Wes Streeting has threatened to introduce a new wealth tax if he becomes prime minister. In his first extended interview since he sensationally quit Sir Keir Starmer’s Cabinet in the wake of bloodbath local election results, the former health secretary claimed the current system was “penalising work”.

He told BBC presenter Nick Robinson’s Political Thinking podcast that equalising capital gains tax with income tax could raise £12billion a year. “A member of my family is a cleaner in Lancashire,” he explained. “She pays a higher tax rate on her salary than her landlord pays for the growing value of the home she lives in. She slogs her guts out, he puts in far less effort, yet the state rewards him more than her. And we wonder why people are angry.

“The system is penalising work. It’s not fair, and it’s bad for our economy. We need a wealth tax that works.”

Higher or additional rate taxpayers currently pay 24% on gains in the current financial year. Mr Streeting’s plan would mean they pay either 20%, 40% or 45%, depending on their tax band.

He added that: “We can do it in a way that is pro-growth, pro-entrepreneur and pro-work.”

It came after the Prime Minister faced repeated questions about his leadership in the wake of a series of controversial policies and scandals.

Mr Streeting has said he will stand in any leadership contest to replace Sir Keir, with allies insisting he had the required support of at least 81 Labour MPs to mount a leadership challenge.

But the Ilford North MP told Robinson on Political Thinking: “It was clear that if we'd been plunged straight into a leadership contest by me or for that matter anyone else, I think it would have been seen as a deliberate attempt to get ahead of Andy Burnham's potential return.”

If he wins, it is expected that he will challenge Sir Keir for the Labour leadership.