Rachel Reeves told to implement wealth tax at next Budget

Dodds, who quit her position in February after the Prime Minister decided to slash the overseas aid budget, said there had been a "lot of discussion" about a wealth tax.

The tax is an annual levy on an individual's total net assets, including property, investments, and cash above a given threshold.

The Oxford East MP admitted she had been "a bit sceptical about some of those claims for a long time because, of course, wealth is taxed in the UK".

But, she said the Wealth Tax Commission had looked at various types of international wealth taxes in 2020 and how it could be delivered in Britain.

"I would hope the Treasury is considering that kind of evidence, as well as other changes that have been put forward," Dodds added.

The former Shadow Chancellor, while Labour was in opposition, said the tax proposals outlined by Deputy Prime Minister Angela Rayner ought to be "considered".

The Daily Telegraph reported in May that Rayner suggested to the Chancellor that she increase taxes, including restarting the pensions lifetime allowance and a higher corporation tax level for banks.

Questions have been asked about how the Labour Government will raise enough money to fund a number of U-turns and spending commitments.

With a number of departments experiencing cuts, Reeves could be forced to raise taxes instead.

However, Labour has pledged not to raise taxes on "working people".

When speaking to Sky News, Dodds said: "I don't think you can, particularly via cuts, actually deliver the kind of fiscal room that is necessary".

"But I know Rachel will be thinking deeply about this," she added.

Dodds also called on Labour to take a "longer-term approach" in relation to public finances.

It comes after Prime Minister Keir Starmer was forced into a £5bn U-turn on welfare cuts by his own party.

Dodds said that the welfare cuts "sometimes seem like the right thing to do for tactical reasons".

"In order to deal with a gap that had opened up because of the OBR's assessment, to try and plug that by cutting spending," she said.

"It may make sense tactically, but strategically, a longer term approach is needed and that's the big issue that the government has to face up to."

Labour has not ruled out a wealth tax, but the Prime Minister has previously said, "we can't just tax our way to growth" when questioned during PMQs in June.

Leader of the rebel Labour MPs - who put Starmer in the position to abandon his welfare reforms - Rachael Maskell, said a wealth tax could raise up to £24bn a year by increases in capital gains tax and other ways.

Dodds told The Guardian that: "Now is a time when we're seeing forces outside our country's control impacting on our security.

"It's important to have an open conversation with the public and say that means we will need to change when it comes to tax," she said.

"That needs to be done in a way where those with the broadest shoulders take more responsibility."