The IPPR is urging the Government to look at tax rises to tackle the cost of living pressures.
Published 15th Oct 2026, 06:00 BST
Chancellor John Healey is coming under pressure to ease the cost of living through tax rises, though reports suggest that he and Prime Minister Andy Burnham have calmed business nerves ahead of the Budget.
Prior to getting into power, Mr Burnham suggested that the UK should be less “in hock to the bond markets”, appearing to indicate a loosening of fiscal discipline.
However, since entering No10 the new Prime Minister has pledged to stick to Rachel Reeves’ rules, with the global uncertainty heaping pressure on his new Chancellor Mr Healey.
Influential think tank the Institute for Public Policy Research (IPPR) is urging the Government to look at tax rises to tackle the cost of living pressures.
It says this will maintain the Chancellor’s headroom and stick to the fiscal rules, while allowing additional support for struggling families.
IPPR is suggesting around £20bn could be raised by a combination of reforming capital gains tax, deferring Bank of England losses from quantitative easing and placing a windfall tax on banks.
It has also called for a 2 per cent levy on the online sale of retail goods, which should be pumped into business rates cuts for the High Street.
To tackle the cost of living crisis, IPPR says the Government should introduce a cap on rent hikes, guarantee household energy bills won’t go over £2,000 for the first six months of 2027 and freeze fuel duty for the same period.
Harry Quilter-Pinner, IPPR executive director, said: “This Budget needs to deliver by bringing household bills down and getting the economy growing, while doubling down on fiscal responsibility.
“That means raising some additional revenues in ways that support growth: reforming capital gains tax with pro-entrepreneurship exemptions, introducing an online sales tax while cutting high street business rates, stopping taxpayers footing the bill for Bank of England losses, and temporarily taxing bank windfalls.
“In all that could raise around £16bn. The goal should be simple: give people breathing room today, while building an economy that can raise living standards tomorrow.”
Meanwhile the York-based Joseph Rowntree Foundation has warned that without urgent action this could be the worst Parliament for living standards in modern times.
New research from the JRP, Pro-Bono Economics and the Fraser of Allander Institute has found that the hit to growth from the cost-of-living crisis is five times greater than the benefits from a third runway at Heathrow.
Chris Belfield, chief economist at the JRF, said:“We might be facing the worst parliament for living standards on record.
“If we want growth that lasts and a productive economy that works for everyone, we need to implement measures that provide a firm foundation that enables people to live well, to look to the future, to learn the skills needed for a changing world and to take a risk.
“By focusing on economic security, we can regain some control in an uncertain world.”
This comes after reports that Mr Burnham and Mr Healey met with business chiefs this week to assuage fears ahead of the Budget.
The Financial Times has said that the Prime Minister told bosses that he wanted to run the “most pro-business country in the world”, indicated that they would not be hit with more tax rises on October 28.