Category Archives: Public finance

Thames Water collapse could trigger Truss-style borrowing crisis, Whitehall officials fear

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Exclusive: Concerns over effect on UK’s finances lead officials to believe utility should be renationalised before general election

Senior Whitehall officials fear Thames Water’s financial collapse could trigger a rise in government borrowing costs not seen since the chaos of the Liz Truss mini-budget, the Guardian can reveal.

Such is their concern about the impact on wider borrowing costs for the UK, even beyond utilities and infrastructure, that they believe Thames should be renationalised before the general election.

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UK government borrowing higher than expected in February

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Borrowing of £8.4bn last month could threaten OBR forecast for £114.1bn deficit for 2023-24 as a whole

Jeremy Hunt has been handed disappointing news from the public finances after government borrowing was higher than expected in February, leaving the national debt at the highest levels since the 1960s.

The Office for National Statistics said public sector net borrowing was £8.4bn in February, £3.4bn less than in the same month a year ago. However, it was higher than any economist expected in a Reuters poll that predicted a deficit of £6bn.

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Budget 2024: Jeremy Hunt announces 2p cut in national insurance

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Chancellor also scraps ‘non-dom’ tax breaks and slashes capital gains on property in pre-election gambit

Jeremy Hunt has announced a 2p national insurance cut in his budget as a pre-election gambit to revive flatlining opinion poll ratings and reboot Britain’s economy from recession.

In what could be the last major economic intervention before voters go to the polls, the chancellor said the government was making progress on its economic priorities and could now help hard-pressed families by permanently lowering certain taxes.

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Hunt scrambles to raise revenue as OBR slashes scope for tax cuts in budget

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Chancellor considers unexpected tax rises such as abolishing non-dom status after latest forecast

Jeremy Hunt’s scope to make tax cuts in next week’s budget has been reduced further this week, according to Treasury insiders, leaving the chancellor considering emergency measures to raise revenue.

Recent forecasts from the Office for Budget Responsibility (OBR) are said to have given the chancellor less fiscal headroom than hoped, pushing him to consider unexpected tax rises such as abolishing the non-dom tax status.

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Cash-strapped London council starts crowdfunding drive to pay for green upgrades

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Southwark asks residents to invest as little as £5 to help fund eco-projects such as cycle hangars and school upgrades

Deep cuts to government funding have led a council in south London to ask its residents to invest their own money, for a financial return, to build cycle hangars, new LED street lighting and green upgrades at schools and leisure centres.

In the midst of a financial crisis hitting town halls across England, councillors in Southwark have resorted to a crowdfunding scheme to raise £6m over the next six years to help fund climate-friendly projects.

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Labour ditches radical reforms as it prepares ‘bombproof’ election manifesto

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Plans to reform social care and House of Lords are trimmed as Keir Starmer’s party opts for caution ahead of vote

Labour is planning only limited first-term reforms of social care and the House of Lords and a smaller green investment plan as part of a stripped-down general election manifesto, as it seeks to make its policies “bombproof” to Tory attacks.

Shadow cabinet ministers have been given until 8 February to make policy submissions for the manifesto, as Keir Starmer’s party gears up for an election that, according to opinion polls, looks likely to return it to government for the first time since 2010.

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UK wasting ‘tens of billions’ on crumbling infrastructure and badly run projects

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Spending watchdog says smarter government can find huge savings for better public services

Britain is wasting tens of billions of pounds on badly run projects, cold war-era IT systems and crumbling, poorly maintained infrastructure, parliament’s spending watchdog will say on Tuesday.

Gareth Davies, head of the National Audit Office (NAO), will argue the government could save vast sums if it addresses maintenance backlogs and replaces out-of-date IT.

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How a spring UK budget could fire the starting gun for an early election

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UK economic prospects are bleak but an agenda-setting fiscal event such as sweeping tax cuts in March offers another roll of the dice

To grasp the nettle, or wait in the hope that things somehow miraculously improve. This is the choice Rishi Sunak will be weighing for the next general election, as the Conservatives limp towards the finishing line of another challenging year.

After Jeremy Hunt announced the government would hold an earlier than anticipated budget, with a date set for 6 March, the possibility of a poll in May, in the afterglow of some electioneering tax cuts, is clearly being given considerable thought.

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OBR halves UK growth forecast and warns inflation will exceed 2% target until 2025

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Despite £27bn windfall for the autumn statement, government forecaster warns of generally more difficult outlook until 2028

The government’s official forecaster has slashed its predictions for economic growth over the next two years, and warned that inflation could take until 2025 to come back to the official 2% target.

In an updated financial health check to accompany the autumn statement, the Office for Budget Responsibility (OBR) said a more resilient economy this year had handed the chancellor a £27bn budget windfall, but it warned of a more difficult outlook up to 2028 than previously forecast at the time of the budget in March.

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Autumn statement: Jeremy Hunt looks to cut UK taxes and ‘turbo-charge growth’

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Amid less gloomy OBR forecasts the chancellor is expected to take first steps towards cutting personal taxes

Jeremy Hunt will announce 110 measures to boost Britain’s stagnant economy and bow to demands from anxious Tory MPs for tax cuts when he delivers his second autumn statement on Wednesday.

In one of the last set-piece economic events before the general election, the chancellor will pledge to “turbo charge” growth while taking the first steps to cut personal taxes after recent sharp increases.

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Hunt urged to invest £30bn a year in infrastructure or risk ‘decade in doldrums’

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Thinktank says stronger than expected tax revenues have given chancellor scope for bold package in autumn statement

Jeremy Hunt risks condemning Britain to a decade in the doldrums unless he uses this month’s autumn statement to announce a £30bn-a-year investment plan to upgrade public infrastructure, a leading thinktank has warned.

The National Institute for Economic and Social Research (NIESR) said the chancellor should ignore calls by Tory MPs for pre-election tax cuts and instead focus on measures to boost growth through improvements to transport, digital networks, skills and housing.

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Councils ‘on their knees’ as they face record £3.5bn funding shortfall

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Research finds 114 councils in England, Scotland and Wales facing budget gaps of more than £10m

Councils are facing a record cash shortfall of more than £3.5bn in the coming year with jobs and services facing cuts, according to analysis.

Data compiled by Unison, the trade union, found that there were 114 councils in England, Scotland and Wales – almost a third – facing shortfalls of more than £10m. It said 15 councils were likely to be in the red by more than £40m next year.

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‘It’s going to cost billions’: UK councils face huge bills over equal pay claims

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GMB union is supporting 3,000 claims in Birmingham – and is gathering evidence from 20 other councils

Councils in the UK are facing compensation bills running into billions of pounds over equal pay claims, campaigners have warned, as they called on the government to intervene.

The GMB union is supporting more than 3,000 equal pay claims against Birmingham city council, and has disputes against councils in Coventry, Westmorland, Cumberland, Glasgow, Dundee and Fife.

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Councils in England in crisis as Birmingham ‘declares itself bankrupt’

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With Birmingham indicating it cannot balance its books, experts warn of others living ‘hand to mouth’

The crisis in local authorities was laid bare on Tuesday as Birmingham city council in effect declared itself bankrupt, with experts warning that others across the UK were now living “hand to mouth”.

The council’s head of finance took the dramatic decision on Tuesday to issue a section 114 notice, indicating that it did not have the resources to balance its books.

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Row growing after third historic rail bridge filled in with concrete

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National Highways faces third intervention by a local authority over infilling, after burying Congham bridge in Norfolk in tonnes of concrete

A controversial practice by the government’s roads agency of burying historic railway bridges in concrete has been dealt a fresh blow after a third council intervened over another infilled structure.

King’s Lynn and West Norfolk council has told National Highways it must apply for retrospective planning permission if it wants to retain hundreds of tonnes of aggregate and concrete it used to submerge Congham bridge, a few miles east of King’s Lynn.

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Sunak strives to be reassuring but is five-point plan all sleight of hand?

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PM plans a ‘no tricks’ reset but with an inflation fall already expected this is more about hanging on at an election

In his first big speech since taking over at No 10, Rishi Sunak promised “no tricks, no ambiguity” as he announced his five promises to reset the government after a difficult year.

The prime minister said he would be focusing on halving inflation, growing the economy, reducing debt, cutting NHS waiting lists, and stopping small-boat crossings to the UK.

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Michelle Mone accused of trying to ‘bully’ ministers over PPE contracts

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Whitehall sources reportedly say ‘rude’ peer lobbied Michael Gove and Lord Agnew to secure business for PPE Medpro

Michelle Mone has been accused of attempting to “bully and hector” ministers into awarding public PPE contracts worth more than £200m to a company that she appeared to profit from.

The Guardian revealed last month that the Conservative peer and her children secretly received £29m originating from the profits of a PPE business that was awarded large government contracts after she recommended it to ministers.

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English councils warn of ‘existential crisis’ caused by funding shortfall

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Local Government Association says any attempt to patch up budgets by raising council tax is doomed to fail

Local authorities have warned they face an “existential crisis” caused by massive funding shortfalls and any attempt by ministers to patch up budgets by allowing increased council tax is doomed to failure.

The multibillion “black hole” in England’s municipal finances – which has pushed a number of councils to the brink of bankruptcy – could not be fixed by local ratepayers alone, who would face unrealistic council tax increases of up to 20%, the Local Government Association (LGA) said.

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Non-dom tax breaks being reviewed by the Treasury in effort to raise revenue

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Officials are also looking at incorporating cut in tax-free allowance for dividends into autumn statement

Treasury officials are examining whether the autumn statement could include changes to non-dom status and moves to raise taxes on dividends by cutting tax-free allowances.

No final decisions have been taken but Whitehall sources said options were being examined by the Treasury’s high net worth individuals policy team.

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Cost of living crisis: Stop the Squeeze calls for wealthiest to ‘pay proper share’ of tax

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Coalition of 40-plus charities and groups launches amid fears of spending cuts to plug public finances

Pressure is building on the leaders of Britain’s two biggest political parties to support higher taxes on wealth amid growing fears over the impact that a renewed austerity drive would have amid the cost of living crisis.

In an intervention which comes as the new prime minister, Rishi Sunak, considers options for filling a £35bn black hole in the public finances, a new coalition of 40 charities and campaign groups – including Oxfam, Save the Children and Christians Against Poverty – said Britain’s tax system was broken and those who paid the most should “pay their proper share”.

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