Paul Johnson: The spending review was ‘incomprehensible'
Rachel Reeves's spending review was the 'most incomprehensible speech I've ever heard from a chancellor', according to Paul Johnson of the Institute for Fiscal Studies. He spoke to me on today's edition of Coffee House Shots.
In this special episode, I was also joined by Ruth Curtice, chief executive of the Resolution Foundation, to take a wider look at Britain's fiscal and economic problems. Why, despite record tax levels, do our public services feel as if they're in managed decline? Why do voters' expectations of the state seem so out of whack with what we actually deliver?
We discussed whether Ruth's predecessor, Torston Bell, was right to claim Labour has ended austerity, and how much the lingering effects of Covid still shape where we are today. Paul and Ruth examined whether our economic doom loop – the endless chatter about tax rises and spending squeezes – are explained by structural problems in the British economy. Are tax rises inevitable? Or do the public need to get on board with a smaller state.
Finally, I asked what they would do as Treasury dictators with a free hand to reform any policy they like. Listen below.
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The Herald Scotland
an hour ago
- The Herald Scotland
SNP's nuclear stance costing Scotland jobs, says UK minister
While energy is largely reserved to the UK Government, the Scottish Government effectively has a veto on new nuclear power developments through planning regulations. Last week, in her Spending Review, Rachel Reeves unveiled a multi-billion-pound investment programme in new nuclear energy. The Chancellor said £2.5 billion of the £8.3bn set aside for Great British Energy would be redirected to support new nuclear technologies, including small modular reactors, and a new plant in the south of England. READ MORE: In an interview with BBC Scotland's Sunday Show, Mr Shanks was asked about why the money had been redirected, particularly given the party's manifesto made no mention of nuclear, but instead focussed on onshore wind, solar, and hydro power. 'Well, it's not an exclusive list, because there's a lot of other clean energy technologies,' Mr Shanks said. 'Nuclear is part of our energy mix. 'I'm not going to make any apologies for the government investing in nuclear where thousands of highly skilled jobs can be delivered, including in Scotland if it wasn't for the ideological position of the SNP to block new nuclear, could be delivering those well paid skilled jobs here in Scotland. 'They turned their face against that, and they will have to answer for that.' He added: 'The broader point here is Great British Energy is all about harnessing the power of the public purse to invest not just in clean power projects directly but supply chains that drive them. 'Because unlike the previous government, we want to see those well paid, industrialised jobs coming alongside us, not towing in offshore wind and switching it on, but building it in this country and getting the manufacturing jobs that go with it. "That's how we deliver the jobs of the future.' The Herald revealed at the weekend that unions are calling on the Scottish Government to end its longstanding resistance to new nuclear power. Louise Gilmour, from GMB Scotland, has written to Energy Minister Gillian Martin calling for an urgent rethink. She said: 'Amidst broken promises on a green jobs revolution, the Scottish Government cannot afford to scoff at the offering of nuclear energy on the table. An offer that would in large part be funded by the UK Government. The ban against new nuclear – especially SMRs – must be lifted.' Responding to Ms Gilmour's comments, a Scottish Government spokesperson told The Herald: 'The Scottish Government is focused on supporting growth and creating jobs by capitalising on Scotland's immense renewable energy capacity rather than expensive new nuclear energy which takes decades to build, creates toxic waste which is difficult and costly to dispose of and does not generate power at a cost that will bring down energy bills.' READ MORE: Meanwhile, during the interview with the BBC, Mr Shanks was pressed on the impact of oil and gas job losses in Aberdeen. Companies in the north east have blamed the UK Government's Energy Profits Levy, which means the effective rate of tax on oil and gas companies is 78%. Mr Shanks said: 'Every single job loss is hugely distressing for the individuals and for their families and communities. 'I do not for a second discount the impact that job losses have, but I do not think that is an entirely fair assessment, because yes, there have been job losses recently announced, but there have also been thousands of jobs created.' He argued that transition involved movement from one part of the energy sector to another, and that support for workers was crucial. 'That is why we announced incredibly quickly that passporting support—where if you are an offshore oil and gas worker doing a particular job and you could do the same job in offshore wind, you should not have to requalify or have your skills reassessed. 'You should be able to move straight into that job. That is something the previous government talked about for a long time. We delivered it.' READ MORE: The Labour Energy Minister also said he was 'hopeful' that an announcement on investment in Grangemouth will be made soon. Mr Shanks said more than 80 potential investors had come forward since the UK Government pledged £200 million for the site. The Government is seeking a further £600m in private investment in the area, following the closure of Scotland's last oil refinery. Mr Shanks said the investment would help provide a 'long-term, sustainable future' for the site. Petroineos, the joint venture between INEOS and PetroChina, which owns the 100-year-old refinery, first announced plans to close in November 2023. They said the plant's future as an import terminal would 'require significantly fewer people to operate' and that there would need to be a 'net reduction of approximately 400 roles over the next two years.' Mr Shanks said the Government was engaging with businesses on new projects for the area. 'We have had some really positive meetings around potential investors,' he said. 'In fact, more than 80 potential investors have come forward. Scottish Enterprise is driving forward due diligence on that. There are a number of really credible projects that we are developing at the moment. 'We hope we will have some really positive announcements to make soon.' Mr Shanks said the 'unprecedented' £200m investment from the National Wealth Fund would help 'create the jobs of the future' while ensuring long-term investment security. He added: 'I am not involved in the due diligence, as you would not expect, but there are some really exciting, viable projects coming forward that will deliver jobs in Grangemouth long into the future.' Last week, Jan Robertson, Grangemouth director for Scottish Enterprise, said she had received a 'mixture of inquiries' from businesses—some interested in the site itself and others with 'a good opportunity to become projects in the relatively near term.' 'What I mean by that is the next three to four years,' she told Holyrood's Economy and Fair Work Committee. 'Our approach at the moment is very much working with those and working as closely and quickly as we can to make the progress that we want to see in Grangemouth.' Ms Martin told the committee the 'door is not closed' to companies looking to work at the site, and said Petroineos had also received approaches. 'We could look back five years and start pointing fingers, but the most important thing is that in the last year—actually the last six months—Project Willow and the taskforce have moved things along in a way that has been swift, agile and focused,' she said. 'I am feeling so much more confident than I did this time last year in the prospects for that site.'
South Wales Argus
an hour ago
- South Wales Argus
UK Foreign Office advises against all travel to Israel
Conflict in the Middle East continues to escalate as Israel has threatened even greater force as some Iranian missiles evaded Israeli air defences to strike buildings in the heart of the country. The region braced for a protracted conflict after Israel's surprise bombardment of Iran's nuclear and military sites on Friday (June 13) killed several top generals and nuclear scientists, and neither side showed any sign of backing down. Today (June 15), the Foreign, Commonwealth & Development Office (FCDO) has said it advises 'against all travel' to Israel, following the latest travel update. UK Passport Renewal Guide It comes as areas around Gaza, the West Bank and the Golan Heights were already classed as 'red zones'. Latest UK Foreign Office travel advice to Israel Failure to follow the latest travel advice from the Foreign Office, which covers Israel and the Occupied Palestinian Territories, means your travel insurance could be invalidated. A statement on the government website says: "Iran has launched multiple rounds of missile and drone attacks against Israel. "On 13 June a nationwide state of emergency was declared in Israel. "This followed Israeli strikes against nuclear and military facilities in Iran. Israeli airspace remains closed." Can you still use a red passport in 2025? It added: "We recognise this is a fast-moving situation that poses significant risks. The situation has the potential to deteriorate further, quickly and without warning. The current situation has disrupted air links out of the country and may disrupt road links." The Foreign Office also shared: "The interception of missiles over Israel and the OPTs may result in falling fragments or debris. "If you encounter any projectile debris or fragments you should move away from them immediately and contact local authorities." See the latest updates on the government website. Recommended reading: Sir Keir Starmer confirmed on Saturday (June 14) that more RAF planes are being deployed, amid the escalating hostilities between Israel and Iran. Additional refuelling aircraft have been deployed from UK bases and more fast Typhoon jets will be sent over, it is understood. Asked whether the announcement from the Prime Minister means the UK is at war, Rachel Reeves told Sky News: 'No, it does not mean that we are at war. 'And we have not been involved in these strikes or this conflict, but we do have important assets in the region and it is right that we send jets to protect them and that's what we've done. 'It's a precautionary move.'
Daily Mail
an hour ago
- Daily Mail
Treasury 'already drawing up tax rises for the Autumn' as grim poll shows just a fifth of Brits say Rachel Reeves had priorities right in Spending Review
The Treasury is already said to be drawing up tax rise options for the Autumn as economists warn Rachel Reeves ' plans no longer add up. Dividends and bank profits are among the areas being mooted for drumming up revenue to balance the books. The Chancellor declined to rule out tax rises again this morning, amid fears that the Israel-Iran conflict could deal another hammer blow to the prospects for growth. Meanwhile, a poll has suggested that last week's Spending Review did not go down well with Brits. Just 19 per cent thought the package had the right priorities - with 36 per cent saying it did not. More than half expect the economy to get worse over the next year. Ms Reeves insists her spending plans for the next three years are 'fully' funded. But critics have claimed the stalling economy, together with pressures on defence and a Labour revolt on benefits mean she is writing cheques with 'fantasy' money. The issues could crystalise at the Budget in the Autumn, when many believe the independent OBR will downgrade growth forecasts. GDP shrank by 0.3 per cent in April, although it has grown over the past quarter. The IFS think-tank has warned that tax rises look 'almost inevitable', ridiculing the government's claim to have identified billions of pounds in 'efficiencies' during a 'zero-based' overhaul of costs. According to the Sunday Times, a list of potential tax increases drawn up in the Treasury includes raising the bank surcharge. That is a levy on profits on top of the 25 per cent corporation tax rate. It was cut from 8 per cent to 3 per cent under the Tories, with suggestions it could return to 5 or 6 per cent. Another apparent option is increasing tax on dividends, often taken by company directors instead of wages. Currently the highest rate stands at 39 per cent - lower than the 45 per cent top rate of income tax. Removing a tax-free £500 dividend allowance would bring in hundreds of millions of pounds for the Treasury, but could punish small investors. Challenged on the BBC's Sunday with Laura Kuenssberg that 'lots of experts' were already saying she would need to put taxes up, Ms Reeves said: 'Well we're a strong economy with strong foundations and we have weathered other shocks... 'We are still the only country to have secured a deal with the United States, and in addition we've got trade deals with India and the EU, so we are working hard as a government to strengthen our economy, to grow our economy in a way that creates good jobs here in Britain, paying decent wages, to put more money in peoples' pockets.' Options are always drawn up within the Treasury ahead of fiscal events, and not necessarily implemented. Shadow chancellor Mel Stride said: 'Rachel Reeves today refused to rule out coming back with more tax rises later this year as the impact of her decisions on the economy worsens. 'Meanwhile today the Sunday Times has revealed Rachel Reeves' team have drawn up a secret tax rising dossier outlining how to hit the British people with higher taxes. This is despite the Chancellor promising not to come back for more taxes after spooking markets last year. 'The truth is Rachel Reeves is more than likely to put her hands in the pockets of British taxpayers and business to pay for her mistakes.'
