Ex-first minister Drakeford calls for wealth tax

Mark Drakeford says the "root of inequality is the way that wealth is distributed across the population"

The chancellor "absolutely" needs to look at introducing a wealth tax to deal with a growing gap between the rich and the poor, according a former Welsh first minister.

Mark Drakeford said the "root of inequality is the way that wealth is distributed across the population".

He also told Walescast it was a "moral imperative" for Labour governments to scrap the two-child benefit cap as a way of reducing child poverty.

Asked about Drakeford's wealth tax comments in the Commons on Wednesday, Sir Keir Starmer said his government could not "tax our way to growth".

Drakeford, who is the current Welsh finance secretary, accepted the next Senedd election in May 2026 would be "challenging" for Welsh Labour.

It comes as another opinion poll has suggested the party is currently in third place.

After Labour MPs forced the UK government to water down a package of welfare reforms that would have saved £5bn a year by 2030, Chancellor Rachel Reeves is under increasing pressure ahead of the autumn Budget.

England's Education Secretary Bridget Phillipson told the BBC over the weekend that spending decisions have been made "harder" by the government's welfare u-turn.

The UK government's official forecaster, the Office for Budget Responsibility, said public finances were in a "relatively vulnerable position".

Speaking on the BBC podcast, finance secretary Drakeford suggested the chancellor should look at a tax on the online gambling industry, taxes on banking profits, and a tax on the wealthiest.

"I think wealth taxes absolutely need to be looked at," he said.

"We're a sharply unequal society. We've become more and more unequal. The root of that inequality is the way that wealth is distributed across the population.

"There are practical challenges. Wealthy people are mobile, they can move their assets, they can move themselves.

"But there are plenty of people out there who are experts in this field who do say it can be done and the chancellor, I'm sure, will be looking at what she thinks is possible," he added.

'Most effective' to lift the two-child benefit cap

Before its retreat on benefits, the UK Labour government was considering lifting the two-child benefit cap.

The policy restricts means-tested benefits to a maximum of two children per family for those born after April 2017.

The Institute for Fiscal Studies think tank estimates that axing the policy would cost the government about £3.4bn a year and would lift 500,000 children out of relative poverty.

There is a big appetite to lift the cap among many Labour backbenchers, especially those who were leading opponents of the planned cuts to welfare.

Drakeford said: "I think that reducing child poverty is a moral imperative for a Labour government.

"Difficult as the circumstances are... I don't think there would be a single Labour member of this Senedd or of the House of Commons who does not want to see a reduction in child poverty over the term of this parliament.

"And we know that the single most effective thing that can be done to tackle child poverty is to abolish the two child limit that the Tories introduced."

An opinion poll by Sky News/More in Common, released on Wednesday suggested Reform UK is in the lead for the next Senedd election.

In the poll Nigel Farage's party was on 28%, Plaid Cymru on 26%, Welsh Labour on 23%, and the Welsh Conservatives in fourth on just 10%.

Drakeford said the Senedd election in May 2026 was always going to be "challenging" for Welsh Labour.

"Every time you win an election, the hill gets a bit steeper the next time you have to climb it," he added.

He defended the introduction of the new, more proportional voting system being introduced next year.

Drakeford said: "There are always dissenting voices - people who lost the argument and want to go on rehearsing the hard feelings they have for being on the losing side.

"In a democracy, you want every vote to count - that's what this system delivers."

'Carry the largest burden'

Drakeford's comments on a wealth tax were mentioned in the Commons on Wednesday by the co-leader of the Green Party Adrian Ramsay.

He asked if the prime minister would "stand by his promise that those with the broadest shoulders should carry the largest burden – and can he clarify that means the ultra-wealthy".

In response, Sir Keir said: "We can't just tax our way to growth."