Reeves to press ahead with Value for Money office despite ‘risking taxpayer cash'
Rachel Reeves is set to push ahead with controversial plans to create an Office for Value for Money (OVfM) despite warnings from MPs that it risks wasting taxpayer money.
The Chancellor is forging ahead with the new taxpayer-backed body in the hope it will help the Government root out £4bn in cost savings a year.
The Treasury said in a report on Tuesday that the OVfM will begin by prioritising how to stem the spiralling costs of housing asylum seekers, while also scrutinising spending on so-called 'mega-projects'.
It comes after the Treasury Committee criticised the plans in January over fear the unit will not have a 'meaningful impact'.
Labour's Dame Meg Hillier, warned at the time that OVfM 'has been set up with a vague remit and no clear plan to measure its effectiveness', describing it as an 'understaffed, poorly-defined organisation'.
In response to the committee's criticism, the Treasury said even small improvements in the budgets for mega projects had the potential to create 'significant savings' for the public purse.
It said the OVfM also has the potential to cut the billions of pounds spent on temporary accommodation for asylum seekers.
The Home Office paid out £2.3bn on hotels and short-term accommodation for asylum seekers last year, while local authorities paid out a further £1.6bn, the report said.
The new cost-cutting unit will have a staff of around 15 officials between offices in London and Darlington and be led by David Goldstone, the former chief operating officer of the Ministry of Defence.
Mr Goldstone's appointment has already been mired in controversy after it emerged he will be paid £950 a day for chairing the body. On a full-time basis, his pay would be equivalent to a salary of £247,000 a year.
In his new position, Mr Goldstone will also continue to hold his seats as a non-executive director on the boards of the Submarine Delivery Agency and HS2. However, conflicts of interest rules mean he will be required to recuse himself from discussions with the boards of either organisation.
Mr Goldstone is set to work at the OVfM on a part-time basis for an initial 12-month period, providing private advice to the Chancellor and Chief Secretary to the Treasury.
In response to the Treasury's report on Tuesday, Dame Hillier said: 'As always with these initiatives, the proof of the pudding will be in the eating, but we will closely hold the Treasury to the letter and spirit of the transparency commitments made today.'
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Los Angeles Times
an hour ago
- Los Angeles Times
G-7 leaders gather in Canada for a summit overshadowed by Israel-Iran crisis and trade wars
BANFF, Alberta — Leaders of some of the world's biggest economic powers began arriving in the Canadian Rockies on Sunday for a Group of 7 summit, overshadowed by an escalating conflict between Israel and Iran and President Trump's unresolved trade war with allies and rivals alike. Israel's strikes on Iran and Tehran's retaliation, which appeared to catch many world leaders unawares, is the latest sign of a more volatile world as Trump seeks to withdraw the U.S. from its role as world policeman. Speaking on a flight to Canada to attend the summit, British Prime Minister Keir Starmer said he had discussed efforts to de-escalate the crisis with Trump and Israeli Prime Minister Benjamin Netanyahu, as well as other world leaders. Britain is sending fighter jets and other military reinforcements to the Middle East. 'We do have long-standing concerns about the nuclear program Iran has. We do recognize Israel's right to self-defense, but I'm absolutely clear that this needs to de-escalate. There is a huge risk of escalation for the region and more widely,' Starmer said, adding that he expected 'intense discussions' would continue at the summit. As summit host, Canadian Prime Minister Mark Carney has decided to abandon the annual practice of issuing a joint statement, or communique, at the end of the meeting. With other leaders wanting to talk to Trump in an effort to talk him out of imposing tariffs, the summit risks being a series of bilateral conversations rather than a show of unity. Trump is the summit wild card. Looming over the meeting are his inflammatory threats to make Canada the '51st state' and take over Greenland. French President Emmanuel Macron arrived in Greenland on Sunday for a highly symbolic stop on his way to Canada, meeting the Arctic territory's leader and Denmark's prime minister aboard a Danish helicopter carrier. Macron's office said the trip to Greenland is a reminder that Paris supports principles of sovereignty, territorial integrity and the inviolability of borders as enshrined in the United Nations charter. Macron, who is one of the few leaders to have known Trump during his first term, was the first European leader to visit the White House after Trump took office, emerging unscathed from the Oval Office encounter. But despite the two leaders' sporadic alliance, Macron's approach to Trump has failed to bear major results, with France caught up in the president's planned tariffs on the European Union. Nor did it bring any U.S. security guarantees for Ukraine despite Macron's efforts, together with Starmer, to build a coalition of nations that could deploy forces after any ceasefire with Russia, with the hope it would convince the Trump administration to provide backup. Trump is scheduled to arrive late Sunday in Kananaskis, Alberta. Bilateral meetings among other leaders are possible Sunday, but the summit program does not get underway until Monday. Peter Boehm, who managed Canada's 2018 Group of 7 summit in Quebec and is a veteran of six G-7 gatherings, expects the heads of state to pivot discussion to devote more time to the war. 'Leaders can accommodate a discussion, perhaps even a statement,' Boehm said. 'The foreign policy agenda has become much larger with this.' Leaders who are not part of the G-7 but have been invited to the summit by Carney include the heads of state of India, Ukraine, Brazil, South Africa, South Korea, Australia, Mexico and the United Arab Emirates. Avoiding tariffs will continue to be top of mind. 'Leaders, and there are some new ones coming, will want to meet Donald Trump,' Boehm said. 'Trump doesn't like the big roundtable as much he likes the one-on-one.' Bilateral meetings with the American president can be fraught as Trump has used them to try to intimidate the leaders of Ukraine and South Africa. Former Canadian Prime Minister Jean Chrétien told a panel last week that if Trump does act out, leaders should ignore him and remain calm like Carney did in his recent Oval Office meeting. 'He tends to be a bully,' Chrétien said. 'If Trump has decided to make a show to be in the news, he will do something crazy. Let him do it and keep talking normally.' Starmer had a warm Oval Office meeting with the president in February, wooing Trump with an invitation for a state visit from King Charles III. Trump has praised the British prime minister, despite their political differences. Last month Britain and the U.S. announced they had struck a trade deal that will slash American tariffs on U.K. autos, steel and aluminum. It has yet to take effect, however, though British officials say they are not concerned the Trump administration might go back on its word. Starmer's attempts to woo Trump have left him in an awkward position with Canada, the U.K.'s former colony, close ally and fellow Commonwealth member. Starmer has also drawn criticism — especially from Canadians — for failing to address Trump's stated desire to make Canada the 51st state. Asked whether he has told Trump to stop the 51st-state threats, Starmer told the Associated Press: 'I'm not going to get into the precise conversations I've had, but let me be absolutely clear: Canada is an independent, sovereign country and a much-valued member of the Commonwealth.' The war in Ukraine will also be on the agenda. President Volodymyr Zelensky is due to attend the summit and is expected to meet with Trump, a reunion coming just months after their bruising Oval Office encounter which laid bare the risks of having a meeting with the U.S. president. Starmer met with Carney in Ottawa before the summit for talks focused on security and trade, in the first visit to Canada by a British prime minister in eight years. German officials were keen to counter the suggestion that the summit would be a 'six against one' event, noting that the G-7 countries have plenty of differences of emphasis among themselves on various issues. 'The only problem you cannot forecast is what the president of the United States will do depending on the mood, the need to be in the news,' said Chrétien. Gillies and Lawless write for the Associated Press and reported from Banff and Ottawa, respectively. AP writers Josh Boak in Calgary, Canada, Mari Yamaguchi in Tokyo, Sylvie Corbet in Paris, Geir Moulson in Berlin and Nicole Winfield in Rome contributed to this report.
2 hours ago
G7 leaders gather for summit overshadowed by Israel-Iran crisis and trade wars
BANFF, Alberta -- Leaders of some of the world's biggest economic powers arrive in the Canadian Rockies on Sunday for a Group of Seven summit, overshadowed by an escalating conflict between Israel and Iran and U.S. President Donald Trump's unresolved trade war with allies and rivals alike. Israel's strikes on Iran and Tehran's retaliation, which appeared to catch many world leaders unawares, is the latest sign of a more volatile world as Trump seeks to withdraw the U.S. from its role as world policeman. Speaking on a flight to Canada to attend the summit, British Prime Minister Keir Starmer said he had discussed efforts to de-escalate the crisis with Trump and Israeli Prime Minister Benjamin Netanyahu, as well as other world leaders. Britain is sending fighter jets and other military reinforcements to the Middle East. 'We do have longstanding concerns about the nuclear program Iran has. We do recognize Israel's right to self-defense, but I'm absolutely clear that this needs to de-escalate. There is a huge risk of escalation for the region and more widely," Starmer said, adding he expected 'intense discussions' would continue at the summit. As summit host, Canadian Prime Minister Mark Carney has decided to abandon the annual practice of issuing a joint statement, or communique, at the end of the meeting. With other leaders wanting to talk to Trump in an effort to talk him out of imposing tariffs, the summit risks being a series of bilateral conversations rather than a show of unity. Trump is the summit wild card. Looming over the meeting are his inflammatory threats to make Canada the 51st state and take over Greenland. French President Emmanuel Macron arrived in Greenland on Sunday for a highly symbolic stop on his way to Canada, meeting the Arctic territory's leader and Denmark's prime minister aboard a Danish helicopter carrier. Macron's office said the trip to Greenland is a reminder that Paris supports principles of sovereignty, territorial integrity and the inviolability of borders as enshrined in the U.N. charter. Macron, who is one of the very few leaders to have known Trump during his first term, was the first European leader to visit the White House after Trump took office, emerging unscathed from the Oval Office encounter. But despite the two leaders' sporadic bromance, Macron's approach to Trump has failed to bear major results, with France caught up in the president's planned tariffs on the European Union. Nor did it bring any U.S. security guarantees for Ukraine despite Macron's efforts, together with Starmer, to build a coalition of nations that could deploy forces after any ceasefire with Russia, with the hope it would convince the Trump administration to provide backup. Trump is scheduled to arrive late Sunday in Kananaskis, Alberta. Bilateral meetings between other leaders are possible Sunday, but the summit program does not get underway until Monday. Peter Boehm, Canada's sherpa of the 2018 G7 summit in Quebec and veteran of six G7 summits, expects the heads of state to pivot discussion to devote more time to the war. 'Leaders can accommodate a discussion, perhaps even a statement,' Boehm said. 'The foreign policy agenda has become much larger with this.' Leaders who are not part of the G7 but have been invited to the summit by Carney include the heads of state of India, Ukraine, Brazil, South Africa, South Korea, Australia, Mexico and the UAE. Avoiding tariffs will continue to be top of mind. 'Leaders, and there are some new ones coming, will want to meet Donald Trump,' Boehm said. 'Trump doesn't like the big round table as much he likes the one-on-one.' Bilateral meetings with the American president can be fraught as Trump has used them to try to intimidate the leaders of Ukraine and South Africa. Former Canadian Prime Minister Jean Chrétien told a panel this week that if Trump does act out, leaders should ignore him and remain calm like Carney did in his recent Oval Office meeting. 'He tends to be a bully,' Chrétien said. 'If Trump has decided to make a show to be in the news, he will do something crazy. Let him do it and keep talking normally.' Starmer had a warm Oval Office meeting with the president in February, wooing Trump with an invitation for a state visit from King Charles III. Trump has praised the British prime minister, despite their political differences. Last month Britain and the U.S. announced they had struck a trade deal that will slash American tariffs on U.K. autos, steel and aluminum. It has yet to take effect, however, though British officials say they are not concerned the Trump administration might go back on its word. Starmer's attempts to woo Trump have left him in an awkward position with Canada, the U.K.'s former colony, close ally and fellow Commonwealth member. Starmer has also drawn criticism — especially from Canadians — for failing to address Trump's stated desire to make Canada the 51st state. Asked if he has told Trump to stop the 51st state threats, Starmer told The Associated Press: 'I'm not going to get into the precise conversations I've had, but let me be absolutely clear: Canada is an independent, sovereign country and a much-valued member of the Commonwealth.' The war in Ukraine will be on the agenda. President Volodymyr Zelenskyy is due to attend the summit and is expected to meet with Trump, a reunion coming just months after their bruising Oval Office encounter which laid bare the risks of having a meeting with the U.S. president. Starmer met with Carney in Ottawa before the summit for talks focused on security and trade, in the first visit to Canada by a British prime minister for eight years. German officials were keen to counter the suggestion that the summit would be a 'six against one' event, noting that the G7 countries have plenty of differences of emphasis among themselves on various issues. Chrétien.
Yahoo
2 hours ago
- Yahoo
NHS faces paying more for US drugs to avoid future Trump tariffs
Britain faces paying more for US drugs as part of a deal to avoid future tariffs from Donald Trump. The NHS will review drug pricing to take into account the 'concerns of the president', according to documents released after a trade agreement was signed earlier this year. White House sources said it expected the NHS to pay higher prices for American drugs in an attempt to boost the interests of corporate America. A Westminster source said: 'There's an understanding that we would look at the drug pricing issue in the concerns of the president.' The disclosure is likely to increase concerns about American interference in the British health service, which has long been regarded as a flashpoint in trade talks. It comes after Rachel Reeves announced a record £29 billion investment in the NHS in last week's spending review. The Chancellor's plans will drive spending on the health service up towards 50 per cent of all taxpayer expenditure by the mid-2030s, according to economists at the Resolution Foundation. The Telegraph has also learnt that under the terms of the trade deal with America, the UK has agreed to take fewer Chinese drugs, in a clause similar to the 'veto' given to Mr Trump over Chinese investment in Britain. The White House has asked the UK for assurances that steel and pharmaceutical products exported to the US do not originate in China, amid fears the deal could be used to 'circumvent' Mr Trump's punishing tariffs on Beijing. Mr Trump is enraged by how much more America pays for drugs compared with other countries and considers it to be the same issue as he has raised on defence spending. Just as the US president has heaped pressure on European nations to increase the GDP share they allocate to defence, he thinks they should spend more on drug development. An industry source said: 'The way we've been thinking about it and many in the administration have been thinking about it, it's more like the model in Nato, where countries contribute some share of their GDP.' Britain and the US 'intend to promptly negotiate significantly preferential treatment outcomes on pharmaceuticals and pharmaceutical ingredients', the trade deal reads. Pharmaceutical companies are also pushing for reductions in the revenue sales rebates they pay to the NHS under the voluntary scheme for branded medicines pricing, access and growth (VPAG) – a mechanism that the UK uses to make sure the NHS does not overpay. Last week, Albert Bourla, Pfizer's chief executive, said non-US countries were 'free-riding' and called for a US government-led push to make other nations increase their proportionate spend on innovative medicines. He said White House officials were discussing drug prices in trade negotiations with other countries. 'We represent in UK 0.3pc of their GDP per capita. That's how much they spend on medicine. So yes, they can increase prices,' Mr Bourla said. Industry sources said there was no indication yet on what the White House would consider to be a fair level of spending. Whatever the benchmark, Britain will face one of the biggest step-ups. UK expenditure on new innovative medicines is just 0.28pc of its GDP, roughly a third of America's proportionate spending of 0.78pc of its GDP. Even among other G7 nations, the UK is an anomaly. Germany spends 0.4pc of its GDP while Italy spends 0.5pc. Most large pharmaceutical companies generate between half and three quarters of their profits in the US, despite the fact that America typically makes up less than a fifth of their sales. This is because drug prices outside of the US can cost as little as 30pc of what Americans pay. Yet, pharmaceutical companies rely on higher US prices to fund drug research and development, which the rest of the world benefits from. A month ago, Mr Trump signed an executive order titled 'Delivering Most-Favored-Nation Prescription Drug Pricing to American Patients', which hit out at 'global freeloading' on drug pricing. It stated that 'Americans should not be forced to subsidise low-cost prescription drugs and biologics in other developed countries, and face overcharges for the same products in the United States' and ordered his commerce secretary to 'consider all necessary action regarding the export of pharmaceutical drugs or precursor material that may be fuelling the global price discrimination'. Trung Huynh, the head of pharma analysis at UBS, said: 'The crux of this issue is Trump thinks that the US is subsidising the rest of the world with drug prices. 'The president has said he wants to equalise pricing between the US and ex-US. And the way he wants to do it is not necessarily to bring down US prices all the way to where ex-US prices are, but he wants to use trade and tariffs as a pressure point to get countries to increase their prices. 'If he can offset some of the price by increasing prices higher ex-US, then the prices in America don't have to go down so much.' Mr Huynh added: 'It's going to be very hard for him to do. Because [in the UK deal] it hinges on the NHS, which we know has got zero money.' Under VPAG, pharmaceutical companies hand back at least 23pc of their revenue from sales of branded medicines back to the NHS, worth £3bn in the past financial year. The industry is pushing for this clawback to be cut to 10pc, which would mean the NHS would have to spend around 1.54bn more on the same medicines on an annual basis. The Government has already committed to reviewing the scheme, a decision which is understood to pre-date US trade negotiations. A government spokesman said: 'This Government is clear that we will only ever sign trade agreements that align with the UK's national interests and to suggest otherwise would be misleading. 'The UK has well-established and effective mechanisms for managing the costs of medicines and has clear processes in place to mitigate risks to supply.'
