Leaked memo reveals Angela Rayner called for tax rises

May 21, 2025 – A leaked government memo has revealed that Deputy Prime Minister Angela Rayner’s department wanted the Chancellor, Rachel Reeves, to raise taxes before this year’s Spring Statement.

The note, seen by The Daily Telegraph, suggested tax hikes of £3 to £4 billion per year. However, Reeves chose not to follow those ideas. Instead, she announced £5 billion in welfare cuts in March.

Government sources said it’s common for departments to share memos informally, and the note didn’t have ministerial approval.

Labour Party Split Over Tax and Spending Plans

Tensions within the Labour Party are rising. In June, official departmental budgets will be set. Some Labour MPs say Reeves could avoid public service cuts by raising taxes on the wealthy or relaxing borrowing rules.

But the chancellor has promised not to borrow money to pay for daily government spending.

Memo Suggested Wealth Taxes

The leaked memo from Rayner’s team included several tax ideas:

• Raise corporation tax on banks

• Extend the freeze on the 45% income tax threshold

• Scrap tax-free dividend allowance

• Bring back the lifetime pension allowance

Labour had planned to restore the pension cap before the last election but later dropped it from their manifesto.

Cabinet Tries to Show Unity

Environment Secretary Steve Reed said on BBC Breakfast that the cabinet is “united behind the government’s plan.”

He also said Labour had already raised taxes for the wealthy, including changes to non-dom tax rules.

Criticism From Opposition

Mel Stride, the Conservative Shadow Chancellor, said the memo proves Labour still follows Jeremy Corbyn-style politics.

“Labour leaders are debating which taxes to raise next,” he told The Telegraph. “That’s why Reeves won’t rule out another tax rise in the autumn.”

Anger Over Welfare Cuts

Labour’s welfare cuts are also causing internal backlash. Some MPs are unhappy about stricter rules for disability benefits.

Neil Duncan-Jordan, Labour MP for Poole, said the changes could push 400,000 people into poverty.
“There’s a strong debate in the party about how to raise funds without hurting vulnerable people,” he told BBC Radio 4.

Winter Fuel Payments May Return

The government is also reviewing its decision to cut winter fuel payments for most pensioners. The cuts were blamed for local election losses, and some senior figures want the policy changed.

Options include:

• Restoring payments to all pensioners

• Raising the income threshold so more people qualify

Still, Reeves defended the policy:
“It was needed to stabilise the public finances,” she said.

Aid Budget Cuts Spark Resignation

Another controversy is the government’s decision to cut the foreign aid budget to boost defence spending.

This led to Anneliese Dodds resigning as international development minister. She said she was disappointed the prime minister focused on cuts instead of having a proper debate on fiscal rules and taxes.