Labour's favourite think-tank has urged under-fire Keir Starmer to hike taxes on the wealthy and abandon the pensions triple-lock – as families face a £550 hit to living standards.

As Left-wing MPs plot to unseat the Prime Minister, the Resolution Foundation called for older and richer households to 'pay their way'.

In a new report, it presses for higher income taxes, council tax reforms and a raid on pension lump sums, as part of a programme designed to target wealth.

Capital gains tax and inheritance tax changes could also be used to raise more money, it suggests.

'The Government's reset should double down on growth and focus on those who have borne the brunt of long-term economic stagnation: young people and working families,' the report said

'Their needs should be prioritised over advantaged wealthier households, who have benefitted from Britain's 40-year wealth boom and a state that is increasingly dominated by delivering healthcare and pensions.'

The recommendations by the influential think-tank – many of whose members have become ministers or government officials – are likely to be closely studied by Sir Keir and his challengers as Labour grapples with its response to last week's disastrous local election results.

But they could also stoke fears of a damaging lurch to the Left.

The report noted that despite Labour announcing £70 billion of tax rises and £84 billion in spending hikes, Britain is still saddled with crumbling public services while the economy 'continues to splutter and stall' and public finances are 'in dire need of repair'.

Meanwhile living standards for working age families have stagnated and will take a further blow thanks to the war pushing up prices.

It will amount to an average £550 hit over the year, with lower-income households worse affected because they spend a greater proportion of their income on food and energy bills, which are rising sharply.

The report called for changes including council tax reforms that would leave the majority better off but raise more from 'residents of expensive houses'.

It also suggested scrapping the 'nil rate' band of inheritance tax, implying that all assets passed down from the deceased would be subject to some tax and not just those over a certain threshold.

And the report backed capital gains tax changes including an exit tax on those leaving the country as well as scrapping a loophole meaning it is no longer applied after death.

It also called for an end to the 'triple lock', introduced in 2012, which means that the state pension increases each year by either the rate of inflation, the average wage increase, or 2.5 per cent – whichever is highest.

'This makes sense if the pension was deemed too low, but – logically – there must come a point beyond which it can no longer be defended,' the think-tank said.

Resolution Foundation chief executive Ruth Curtice said: 'The Government's appetite for a reset is being driven by terrible election results.

'But… it is in everyone's interest for the country to change economic gear.

'The Government must ruthlessly prioritise what really matters – doubling down on growth and focusing on those who have lost out from economic stagnation such as young people and working families.'