurance if being a landlord is not your main job. But the think-tank has suggested all landlords should pay NI.
A Resolution Foundation spokesman said: ‘We’ll try to influence the upcoming Budget in the same way we have done for the past 20 years.’ Except that this time, it will be pushing at an open door.
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