Andy Burnham urged to scrap income tax and NI in radical fiscal overhaul | Andy Burnham

Leading economists, including Andy Burnham ally Jim O’Neill, are calling on the Makerfield MP to introduce radical tax and spending reforms to “unlock the gridlock that plagues the country” when confirmed as prime minister.

O’Neill joins Jonathan Portes, professor of economics at King’s College London, and Danny Sriskandarajah, chief executive of the New Economics Foundation, in calling for bold action in an open letter.

They write: “Taxes in Britain are rising faster than in any comparable economy, while public services are deteriorating. The country spends £100bn a year on debt interest, more than the entire defense budget and equivalent to half NHS spending.”

“Seven prime ministers in 10 years have inherited the same challenge and failed to solve it for the same reasons: the problems are structural and systemic.”

Other signatories of the letter include John Muellbauer, senior research fellow at Oxford’s Nuffield College, who has long advocated for property tax reform, and Prof Henrietta Moore, director of the Global Wellbeing Institute at University College London.

The starting point, they argue, should be a plan for a fundamental overhaul of taxes and public services, laid out in a new report published by the institute on Thursday. Prosperity 2030 proposes replacing six core taxes, including income tax, capital gains tax, inheritance tax and national insurance contributions, with a single tax.

These “national contributions” will be paid on all income, regardless of income from business, the sale of assets, or the inheritance of a deceased relative.

The report’s authors claim that, depending on the rate set, this could generate a whopping £75bn a year in additional income within five years. They call for revenues from these and other tax reforms, including tripling the air passenger tax, to be spent on providing universal services to the public, including free bus services and free lunches for all primary school children.

Moore said: “Wellbeing 2030 is about rebuilding the systems that shape daily life, work, care, housing, skills and the cost of living. It is an economic plan that measures success by whether people can live lives of safety, dignity and hope.”

Tax expert Dan Neidle, of consultancy Tax Policy Associates, raised questions about the credibility of Prosperity 2030’s assumptions, saying: “I don’t understand where the figures are coming from.”

The report also advocates the abolition of stamp duty and council tax, the imposition of a 1% national tax on property value and the transfer of revenue to local governments based on population.

The second proposal echoes one made by Sheffield Hallam MP Louise Haigh, a key member of Burnham’s team, in a recently published leaflet for the Tribune group of Labor MPs. Burnham himself has talked about the benefits of a “land value tax” on properties.

Policy interests from across the Labor Party and beyond are vying to influence the incoming regime. Burnham is expected to be confirmed as leader of the Labor Party on July 17, when nominations close, and to take over as prime minister from Keir Starmer on July 20.

Who is appointed as chancellor will be a critical early decision, with energy secretary Ed Miliband seen as the most likely choice.

O’Neill, a different colleague and former chief economist at Goldman Sachs, collaborated with Burnham in Manchester. Although no official announcement has been made, he is being discussed as a potential senior advisor to the Prime Minister-in-Chief.