Burnham ally warns tax hikes leave UK businesses feeling beaten up

Lord Jim O’Neill, a senior figure in Andy Burnham’s inner circle, addressed the Treasury Select Committee and warned that businesses are feeling “beaten up” by the prospect of further tax hikes. He opposed increases to capital gains tax and expressed reluctance toward higher taxes on banks, arguing such moves could dampen confidence and investment. O’Neill pointed to a possible two-per-cent annualised growth rate, driven by a strong first half of the year, and highlighted recent productivity data that exceeds earlier forecasts.

He suggested that the recent rise in national insurance contributions may have shocked employers but also spurred productivity gains, and he supported proposals to redesign tax incentives for pension fund investment in domestic assets. While acknowledging the risk of eroding the fiscal buffer, O’Neill said a £5bn cut in headroom would make little difference, and noted that Chancellor John Healey is not planning to align capital gains tax with income tax rates.