Shabana Mahmood tipped as next chancellor amid economic discourse
Shabana Mahmood, perceived as Andy Burnham’s preferred candidate for the position of chancellor, has previously advocated for a 50p rate of income tax for high earners, reports BritPanorama.
As the home secretary prepares for a possible reshuffle, her earlier comments about taxation have resurfaced, drawing attention to her economic views that have remained largely undisclosed during her tenure in government. In a House of Commons debate in 2014, Mahmood criticized the Conservative government’s decision to lower the additional rate of income tax from 50p to 45p, asserting that it was “wrong.” Under the current law, 45% taxation applies to earnings exceeding £125,140.
She stated: “This Government made a bad choice – the wrong choice – when they prioritised a tax cut for millionaires while ordinary working people continued to struggle as a result of their decisions, and we will not let them forget it.” The respected Institute for Fiscal Studies at the time estimated that this policy would cost the exchequer approximately £700 million annually, considering behavioural adjustments.
Energy Secretary Ed Miliband, a potential candidate for the Treasury, also criticized the tax change. As Labour leader in 2014, he had pledged to restore the 50p rate should Labour regain power. The coalition government led by David Cameron and Chancellor George Osborne implemented stringent austerity measures aimed at reducing government debt, during which time Mahmood’s comments were directed at them.
Initially introduced by then-Prime Minister Gordon Brown in 2010, the 50p rate was in place for roughly three years before being lowered. In Labour’s 2024 manifesto, the party promised not to raise taxes on “working people” through means such as National Insurance, VAT, or income tax, suggesting that revisiting the 50p tax rate during this parliamentary term seems unlikely.
Nonetheless, discussions surrounding various revenue-raising mechanisms, including higher capital gains tax or a wealth tax, have emerged, with proponents arguing that such measures would not burden “working people.” Burnham has not dismissed the idea of a wealth tax, indicating a need for “a greater sense of fairness” ahead of becoming prime minister.
In an interview with former footballer Gary Lineker on Monday, Burnham remarked, “You know, we are going to have to work quite hard to make sure, you know, we can pay our way. And at some point that might be having to ask for a little more. But, you know, those decisions are not for now. They’re for another day.”
Earlier this month, he outlined a vision for fiscal policy that includes potential tax flexibility within Labour’s manifesto framework, with proposals such as reducing business rates for small enterprises funded through higher charges on large corporate entities like Amazon. The suggestion of Mahmood being Burnham’s top pick for Number 11 has reportedly surprised some Labour MPs, particularly those aligned with the party’s left wing.
Mahmood, a visible figure in the ‘Blue Labour’ faction, may not be seen as a natural ally of Burnham, primarily due to her focus on home office responsibilities which have limited her commentary on economic issues. As Burnham formally takes on the role of prime minister on Monday, his imminent cabinet selections will soon unveil the direction of his administration.
