Lord Jim O'Neill, a former Goldman Sachs economist and Conservative Treasury minister, is reportedly hesitating to formally join Andy Burnham's new Labour administration in a ministerial capacity. His reluctance stems from concerns over the potential implementation of a wealth tax and his desire to maintain his existing business engagements.
O'Neill, who was instrumental in advising Burnham's leadership bid, has expressed opposition to wealth taxes in the past. In June, he told LBC radio that such taxes are "very easy to be gamed and avoided" and unlikely to generate significant revenue. He is also reportedly seeking to continue his extensive business dealings, which would require him to place them in a blind trust if he were to serve as a minister.
Concerns about the economic direction under the new administration have also been raised regarding potential reforms to the council tax system. Burnham has indicated a desire to reform council tax rates, which have not seen a significant overhaul in over 30 years, potentially moving towards a land value tax system. He has stated the need for "big decisions ahead" and "a greater sense of fairness" in the system.
These proposed changes have drawn caution from financial institutions. RBC BlueBay Asset Management has expressed caution regarding the outlook for sterling, citing the potential impact on house prices. Mike Bell, head of market strategy at the firm, noted that higher mortgage rates combined with potential increases in property taxes, particularly in the South, could lead to a decline in house prices, which historically has not been favorable for the pound.
Burnham's administration has also appointed Matthew McGregor as his No. 10 strategy chief, a move that has amplified tax-related concerns. McGregor has previously supported the idea of a new levy on assets exceeding £10 million, estimating it could raise £24 billion for the Treasury. While Burnham himself has not fully committed to such a tax, he has left the door open by emphasizing the need for greater fairness within the current system.
Burnham has highlighted discrepancies in the current council tax system, pointing out that some residents in Greater Manchester pay more council tax than individuals in larger homes in London, a situation exacerbated by the failure to revalue property bands for decades. He cited former Chancellor Rachel Reeves's efforts to reform council tax as a step toward creating a fairer system.
Lord O'Neill, aged 69, previously served as Commercial Secretary to the Treasury under Prime Ministers David Cameron and Theresa May. He resigned from his position under May's leadership due to a perceived lack of commitment to the Northern Powerhouse project. He has been a crossbench peer in the House of Lords since 2017.