Category Archives: Public finance

Rachel Reeves targets UK’s wealthiest in £26bn tax-raising budget

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Chancellor axes two-child benefit cap and cuts energy bills paid for by mansion tax and freezing tax thresholds

Rachel Reeves targeted Britain’s wealthiest households with a £26bn tax-raising budget to fund scrapping the two-child benefit policy and cutting energy bills.

On a chaotic day that involved key details of her budget accidentally being released early by the Office for Budget Responsibility (OBR), the chancellor defended the measures, saying she was “asking everyone to make a contribution to repair the public finances”, but that she wanted the wealthiest to pay the most.

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UK government borrows more than expected in setback before budget

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October figures represent final snapshot of public finances before Rachel Reeves’s tax and spending statement

Rachel Reeves was urged to use next week’s budget to create significantly more headroom against her fiscal rules, after official figures showed the UK government borrowed almost £10bn more than forecast in the year to October.

In the final snapshot of the public finances before the chancellor’s crunch budget, the Office for National Statistics (ONS) said borrowing – the difference between public spending and income – was £17.4bn last month.

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Government inheriting poor value assets due to bad handling of PFI contracts, watchdog says

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Public accounts committee warns UK infrastructure risked becoming ‘stony ground’ for investors without major overhaul

Bad management of private finance contracts is leading to poor quality assets being handed back to the government, including schools and hospitals, according to parliament’s spending watchdog.

Its report into the use of private finance initiatives (PFI) for infrastructure comes at a time when the government has identified private investment in projects such as power plants and transport outside London as a key part of its growth agenda.

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Europe’s pledge to spend more on military will hurt climate and social programmes

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Nato spending plan overlooks risks to security posed by environmental breakdown and social decay, say economists

Europe risks choosing militarism over social and environmental security, economists have warned, as the head of Nato said all 32 members had agreed to increase weapons spending.

Analyses drafted in anticipation of a Nato summit beginning on Tuesday warned of the opportunity cost that higher military spending would pose to the continent’s climate mitigation and social programmes, which are consistently underfunded.

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More than 3m Britons to lose out from benefits cuts

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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.

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Former Bank of England deputy warns Rachel Reeves against kneejerk cuts

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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.

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

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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.

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

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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.

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

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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.

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Unambiguously bleak Bank of England forecasts pave way for spending cuts

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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”.

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

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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.

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

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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.

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

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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.

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

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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.

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

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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.

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

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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.

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

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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.

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Councils in England draining reserves to stay afloat, leaders say

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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.

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

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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.

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

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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.

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