LONDON — Former Bank of England governor Lord Mervyn King has issued a stark warning over the UK government’s reported plan for a mansion tax, arguing it exposes “the absence of a coherent strategy” at the core of Britain’s economic policy. The WP Times reports, citing Sky News.

In an interview on Sunday Morning With Trevor Phillips, King accused ministers of “writing ideas on the back of a fag packet” instead of developing a credible long-term fiscal framework. His comments come as Chancellor Rachel Reeves is said to be weighing the measure for inclusion in next month’s Budget, seeking to plug a multi-billion-pound shortfall in the public finances amid rising debt costs and slowing growth.

Fragmented system, no direction

“There’s plenty of scope for reforming the tax system,” King said. “We haven’t seen a chancellor take a strategic look at it for almost 40 years. It’s been one round of tinkering after another — creating an excessively complex mess.”

According to The Mail on Sunday, one version of the proposal would impose an annual 1% levy on the value of properties above £2 million — effectively £10,000 a year for a £3 million home.

King warned that such a step would add confusion rather than clarity:
“Property taxes already include stamp duty, council tax, capital gains and inheritance tax. You don’t solve that problem by simply adding another wealth tax.”

Policy by spreadsheet

The former central banker suggested that policy decisions are increasingly driven by short-term budget targets rather than economic logic.
“What happens is the OBR produces a single number just before the Budget, and ministers then look for quick ideas — almost written on the back of a fag packet — to raise a few billion here or there,” King said. “That is not a coherent tax strategy.”

Mounting fiscal pressure

Economists estimate that Ms Reeves needs to find £20–50 billion in new revenue to balance day-to-day spending by 2029/30 while keeping a £10 billion buffer. The task has become tougher after the Office for Budget Responsibilitydowngraded its productivity forecast.

Among the other options under review is a possible 2p increase in income tax — a move that would break Labour’s election pledge not to raise income tax, VAT or national insurance.

Asked if those promises were a strategic mistake, King replied: “Very unwise. The previous government was irresponsible to cut national insurance when it was barely feasible, given unrealistic spending plans. And the Opposition didn’t need to pledge not to reverse that. It would be better now to say, ‘We made that pledge in the heat of battle, it was a mistake, and we’ll unwind it.’ ”

Fiscal realism over slogans

In her interview with Sky News, Ms Reeves reaffirmed her commitment to restoring fiscal balance. “We are looking at both tax and spending, but the numbers will always add up with me as chancellor,” she said. “We saw what happened when a government lost control of the public finances — inflation and interest rates went through the roof.”

Read about the life of Westminster and Pimlico district, London and the world. 24/7 news with fresh and useful updates on culture, business, technology and city life: FCA Reversal Explained: Why Bitcoin ETPs Are Now Available to UK Savers