Labour MPs clash over economic plans as calls for Starmer's exit grow
Two rival groups of Labour MPs have released opposing economic growth plans, deepening divisions within the party. The proposals come from 81 Labour backbenchers who have also called for Sir Keir Starmer’s resignation. Each report outlines starkly different approaches to tax, spending, and government reform.
One plan, from the Tribune group, focuses on higher wealth taxes and lower VAT to boost youth jobs. The other, by the Labour Growth Group, pushes for national insurance cuts, radical devolution, and even letting Thames Water collapse. The Tribune report calls for a major shift in taxation. It recommends raising wealth taxes while cutting VAT to make hiring younger workers in hospitality more affordable. The group also criticises the Bank of England’s quantitative tightening policy, arguing it harms growth. Additionally, it proposes rewriting fiscal rules so certain government departments can borrow beyond current limits.
The Labour Growth Group’s plan takes a different direction. It suggests cutting national insurance and reforming capital gains tax to encourage investment. The report also backs new tax reliefs for business founders and venture capitalists. On public services, it advocates radical devolution, handing more power to councils and local authorities. A standout proposal is allowing Thames Water to fail, with new investment replacing it. The group also wants a new ‘Department of the Prime Minister’ to oversee key government priorities.
Influential figures have already welcomed the Growth Group’s ideas, while the Tribune plan has sparked debate among economists. Both reports were published by MPs who have publicly demanded Starmer step down as leader. The competing plans highlight sharp divisions over Labour’s economic direction. One side backs higher taxes on wealth and looser borrowing rules, while the other pushes for tax cuts and localised control. The reports add pressure on Starmer as the party grapples with its policy path ahead of the next election.
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