Category Archives: Public finance

More than 3m Britons to lose out from benefits cuts

Posted on by

Families forecast to lose an average of £1,720 a year, according to official government analysis

More than 3 million people will lose out as a result of the government’s sweeping cuts to welfare, according to the official government analysis, with families losing an average of £1,720 a year.

The official assessment of the impact of the benefits cuts – including a sharper-than-expected cut to universal credit payments – shows those eligible for disability payments will be hit the hardest.

Continue reading...

Former Bank of England deputy warns Rachel Reeves against kneejerk cuts

Posted on by

Charlie Bean says OBR forecasts are ‘flaky’ and cautions against trying to hit targets five years away

The former Bank of England deputy governor Charlie Bean has warned the chancellor against making kneejerk cuts in next week’s spring statement to try to hit fiscal targets that are five years away.

Rachel Reeves is preparing to slash spending, including on disability benefits, in response to weaker forecasts from the independent Office for Budget Responsibility (OBR) – prompting a backlash from within her own party.

Continue reading...

Former shadow chancellor Ed Balls says plans to cut disability benefits ‘won’t work’

Posted on by

Influential Labour figure says cuts ‘not a Labour thing to do’, while George Osborne says when chancellor he resisted move as ‘step too far’

The former shadow chancellor Ed Balls has criticised plans for cuts to disability benefits, saying on his podcast that it was “not going to work”.

George Osborne, the architect of welfare cuts during the coalition years, also told the same podcast that he had resisted freezing personal independence payments (Pip) – a move currently under consideration – because he felt it was going too far.

Continue reading...

Wes Streeting to axe thousands of jobs at NHS England after ousting of chief executive

Posted on by

NHS staff fear power grab by health department as health secretary looks to shrink body due to ‘duplication’ of roles

Wes Streeting will axe thousands of jobs at NHS England after his ousting of its chair and chief executive in what health service staff fear is a power grab.

The health secretary’s plan follows Amanda Pritchard’s shock announcement on Monday that she was stepping down as the organisation’s chief executive next month.

Continue reading...

Starmer can only hope slashing aid to boost defence wins Trump’s favour

Posted on by

PM’s Washington trip clear impetus for abrupt news of budget switch to meet defence commitment by 2027

Before Keir Starmer’s meeting with Donald Trump on Thursday, the prime minister thought it necessary to offer the president a gift. Britain’s defence spending will increase by 0.17 percentage points to 2.5% of GDP by April 2027, he told MPs in a hastily arranged Commons statement. The money, he added, would be taken directly from the overseas aid budget, whose level will be cut by nearly half to 0.3%.

The last measure is a remarkable turn for a Labour government. Uncomfortably, it comes at a time when Donald Trump wants to shut down perhaps the entire $40bn US aid budget – and at a stroke eliminates a signature commitment from the Blair-Brown years. It was back in 2004, when Tony Blair was prime minister, that Labour first committed to increasing aid spending to 0.7% of GDP.

Continue reading...

Unambiguously bleak Bank of England forecasts pave way for spending cuts

Posted on by

Weak jobs market and above-target inflation will dent Reeves’s growth plans and may wipe out fiscal headroom

With the public finances tight and Rachel Reeves having pledged to balance the books, interest rate cuts are one of the few levers that could boost the UK’s economic growth in the short term, and the chancellor will be glad of the Bank of England’s quarter-point reduction on Thursday – and the clear signal that it is now in cutting mode.

Seven of the monetary policy committee’s (MPC) nine members backed the quarter-point drop, taking the Bank’s policy rate to 4.5%, while two wanted to be more “activist”, proposing a half-point cut. The Bank of England’s governor, Andrew Bailey, said the MPC would be “taking a gradual and careful approach to reducing rates further”.

Continue reading...

Home Office wasted nearly £100m on plans to house asylum seekers, watchdog finds

Posted on by

Public Accounts Committee examined series of site purchases and found ‘troubling culture that repeatedly wastes public money’

The Home Office’s plans to house asylum seekers reveal a “dysfunctional culture of repeated mistakes and weak internal challenge” that wasted nearly £100m, parliament’s spending watchdog has concluded.

A Public Accounts Committee report said the department had a “troubling culture that repeatedly wastes public money” after examining the acquisition of the £15.4m HMP Northeye site to house new arrivals.

Continue reading...

Reeves: ‘My budget will match greatest economic moments in Labour history’

Posted on by

The chancellor says she will invest to reverse Tory decline, but stands accused of breaking party manifesto promises

Labour will launch a new era of public and private investment in hospitals, schools, transport and energy as momentous as any in the party’s history in this week’s budget, the chancellor, Rachel Reeves, has said.

In an interview with the Observer before the first budget by a female chancellor, Reeves draws comparisons with Labour’s historic reform programmes begun in 1945 by Clement Attlee, in 1964 under Harold Wilson and in 1997 under Tony Blair.

Continue reading...

Labour considers up to £3bn tax raid on gambling firms

Posted on by

Treasury weighing proposals as chancellor attempts to plug £22bn hole in public finances

Ministers are considering a tax raid of up to £3bn on the gambling sector as Rachel Reeves casts around for funds to shore up the public finances.

Treasury officials are understood to be weighing up proposals, put forward by two influential thinktanks and backed by one of the party’s top five individual donors, to double some of the taxes levied on online casinos and bookmakers.

Continue reading...

Will Rachel Reeves’s rules on debt and spending survive the budget?

Posted on by

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...

Labour needs £25bn a year in tax rises to rebuild public services, warns IFS

Posted on by

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...

UK debt must be steered off unsustainable course, warns Lords committee

Posted on by

Peers said they were raising a ‘big red flag’ and tough choices will be needed

The pressing risk of the national debt becoming unsustainable will force Britain into the unenviable choice of paying higher taxes or the state doing less, a House of Lords committee has warned.

A report by peers said tough decisions and a new set of rules for the public finances were needed in order to put debt – currently just under 100% of annual national income – on a decisive downward path.

Continue reading...

Chancellor faces down would-be rebels ahead of winter fuel payment vote

Posted on by

Rachel Reeves tells Labour MPs that axing allowance for all but poorest pensioners will help plug £22bn hole in finances

The chancellor has faced down would-be rebels in a private meeting of Labour MPs ahead of the crunch vote on the government’s controversial plan to scrap the winter fuel allowance.

Rachel Reeves told a gathering of the parliamentary Labour party that the move was necessary, despite fears about the impact on millions of less-well-off pensioners, as it would help to plug a £22bn gap in the public finances.

Continue reading...

Councils in England draining reserves to stay afloat, leaders say

Posted on by

Survey of 24 city authorities finds two in five plan to sell off assets and reduce services

Local authority leaders say they are having to drain their financial reserves to keep services afloat and avoid effective bankruptcy.

A survey of the mid-tier group of English city councils, which includes Southampton, Hull, Sunderland and Norwich, found that many that had previously avoided financial difficulties during periods of austerity were close to running out of funds.

Continue reading...

Civil service chief backs UK government claim of £22bn shortfall

Posted on by

Simon Case criticises Tory government’s failure to hold regular spending reviews in letter to Jeremy Hunt – who had challenged figure

Simon Case, the head of the civil service, has backed the government’s figures showing that a £22bn shortfall was left by the previous Conservative administration.

The cabinet secretary said the Tories’ failure to hold regular spending reviews had contributed to the financial uncertainty.

Continue reading...

Jack Reacher would not exist without Birmingham’s libraries, says writer

Posted on by

Lee Child says childhood visits to city’s libraries helped him to create protagonist as he laments proposed closures

It is said that heroes are made, not born.

In the case of the fictional ex-military action man Jack Reacher, it has emerged he was made in a library in Birmingham.

Continue reading...

Keir Starmer takes a political gamble with message of bad news

Posted on by

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...

Labour ‘promoting age-old message of fear and hostility’ over migrants, says charity – UK politics live

Posted on by

Amnesty International UK says Labour is ‘reheating’ the previous government’s rhetoric as Yvette Cooper vows to increase removals

Clean water campaigner Feargal Sharkey has written an opinion piece for the Guardian about the ways in which privatised water firms have polluted English rivers and beaches with sewage, causing significant damage to public health.

You can read it in full here:

Continue reading...

Greens say Labour should focus more on building council homes and that new housing plan is flawed – UK politics live

Posted on by

Rayner says housing target system will raise number of homes planned to 370,000 and confirmed targets will be mandatory

Balls, who, of course, is a former Labour cabinet minister, and a former shadow chancellor, questions whether Reeves is right to suggest that Jeremy Hunt is wholly to blame for the black hole. He says that other cabinet ministers and departments drew up the spending plans that she says were unfunded.

Reeves repeats the point she has been making all morning about how the public were misled. (See 8.06am.)

Continue reading...

Winter fuel payments to be restricted as Reeves says there is £22bn spending shortfall – UK politics live

Posted on by

Chancellor suggests budget, on 30 October, will involve tax rises and cuts to spending and benefits

Downing Street has refused to comment on a report saying junior doctors are being offered a pay rise worth about 20% over two years.

In a story for the Times, Steven Swinford reports:

The British Medical Association’s (BMA) junior doctors committee has recommended an offer that includes a backdated pay rise of 4.05 per cent for 2023-24, on top of an existing increase of between 8.8 per cent and 10.3 per cent.

Junior doctors will be given a further pay rise of 6 per cent for 2024-25, which will be topped up by a consolidated £1,000 payment. This is equivalent to a pay rise of between 7 per cent and 9 per cent.

As we’ve said before, we’re committed to working to find a solution, resolving this dispute, but I can’t get into detailed running commentary on negotiations.

We’ve been honest with the public and the sector about the economic circumstances we face. But the government is determined to do the hard work necessary to finally bring these strikes to an end.

Continue reading...