While Rachel Reeves was all smiles as she sat next to Sir Keir Starmer on the Labour front bench during Prime Minister’s Questions on Wednesday, when the Chancellor left the chamber she had a face like thunder. And her grim demeanour was not just because of the growing turmoil in the financial markets.
Reeves was battling to contain her emotions as she faced up to the fact she has been sidelined by the PM as he and his advisers took control of preparations for the November 26 Budget, which promises to be one of the harshest in modern history. And it will also involve a sharp pivot to the Left.
The truth is that yesterday’s resignation of deputy prime minister Angela Rayner, the hardline socialist former trade unionist known as the ‘Red Queen’, does not signal the end of the hard-Left’s influence over the Prime Minister. Far from it.
The people who have been entrusted with setting the Government’s economic direction of travel are a trio of economists with links to a think tank that firmly believes in that old Labour slogan: ‘Squeeze the rich until the pips squeak.’
It was widely trailed last month that junior pensions minister Torsten Bell, who was chief executive of Left-leaning think tank the Resolution Foundation before becoming an MP last year, had been brought in to bring some intellectual firepower to Budget planning.
But this week it emerged that he has been joined by former colleagues Dan Tomlinson and Minouche Shafik.
Tomlinson, who spent seven years at the foundation, was made Exchequer Secretary and Baroness Shafik, an Egyptian-born academic and former deputy governor of the Bank of England, was appointed as Starmer’s first personal economics adviser.
Angela Rayner’s resignation does not signal the end of the hard-Left’s influencer over the Prime Minister
Rachel Reeves was this week sidelined by Sir Keir Starmer as he and his advisers took control of preparations for the Budget on November 26
Dubbed ‘tax fanatics’ by their critics, this trio’s pivotal role in the formation of the Budget is a major factor in why the Government’s long-term borrowing costs have soared to a 28-year high, a development that is triggering fears of a financial crisis.
To understand why their rise should spook the markets it’s instructive to look at the track record of their alma mater.
The Resolution Foundation was founded by the billionaire insurance tycoon Sir Clive Cowdery, a visceral opponent of Brexit, and is bankrolled by him to this day.
As a result, money is no object. It employs no fewer than 35 people and its income last year was £4.04million, with outgoings of £3.7million.
Cowdery is also the publisher of Prospect magazine, which is run by former Guardian editor Alan Rusbridger, an appointment that speaks volumes about the proprietor’s political leanings.
When news of Bell’s central role in Budget decision-making first became known, Reeves – in public at least – welcomed his elevation, describing him as one of the party’s ‘sharpest minds’.
But in some Labour circles there is growing alarm over the fact the Chancellor has been usurped by Bell, who advocates scrapping the triple lock, which guarantees an annual increase in the state pension based on the highest of three measures: inflation, average earnings growth, or 2.5 per cent.
And a scan of his tweets over the years reveals him to be a relentless critic of free-market policies.
His critics compare his arrival at the centre of power, along with his equally radical colleagues, to an economic Trojan Horse, as it represents the stealthy importation of a revolutionary new financial agenda which will involve targeting Britain’s strivers.
Torsten Bell was chief executive of Left-leaning think tank the Resolution Foundation before becoming an MP last year has been brought in to bring some intellectual firepower to Budget planning
Bell is joined by former colleague Dan Tomlinson, who was confirmed as the new Exchequer Secretary despite being an MP for less than a year
Minouche Shafik, who was appointed as Starmer’s first personal economics adviser, co-chaired a Resolution Foundation report in 2023
Apart from the measures cited above, Bell supports freezing income tax thresholds, an approach which every year drags millions more taxpayers, including members of Labour’s core constituency such as nurses, teachers and doctors, into higher brackets.
And in his 2024 book Great Britain? How We Get Our Future Back, he floated the idea of scrapping national insurance and covering the resulting shortfall by raising income tax by 5p in the pound. This was met with howls of protest because the move would hit landlords and pensioners, who currently don’t pay NI.
Even Individual Savings Accounts (ISAs), which allow adults to save or invest up to £20,000 a year tax-free, are in Bell’s sights.
Last summer, he shared a report on social media suggesting that ISAs, a favourite of middle-class savers, benefit wealthier individuals and proposed that ‘at a minimum we should be capping total ISA savings at £100k’. He later deleted the post.
But Bell and the Resolution Foundation really nailed their colours to the mast in December 2023 when they published a 295-page report called Ending Stagnation, A New Economic Strategy For Britain.
Among other things, the report called for capital gains tax on shares to be more than doubled to 37 per cent, the VAT registration threshold to be slashed from £90,000 to £30,000, the £270,000 cap on tax-free pension lump sum withdrawal to be reduced to £40,000.
In his tax-raising endeavours at the foundation, Bell was assisted by Dan Tomlinson, the very man who was this week confirmed as the new Exchequer Secretary despite being an MP for less than a year.
Tomlinson, who joined the foundation in 2015, rising to become its chief economist before leaving in 2022, argued that it would be ‘indefensible’ not to consider higher wealth taxes.
He was a key figure in the framing of Resolution’s Economy 2030 Inquiry, which proposed ‘creating road duty for electric vehicles; more local congestion charges; scrapping non-dom status and hiking national insurance for higher self-employed incomes.’
Another Resolution Foundation paper, Under Pressure, which was co-authored by Tomlinson and published the year he left the think tank, concluded: ‘Higher taxation on wealth and non-employment income are very likely to be part of the answer for governments seeking to cope with fiscal pressures in the 2020s. We’ll need to tax income more efficiently and fairly, and find new sources of tax revenue, such as from better taxing wealth.’
To the consternation of the Chancellor, this new unofficial Treasury team of Bell, Tomlinson and Shafik now reports directly to Starmer
And it doesn’t stop there… Downing Street chief of staff Morgan McSweeney’s deputy, Vidhya Alakeson, was deputy chief executive of the Resolution Foundation for four years
The third member of the Resolution triumvirate masterminding the Budget is Baroness Shafik.
She quit as president of Columbia University in New York in August last year after coming in for sustained criticism over her handling of pro-Palestine protests on campus.
During a Congressional hearing in the months preceding her resignation, she was accused by Republican committee chairman Virginia Foxx of allowing the university to become ‘a hotbed of anti-Semitism and hatred’ and struggled to give direct answers when asked if various chants used by protesters were anti-Semitic.
She stood down four months later and returned to the UK to work for David Lammy, then Foreign Secretary, on a review of international aid.
But Shafik has been on Torsten Bell’s radar since 2023 when she co-chaired the Resolution Foundation’s flagship 2030 report calling for wealth taxes on inheritance, land and property.
Her report also recommended scrapping the decades-old inheritance tax relief for farmers, which allowed them to pass on their estates to their children without paying the tax on the basis it was being abused as a loophole by super-rich landowners.
But, according to official data, 6,365 agriculture, forestry and fishing businesses have shuttered over the past year – the highest number since the figures started being collected in 2017.
Despite triggering a huge battle between the Labour government and the countryside, an unrepentant Shafik is now the most influential unelected woman in the Government.
To the consternation of the Chancellor, this new unofficial Treasury team of Bell, Tomlinson and Shafik now reports directly to Starmer.
Even the all-powerful Downing Street chief of staff Morgan McSweeney, who plotted Starmer’s leadership bid and ran the general election campaign, is linked to the Resolution Foundation. His deputy chief of staff Vidhya Alakeson was deputy chief executive of it for four years.
And if the high tax advocates from the foundation want to run their ideas past the Office for Budget Responsibility (OBR), which was one of Reeves’s favourite quangos before she became Chancellor, they have an excellent connection.
Set up by Tory chancellor George Osborne in 2010, as an arm’s length body to scrutinise government financial forecasts, it is chaired by Richard Hughes. And where did he used to work? Surprise, surprise, he was a research associate at the Resolution Foundation between 2019 and 2020.
A Freedom of Information request last year revealed that the foundation had an extraordinary 13 meetings over two-and-a-half years with the OBR, an average of one every two months.
And anyone who doubts Bell’s ability to push through his proposals should take into account the fact that he has deep roots in the Labour party.
Before Bell joined the Resolution Foundation, he acted as an adviser to two senior Labour politicians. First, he was an aide to Alistair Darling, who was Chancellor in Gordon Brown’s government, and then he became director of policy for Ed Miliband when he was Labour leader.
It was in the latter role that he allowed his too-clever-by-half nature to get the better of him and dreamed up the risible ‘EdStone’, the 8.5ft tall slab of limestone on which Labour’s pledges to the electorate were carved ahead of its ignominious defeat in the 2015 election.
Challenged over his Labour links in March last year, he said: ‘Well, in ancient history! I’d say I’m a prominent figure in Resolution Foundation circles and we are an independent think tank.’
Two months later he was parachuted into the safe Labour seat of Swansea West despite having no connections with the constituency, or Wales as a whole.
Now, a year later, he looks to be the new chief architect of Labour’s financial planning.
While he was at the Resolution Foundation, its mission statement read: ‘To improve the living standards of low and middle-income households through independent research and policy development.’
All the signs are that the upcoming Budget will do the exact reverse of that as taxes will soar to try to plug a £50billion black hole in the nation’s finances.
No one has been more withering about the way the Resolution Foundation’s tax fanatics have hijacked the Budget than Mel Stride, the Shadow Chancellor.
‘Labour’s appointment of Baroness Shafik, Torsten Bell and Dan Tomlinson confirms their intent – higher taxes, more borrowing, and punishing success,’ he said.
‘Shafik has called for tax hikes on everything from inheritance and pensions to family homes and employers, Bell has previously proposed taxing homes, hiking fuel duty and driving up council tax, while Tomlinson argued in favour of wealth taxes.
‘Far too many successful people are already quitting the country under Labour. This is yet another worrying sign that more will follow. Labour is taxing your family’s future to pay for Rachel Reeves’ failure.’
And it will all be down to an obscure group of policy wonks from a radically Left-wing think tank.
