Category Archives: Tax and spending

Rachel Reeves needs to put up taxes to cover £40bn deficit, thinktank says

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NIESR suggests a rise of 5p in the pound on basic and higher rate of income tax would fill the budget gap

Rachel Reeves will need to raise taxes to close a government spending gap that is on course to reach more than £40bn after a slowdown in economic growth and higher-than-expected inflation, according to a leading thinktank.

In a blow to Labour’s hopes of balancing the books without breaking manifesto commitments ruling out personal tax rises, the National Institute of Economic and Social Research (NIESR) said a number of factors would knock off course the chancellor’s plans to stay within Whitehall spending limits.

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Starmer and Reeves should consider wealth tax, says former shadow chancellor

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Anneliese Dodds urges government not to duck ‘big decisions’ in autumn budget

The Treasury should consider a wealth tax to close the growing gap in the public finances, according to a Labour former shadow chancellor.

Anneliese Dodds, who held the role under Keir Starmer in opposition, said ministers must have a “full and frank discussion” with the public about the “really big decisions” they had to take at this autumn’s budget.

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HSBC boss says Rachel Reeves putting up bank taxes would harm UK growth

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Georges Elhedery’s comments come amid speculation the chancellor could make such a move in autumn budget

The boss of HSBC has joined a growing chorus of bankers cautioning Rachel Reeves against increasing taxes on banks in her autumn budget, warning it risked “eroding” investment and ultimately harming UK growth.

Georges Elhedery, its chief executive, said banks in the UK were already subject to the highest level of taxes on profits compared with other sectors, and paid more than in most other countries. He said placing further financial pressures on lenders could spell trouble for the UK economy.

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Treasury minister says ‘headline’ rate of income tax won’t go up, in hint thresholds might be frozen in budget – UK politics live

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Darren Jones also declines to rule out wealth tax when questioned about government plans

In an interview with the Times, Andrew Bailey, governor of the Bank of England, says firms are “adjusting employment and hours” in the light of last year’s rise in employer NICs. That sounds like a euphemism for cutting jobs. But he says, if the labour market slow down, the Bank may respond by cutting interest rates more aggressively.

Asked about this comment in an interview on the Today programme, Darren Jones, chief secretary to the Treasury, played down the impact of the budget. He said:

There’ve also been hundreds of thousands of new jobs created across the economy, and in the first quarter of the year [we had] the fastest growing economy in the G7, so we’re doing everything we can to create conditions for businesses to be profitable and to be able to grow.

Of course, we had that particular tax decision in the budget last year, because our commitment was to protect working people in their pay slips. And I recognise the independence of the bank governor.

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Labour should raise national insurance in autumn budget, says Ed Balls – UK politics live

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Former chancellor says employees’ contributions should rise to help address a £6bn shortfall caused by recent U-turns

The Unite union has voted to re-examine its relationship with the Labour party in the light of the government’s failure to support its members in the Birmingham bin strike.

It has also said it was suspending Angela Rayner’s membership, given her role as minister in charge of the department that oversees local government. The union is in dispute with Birmingham city council over proposals to reorganise waste disposal services in the city, and Unite has repeatedly said the government should step in and force the Labour-led council to settle.

Unite is crystal clear it will call out bad employers regardless of the colour of their rosette. Angela Rayner has had every opportunity to intervene and resolve this dispute but has instead backed a rogue council that has peddled lies and smeared its workers fighting huge pay cuts.

The disgraceful actions of the government and a so-called Labour council, is essentially fire and rehire and makes a joke of the Employment Relations Act promises.

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Minister won’t rule out support cuts for children with EHCPs amid Send overhaul – UK politics live

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Stephen Morgan, the early education minister, would not confirm every child who has an EHCP would continue to keep the same provisions

The Conservatives will try to change the government’s welfare Bill to tighten up access to personal independence payments (Pip) and universal credit, PA Media reports. PA says:

Kemi Badenoch will pledge that the Tories are “now the only party committed to serious welfare reform” after Keir Starmer shelved plans to restrict eligibility for Pip in the face of a backbench revolt this week.

The Tories will look to lay amendments to the legislation – set to be renamed the universal credit bill – and party leader Badenoch is due to deliver a speech on welfare on Thursday.

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Keir Starmer should be bold and consider a wealth tax, Neil Kinnock says

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Former Labour leader says government needs a better narrative and risks being bogged down by ‘imposed limitations’

Keir Starmer’s government is suffering from a “lack of narrative” about what it is trying to achieve and should be more fiscally bold and consider a tax on wealth, Neil Kinnock has said.

The former Labour leader said too many of the government’s achievements were being overshadowed. A year after a landslide election win, the party is struggling in the polls and has U-turned on policies including cuts to winter fuel payments and welfare.

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Trump’s big bill achieved what conservatives have been trying to do for decades

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The Republican fantasy of lower taxes and hard-to-access social safety net programs will now be a reality

For decades, Republicans have argued that the US would be better off if taxes were low, and programs to help low-income Americans were harder to access. With Donald Trump’s marquee tax and spending bill now set to become law, the country will find out what it’s like to live under that sort of system.

The massive legislation that Trump plans to sign Friday will make his campaign promises a reality by extending tax cuts enacted during his first term, and creating new deductions aimed at the working-class voters who backed his re-election.

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Minister declines to rule out tax rises after welfare concessions – UK politics live

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Pat McFadden says there will be ‘financial consequences’ to Keir Starmer’s climbdown amid renewed speculation over Labour’s budget plans

Helen Miller, the new head of the Institute for Fiscal Studies thinktank, said the lack of savings from the personal independence payments (Pip) changes made tax rises “increasingly likely” at the budget and that the chancellor, Rachel Reeves, now had “very little wriggle room”.

The welfare bill as it stood would now not create any savings, she told Today:

By the end of this parliament the government will save nothing.

After govt’s 11th hour 59th minute climbdown over Pip it’s time for Reeves to go back to the drawing board and look for fairer and more sensible ways to raise money – like a wealth tax on multimillionaires and billionaires to raise up to £24bn a year.

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Welfare bill climbdown will have ‘a cost’ at budget, says senior minister

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Pat McFadden says U-turn will change calculations, as IFS says tax rises in autumn look increasingly likely

There will be “a cost” to the government’s climbdown on welfare changes at the budget, one of Keir Starmer’s senior ministers has said, as a leading fiscal thinktank said new tax rises appeared increasingly likely.

Pat McFadden, the chancellor of the Duchy of Lancaster, defended Starmer and the work and pensions secretary, Liz Kendall, after the second reading of the government’s main welfare bill passed its first Commons test only after a central element was removed.

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UK borrowing rises to £17.7bn, adding to pressure on Rachel Reeves

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May figure second highest for month on record amid fears chancellor is struggling to keep within spending rules

Higher tax receipts were unable to prevent a rise in public sector borrowing in May to £17.7bn, up from £17bn a year earlier and the second highest for the month on record.

A poll of City economists had forecast public sector net borrowing – the difference between public spending and income – would be £17.1bn.

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Trump’s ‘revenge tax’ could threaten foreign investment into US, analysts say

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Concerns raised that section 899 could backfire and also undermine dollar’s safe haven status

Foreign investment into the US could be threatened by Donald Trump’s new “revenge” taxes, analysts have warned.

A provision within the president’s One Big Beautiful Bill Act will allow the US to apply higher taxes on foreign individuals, businesses and investors connected to jurisdictions that impose “unfair foreign taxes” on US individuals and companies.

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Keir Starmer faces Kemi Badenoch at PMQs ahead of government’s spending review – UK politics live

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Prime minister faces Conservative party leader as chancellor to reveal how government plans to spend almost £1.4tn in 2026-27

Green party MPs and activists staged a protest outside parliament today saying the government should use the spending review to announce a wealth tax. In a post on social media, Adrian Ramsay, the party’s co-leader, said:

We expect the Chancellor to take another axe to public spending today: decline by design from a govt that refuses to tax wealth to properly fund our overstretched public services & support the most vulnerable. We need to invest in a secure & fairer future. #TaxExtremeWealth

Senior SNP figures held a secret meeting on Monday night to discuss removing John Swinney as party leader, The Herald has learned, following last week’s defeat in the Hamilton, Larkhall and Stonehouse byelection.

One of the 25 attendees said the first minister had two weeks to come up with a new strategy on independence — or risk facing a leadership challenge at the SNP conference in October.

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Sizewell C power station to be built as part of UK’s £14bn nuclear investment

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Ed Miliband promises to ‘get Britain off the fossil fuel rollercoaster’ with new plant expected to create 10,000 jobs

The biggest nuclear programme in a generation will “get Britain off the fossil fuel rollercoaster”, the energy secretary, Ed Miliband, has said, announcing £14.2bn to build a new nuclear power station and a drive to build small modular reactors.

The multibillion-pound investment at Sizewell C on the Suffolk coast, which has been long expected, will create 10,000 jobs and power the equivalent of 6m homes.

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Winter fuel payments U-turn likely to lead to higher taxes or other welfare cuts, says IFS director – UK politics live

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Treasury says move to restore the funding for most pensioners will cost around £1.25bn

The Conservatives and the Liberal Democrats are both trying to take credit for the winter fuel payments U-turn by the government.

This is from Kemi Badenoch, the Tory leader.

Keir Starmer has scrambled to clear up a mess of his own making. I repeatedly challenged him to reverse his callous decision to withdraw winter fuel payments, and every time Starmer arrogantly dismissed my criticisms.

This humiliating U-turn will come as scant comfort to the pensioners forced to choose between heating and eating last winter. The prime minister should now apologise for his terrible judgement.

Finally the chancellor has listened to the Liberal Democrats and the tireless campaigners in realising how disastrous this policy was, but the misery it has caused cannot be overstated.

Countless pensioners were forced to choose between heating and eating all whilst the government buried its head in the sand for months on end, ignoring those who were really suffering.

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Labour’s £13.2bn warm homes plan will not face cuts in spending review

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Source confirms decision that will help meet net zero targets and pledge to cut energy bills by £300

Ministers have decided not to cut Labour’s landmark £13.2bn fund to fix draughty homes and install heat pumps and solar panels in next week’s spending review, it has emerged.

A government source confirmed Rachel Reeves, the chancellor, would not be making cuts to the flagship warm homes plan. The decision, which was first reported by the Daily Telegraph, marks a victory for Ed Miliband in his negotiations with the Treasury over the Department for Energy Security and Net Zero’s budget.

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Rachel Reeves to announce £15bn in transport spending amid questions over police cuts – UK politics live

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Chancellor will give speech in Greater Manchester, while police leaders have written to the PM over potential cuts in next week’s spending review

Good morning. A week today Rachel Reeves, the chancellor, will unveil the outcome of the spending review, which will set spending budgets – day-to-day (“resource”) and capital – covering most of the rest of this parliament. Many departments will get resource budgets that feel like cuts, but the Treasury has a more positive story to tell on capital spending and today Reeves is giving a speech announcing a £15bn spending spree on transport projects, mostly in the north of England.

Pippa Crerar and Jessica Elgot have all the details in our splash story.

We are deeply concerned that the settlement for policing and the [NCA], without additional investment, risks a retrenchment to what we saw under austerity. This would have far-reaching consequences.

Policing and the NCA have seen a sustained period where income has not kept pace with demand. Often, this has been masked by attempts to defer costs in the hope of more income in future, but that now leaves policing with very limited room for manoeuvre.

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English mayors push for visitor levy to boost income from tourism

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Group led by Steve Rotheram says introducing local tourism tax would empower regional growth

A coalition of mayors from across England are urging the government to allow local authorities to bring in a Barcelona-style visitor levy to generate income from tourism.

The group, led by the Liverpool city region mayor, Steve Rotheram, argues that a visitor levy would unlock vital funding for tourism and cultural infrastructure, empower regional growth and reduce dependence on central government funding.

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Starmer defends not putting date on 3% defence spending target as UK to announce plans to build new submarines – politics live

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Prime minister to launch strategic defence review in Glasgow this morning

Here is the clip of Keir Starmer in his Today programme interview refusing to say when the government will raise defence spending to 3% of GDP.

In an interview with the Times published on Saturday John Healey, the defence secretary, said that he had “no doubt” that Britain would reach the 3% target by 2034 – ie, before the end of the next parliament. Yesterday he described this as an “ambition”.

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No 10 won’t say if fuel payments U-turn will be implemented in time for this winter – UK politics live

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Downing Street unable to say how many more pensioners would receive winter fuel payments or when changes would come in

YouGov has published more details of its polling on the electorate’s relationship with Labour, as covered in the Sky News report mentioned earlier. (See 10.06am.)

It shows that Reform UK supporters are most likely to think that Labour is trying hard to appeal to them – but least likely to say they would respond positively. Only 4% of Reform UK supporters say they would consider voting Labour, the poll says.

I ask her if there will be any changes as demanded by MPs

She says while “we want to make sure we address all of people’s concerns, but stressed: “whatever the fiscal position that the government faces, I think the system as a whole needs to change.”

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