The chancellor desperately needs more money to finance growth and public spending so expect a bit of tweaking to supposedly strict constraints
Change*. If Labour’s one-word campaign slogan had an asterisk, it would have directed voters to Rachel Reeves’s budget.
Later this month the chancellor will attempt to walk the line between repairing Britain’s battered public realm, while sticking to a manifesto promise to balance the books without raising taxes on working people.
Continue reading...Thinktank says tax increases in budget will be necessary even if Rachel Reeves changes fiscal rules
Keir Starmer’s promise to end austerity and rebuild public services will require tax increases of £25bn a year in the coming budget even if debt rules are changed to provide scope for extra investment spending, a leading thinktank has said.
In its preview of the first Labour budget in 14 years, the Institute for Fiscal Studies said Rachel Reeves would need to raise taxes to fresh record levels to meet the government’s policy goals. The chancellor was also warned of the risk of a Liz Truss-style meltdown if the City responded badly to substantially higher borrowing.
Continue reading...As the budget looms, where the party stands on investment in the UK economy, workers’ rights and more
For a second year running, corporate Britain descended on Liverpool for Labour’s annual conference, in an event so packed with executives that some insiders joke the socialist gathering has developed into a full-blown “Davos on the Mersey”.
Like last year, the exhibition and conference fringe had sponsored events, lounge areas and advertising from exhibitors including Gatwick, National Grid, Ikea and Specsavers. This year, however, business leaders were looking for clues about how Labour will govern after July’s election landslide.
Continue reading...Chancellor says £22bn gap in current spending budget and state pension rise meant she had to make decision on means-testing fuel payments
In interview this morning Rachel Reeves, the chancellor, defended her own decision to accept clothing donations worth £7,500 when she was in opposition.
Speaking on the Today programme, she said:
I can understand why people find it a little bit odd that politicians get support for things like buying clothes.
Now, when I was an opposition MP, when I was shadow chancellor of the exchequer, a friend of mine who I’ve known for years [Juliet Rosenfeld] – she’s a good personal friend – wanted to support me as shadow chancellor and the way she wanted to support me was to finance my office to be able to buy clothes for the campaign trail and for big events and speeches that I made as shadow chancellor.
It’s never something that I planned to do as a government minister, but it did help me in opposition.
It’s rightly the case that we don’t ask taxpayers to fund the bulk of the campaigning work and the research work that politicians do, but that does require, then, donations – from small donations, from party members and supporters, from larger contributions, from people who have been very successful in life and want to give something back.
We appreciate that support. It’s part of the reason why we are in government today, because we were able to do that research work, and we were able to do that campaigning.
Unite and the Communication Workers Union (CWU) have put forward motions which were due to be debated on Monday afternoon, with strong support expected from other unions.
Sources said unions were told late on Sunday that the debate is being moved to Wednesday morning.
Continue reading...The chancellor beamed her way through a conference speech that offered hope at least but little of substance
Stop all the clocks, cut off the telephone. If you had thought that maybe today was the day when you made that call to Dignitas, then think again. Cancel that flight to Zurich. At least postpone it. Things might not be quite as bad as you had been led to believe. Or rather, they are that bad but there is some small flicker of hope if you can hold on long enough. There will be pain in the short and medium term. There’s no avoiding that. Try to think of it as character building. But possibly, just possibly, you might come through. We happy few. Blinking into the light of the promised land.
This was Rachel Reeves’s day. And she knew everything was going to be just fine the moment she woke up to find that Liz Truss had posted yet another cry for help on X. You can now follow the Trusster’s decline in real time on social media. It’s got so bad that she now films herself in front of a bookcase where everything is arranged by colour. The kindest explanation is that she thinks she’s filming a hostage video and the books are a coded message for “I’m being held against my will”.
Continue reading...Economic activity was ‘a little bit softer’ than central bank had predicted, one expert notes, but a rate cut still seems unlikely
How soon the Reserve Bank might cut interest rates will be the focus for borrowers and economists alike when the central bank wraps up its latest meeting on Tuesday.
Governor Michele Bullock is expected to keep the RBA’s key rate unchanged for a seventh meeting in a row, according to a survey of 45 economists by Reuters. The bank lifted the rate 13 times between May 2022 and last November.
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Continue reading...Policymakers vote 8-1 against back-to-back cuts in borrowing costs after inflation stayed above Bank target
The Bank of England has kept interest rates unchanged at 5% as it put its efforts to ease the pressure on household budgets on hold.
The Bank’s monetary policy committee (MPC) voted by a majority of eight to one against launching a back-to-back reduction in borrowing costs amid concerns over lingering inflationary pressures.
Continue reading...The government saw off a rebellion over its plans to cut winter fuel allowance this week. John Harris speaks to Caroline Abrahams from Age UK about what this winter will look like for millions of pensioners losing out. Plus, he talks to columnist Rafael Behr about whether the technocrats (Starmer and Reeves) are taking the Labour party in the wrong direction
Continue reading...Pre-election slowdown continues in July despite economists predicting growth of 0.2%
The anticipated post-election bounceback in the UK economy failed to materialise as activity flatlined in July for a second month, , according to the latest official data.
The Office for National Statistics (ONS) said the pre-election stalling of activity in June was followed by another month in which gross domestic product remained unchanged.
Continue reading...Dozens said to be considering abstaining from Tuesday’s vote over pensioners’ payments, as PM says dealing with dissent is ‘matter for chief whip’
As many as 50 Labour MPs could refuse to back the government’s controversial plan to cut the winter fuel allowance, despite Keir Starmer urging back benchers to get behind a measure he has conceded is “unpopular”.
While few on the government benches are expected to vote against the policy in Tuesday’s vote, dozens are believed to be considering abstaining or being absent – though rebels say the numbers in their ranks are very hard to predict.
Continue reading...Employees have lost out on holiday pay worth £2bn, according to new trade union research
Workers across Britain have lost out on holiday pay worth £2bn, with more than a million people going without a single day of paid time off, according to new research.
With unions gathering in Brighton this weekend for the first TUC conference under a Labour administration for 15 years, the body revealed new research showing the extent to which workers are being denied holiday pay. Workers are entitled to 28 days paid leave for a typical five-day week.
Continue reading...The 2017 Grenfell Tower fire in London was the result of ‘decades of failure’ by central government, the public inquiry into the catastrophe has found. The Guardian’s John Harris looks at the findings of the report with the social affairs leader writer Susanna Rustin. And, as Labour continues to warn ‘things will get worse before they get better’, we are joined by the economists James Meadway and Ann Pettifor to discuss whether a painful period of austerity-lite is the only way through the storm
Continue reading...Stella Creasy says she wants to put school and hospital debts and impact of trade deals ‘on nation’s books’
A senior Labour backbencher is seeking to have liabilities from schools and hospitals built under private finance initiative (PFI) deals scrutinised under a new budget responsibility bill.
Stella Creasy, who has tabled two amendments to the bill, said this would help highlight the scale of debt incurred. She also wants trade deals such as the post-Brexit arrangement with the EU to fall under its remit, arguing these can have an even greater fiscal impact.
Continue reading...Keir Starmer struggling to sell his remedies for the problems facing Britain after Tory mess
The prime minister is struggling to communicate how his government will address the significant problems facing the UK. While the public readily accepts that the last government left a mess, selling Labour’s remedies as necessary or fair is proving more challenging.
The incoming government’s first job was to assign blame for the country’s current woes. This proved relatively easy, given the last government’s unpopularity and the Conservatives’ poor campaign.
Continue reading...Past Labour PMs – Blair, Wilson, Attlee – have tended to arrive in power accentuating the positive
Sir Keir Starmer could perhaps have timed it better. On the day that Oasis, the band that symbolised the mood of sunny optimism that swept Tony Blair to power in 1997, announced their reunion, the prime minister’s message to the nation was that things would get worse before they got better.
Politically, it is quite a gamble. There haven’t been all that many Labour governments in the past 125 years, but they have tended to arrive in power accentuating the positive. That was true of Blair in 1997 and true of Harold Wilson in 1964.
Continue reading...Chancellor insists she still has large black hole to fill despite stronger-than-expected growth in first half of 2024
Rachel Reeves is planning to raise taxes, cut spending and get tough on benefits in October’s budget amid Treasury alarm that the pickup in the economy has failed to improve the poor state of the public finances.
With the latest official set of borrowing figures out on Wednesday, the chancellor is insisting she will still have a substantial black hole to fill despite stronger than expected growth in the first half of 2024.
Raising more money from inheritance tax and capital gains tax.
Sticking to plans for a 1% increase in public spending even though it would involve cuts for some Whitehall departments.
Rejecting pressure to scrap the two-child benefit cap.
Changing the way debt is measured to exclude the Bank of England.
Continue reading...ONS data shows strong performance in second quarter with service sector helping drive growth
Britain’s economy has extended its recovery from recession after recording growth of 0.6% in the three months to June, handing a boost to the chancellor, Rachel Reeves, in the run-up to the autumn budget.
Figures from the Office for National Statistics (ONS) show gross domestic product continued to grow in the second quarter, after a rise of 0.7% in the first three months of 2024. The reading matched the forecasts of City economists.
Continue reading...Former PM says ‘that’s not funny’ when remote-controlled banner is unfurled behind her at event in Suffolk
Liz Truss left the stage abruptly at an event to promote her own book after campaigners unfurled a banner behind her that was emblazoned with the phrase: “I crashed the economy” below a picture of a lettuce.
The former prime minister, who lasted 45 days in office, was in Suffolk on Tuesday discussing the US presidential election when the campaign group Led By Donkeys lowered its remote-controlled banner with a huge picture of a lettuce.
Continue reading...Survey reveals net fall in permanent jobs last month amid lengthening slowdown in employment market
The UK’s largest employers have warned the jobs market is cooling amid a slowdown in wage growth in July and a fall in vacancies, extending an almost two-year downturn in hiring demand for permanent staff.
Figures from the Recruitment and Employment Confederation (REC) and the accountancy firm KPMG showed a fall in permanent staff placements in July as large employers made more redundancies and hired fewer new starters.
Continue reading...Governor Michele Bullock makes clear any expectation of interest rate cuts this year ‘not aligned’ with bank’s present thinking
Those hoping for lower interest rates soon – whether stressed borrowers or those in the Albanese government itching for an early election – would have been dismayed by the Reserve Bank of Australia governor Michele Bullock’s media conference on Tuesday.
The RBA board had just wrapped up the eighth meeting under her leadership and considered just two options for its key interest rate: “hold for some time” or another rate hike. A rate cut was not up for discussion.
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