Rising costs and global uncertainty may force chancellor to turn to pensioners and wealthier taxpayers
Ministers may have to target pensioners and wealthier taxpayers at the autumn budget, as senior government figures voiced fears brutal welfare reforms would still not go far enough to tackle rising costs.
The Institute for Fiscal Studies warned the chancellor may be forced to consider a freeze on tax thresholds, hikes to capital gains and potentially pension taxes.
Continue reading...Department for Work and Pensions says thousands, including children, will be hit by chancellor’s announcement, as OBR forecasts UK growth to halve in 2025
Rachel Reeves will not be raising taxes in the spring statement today, even though there are many people on the left who would prefer taxes to rise as an alternative to public spending being cut. Reeves came into office promising only one budget-type event a year, and that is one reason why she is not hiking taxes today. But mainly it’s because she thinks Britons are relatively highly taxed already, because Labour was elected on a manifesto ruling out most of the obvious possible tax rises and because she’s not convinced a sweeping wealth tax would work.
But that has not stopped campaigners calling for a wealth tax, and yesterday about 300 people attended a ‘Tax the Super-Rich’ rally outside the Treasury. It was organised by charities and social justice campaign groups, but one of the speakers was Carla Denyer, co-leader of the Green party, which is in favour of a wealth tax.
Across the country, inequality is soaring and people are being left behind, struggling to make ends meet and dealing with broken public services, all while the very richest get richer. Choosing to make cut after cut to the poorest and most marginalised, while leaving the vast resource of the extreme wealth of the super rich untouched, is immoral, harmful, and will not deliver for our communities or the economy.
Continue reading...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...Chancellor will announce plans to fund 18,000 social homes before fraught spring statement on Wednesday
Rachel Reeves will plough £2bn into affordable housing in a bid to “sweeten the pill” of the spending cuts being announced at this week’s spring statement.
The chancellor made the surprise announcement of the new cash – a down payment on the June spending review – as the Treasury bids to demonstrate that it remains focused on investment, rather than cuts. It will fund 18,000 affordable and social homes, part of the target to build 1.5m homes over the course of the parliament.
Continue reading...PM also claims government is spending record amount on pothole repairs amid criticism of spring statement plans
Well, that did not really get us very far. Apologies to anyone who feels misled by “grilling” in the headline. We learned very little. After the interview was over, Rachel Burden, the Radio 5 Live presenter, read out some listener reaction, including a message from someone who said: “The country is literally falling apart and Sir Keir is fixated on potholes. I give up.”
But in the interview Keir Starmer did not challenge the claim that some government departments will have to reduce spending. This is what he said when it was put to him that unprotected deparments would face cuts.
We’re looking across the board. We made a budget last year, we made some record investments, and we’re not going to undo that.
So, for example, we’ve got a record amount into the NHS. That’s just delivered five months’ worth of waiting lists coming down – five months in a row during the winter, that’s really good. So we’re not going to alter the basics.
I do think this is something that we have to take seriously. We have to address. We can’t shrug our shoulders at it.
Continue reading...Labour MP and Lib Dem leader express concern social media companies could be let off hook just as benefits are cut
Keir Starmer has been warned against “appeasing” Donald Trump as he considers reducing a major tax for US tech companies while cutting disability benefits and public sector jobs.
His chancellor, Rachel Reeves, confirmed on Sunday that there were “ongoing” discussions about the UK’s £1bn-a-year digital services tax that affects companies including Meta and Amazon.
Continue reading...Keir Starmer has been dealt a fresh blow to his living standards pledge in advance of the spring statement
Living standards for all UK families are set to fall by 2030, with those on the lowest incomes declining twice as fast as middle and high earners, according to new data that raises serious questions about Keir Starmer’s pledge to make working people better off.
The grim economic analysis, produced by the respected Joseph Rowntree Foundation (JRF), comes before the chancellor, Rachel Reeves, makes her spring statement on Wednesday in which she will announce new cuts to public spending rather than increase borrowing or raise taxes, so as to keep within the government’s “iron clad” fiscal rules.
Continue reading...Chancellor to tell party she is making steep cuts to avoid similar fallout to that which followed 2022 mini-budget
Rachel Reeves will raise the spectre of Liz Truss’s disastrous mini-budget in the lead-up to next week’s spring statement as she tries to persuade her Labour colleagues to accept the steepest departmental cuts since austerity.
The chancellor will tell her fractious party she has decided to cut public spending rather than increasing borrowing because of the risk of a similar fallout to that which followed the then prime minister’s disastrous fiscal statement in 2022.
Continue reading...Despite the decision to hold at 4.5%, businesses and households can take a confident view of the UK’s prospects
Bank of England policymakers might be on a “go-slow” as they look forward to interest rate cuts this year, but the direction of travel is almost certain.
After a meeting on Thursday when interest rates were kept on hold at 4.5%, City investors bet there would be more reductions in the cost of borrowing this year, most likely two cuts reducing the rate to 4%.
Continue reading...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...Chancellor says current welfare system ‘is not working for anyone’ after reports of unease within the Labour cabinet
Prisons in England and Wales are forecast to run out of space again in early 2026 as years of government efforts have failed to create the extra capacity needed, MPs have warned.
A report from the Commons public accounts committee out today says plans from 2021 to create 20,000 more prison places by the mid 2020s were “completely unrealistic” and thousands of outstanding spaces are expected to be delivered five years late for £4.2bn – 80% – more than planned.
As a result of poor planning and delays, the adult male prison estate was operating at 98.0% to 99.7% occupancy between October 2022 and August 2024 and remains alarmingly full.
Overcrowding is endemic, staff are overburdened, and access to services and purposeful activity is poor. The current prison system has had to focus on ensuring there are sufficient places to house prisoners. While the efforts of HMPPS [HM Prison and Probation Service] staff to avert disaster are admirable, this state of crisis undermines their efforts to rehabilitate prisoners and reduce reoffending.
Lives are being put at increasing risk by the government’s historic failures to increase capacity.
Despite the recent emergency release of thousands of prisoners, the system still faces total gridlock in a matter of months.
Continue reading...GDP goes in wrong direction as chancellor puts final touches to fiscal plans
For a government that has made growth its overriding mission, the 0.1% decline in GDP in January signalled by the Office for National Statistics will be depressing news.
As Rachel Reeves prepares to announce her spring statement on 26 March, the economy appears to be going in the wrong direction – underlining the fact that the Office for Budget Responsibility is likely to have presented her with notably weaker forecasts than in October.
Continue reading...ONS data showing 0.1% fall in GDP in January comes less than two weeks before chancellor’s spring statement
The UK economy contracted by 0.1% in January, dealing a blow to Rachel Reeves before the spring statement later this month.
In a surprise to City economists, who expected 0.1% growth in January, the Office for National Statistics data showed the services sector failed to offset a decline in the industrial sector and maintain growth from the previous month.
Continue reading...Districts in Birmingham now ranked below poorest areas of France, Malta and Slovenia as institute urges rethink on planned welfare cuts
The UK has tumbled down the league of affluent nations after almost a decade of welfare cuts and stagnant incomes, according to a report that found the poorest districts in Britain now rank below the lowest-income areas of Malta and Slovenia.
In a warning for ministers to protect welfare spending before Rachel Reeves’s spring statement later this month, the National Institute of Economic and Social Research (NIESR) said the UK’s reputation for high living standards was under threat.
Continue reading...Even Berlin and Brussels are bending fiscal rules in the face of Russia’s threat. Will the chancellor still stick to hers?
As the Nobel laureate Robert Lucas quipped during the 2008 financial crisis: “I guess everyone is a Keynesian in a foxhole.” Donald Trump’s upending of the postwar security consensus has underlined the enduring wisdom of Lucas’s observation. But now, instead of bank bailouts and emergency bond buying, European firepower is being directed at bombs, tanks and drones in the desperate fight to secure the continent’s border with Russia.
Berlin and Brussels – typically capitals of financial orthodoxy – have been convinced that this approach is required once again. Under the plan put forward by Germany’s chancellor-in-waiting, Friedrich Merz, Berlin is on the brink of relaxing its “debt brake” rule to pave the way for spending on defence and infrastructure worth an additional €1tn (£840bn) over the coming decade.
Continue reading...Ministers say ‘unsustainable’ rise in spending must be tackled but many backbenchers fear changes will not work
Dozens of backbench Labour MPs are unhappy with plans to cut billions from the rising welfare bill, with ministers holding meetings to convince them that the changes to disability benefits are necessary.
Labour MPs told the Guardian there were deep concerns within the parliamentary party that the changes would take money from the poorest, which was not what they had entered government to do.
Continue reading...Chancellor is eyeing welfare system for potential cuts but pensions secretary says more support for jobseekers is key
The work and pensions secretary, Liz Kendall, has said helping more people back into a job is the best way to cut the benefits bill, as the chancellor looks for savings ahead of the 26 March spring statement.
With Rachel Reeves zeroing in on welfare as a source of potential cuts as she prepares to take action to meet her self-imposed fiscal rules, Kendall said the starting point must be getting people back into work – not numbers on a spreadsheet.
Continue reading...Interventions follow US vice president’s comments about ‘20,000 troops from some random country that has not fought a war in 40 years’. This live blog is closed
In response to a question about intelligence cooperation with the US, Sir David Manning, a former ambassador to Washington, said he thought this would become “more difficult” because there was a problem of trust. He explained:
If you have some of Trump’s appointees in these key jobs who have very strange track records, and have said very strange things about Nato allies, the Nato alliance and so on, and you have people in the administration who seem to be, let’s say, looking for ways of appeasing Russia, then you have a problem on the intelligence front, because these are not the values that we have.
Continue reading...Chancellor says increased military spending should support ‘British jobs and British industries’
Rachel Reeves has said UK companies and jobs will be prioritised under the government’s plans for a significant increase in defence spending, with an aim to support “left behind” industrial towns and the economy at large.
Announced by Keir Starmer last week amid growing fears over Donald Trump’s commitment to European security, the government will increase defence spending to 2.5% of GDP by 2027 – worth an additional £6bn a year.
Continue reading...European reconstruction bank will help rebuild country if peace is agreed but a lasting end to conflict is needed
The war-torn Ukrainian economy could expand by 5% next year if a ceasefire is agreed, the European Bank for Reconstruction and Development (EBRD) has predicted – but prospects for reconstruction depend on a lasting peace.
The London-based lender has invested $6.2bn (£4.9bn) in projects in Ukraine over the course of the three-year conflict.
Continue reading...