Burnham warned raising capital gains tax would be 'stupid' and drive entrepreneurs out of Britain ahead of Budget

Lord O'Neill of Gatley, a Labour peer and one of Andy Burnham's own economic advisers, has publicly branded a potential capital gains tax rise "stupid", warning it would prompt business owners to delay company sales or shift money overseas to sidestep the levy. The intervention comes just weeks before Burnham and Chancellor John Healey deliver their first Budget on October 28, with widespread speculation that the government is targeting tax increases on second homes, shares and other assets. Lord O'Neill also urged the Prime Minister to abandon his pledge of "growth in every postcode" and direct investment into London, the West Midlands and the Northern Powerhouse instead.

Lord O'Neill warned that pushing capital gains tax too high would actually lose the Treasury money, not raise it.

Asda chair Allan Leighton backed Frasers Group founder Mike Ashley's attack on Burnham, calling the government's business rates stance "disastrous" and warning the Budget could be a "tipping point" for the economy.

Lord O'Neill said Burnham risks proving his government is not "thinking about growth as sincerely as they claim" if he presses ahead with the rise.