Lord O’Neill Warns Burnham Over ‘Stupid’ Wealth Tax Plans

Key Points

• The Times reports that Lord O’Neill of Gatley, the top economic adviser to Prime Minister Andy Burnham, has stepped in to complain that the plan is “stupid” and is not worth considering in the Budget on 28 October.
• The Times interview quoted O’Neill as saying ministers were “scared and lazy” to take on welfare expenditure rather than go for tax hikes.
• But Britain already collects more revenue from taxes on wealth and wealth-related taxes, as a proportion of GDP, than any other OECD nation, the Institute of Economic Affairs (IEA) claims.
• From April 2028, the High Value Council Tax Surcharge (also known as the mansion tax) will be applied to properties in England valued at over £2 million, resulting in an extra £2,500 to £7,500 each year on bills.
• The Valuation Office has confirmed it will be relying on checks by its inspectors, satellite images and third-party information to determine which properties are due for the levy.
• The enforcement plans are “a sinister assault on civil liberties,” says Shadow Chancellor Sir Mel Stride.
• Mr Burnham was likened to the “Sheriff of Nottingham” over the policy by Conservative MP Mike Wood.
• Economist Paul Johnson warns that no nation has ever successfully collected substantial taxes through a formal tax on wealth.
• But there are a few Labour backbenchers and campaign organisations that remain firm in their call for a greater wealth tax based on fairness.
• The row comes ahead of the Chancellor John Healey’s first Budget on 28 October.

London (Britain Today News) August 29, 2026 — Prime Minister Andy Burnham is facing pressure from his own economic camp over the direction of Britain’s tax policy, after one of his most senior advisers branded the prospect of a capital gains tax rise “stupid” just weeks before the Government’s first Budget under Chancellor John Healey. Lord O’Neill of Gatley, the crossbench peer who declined a formal role as the Prime Minister’s economic adviser, used an interview with The Times to warn that further tax rises on business and investment would undermine Mr Burnham’s own promise of economic growth, adding fuel to a wider debate over wealth taxation that also touches the Government’s new “mansion tax” on high-value homes.

What is happening in Britain’s wealth tax debate right now?

Britain finds itself in the middle of an unusually public argument over how — and how much — to tax wealth, playing out just weeks before Chancellor John Healey delivers his first Budget on 28 October. The debate spans several fronts: a possible rise in capital gains tax, the rollout of a new surcharge on expensive homes, and long-standing calls from parts of the Labour movement for a formal, annual wealth tax on the very richest. Economists, think tanks and opposition politicians have all weighed in over the past few days, producing a genuinely divided picture of what the right approach should be.

What did Lord O’Neill say about a capital gains tax rise?

Speaking to The Times, Lord O’Neill said he did “think it would be stupid” for the Government to increase capital gains tax in the coming Budget. According to the same report, carried by the Western Morning News, he argued that raising the tax on the sale of second homes, shares and other assets would end up costing the Treasury more overall, because business owners would simply defer selling their companies or move money abroad to avoid the charge. He is also reported to have said the move would suggest Mr Burnham and Mr Healey were not.

“thinking about growth as sincerely as they claim they are.”

Why has Lord O’Neill been so critical of the Government’s approach?

Lord O’Neill’s intervention is notable because of who he is: a former Conservative Treasury minister under David Cameron and Theresa May, a former chairman of Goldman Sachs Asset Management, and the economist who coined the term “BRIC.” Despite that background, he has been advising Mr Burnham since before he entered Downing Street, though he turned down a formal government post. In his Times interview, reported by the Western Morning News, he suggested the pull towards taxing wealth and investment reflected a reluctance to confront harder political choices, saying ministers were

“just being scared and lazy and constrained in dealing with the sacred cows”

— a reference, in context, to welfare spending and the state pension triple lock. Separately, in another Times interview reported by AOL, Lord O’Neill urged the Prime Minister to concentrate growth efforts on London and the Northern Powerhouse region rather than spreading resources thinly across the country, warning that the capital’s economic weight could not be replaced.

What is the mansion tax and who will have to pay it?

Running alongside the capital gains tax row is the rollout of the so-called mansion tax, formally known as the High Value Council Tax Surcharge. The levy was announced by the then-Chancellor, Rachel Reeves, at the Budget on 26 November 2025, and, according to the HomeOwners Alliance, will apply to homeowners — rather than tenants — with properties valued above £2 million, at a rate of between £2,500 and £7,500 a year depending on the property’s worth. Collection is due to begin alongside council tax from April 2028. Mr Burnham has previously described the current council tax system, still based on 1991 property valuations, as “highly regressive,” though Downing Street has denied reports that he is planning to scrap council tax and stamp duty altogether in favour of a single new property tax.

How will the Valuation Office decide which homes are liable?

According to evidence given to MPs and reported by GB News, the Valuation Office will rely on a combination of publicly available data, third-party data and satellite imagery to assess which properties cross the £2 million threshold, alongside physical inspections in some cases. Jonathan Russell, the Valuation Office’s chief executive, told MPs earlier this year that homes previously valued above £1.5 million would be reassessed to check whether they have since crossed the higher threshold, saying officials wanted to “make sure we’re not missing anything.” Inspectors are expected to record details such as a property’s size, architectural style and number of rooms, bedrooms and bathrooms. Ministers have confirmed that homeowners who refuse entry could face a fine of up to £200, while those who fail to supply requested information without a reasonable excuse could be fined up to £500.

What have Conservative politicians said about the enforcement plans?

The prospect of inspectors visiting homes has drawn sharp criticism from the Opposition. Shadow Chancellor Sir Mel Stride told GB News the enforcement measures amounted to “a sinister assault on civil liberties,” adding that Labour had returned to a familiar pattern of looking for new ways to raise money for spending. Separately, the Shadow Cabinet Office Minister, Mike Wood, told GB News it was

“hard to believe that this is something that’s seriously being proposed in Britain.”

and compared the Prime Minister to the villain of the Robin Hood legend over the plans.

What does the Institute of Economic Affairs say about wealth taxes?

Away from the mansion tax row, the free-market think tank the Institute of Economic Affairs (IEA) has published research directly challenging the case for a new, broader wealth tax. The paper, titled Fool’s Gold: The case against the wealth tax, and suggestions for alternatives, was written by Dr Kristian Niemietz, the IEA’s editorial director and head of political economy. According to the IEA, the study finds that when property taxes, inheritance tax, stamp duty and capital gains tax are combined into a single category of wealth-related taxation, the UK already raises more revenue from that category as a share of GDP than any other OECD economy — including Norway, Spain and Switzerland, the only three European countries that still operate a formal, annual wealth tax. Dr Niemietz was quoted by the IEA as saying the current enthusiasm for a new levy was “entirely vibes-based, and completely undeserved.”

How does Britain’s wealth taxation compare with other countries?

The IEA’s broader point is one of international comparison: while campaigners often argue that Britain under-taxes the wealthy relative to its peers, the think tank’s analysis suggests the opposite is true once all wealth-related levies are counted together, rather than looking only at whether a country has a formal, standalone wealth tax. Separately, reporting by Bloomberg has noted that only four of the 38 OECD countries — Norway, Spain, Switzerland and Colombia — still impose a formal wealth tax at all, with France dropping its own version in 2018 in favour of a narrower property tax, reflecting a broader retreat from the policy across the developed world over the past three decades.

What has the Institute for Fiscal Studies said about a wealth tax?

Economist Paul Johnson, formerly director of the Institute for Fiscal Studies, has previously offered a more measured but still sceptical assessment. Speaking to The Independent, as reported by the news agency AOL, he acknowledged a wealth tax “could raise a noticeable amount of money,” but warned of major administrative obstacles, noting that much of the revenue would come from the wealthiest individuals, who “can afford very good lawyers.” He questioned how residency and asset values would be determined in practice, and said that, historically, no country had managed to raise substantial sums through such a levy.
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Why do some MPs and campaigners still back a wealth tax?

Despite this weight of criticism, calls for a formal wealth tax have not gone away within the Labour movement. Some backbench MPs, trade unions and campaign groups continue to argue that a modest annual levy on the largest fortunes — often floated at around 2 per cent on assets above £10 million — would be a fairer way to fill gaps in the public finances than further cuts to spending or benefits. Supporters point to the concentration of wealth at the top of British society and argue that existing taxes on income and consumption fall disproportionately on those who are not among the wealthiest. Critics of that position, including Lord O’Neill and the IEA, counter that such a levy would raise far less than its advocates claim once the effects on investment and business decisions are taken into account.

What happens next for the Government’s tax plans?

Attention now turns to the Budget on 28 October, when Chancellor John Healey is expected to set out the Government’s final position on capital gains tax and any further wealth-related measures, against a backdrop of continued pressure over the public finances. The rollout of the mansion tax continues in parallel, with valuations expected to accelerate ahead of the April 2028 start date. Both issues are likely to remain politically contentious, with the Government facing pressure from economic advisers and business groups on one side to avoid further tax rises, and from parts of its own party and outside campaigners on the other to go further in taxing accumulated wealth.