There is a welcome conversation happening in our party right now about the limits of GDP as a measure of success. As our Thriving Economy working group develops the policies that will take us into the next general election, colleagues are rightly asking whether we should measure what actually matters for people and the planet rather than treating growth as the ultimate aim.
I am firmly in the “measure what matters” camp. But I want to push this conversation somewhere it too often fails to go. Because the history of beyond-GDP thinking is littered with beautifully designed frameworks that changed nothing. The reason they changed nothing is not that policymakers hadn’t heard of them. It is that GDP supremacy serves powerful interests, and moving beyond it requires confronting those interests directly.
Let me put it bluntly. You cannot build a wellbeing economy without redistribution. New metrics are necessary but they are not sufficient. If we stop at dashboards and frameworks, we will have a more sophisticated way of describing the same broken system.
What the plans actually look like
Wales has shown that this is not abstract. The Well-being of Future Generations Act, passed in 2015, places a legal duty on public bodies to pursue wellbeing objectives across four dimensions: economic, social, environmental and cultural. It created a Future Generations Commissioner who can conduct formal reviews of public bodies and make recommendations they must respond to publicly. It is a genuine institutional innovation, but its limits are instructive too: the Commissioner’s powers remain largely advisory, and critics in the Senedd have called for stronger enforcement.
A UK-wide Wellbeing of Future Generations Act should learn from Wales and go further. It should embed wellbeing impact assessments into Treasury rules alongside traditional cost-benefit analysis, require departments to quantify outcomes using recognised measures like life satisfaction, mental health and social connectedness, and create an independent Future Generations Commissioner with the power to issue compatibility notices when legislation conflicts with wellbeing objectives, triggering mandatory parliamentary debate. Quarterly regional wellbeing dashboards, published by an expanded ONS, would give every community a clear picture of whether policy is actually working for them.
This is the institutional architecture that makes “beyond GDP” real rather than rhetorical. But architecture without funding is just a blueprint. The history of wellbeing frameworks, from the Stiglitz Commission to the UN’s own Sustainable Development Goals, confirms this: without the resources and political will to act on what the metrics reveal, measurement becomes an end in itself.
The redistribution question we keep avoiding
Every time this conversation happens, someone asks the obvious question: if you are agnostic about GDP growth, how do you fund the NHS, education, and defence? It is a fair question and we need a better answer than gesturing at natural capital accounting and hoping the UN sorts it out.
The answer starts with wealth. The wealthiest one per cent of UK households hold the same share of total wealth as the least wealthy half combined. This concentration is not just an economic problem; it is a democratic one, distorting political voice through media ownership, political donations, and the unreformed House of Lords.
A progressive annual levy on extreme wealth, starting at one per cent on fortunes above five million pounds and rising to three per cent above one billion, would generate significant revenue. Paired with a public wealth register and strong anti-avoidance provisions, it provides a funding base that does not depend on endless GDP growth. Half of receipts could be earmarked for child poverty reduction, universal care, and the green transition; the remainder stabilises public finances and allows gradual reductions in regressive consumption taxes.
Why this matters for us as liberals
Individual freedom means very little if you cannot afford to eat, cannot access healthcare, or cannot take a day off work without falling into debt. Economic precarity is the primary mechanism producing unfreedom in modern Britain. A wellbeing economy that does not address it is just a nicer way of describing the status quo.
We have always been the party that combines vision with plans. Our 2019 decarbonisation strategy and our 2024 EU policy showed that we can do serious transition planning. The Thriving Economy working group has the opportunity to do the same for economic transformation: not just a new set of metrics, but a new set of institutions, funded by a fairer distribution of wealth, accountable to wellbeing outcomes, and designed to expand the genuine freedom of every person in this country.
That is what a thriving economy actually requires. This is not an argument against economic growth; it is an argument that growth alone, without fair distribution, does not deliver freedom. The frameworks exist and the evidence is there. What has been missing is the political will to match the vision with the means. We should be the party that provides both.
* Tanya Park is a Lib Dem County, Borough & Town councillor in Eastleigh, Hampshire and writes at A Just Society, a liberal policy project making the case for radical progressive policies grounded in liberal principles.
Follow @libdemvoice.org on Bluesky
Like us on Facebook
Subscribe to our feed
Sign-up for our daily email digest
Why non-fiction books need their indexes
Changes in status: Local Elections wrap up
What should the Liberal Democrats stand for?
Ben Wood
Ed Sanderson
Jack
Matt (Bristol)
John Grout
25 Comments
“A progressive annual levy on extreme wealth, starting at one per cent on fortunes above five million pounds and rising to three per cent above one billion, would generate significant revenue” – you’re missing the word “not” before “generate”.
In reality it would lead to massive capital flight – as every other country that has attempted such a levy has discovered.
@Dominic The claim that “every other country that has attempted such a levy” has seen massive capital flight is simply not true. Switzerland has operated cantonal wealth taxes continuously for decades and remains one of the most attractive jurisdictions for capital in the world. Norway levies an annual wealth tax. Spain introduced a new solidarity tax on large fortunes in 2022 and collected revenue from it in the first year.
Some countries have abolished wealth taxes, notably France and Sweden. But the reasons are more instructive than the headline. France’s ISF had notoriously porous exemptions and poor enforcement. Sweden’s tax interacted badly with other parts of the tax code and was abolished as part of a broader package including the removal of inheritance tax. These are design failures, not proof that the concept is unworkable.
The UK Wealth Tax Commission, which included economists from the LSE, Warwick and other institutions, examined the evidence on behavioural responses in detail and concluded that a well-designed wealth tax with proper anti-avoidance provisions was feasible for the UK. The key design features matter: a public wealth register, mandatory disclosure for offshore trusts, and an exit levy on unrealised gains for those who leave. You can disagree with the politics of wealth taxation, but dismissing it as self-evidently impossible requires ignoring quite a lot of the evidence.
“A progressive annual levy on extreme wealth…..would generate significant revenue.”
There’s an economic argument that taxes aren’t about generating revenue for spending. Instead, they are about stopping us spending so that the government can use the fiscal space created to spend instead. This is largely true, and it can be used as an argument against having wealth taxes, but at the same time we do need to try to ascertain just how much fiscal space a wealth tax would create.
If the rich simply parked their wealth by buying up government bond there would be no need to impose wealth taxes. Their spare cash would end up back with the government. We know they don’t do that. They buy up land and real estate. This forces the price up. Once they own the land an real estate they seek to increase their capital “investment” by charging high rents.
The Blair government was sold the argument of PFI schemes. The wealthy weren’t wanting to put their money into hospitals and schools out of the kindness of their hearts. They wanted returns. Paid for by the rest of us.
If anyone has taken their pet to the vets recently they’ll know how expensive it has become. Largely this is because finance capital has taken over the ownership of veterinary practices which were previously owned by those who ran them.
Whenever finance capital moves in, with rentier motivations, we know prices will rise.
So let’s tax the rentiers out of existence!
Given that the welsh economy is a basket case and its public servcies perform worse that england it seems ironic you identify Wales and an example to follow ….
Disappointing to see Councillor McGrath have a bit of a go at Wales.
If the NHS in Wimbledon and Merton had the same inheritance of former coal mines and steel works…… and hill farmers for that matter…. (all of which has had a negative lasting impact on the health and life expectancy of its inhabitants) then it might be a fairer comparison. Vision in middle England clearly has its limitations.
@ Simon,
It’s not really fair to use this argument against Wales. You could equally use it against the concept of devolution in general.
But, devolution in Scotland works reasonably well and better than it does in Wales.
~
Why is this? It’s because Scotland’s Barnett formula gives it more spending power than does the formula for Wales. Does the Welsh formula even have a name?
So the lesson for any region of the UK wanting its local government to be take more devolved power is: make sure you negotiate a good deal with Westminster! Westminster will happily hand over the responsibility for someone else to run the schools and hospitals etc, They just don’t want to hand over the power to do it.
@Peter, this is a really useful way of thinking about it and I think we’re largely in agreement on the substance even if we’d express it differently
.
You’re right that the rentier problem is central. Extreme wealth doesn’t just sit in a vault; it flows into land, property, veterinary chains, care homes, water companies, and every other sector where you can extract rents from people who have no choice but to pay. The PFI example is a good one. The result is that wealth concentration actively makes life more expensive for everyone else.
I’d add, though, that the fiscal space argument and the revenue argument are harder to separate in practice than in theory. A wealth levy does both: it reduces the purchasing power concentrated at the top, and it generates receipts that can be earmarked for specific purposes like child poverty reduction or care. The earmarking matters politically because it builds and sustains public consent for the tax. People are more willing to support a levy when they can see what it funds.
But your core point stands. The case for taxing extreme wealth isn’t only about what the Treasury receives. It’s about what concentrated wealth does to the rest of the economy when left unchecked.
@Simon, the article specifically identifies Wales as an institutional innovation worth learning from while noting its limits and calling for a UK version to go further. That’s quite different from holding up the Welsh economy as a model.
The Well-being of Future Generations Act is a piece of legislation about how public bodies make decisions. It doesn’t set Welsh fiscal policy, control the block grant, or determine macroeconomic outcomes. Dismissing the legislative framework because of broader economic challenges in Wales is a bit like dismissing the Human Rights Act because the UK has a housing crisis.
@Simon. Surely the measure of the Welsh initiative should be whether the alternative measures of success are out-performing GDP growth. I don’t know the answer but unless the criteria include Rugby performance, it seems likely.
Sorry no, @Tanya. Switzerland’s wealth tax is only palatable to mobile capital because there are very easy ways to avoid it – and because other taxes on passive income are low. Norway’s has resulted in an exodus of the wealthiest individuals and arguably results in a lower tax take than if it were not in existence. Economists can pontificate all they like but tax professionals see what happens in reality, and these taxes simply don’t work.
If you want to tax wealth better, which is a laudable aim, the focus should be on immoveable capital, principally land (rather than buildings). This is not just good economics but workable tax policy, as it is much harder to avoid. It’s also long-standing Liberal policy. I’d advise you to focus on this area rather than the more generic wealth tax (which will only ever work if there is truly international consensus rather than just national policies).
@Dominic, the Switzerland point is fair as far as it goes. Its wealth tax works partly because of how it sits within the broader Swiss tax system. But you can’t cite Switzerland as evidence that wealth taxes fail when it’s been running one successfully for decades.
On Norway, you’re overstating the case. Some wealthy individuals have left, yes. But the Norwegian tax administration’s own analysis shows the revenue impact of emigration has been modest relative to total receipts. The government’s response was to tighten the rules, not scrap the tax. This is an argument for good design, not surrender.
The appeal to “tax professionals” as the voice of reality is worth examining. Tax professionals make their living from complexity, avoidance structures, and the gap between what the law intends and what it achieves. They have a professional interest in taxes being considered unworkable. That doesn’t make their technical knowledge worthless, but it does mean their instinct will always be that the clever money will find a way around it. The correct response to that is better enforcement, not giving up.
On land: I support reforming property taxation. But suggesting LVT as a substitute for a wealth levy is a move I see a lot in our party, and it doesn’t survive scrutiny. Land taxes don’t touch financial wealth, business equity, trusts, or offshore holdings. If your concern is the concentration of economic and political power, land alone doesn’t get you there.
Tanya – I’m not going to reinvent the wheel but instead refer you to this comprehensive piece by Dan Neidle and Tax Policy Associates: https://taxpolicy.org.uk/2025/07/22/uk-wealth-tax-anti-growth/
Dan has the benefit of real world experience and draws on the expertise of many others who deal with tax systems as they work in reality, rather than the simplified models that economists play with. He explains in considerable detail why wealth taxes don’t work, including the behavioural impacts on mobile capital (Norway included).
I’ll let his piece cover it (& and he does regularly talk to all parties and none about tax policy, despite being an active Labour member).
As a fellow tax professional, I will however take issue with your statements that “Tax professionals make their living from complexity, avoidance structures, and the gap between what the law intends and what it achieves. They have a professional interest in taxes being considered unworkable” – that is certainly not how 99% of tax professionals make their living and is a bit like saying all lawyers make their living from defending serial murderers. Pretty much every tax professional I know would like to see a far simpler, more rational & indeed fairer tax system – and we continue to make proposals along those lines – but it is HM Treasury (& sadly many politicians) who seem addicted to complexity and unworkable solutions.
We see a lot of arguments to the effect that wealth taxes are anti-growth, they’ll be avoided, they don’t work, and the rich will leave the country etc etc.
I don’t see any arguments to refute the point that an accumulation of wealth leads to increased rentierism. The wealthy don’t simply want to maintain their level of wealth they want to use the wealth they already have to increase it even more. They’ve been very successful in recent years. Their increased wealth doesn’t come out of a vaccuum. We, especially the young with sky high housing costs, are providing that.
According to Google’s AI:
“Billionaire wealth has increased over 1000% since 1990. In 2024, the richest 1% of adults held at least £2.3 million each, with the top 50 families holding more wealth than the bottom 50% of the population ”
What other suggestions do those opposed to wealth taxes have to protect us from rentierism? Keynes proposed the “euthanisia of the rentiers”. How do we achieve that?
@Dominic, Dan Neidle is a good tax analyst and I’ve read the piece. It’s detailed work on the administrative and behavioural challenges of wealth taxation. But it’s one perspective, from someone whose professional formation is in making the tax system work as it currently exists, not in asking whether the system itself is adequate to the scale of wealth concentration we now face.
The piece recommends reforming CGT, IHT, and property tax instead. Fine. We support all three. But none of those reforms reach financial wealth held in trusts, offshore structures, or non-property assets. None of them address the democratic distortion caused by extreme wealth concentration. Neidle is answering a narrower question than the one I’m asking.
Neidle’s own piece concedes that Switzerland’s wealth tax raises over 1% of GDP, which in UK terms would be around £25 billion. Norway collects around 0.4% of GDP despite the emigration headlines. These are annual wealth taxes that exist and raise real money.
More broadly, I’d question the growing tendency to treat tax professionals as the final authority on what taxes a society should levy. Tax policy is a political and moral question, not just a technical one. The administrative challenges are real and deserve serious answers, which is why our Limitarianism proposal includes a public wealth register, mandatory disclosure for offshore trusts, and an exit levy. But the existence of implementation challenges has never been a sufficient reason not to tax something that should be taxed.
@Peter Martin
Keynes proposed the “euthanisia of the rentiers”. How do we achieve that?
One solution is to follow France in 1789. The Terror, French Revolutionary and Napoleonic wars engulfed Europe and ended in 1815. Personally I’d rather avoid a repeat of that approach.
sorry Tanya, Dan Neidle’s isn’t just “one perspective” – his piece draws in various other bodies & research. The IFS, for example, reach a similar conclusion. CenTax are another.
You’re also simply incorrect to say that “none of those reforms reach financial wealth held in trusts, offshore structures, or non-property assets. None of them address the democratic distortion caused by extreme wealth concentration”. If you look at the proposals he and others make, they go a long way to doing precisely that – and have the merit of actually being workable rather than pie-in-the-sky.
There are a wide range of experts, think tanks, even economists from across the political spectrum who – perhaps surprisingly – agree on how the UK tax system should be reformed to achieve many of these outcomes and more. They include the likes of the Joseph Rowntree Foundation and New Economics Foundation to the ‘left’, through to the Adam Smith Institute and other on the right/free market end. Their simple summary paper can be found here: https://centax.org.uk/tax-reforms-for-growth/
What they are not proposing, however, is the blunt instrument wealth tax, and for the really quite important reason that it simply doesn’t work.
You can of course choose to dismiss ‘experts’ … I seem to recall that worked really well in the context of Brexit
@Dominic, I’ve read the CenTax paper. It’s a sensible set of reforms to existing taxes: property, VAT, marginal income tax rates, CGT. I support most of them. But you said these proposals “go a long way” to reaching financial wealth held in trusts, offshore structures, and non-property assets. They don’t. The paper contains no proposals on trust transparency, no wealth register, nothing on offshore disclosure, and nothing on the concentration of financial wealth as distinct from income or property.
This is the core disagreement and it’s worth being honest about it. You’re arguing that the existing tax system just needs better calibration. I’m arguing that the system is structurally inadequate to the scale of wealth concentration we now have. These are different diagnoses, and they lead to different prescriptions. No amount of CGT reform or council tax revaluation addresses the fact that fifty families hold more wealth than half the UK population. That isn’t a design flaw in the tax code. It’s the outcome of a system that was never built to prevent it.
And since you brought up Brexit: the expert consensus before 2016 was that the economic status quo was broadly working. It wasn’t, for millions of people, and the refusal to acknowledge that is part of how we got Brexit. The lesson isn’t “always defer to the expert consensus.” It’s “make sure the experts are asking the right question, and that the people most affected by the answer are in the room when it’s decided.”
@ Tristan,
I’d favour a more humane method of euthanasia too! 🙂 But I don’t think we should take Keynes quite so literally.
Paul Krugman explains as below:
https://archive.nytimes.com/krugman.blogs.nytimes.com/2014/01/22/the-euthanasia-of-the-rentier/index.html
It’s not a CenTax paper, it’s a paper written jointly by every major tax or economic think tank from across the political spectrum. It doesn’t cover “trust transparency, no wealth register, nothing on offshore disclosure” because those are not primarily matters of tax policy. I have no strong views on those points – they look like they speak more to concern around collection of taxes (if you think there is significant tax evasion aka fraud) as opposed to tax policy design. From what I know of HMRC, I think much of the evasion concern/tax gap is already being addressed through better data mining and use of AI.
“No amount of CGT reform or council tax revaluation addresses the fact that fifty families hold more wealth than half the UK population”. I’m genuinely bemused as to how you come to that conclusion. In fact they (along with reformed IHT and ideally a LVT in place of council tax/SDLT) do precisely that.
The Duke of Westminster’s estate incurred no IHT precisely because of flaws in how IHT is currently designed. If IHT were moved to an accessions basis, we scrapped PETs and numerous other exemptions (and reduced the IHT rate/revisited thresholds) then the largest estates would indeed be subject to IHT. Trusts don’t in themselves result in avoidance of capital taxes; rather it is the design of those capital taxes which determines whether they can be used to avoid them (which is not nearly as easy as you seem to think).
/cont.
continued …
Similarly you seem to think that non-property or “financial” wealth isn’t subject to existing wealth taxes (IHT, CGT). Not true. Virtually all assets fall within an estate and almost all assets are subject to CGT (or failing that, income tax/corporation tax on a mark-to-market basis). The incidence is different (on realisation or death or transfer rather than an annual levy) but that doesn’t change the fact that they are already subject to capital (aka “wealth”) taxes – they just need to be better designed.
Your lesson on experts seems to be just to ignore them. When all the experts are saying that your proposal doesn’t work, perhaps it’s time to think again?
@Dominic, a few things.
You say trust transparency, wealth registers, and offshore disclosure “are not primarily matters of tax policy.” That’s a remarkable position. You cannot tax what you cannot see. The entire history of tax avoidance is the history of assets being made invisible to the authorities. Separating enforcement architecture from policy design is like designing a speed limit and declaring enforcement to be someone else’s problem.
You say CGT and IHT reform would address the concentration of wealth in fifty families. They wouldn’t, and here’s why. CGT triggers on realisation. IHT triggers on death. Between those events, wealth sits and compounds, untouched. A family that holds and never sells pays no CGT. A family with good estate planning can defer IHT across generations. The Duke of Westminster example you raise actually proves my point: the problem isn’t just that IHT was badly designed. It’s that event-triggered taxes are structurally unable to reach wealth that is accumulated and held, which is precisely what extreme wealth does. An annual levy addresses the gap between events. Your preferred reforms do not.
And I’m not ignoring experts. I’ve engaged with Neidle’s piece in detail, agreed with several of the CenTax proposals, and set out where and why I disagree. That’s not ignoring anyone. It’s the normal process of democratic argument about what kind of tax system a society should have. You seem to think the debate is settled. I don’t.
1) transparency & registers etc – that’s about evasion, people not paying the tax they are supposed to. It’s criminal. It’s not a question of tax policy design, however. That’s quite a different matter to tax avoidance, which is using the rules to achieve a more favourable tax outcome – within the law, if not necessarily within the spirit of the law. That a question of how the law is constructed rather than a matter of transparency etc.
2) “A family that holds and never sells pays no CGT” – no. If an individual in the family that owns the asset dies, then that triggers IHT (unless passed to their spouse). The tax code doesn’t operate on the basis of family taxation. The Duke of Westminster point is precisely because of an exemption that doesn’t need to be there. A reformed IHT would tax the estate at the point of death (or transfer). Taxes on realisation events like these are better suited to assets that are illiquid and where increases in value are not converted into cash, whereas financial assets can often be taxed on a mark-to-market basis, reflecting the fact that they are more readily realisable. But that aside, there is no magic about an annual tax that makes wealth taxed *more*; rather it’s a question of timing – and indeed of behavioural impact.
/cont …
Continued …
You may not regard the position as settled, fine. HMT looked at this (again) seriously last year and wisely decided against going down the path you suggest, not least because of all of the practical & behavioural challenges which convinced them – much like every tax think tank and all the main tax policy experts – that while superficially attractive, this is a bad policy. You are of course fully entitled to carry on swimming against the tide on this, that is your prerogative. But it’s not going to happen and the party would only make itself look silly if it advocated this policy (& thankfully I see no signed that it intends to).
I have no expertise on tax. So I have no idea whether or not Tanya is talking sense. But I can sure recognise who is not. Dominic – People who rely on browbeating, shouted assertion, and belittling those who disagree with them, are always in the wrong.
The country needs to receive sufficient funds from taxation to fund public services. That is half the story. It also needs to help create a fairer, happier and freer society. Each individual should be able to forge a creative, happy and empowering life for themselves and their friends. We should also play our part in making the world more sustainable, equal and fair. We should measure all these things. I prefer separate simple metrics rather than a composite figure that imposes relative importance to each. Each component should receive equal coverage in debates, analysis and media coverage.