Section 4: Raising the money · Chapter 20
Where the money is
Reading time: 4 minutes 30 seconds
In this section
We have covered a lot of ground in this section. Here are the mechanisms in one place.
Three things about how to read what follows.
These are not all the same kind of money. Money borrowed and repaid, money we stop paying out, and money raised in tax are three different things, and they are set out separately below for that reason. Some figures describe a pool that already exists; others describe a flow arriving every year. Both are marked.
This is third party research. It comes from different people, in different years, on different assumptions, and several of them disagree with each other. The Taxing Wealth Report does not propose a wealth tax at all, and still finds £90 billion a year by reforming existing taxes. The Wealth Tax Commission expects between seven and seventeen per cent of the tax base to be lost to avoidance. We have not smoothed those disagreements away, because they are the point. There is more than one way to do this, and the argument in this report does not depend on any single one of them.
And we have not added them up. That is deliberate. This report does not set out a costed budget, because the binding constraint on this programme is not money. It is capacity – how fast Britain can build, and how many people we can train to build it. That is what the capacity guardrail is for. A total here would imply a spending envelope, when we have already argued that the envelope should be set by what the country can absorb, not by what the Treasury can raise. Anything we can actually do, we can afford.
1. Off-market financing — existing pools and flows that could be directed into productive investment
| Annual flow into Cash ISAs | £70–85bn a year |
| Redirecting ISA and pension contributions into infrastructure | up to £100bn a year |
| Total funded occupational pension assets | c. £2.1 trillion (existing pool) |
| UK non-financial business cash deposits | c. £597bn (existing pool) |
2. Monetary policy savings — money the state currently pays out and could stop paying
| Tiered bank reserves, 10% non-interest-bearing | £11.5bn a year (2023 estimate) |
| Halting active QT gilt sales | up to £13.5bn a year |
| Slowing active sales to the 2022–23 pace | £4.4bn a year |
3. Tax revenue — money raised
| 2% annual tax on wealth above £100m | £10.4bn a year, rising to £18bn by 2036 |
| 0.6% annual tax on wealth above £2m | £10bn a year |
| 1% annual tax on wealth above £10m, 2% above £1bn | c. £9bn a year (Advani et al.; Green Party policy) |
| One-off 1% a year for five years, above £500,000 | £260bn total |
| One-off 1% a year for five years, above £2m | £80bn total |
| Reform of existing taxes on wealth and income from wealth | up to £90bn a year |
| Digital services tax raised from 2% to 10% | c. £3bn a year (Labour costing, 2021) |
No total. On purpose.1
There is a great deal of money in this country. Most of it is currently circulating inside the financial system rather than being built into anything, which makes us less resilient rather than more. The question this report asks is not whether the money exists. It is what we are prepared to do with it.
- Cash ISAs. HMRC, Annual Savings Statistics, September 2025. Cash ISA subscriptions reached £69.5bn in 2023/24, a 67% increase year on year; total ISA subscriptions were £103bn, and the total ISA market was worth £872bn as at April 2024. Lloyds Banking Group projects over £85bn into Cash ISAs in 2025/26. The estimated Exchequer cost of ISA tax relief in 2024/25 is around £9.4bn — the state already subsidises these accounts at that cost without any requirement as to where the money goes. Note that the Cash ISA allowance is due to fall to £12,000 for under-65s from April 2027, the first reduction in any adult ISA limit since 1999.
Redirecting ISA and pension flows. Richard Murphy, Taxing Wealth Report 2024, taxingwealth.uk. Estimates that if all new ISA funds and 25% of new pension contributions were required to be saved in ways that fund UK infrastructure, including projects linked to climate change, up to £100bn a year could be made available for that purpose.
Pension assets. ONS, Funded occupational pension schemes in the UK: April to September 2025, released 2 April 2026. Private sector defined benefit and hybrid schemes stood at £1,120bn; combined private sector defined contribution and public sector defined benefit and hybrid schemes at £945bn. The composition is shifting: the Investment Association reports defined benefit assets falling 12% in a year to £1.7 trillion, while workplace defined contribution assets rose to £650bn, up 40% since 2019, and the Local Government Pension Scheme grew to £415bn.
Corporate cash deposits. Deposits in currency and repos held by UK non-financial businesses stood at £597bn in 2025, having grown by £126bn since 2019. This figure should be treated as indicative: the OBR notes that measuring corporate cash reserves is difficult, since non-financial holdings are estimated as a residual from aggregate data that also covers financial institutions, and that the apportionment may be too high. Deloitte analysis found that 25% of non-financial FTSE 100 companies hold 80% of total cash reserves — the money is highly concentrated.
Tiered reserves. New Economics Foundation, November 2023. Requiring commercial banks to hold 10% of their liquid assets in reserves paying no interest would save £11.5bn a year, or £55bn over five years, against around £30bn paid out in 2023. Proposals to end interest payments on all reserves, costed at around £35bn a year, have been assessed by fact-checkers as overstated; neither NEF nor the IFS supports that figure. UK Finance argues that remunerating reserves below market rates amounts to a tax on the banking sector, with potential financial stability implications if large enough.
Active gilt sales. New Economics Foundation, February 2025: halting active QT sales would save up to £13.5bn a year, and slowing them to the 2022–23 pace would save £4.4bn a year. The Treasury’s position, set out in the Chancellor’s November 2024 letter to the Governor, is that different unwind paces affect the time profile of APF cashflows but are unlikely to have a material impact on the lifetime profit or loss of the facility. NEF’s counter is that active sales crystallise real losses, with recent sales at as little as 28% of the original purchase price. Between 2009 and 2022 the APF transferred £123.9bn to the Treasury, before the position reversed.
2% tax above £100m. Tippet et al., King’s College London, the Paris School of Economics and the University of California, Berkeley, July 2026. A 2% minimum annual tax on wealth above £100m, net of existing income taxes, would raise £10.4bn in 2026 from fewer than 1,000 households, with administrative costs under 1% of revenue, rising to almost £18bn a year by 2036. Nearly half of revenues would come from fortunes built in finance, real estate and land. The design keeps households liable for up to ten years after leaving the UK.
Wealth Tax Commission figures. Advani, Chamberlain and Summers, A Wealth Tax for the UK, Wealth Tax Commission, December 2020, wealthandpolicy.com, with revenue modelling also published by the IFS. An annual tax at 0.6% above £2m raises £10bn a year; a one-off tax at 1% a year for five years raises £260bn above a £500,000 threshold or £80bn above £2m. The Commission estimates that 7–17% of the initial tax base would be lost to avoidance at a 1% rate. A separate study by Tippet at King’s College London found that had UK tax residents on the annual rich lists paid 2% on assets above £10m from 1994, at least £160bn would have been raised — while their share of total UK wealth would still have nearly doubled.
Timing. Tax Policy Associates, July 2025, notes that a wealth tax announced in an Autumn 2026 Budget would not produce revenue until January 2030 at the earliest, and more probably January 2031. ↩︎