Call for transparency on how Wales is funded amid ‘discrepancy' over £200m transport claim
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Telegraph
11 hours ago
- Telegraph
Reeves is cynically squeezing us dry– without raising taxes
The Chancellor has not had much luck with some of her tax rises. Rachel Reeves was expecting to raise up to £3.2bn each year, or around £12.7bn in this parliament, with the scrapping of non-dom status – a policy announced by her Conservative predecessor Jeremy Hunt and then ramped up by Labour. She is heading for disappointment. With the exodus of more than 10,000 millionaires from the UK last year and an expected 16,000 this year, Reeves has been warned that the move may in fact reduce rather than increase tax receipts. Speculation is thus rife that the measures may be further watered down; there has already been some initial tweaking and softening earlier this year. The imposition of VAT on school fees is likewise now widely expected to raise less than the predicted £1.7bn by 2030, due to more than expected numbers of children transferring to the state sector and becoming a burden on education budgets. The spate of independent school closures – not just as a result of the VAT change but also employer National Insurance rises, the loss of business rate relief for schools with charitable status and the gamut of extra regulation affecting all businesses – will inevitably make this worse. But, ironically, Reeves may have been rather more adept at boosting Treasury revenue with some of the tax measures she did not actually implement. Before last year's Halloween Budget there was much speculation that rates of capital gains tax (CGT) would be brought into line with those for income tax. This would have meant that higher-rate taxpayers earning over £50,270 would have had to pay 40pc instead of 24pc on taxable property gains and 20pc on other assets. Additional rate taxpayers, earning over £125,140, even worried they might be faced with a full 45pc levy on any uplift. The fear that these rates would be aligned was an entirely rational one. The great Conservative chancellor Nigel Lawson in his 1988 Budget had done just that – although the medicine that year was very much sweetened by the scrapping of all income tax rates over 40pc at the same time. Labour's manifesto, while pledging not to raise the rates of income tax or employee National Insurance, was silent about CGT. And after winning the election, Sir Keir Starmer and Reeves never tired of talking up a £22bn 'black hole' the Tories had allegedly left them. This would soon need filling – and Reeves did nothing to dampen down speculation that CGT rises and changes to the pension regime would be how she would achieve at least part of this. In the event, the Chancellor took less drastic action. She raised the rate of CGT for non-property gains from 10pc to 18pc for basic-rate taxpayers and 20pc to 24pc for those on the higher and additional rates. In other words, she aligned the rates for different asset classes to the one already levied on property. But the speculation alone did pay dividends for Reeves. In October last year, the month running up to the Budget, CGT receipts on residential property disposals was £408m – more than double that of most other months in the last tax year. Revenue from CGT is notoriously volatile when compared to other taxes. In the 2023-24 tax year, for example, CGT liabilities were 18pc down from the previous year. But the surge in the run-up to the Budget was vast. The best explanation for the Treasury's October windfall is that residential landlords sold up in advance of a clobbering that did not materialise. As Chris Etherington, of accountants RSM, has noted: 'It is clear that anticipation of CGT changes can distort taxpayer behaviour... the Chancellor benefitted from an inadvertent windfall... Reeves does not necessarily need to increase CGT rates to raise revenues. It's potentially possible to maximise CGT receipts by simply saying very little on the subject.' The Chancellor will insist that she cannot speculate about what moves she will be making in future Budgets – due to such information having an impact on the markets. But that argument does not quite wash. She is more than happy to rule out some fiscal moves, such as raising the rate of income tax. So why not others? Is it too cynical to suggest that Reeves has found her own third way? She can benefit from increased inflows without actually raising taxes. But such tactics are far from victimless – the uncertainty and disruption caused comes at a high price. Additionally, it makes it much more difficult for people to plan for the future and may make them take unnecessary decisions that they will live to regret. In other circumstances, allowing speculation to rip may in fact hurt Treasury coffers. Not closing down current Labour Party debates about a wealth tax will surely mean more wealthy people leaving the UK in anticipation of such a move. This will not only hurt our economy but also mean lower tax yields, resulting in less money for public services.
Daily Mail
a day ago
- Daily Mail
Report: 'Trump accounts' for newborns could grow to $1.9M
Babies born this year could become millionaires before they turn 30, thanks to the 'Trump accounts' established when President Donald Trump signed the 'big, beautiful bill' into law earlier this month. Fox Business reported Wednesday that the one-time government investment of $1,000 per child could grow to as much as $1.9 million by the time that individual turns 28 if the account if fully funded and left untouched. The Treasury assessment found that if a maximum contribution is made each year on the child's birthday through age 17 the account could grow to between $191,500 and $676,400. The money can't be used until the individual turns 18. A child's Social Security number has to be provided in order for parents to sign up. The current law applies to children born between January 1, 2025 and December 31, 2028. Democrats have raised concerns about the program due to a comment uttered Wednesday by Treasury Secretary Scott Bessent. 'In a way, it is a back door for privatizing Social Security,' Bessent said at an event hosted by Breitbart News. 'If, all of a sudden, these accounts grow and you have in the hundreds of thousands of dollars for your retirement, that's a game-changer, too,' he added. On Thursday, Senate Minority Leader Chuck Schumer gave a floor speech on the matter. 'Yesterday, the Trump administration did something they rarely do – they told the truth. It wasn't Donald Trump, but it was one of his minions. They told the truth,' the New York Democrat said. 'The Trump administration, in this case, was talking about wanting to privatize Social Security.'
Telegraph
a day ago
- Telegraph
Labour's hopes of a building boom are fading
The Government's entire economic strategy can be summed up in one phrase: planning reform. This is front and centre of every response to poor GDP figures, in every speech on the economy and high up in any list of government 'achievements'. It doesn't seem to matter that taxes on business have gone up massively and employment regulation is about to do the same. That is all fine because of planning reform. In her Spring Statement for instance, the Chancellor stated that these reforms would mean the Government was now 'within touching distance of delivering our manifesto promise to build 1.5 million homes in England in this Parliament'. The result of all this housebuilding would be, according to the Office for Budget Responsibility (OBR), an increase in GDP worth 'an additional £3.4bn' by 2029/30. Delivering this level of housebuilding is therefore crucial to the Government's economic and political success. The early signs are not good, and this should be a major cause for concern in the Treasury. First, the OBR's assumptions for this economic impact are nothing short of heroic. They state that net additions to the housing stock will increase from 192,000 this year to 305,000 by 2029/30. A near-60pc increase and a 40-year high in terms of net additions. They are also forecasting a booming property market with transactions rising from 1m in 2023 to 1.472m in 2029. Turnover rate in the housing market will apparently rise to 4.58pc by 2029. Other than the Covid market surge in 2021 – when stamp duty was eased – that would be the highest annual turnover rate in 20 years. No one in the industry thinks these forecasts are realistic. And for good reason. The Home Builders Federation's recent housing pipeline report shows that the number of residential planning approvals actually fell by 37pc during the first quarter of 2025. The 50,610 units that these approvals will deliver was the lowest quarterly figure in nearly 12 years. In certain key regions things are even worse. Data from Molior shows that in London, where Labour has been in charge for years, just over 2,000 private homes began construction during the first half of this year. That is just 4.9pc of the Government's 44,000 half-year target. It could be fairly argued that the Government's planning reforms have yet to kick in. The OBR says most of the increase will happen from 2026/27. But things do not look good on that front either. Molior is forecasting that London will deliver just over 5pc of the 176,000 homes that the Mayor is targeting over the next two years. And if that were replicated across the country it would be nothing short of disastrous. If things continue along at the sort of rate we've seen since Labour came to power, rather than that which is currently in the OBR forecast, it will only be a matter of time before they look again at the numbers. They do in fact warn that their projections for housebuilding contain 'several significant uncertainties' including constraints within the sector and local opposition to the reforms. To that they should add other government policies because since these reforms were announced ministers have done everything they can to hamper them. They've already watered down some of their plans in the face of backbench opposition so environmental and nature campaigners will still be able to easily block new developments. Any hope that Government backed affordable housing would help reach the target have been ended after the Spring Statement confirmed most of the £39bn trumpeted for this programme is back loaded into the next parliament. There's actually less money for affordable housing in the next crucial few years. Added to all of this, the Government is actively making it more expensive to build new homes. New levies, inherited from the previous Government, will add a few thousand pounds to the cost of each new home. And Treasury officials have managed to slip through a massive increase to the landfill tax, something the previous government rejected, that will halt many brownfield developments in their tracks. So unless we see some new, additional and radical planning reforms for the OBR to take into account, at some point they will revise down the number of net additions they are currently forecasting. At which point the Government won't have an economic strategy left. The minor planning reforms they have half implemented will count for nothing. Instead of a housebuilding boom that delivers the economic growth that the Chancellor has promised, we are going to see the sector limp along like the rest of the economy because this Government simply doesn't understand that tax and regulation matter.
