Category Archives: budget

Top Stores Tell Rachel Reeves Her Budget Will Cause ‘Inevitable’ Job Losses And Higher Prices

Posted on by
Reply

Some of Britain’s biggest businesses have warned Rachel Reeves that her Budget will lead to “inevitable” job losses and higher prices in the shops.

More than 70 retailers, including Greggs, Amazon UK, Tesco and Sainsbury’s, condemned the “sheer costs” associated with the chancellor’s decision to hike employers’ National Insurance.

It is estimated the move, which will see the NI rate increase and bring down the threshold at which it must be paid, will raise an extra £25,7 billion for the Treasury.

Reeves said it was necessary to help fill a £22 billion black hole in the public finances left by the previous Tory government.

But in a letter to the chancellor, organised by the British Retail Consortium, the firms said: “We appreciate government’s focus on improving the fiscal situation and investing in public services; we also recognise the role businesses have in supporting this.

“But, the sheer scale of new costs and the speed with which they occur create a cumulative burden that will make job losses inevitable, and higher prices a certainty.”

Other major companies who put their names to the letter included Aldi, Boots, Lidl, JD Sports, Primark and Morrisons.

A Treasury spokesperson said: “With our public services crumbling and an inherited £22bn fiscal black hole from the previous government, we had to make difficult choices to fix the foundations of the country and restore desperately needed economic stability to allow businesses to thrive.

“By doing this, more than half of employers will either see a cut or no change in their National Insurance bills, there will be £22.6bn more for the NHS and workers’ payslips will be protected from higher tax.

“This government is committed to delivering economic growth by boosting investment and rebuilding Britain.”

The business backlash comes as farmers prepare to protest in Westminster at changes to inheritance tax which they say will cost them millions of pounds and put many out of business.

However, the chancellor has insisted there will be no U-turn on the policy, telling them: “The reforms to agricultural property relief ensure that wealthier estates and the most valuable farms pay their fair share to invest in our schools and health services that farmers and families in rural communities rely on.”

Share Button

Laura Kuenssberg Corners Minister Over Real-Life Impact Of Bus Fare Cap Hike

Posted on by
Reply

Laura Kuenssberg put the transport secretary on the spot this morning over Labour’s decision to increase the bus fare cap to £3 by reading out the real-life impact of the move.

The government decided in last month’s Budget that, to help fill the “black hole” the Tories supposedly left in the public finances, they would increase the cap from £2.

The department for transport has now announced £1bn of funding will go on delivering London-style buses nationwide, with an extra £151m going on funding the £3 cap outside of the capital until 2025.

But, as the presenter told Louise Haigh, this still means some people will be worse off.

On Sunday with Laura Kuenssberg, the BBC host began by asking: “Do you admit just it’s logical that will make it more expensive for people to get around?”

“The £2 fare cap was due to finish on 31 December, that was the funding settlement I inherited,” Haigh replied.

She said that Labour then “stepped in” to protect the cap at £3, adding: “That means for rural routes in particular where bus fares could have leapt back up to £13 or £14 in some instances, we are keeping it much lower at £3.”

Haigh also said the government has made sure some operators cannot raise fares more than in line with inflation, so that they would not expect all fares to raise to £3, that is just a maximum amount.

But Kuenssberg pushed: “Protecting the cap, as you put it, means increasing fares for lots of people.”

She then read out of an example from a viewer’s relative, who may now have to pay an extra £15 per week just to get to work as she has to get three buses in her commute.

“Where’s she meant to get the money from?” Kuenssberg asked.

Haigh said it would be more economical to buy a weekly card, but the presenter cut in: “OK, this is a real-life example.

“One of our viewers says in their family they’re going to have to find an extra £15 a week, and that’s money they don’t have. What are they meant to do?”

Haigh just said the government stepped in with £150m to protect the fare at £3, and said the fare should not go up to that full amount in urban areas.

The exchange comes a few weeks after health secretary Wes Streeting claimed the bus cap would have risen to £10 if Labour had not acted.

Haigh also refused to commit to extending the £3 cap beyond 2025, telling Times Radio this morning: “So the fare cap is funded until the 31st of December 2025 and over the next year.

“We’ll work to evaluate how that is having an impact and where the cap should land and what the best intervention is.

“We made the choice to step in and fund the cap at £3 after the 31st of December this year.

“But we’re also making the choice to fund £1 billion worth of local bus services today in this announcement because the major thing that keeps people off the buses is the total lack of reliability.”

Share Button

Why GP Surgeries Could Be ‘Tipped Over The Edge’ By Labour’s New Budget

Posted on by
Reply

GP surgeries could be “tipped over the edge” by Labour’s new Budget, according to a union representative.

Chancellor Rachel Reeves has chosen to hike up Employers’ National Insurance contributions in her efforts to raise £40bn of funds and plug the “black hole” left by the Tories in the public purse.

The NHS – which has just received a £22.6bn cash injection in the Budget – is exempt from that tax rise, along with other public sectors.

But GP surgeries, care homes and hospices are not exempt, even though they provide NHS services, because they are privately owned partnerships.

Speaking to Times Radio today, the chair of the BMA Council Phil Banfield warned: “For some GPs, this will tip them over the edge. And we’ve seen over 1,000 practices close in the last 10 years.”

He added that he believes “the government was unaware of how much this would catch out GPs” and so he is hoping for further discussions with the health department.

Banfield said for GPs – who have a contract with the government – “the only way to absorb costs is to reduce the number of staff and at a point at which you’re trying to increase the number of appointments and increase access have more GPs and nurses”.

He added: “This achieves the complete opposite. So I don’t think it will take too long for the government to realise that they need to do something urgently about this.”

Britain's Chancellor of the Exchequer, Rachel Reeves, looks up as she holds up the traditional red ministerial box containing her budget speech, as she poses for the media outside No 11 Downing Street, before departing to the House of Commons to deliver the budget in London, Wednesday, Oct. 30, 2024. (AP Photo/Kirsty Wigglesworth)
Britain’s Chancellor of the Exchequer, Rachel Reeves, looks up as she holds up the traditional red ministerial box containing her budget speech, as she poses for the media outside No 11 Downing Street, before departing to the House of Commons to deliver the budget in London, Wednesday, Oct. 30, 2024. (AP Photo/Kirsty Wigglesworth)

via Associated Press

Chief secretary to the Treasury, Darren Jones, told Times Radio this morning: “Yes, [GPs] will have to pay national insurance contributions as employers, but how much they pay will depend on their size.

“And you know, many GP practices are small organisations, and so they will pay less than some of the bigger businesses that we’re asking to contribute more at this Budget.”

Smaller GP surgeries may be shielded from paying more tax because of the changes to thresholds for Employment Allowance.

However, there are worries that some public bodies doing more than half their work in the public sector will not eligible for that allowance, as stated by government guidance.

Health secretary Wes Streeting also pointed to the £600m extra put aside for social care and suggested more discussions about the employer tax hike for GPs were on the table.

But care groups think that will not be enough due to increased staffing costs.

Dr David Wrigley, GP and deputy chair at the British Medical Association, said the impact would be “monumental” on X, especially since so many of those institutions are already “on a financial tight rope”.

Liberal Democrat Treasury spokesperson Daisy Cooper MP said: “The government must scrap this GP penalty immediately.

“After years of the Conservatives disgraceful neglect, our primary care services are in crisis and this could push many to reduce the number of staff they employ or just decide to shut up shop.

“Instead of investing in our GPs and their staff, the government has put more pressure on them in a move that will make it even harder for patients to see a GP when they need to.”

This row comes as nearly 100 progressive politicians, including independent MPs like Jeremy Corbyn and MPs from the Green Party and Plaid Cymru, banded together to declare that Labour’s Budget punishes the “working people” they claim to support.

“This budget is austerity in another name,” their open letter to Starmer says.

It adds that the investment in schools and hospital buildings have been “undermined by a swathe of public sector cuts, cruel attacks on the worst-off, and a dogmatic refusal to redistribute wealth and power”.

“These are not ‘tough choices’ for government ministers, but for ordinary people who are forced to choose between heating their home and putting food on the table.”

Share Button

Labour’s Tax Rises Will ‘Largely’ Fall On Working People, Leading Economists Say

Posted on by
Reply

Working people will end up paying for Rachel Reeves’ huge tax hike, according to a leading think tank.

The chancellor unveiled a plan to raise a record-breaking £40bn in her Budget today, but maintained that she had stuck to her promise not to bring back austerity.

Labour also claims to have honoured their manifesto pledge not to increase taxes for “working people”.

Although that exact definition is still not clear, the government said they would not put up the income tax, VAT or National Insurance that they pay.

However, Reeves did raise the NI rate paid by for employers to 15% from April next year.

According to the Office for Budget Responsibility, three-quarters of the impact of that will be felt by employees through lower wage rises.

Institute for Fiscal Studies (IFS) director Paul Johnson said: “Somebody will pay for the higher taxes – largely working people.”

Johnson also issued a warning about the way the chancellor had “front-loaded” the government’s spending plans over the next five years.

“A government splashing the cash in the short term and promising to be more austere in future? Stop me if you think you’ve heard this one before,” he said.

He added: “The challenge will be to make sure the money is spent well enough to make those costs worth bearing.”

Accountancy outsourcing specialists Advancetrack said the increase to employers’ NICs is a “big blow to UK businesses of all sizes who are already grappling with a range of escalating costs”.

Meanwhile, accountancy firm Menzies LLP warned that this Budget was focused on “quick fixes rather than meaningful reform”.

European Movement UK CEO and former Lib Dem minister, Sir Nick Harvey, suggested there was something missing from the Budget: Brexit.

“The chancellor can tinker around the edges, but addressing the economic damage done by Brexit must become a priority,” he said.

Social mobility charity Sutton Trust thought it was educational support that was lacking from the Budget, saying: “The government has clearly identified the need to increase the national minimum wage due to cost of living pressures, so why does student maintenance remain inadequate?”

Meanwhile, Generation Rent’s chief executive Ben Twomey said: “The lack of clear support for the half of renters who don’t have savings and are really struggling is a big concern.”

Resolution Foundation’s interim chief executive Mike Brewer said the Budget engages with the country’s economic challenges – but it’s only the “first step of what will be needed”.

Share Button

How Brits Are ‘Bracing Themselves’ For The Budget As Rachel Reeves Looks To Raise £40 Billion

Posted on by
Reply

It is not an overstatement to say that this week’s Budget is likely to be the most consequential event of this parliament.

Every decision the government makes between now and the next general election, for good or ill, will be influenced in some way by what Rachel Reeves announces at lunchtime on Wednesday. No pressure then, chancellor.

This is what we know so far. The Budget – called ‘Fixing The Foundations To Deliver Change’ – seeks to raise £40 billion, the vast majority of it through tax rises plus some spending cuts, including £3 billion from the welfare bill.

With Labour having promised not to increase taxes on “working people” before the election, income tax, VAT and the employees’ rate of National Insurance are all off-limits.

That means Reeves has her eyes on inheritance tax, capital gains tax, pension allowances and – most controversially – the employers’ rate of NI to help her balance the books.

A Treasury source told HuffPost UK: “We are dealing with the £22 billion hole in the public finances left by the Tories, and it’s worth stressing that is this year, next year, the year after that and the year after that. It’s a huge problem and we’ve got to address it.

“What we are doing is resetting the public finances and putting them on a firmer footing.

“We’re also acutely aware that we were elected on a platform of change. People voted to change things and for things to get a little bit better. So there will be more money for the NHS to cut waiting lists and more money for long-term investments like building schools, roads and other infrastructure.”

To that end, the chancellor announced on Thursday that she is changing the way the government measures debt, thereby allowing her to borrow an extra £50bn while still sticking to her pledge to bring overall debt down.

That money will be ploughed into public services which, Reeves claims, the Tories were planning to starve of the funds they need.

However, a poll carried out by Savanta and seen by HuffPost UK will make for worrying reading for the chancellor as she puts the finishing touches to her Budget speech in No.11 this weekend.

It shows that 48% of voters believe she should prioritise cutting taxes, compared to 43% who would rather see more money for public services.

However, more than half (55%) say it is more important for the government to invest in public services, with 32% saying it should be cut.

Meanwhile, just 20% of people believe the Budget will have a positive impact, with older people particularly gloomy about what it will mean for them – a result, most likely, of the row over the means testing of the winter fuel allowance.

A total of 80% of of over-55s think it will have a negative impact on their finances, compared to just 6% who believe it will be positive.

Those aged between 18 and 34 are more optimistic, however, with 40% thinking the Budget will be positive for them, with 28% taking the opposite view.

Even Labour supporters appear to be dreading Wednesday, with 41% of those who voted for the party in July believing it will be negative for them, compared to 33% who think it will be positive.

Emma Levin, associate director at Savanta, said: “Significant swathes of the electorate are bracing themselves for Labour’s first budget in 15 years.

“In particular older people appear nervous, amid rumours of many wealth taxes rises, compared to a relatively sanguine younger population.

“Concerningly for Rachel Reeves, even Labour voters think the Budget is going to have a negative impact on their lives. This may be exactly the mood music Labour HQ is going for ahead of a ‘painful budget’, but it’s clear the public want investment in public services as a priority.”

Nevertheless, allies of the chancellor remain confident that the measures announced in the Budget will eventually pay off both economically and politically.

One said: “It will be an honest Budget. Rachel will be very clear that we’re not going to be able to fix 14 years of failure in one Budget.

“This is a 10-year project. She’s having to make difficult decisions now to deliver long-term growth and prosperity.”

With the new Tory leader being announced just three days later, senior Labour figures also see the Budget as effectively the start of the next general election campaign.

“It will set out the clear divide for the whole parliament,” one Treasury source told HuffPost UK.

“Do we either do nothing, stick with the status quo, continue with more austerity, more cuts and more decline, or do we change and do things differently, asking those with the broadest shoulders to pay a bit more tax and start investing in long-term projects?

“This is where it will start to get difficult for the Tories.”

Share Button

Rachel Reeves Gives Herself Billions To Spend By Changing The Government’s Debt Rules

Posted on by
Reply

Rachel Reeves has unveiled plans to spend billions of pounds on the UK’s infrastructure after changing the way the government measures debt.

In a major shift in policy ahead of next week’s Budget, the chancellor said the move would allow her to “begin to fix the NHS and start to rebuild our economy”.

She also confirmed that taxes will go up to fund the government’s day-to-day spending commitments – and that areas like the welfare budget will face cuts.

Labour’s election manifesto promised that debt would be falling as a share of the economy at the end of five years.

By changing the way that government debt is measured, Reeves hopes to release an extra £50 billion to spend on long-term projects.

The chancellor said: “My fiscal rules will do two things. The first and most important: my stability rule will mean that day-to-day spending will be matched by revenues.

“Given the state of the public finances and the need to invest in our public services, this rule will bite hardest.

“Alongside tough decisions on spending and welfare, that means taxes will need to rise to ensure this rule is met. I will always protect working people when I make these choices, while taking a balanced approach.”

She added: “My second fiscal rule, the investment rule, will get debt falling as a proportion of our economy.

“That will make space for increased investment in the fabric of our economy, and ensure we don’t see the falls in public sector investment that were planned under the last government.”

Reeves also told ITV News: “Our second rule, our investment rule, will change the way in which we measure government debt so we take into account our assets, not just the costs of investment.”

But Jeremy Hunt said civil servants had warned him against such a move when he was chancellor because of the risks it posed to economic stability.

He said: “The consistent advice I received from Treasury officials was always that increasing borrowing meant interest rates would be higher for longer – and punish families with mortgages.

“What’s even more remarkable is that the chancellor hasn’t seen fit to announce this major change to the fiscal rules to parliament. The markets are watching.”

A Labour spokesperson said: “Labour will not take any lectures from the Tories on how to run the economy. It was Liz Truss and the Conservatives that crashed the economy, which sent mortgages soaring and left the British people worse off.

“Jeremy Hunt and the Tories should be apologising to country for the economic mess they left – with a £22 billion blackhole in the public finances and public services on their knees.”

“Labour’s Budget will fix the foundations of our economy and deliver the change people voted for.”

Share Button

Unearthed Video Of Rachel Reeves Laying Into Tory Tax Hike Returns To Haunt Her Ahead Of Budget

Posted on by
Reply

An unearthed video of Rachel Reeves laying into the Tories for putting up National Insurance has come back to haunt the chancellor.

She and Keir Starmer have both repeatedly refused to rule out increasing the NI rate paid by employers in the forthcoming Budget.

But speaking in the Commons in 2021, Reeves, who was then shadow chancellor, said: “It is so worrying that at this crucial time, the prime minister and chancellor concocted a new jobs tax to arrive in the spring.

“Despite all of their election promises to cut National Insurance contributions, they’re actually raising them against the strong advice of business and trades unions.

“The Conservative government’s actions will make each new recruit more expensive and increase the costs to business.

“The decision to saddle employers and workers with a job tax takes money out of people’s pockets when our economic recovery is not yet established or secure, and only adds to the pressure on businesses after a testing year and a half.”

Labour’s election manifesto said: ”[We] will not increase taxes on working people, which is why we will not increase National Insurance, the basic, higher, or additional rates of income tax, or VAT.”

However, speaking on Monday, Reeves insisted that putting up the employers’ rate of NI would not break that pledge.

She said: “We are going to need to sort of close that gap between what government is spending and bringing in through tax receipts. But we are going to be a government that sticks to our manifesto commitments, including that one.”

Asked directly on Monday whether it would break the manifesto promise, the prime minister told the BBC: “It was very clear from the manifesto that what we were saying was we’re not going to raise tax for working people. And it wasn’t just the manifesto, we said it repeatedly in the campaign, and we intend to keep the promises that we made in our manifesto.”

Meanwhile, the chancellor today dropped another huge hint that taxes will rise in the Budget on October 30.

She told a cabinet meeting that “there would have to be difficult decisions on spending, welfare, and tax”.

A Labour spokesperson said: “The chancellor told cabinet the Budget would focus on putting the public finances on a strong footing and being honest with the British people about the scale of the challenge.”

Share Button

Budget 2024: Jeremy Hunt To Cut National Insurance Again In Bid To Avoid Tory Wipeout

Posted on by
Reply

Jeremy Hunt will cut another 2p off national insurance as he mounts a last-ditch attempt to prevent a Tory meltdown at the general election.

The chancellor will unveil the move as part of a “Budget for long-term growth” that he hopes will turn around the Conservative’s miserable poll numbers with speculation mounting the voters could go to the polls in May.

But he has ruled out the cuts to income tax demanded by Tory MPs and thought to be favoured by Rishi Sunak.

Hunt announced an identical cut to to national insurance in last November’s autumn statement, but that did nothing to close the huge opinion poll gap with Labour.

Treasury officials say that taken together, the two reductions in national insurance will leave an average earner around £900 better off.

The chancellor will tell MPs: “In recent times the UK economy has dealt with a financial crisis, a pandemic and an energy shock caused by a war on the European continent.

“Yet despite the most challenging economic headwinds in modern history, under Conservative governments since 2010 growth has been higher than every large European economy.

“Unemployment has halved, absolute poverty has gone down, and there are 800 more people in jobs for every single day we’ve been in office.

“Of course, interest rates remain high as we bring down inflation. But because of the progress we’ve made because we are delivering on the prime minister’s economic priorities we can now help families with permanent cuts in taxation.

“We do this not just to give help where it is needed in challenging times. But because Conservatives know lower tax means higher growth. And higher growth means more opportunity and more prosperity.”

Hunt will add: “Our plans mean more investment, more jobs, more productive public services and lower taxes – sticking to our plan in a Budget for long term growth.”

The latest cutting national insurance by 2p in the pound will cost the Treasury around £10 billion a year, paid for by a combination of tax rises and spending cuts.

Hunt is expected to scrap the “non-dom” tax status enjoyed by wealthy foreigners living in the UK in a move which could raise up to £3.2 billion, while he is also set to extend the windfall tax on the profits of oil and gas firms.

A tax on vaping products is also expected to raise much-needed cash for the Treasury.

Hunt is expected to extend the 5p cut in fuel duty, first announced by Sunak in 2022 when he was still chancellor, at a cost of £5bn to the Treasury.

The chancellor is also set to usher in a new wave of austerity by slowing down the rate at which public spending goes up in future from 1% a year in real terms to 0.75%. That would save the government around £5 billion.

However, Hunt will defend this approach by insisting: “An economy based on sound money does not pass on its bills to the next generation.”

He will say Labour have “opposed our plans to reduce the deficit every step of the way”.

The chancellor will add: “With the pandemic behind us, we must once again be responsible and increase our resilience to future shocks. That means bringing down borrowing so we can start to reduce our debt.”

But shadow chancellor Rachel Reeves accused the Tories of presiding over “fourteen years of economic failure”.

“The Conservatives promised to fix the nation’s roof, but instead they have smashed the windows, kicked the door in and are now burning the house down,” she said.

“Taxes are rising, prices are still going up in the shops and we have been hit by recession. Nothing the chancellor says or does can undo the economic vandalism of the Conservatives over the past decade.

“The country needs change, not another failed Budget or the risk of five more years of Conservative chaos.”

Share Button

Jeremy Hunt’s Claim Tories Always Aim To Lower Taxes Leaves People Pointing Out The Obvious

Posted on by
Reply

Jeremy Hunt told broadcasters this morning that it is an “eternal truth” that Conservative governments “try to bring the tax burden down” – but not many people agree.

The chancellor was speaking to journalists on Sunday ahead of the unveiling of his Spring Budget later this week, an annual event where the government outlines its plans for taxes and spending.

The pressure is on for Hunt and PM Rishi Sunak as Tories have been calling for more popular policies to soften the general public ahead of the general election later this year.

Hunt refused to reveal any particular policies he has lined up before his announcement on Wednesday – but he did repeatedly suggest that the public can trust the Tories with the economy.

He told Sky News: “I do want to show people in an election year that eternal truth that Labour governments spend more and tax more, Conservative governments spend more wisely and try to bring the tax burden down.”

He echoed this claim on the BBC.

“We’ve been very consistent, that we would only cut taxes in a way that was responsible and prudent,” he said, adding that he would not be announcing any “gimmicks” this week.

But, in the last four years, five different Tory chancellors have pledged to bring taxes down – only for them to rise to a historic level.

In fact, the current tax burden in the UK is the highest since World War 2.

As Labour’s shadow chief secretary to the Treasury, Darren Jones, pointed out: “It is the Tories who have raised taxes to their highest level in 70 years.

“No matter what the chancellor does in the Budget this week, working people will be worse off thanks to 14 years of Tory failure.”

Many on X (formerly Twitter), seemed to agree.

And several users pointed out that the last few years in government have hardly improved the economy – especially after former Tory PM Liz Truss’s disastrous mini-budget sent the markets into a complete spin and as the UK is currently in the middle of a recession…

Share Button

Liz Truss Wants To Have Another Go At Delivering A Budget

Posted on by
Reply

Former prime minister Liz Truss is to challenge Rishi Sunak and Jeremy Hunt with her own alternative Budget.

Her proposal will be pitched as one that rails against “conventional thinking”, and will be presented to the government as an alternative to the chancellor’s plans.

The report outlining Truss’s suggestions will be released one week before Hunt delivers his autumn statement on 22 November.

Called the “Growth Budget”, her suggestions are expected to propose similar ideas to those she announced while in office, including tax cuts and changes to corporation tax, income tax and national insurance.

It is also expected to include ideas about how the “tourism tax” could be dropped by bringing back VAT-free shopping.

At the Conservative Party conference this month, Truss made a speech calling for tax cuts to “make Britain grow again”.

Truss told the conference that she wanted to see the Conservative Party become the “party of business again”, and for the government to stop “taxing and banning things” and instead “build things and make things.”

Share Button