Latest news with #RACHELReeves
The Sun
15 hours ago
- Business
- The Sun
Rachel Reeves refuses to rule out MORE tax hikes after spending spree plunged into crisis
RACHEL Reeves refused to rule out hiking up taxes after her spending plans were threatened by dismal growth figures. The Chancellor insisted she wasn't going to write Budgets for the next four years after the UK economy for shrank by 0.3 per cent in April - the biggest monthly drop for 18 months. 1 The move came after she hit back at suggestions she was the 'Klarna Chancellor' after accusations her spending review was buy now and pay later. Ms Reeves told LBC News: "I am not going to write four years worth of budgets... It would be very risky for a Chancellor to write a budget in a world as uncertain as this. "I can say I won't have to repeat a budget like last year, I wiped the slate clean. We do now have that path to lower borrowing and debt". The Chancellor was speaking after she revelled in a £300 billion spending splurge increasing spending for health and defence and outlining new infrastructure projects. But Ms Reeves pointed to "uncertainty about tariffs" had led to the fall in GDP for April following Donald Trump''s global tariff war. The world trade war combined with stubborn inflation and slow growth are likely to see tax rises or major spending cuts at the Budget this autumn. She said: 'We know that April was a challenging month. "There was a huge uncertainty about tariffs, and one of the things if you dig into those GDP numbers today is exports weakening and also production weakening because of that uncertainty in the world around tariffs.' Analysis: Growth figures are wake up call after spending splurge By Ryan Sabey, Economics Editor Rachel Reeves revelled in a major spending splurge yesterday - but this morning she wakes up to a reality check. The Chancellor says that the figures are "clearly disappointing" but its a stark reminder of the fragility of the UK economy and how difficult it will be to turbo-charge growth. The effects of 'Awful April' - when a slew of added costs for business including that national insurance rise came in - has hit home. This Labour government has put that push for growth as their number one mission which will have the knock-on effect of driving up living standards. After a positive start to the year - where we saw growth up by 0.7 per cent - today we see it drop by 0.3 per cent for April. We shouldn't take one month's figures in isolation but the fear is conditions for business and entrepreneurs have hit them hard. The hike to national insurance contributions and minimum wage for firms kicked in at the start of April and this is how the economy has reacted. As the British Chambers of Commerce outline the NI rise has hit investment, recruitment and prices. The uncertainty of Donald Trump's tariffs is also a drag on the UK with the largest monthly fall on record in goods exports to the US. With dismal economic growth, the global trade war and stubborn inflation, the Chancellor will surely be left with little choice but to cut spending or raise taxes in the autumn. She has iron-clad fiscal rules she insists are non-negotiable so it feels inevitable something will have to give. Tory leader Kemi Badenoch hit out at Ministers saying they were waging a "war" with business. She highlighted how ' Awful April' when National Insurance contributions for business were hikes and minimum wage payments went up. The party leader said: "This is a war on the private sector, where private businesses are having to cut their coat according to their cloth. "They're having to downsize. They're having to let go of staff, but no reforms are being asked for any parts of the public sector. 'Of course, we want to fund public services, but we need to make sure that we're doing things better.' Ms Reeves outlined her spending review yesterday saying it was time for national renewal. She told Labour MPs at an event last night that she needed to "sell" the benefits of her plans to voters on the doorstep.
Scottish Sun
a day ago
- Business
- Scottish Sun
Chancellor Rachel Reeves unleashes eye-watering borrowing spree in do-or-die bid to drive growth
RACHEL Reeves was yesterday branded a 'spend now, tax later' Chancellor after unleashing an eye-watering borrowing spree in a do-or-die bid to drive growth. Ms Reeves put £113billion on the country's credit card to fund 'national renewal' projects — with defence and the NHS taking the lion's share of the budget uplifts. 3 Rachel Reeves was branded a 'spend now, tax later' Chancellor Credit: Simon Walker / HM Treasury 3 The Chancellor unleashing an eye-watering borrowing spree in a do-or-die bid to drive growth Credit: AFP She was accused of digging the 'black hole' in public finances Labour claimed to have inherited into a 'crater into which public confidence is plunging'. Experts said her next Budget may have to raise up to £23billion to keep to her fiscal rules amid economic slowdown and uncertainty over US tariffs. It sparked fears of tax rises in autumn to stop UK debt worsening and spooking money markets. Ms Reeves came out fighting after a humiliating 48 hours in which she U-turned on winter fuel cash for millions of OAPs. She unveiled spending plans for the next three years, calling them 'Labour choices' in the hope of shoring up support in the party's heartlands amid the threat of Nigel Farage's Reform UK. Shadow Chancellor Mel Stride said she had a 'Corbynist catalogue' of tax rises to flick through to fund her pledges — a reference to a secret memo Deputy PM Angela Rayner sent her suggesting ways to raise cash. He called her a 'tinfoil Chancellor, flimsy and ready to fold in the face of the slightest pressure' as she set out her plans. He said: 'This is the spend now, tax later review, because the Chancellor knows she will need to come back here in the autumn with yet more taxes and a cruel summer of speculation awaits. 'How can we possibly take this Chancellor seriously after the chaos of the last 12 months?' Mr Reeves insisted later that no tax rises would be needed to pay for her commitments. Top 5 takeaways from Spending review She said: 'Every penny is funded through the tax increases and changes to the fiscal rules that we set out last autumn.' The review was the first since 2007 to go through spending 'line by line', it was claimed. The health department is expected to make £9billion in efficiency savings by 2028-29, and the defence budget £905million. The Chancellor told MPs: 'I've made my choices. In place of chaos, I choose stability. 3 'In place of decline, I choose investment. In place of pessimism, division and defeatism, I choose national renewal. 'Reforms that will make public services more efficient, more productive and more focused on the user. I have been relentless in driving out inefficiencies. 'I will be ruthless in calling out waste with every penny being reinvested into public services.' She will hope the cash injections will ease relationships with Labour backbenchers concerned at welfare cuts. A vote on measures is planned for next month. The biggest winner in the review was the NHS, which gets a three per cent budget rise in England over the next three years, taking its funding to £226billion. Financial cushion The defence budget will go up by 2.6 per cent but pressure is mounting on ministers to raise it again to 3.5 per cent by 2035. The vow to build 1.5 million homes in the next five years was boosted with confirmation an average of £3.9billion will be go on social and affordable housing in the next decade. Ed Miliband's energy department gets a 16 per cent real-terms rise with £14.2billion extra going on the Sizewell C nuclear plant. Families and OAPs could save £600 a year on bills in more energy-efficient homes, she said. A pledge to end the use of asylum hotels by 2029 will save £1billion a year, she insisted. The police will get an above-inflation increase but top cops have warned of 'incredibly challenging' budgets following tense talks between the Chancellor and Home Secretary Yvette Cooper. Surrey Chief Constable Gavin Stephens said the money will 'fall far short' of that needed to fund Government ambitions and maintain the existing workforce. He said the increase 'will cover little more than annual inflationary pay increases'. The Chancellor inherited, supposedly, a black hole and she has dug a crater into which public confidence is plunging. Richard Tice Ms Reeves aims to meet her fiscal rule of balancing day-to-day spending with revenues by 2029-30 and plans to reduce the UK's debt. Her financial cushion is just less than £10billion. Reform deputy leader Richard Tice said public spending was 'completely out of control'. He said: 'The Chancellor inherited, supposedly, a black hole and she has dug a crater into which public confidence is plunging.' Economist Ruth Gregory, of Capital Economics, said Ms Reeves may need to find an extra £13billion to £23billion in autumn's Budget 'simply to maintain her current buffer against the fiscal rules'. Stephen Millard, interim director of the National Institute of Economic and Social Research, said it is now 'almost inevitable' that if she sticks to her rules, she will have to raise taxes this year. Rain Newton-Smith, director general of the Confederation of British Industry, warned that the Government cannot target business again following its £25billion raid at the last Budget. She said: 'We will hold the Chancellor to account that she won't come back for tax rises on business . . . because I don't think business can shoulder any more. 'The Prime Minister himself has said you cannot tax your way to growth. "So I think it's critical that we don't see rises like that on business because they are the ones that need to invest to deliver the growth mission.'
The Sun
a day ago
- Business
- The Sun
Mortgage scheme to help first-time buyers with small deposits WILL launch this summer, Spending Review reveals
RACHEL Reeves' Spending Review has confirmed the extension of a mortgage scheme aimed at helping first-time buyers with small deposits. The Mortgage Guarantee Scheme will re-launch permanently in July, according to government documents released today. 1 The scheme, first introduced in 2021 and initially set to end this month, allows buyers to purchase a home with just a 5% deposit. It can be used for any property costing up to £600,000. The government then provides a guarantee to lenders, covering some of their losses if the borrower cannot repay their mortgage and the home is repossessed. While the current application round ends on 30 June, a new permanent mortgage guarantee scheme will launch in July, aiming to help more young families and renters become homeowners, according to the Spending Review. The Spending Review also includes: A pledge to end the use of migrant hotels by the next election Confirmation that nine million pensioners will get the winter fuel allowance this year Free school meals for half a million more children An extra £39billion over the next decade for social housing A £15billion boost to transport to "properly connect" Britain's towns and cities £22billion investment in research and development and £2billion in Artificial Intelligence A £30billion injection in clean energy including £14billion for nuclear energy A rise in departmental budgets by 2.3% a year totalling £190billion more than the Tories The Defence budget hiked to 2.6% of GDP by 2027 Since the scheme began, over 53,000 mortgages have been completed using it, with a total value of £10.7billion as of December last year. This was especially helpful in the early 2020s, right after the pandemic. At that time, many banks were worried about the economy and were reluctant to offer mortgages to people with small deposits because they feared people might lose their jobs or house prices might fall. It was tough to get a mortgage if you only had a 5% deposit. The Mortgage Guarantee Scheme solved this by promising to cover some of the banks' losses if borrowers couldn't pay back their loans. This gave banks the confidence to offer 95% mortgages again. However, many banks are now offering similar mortgages without relying on government support. Experts believe the scheme's future is less significant, as banks are increasingly willing to lend to people with small deposits. Pete Mugleston, mortgage adviser and managing director at Online Mortgage Advisor, said: "On the one hand, the Mortgage Guarantee Scheme is a useful way of helping first-time buyers get on the property ladder if they don't have a large deposit "But, given that a lot of lenders are now offering mortgages with a 5% deposit and lower, the Scheme isn't as big an issue." For example, Skipton Building Society offers a 100% mortgage deal that allows you to buy a home without a deposit. A similar mortgage deal was recently launched by April Mortgages too. Accord offers a £5,000 deposit mortgage while other lenders have been slashing their affordability rules. A word of warning NO deposit mortgages can open doors for people who wouldn't be able to get on the housing ladder otherwise. Experts have generally seen the reintroduction of 100% mortgages as a positive thing and this deal from April Mortgages does have rigid lending criteria. But it's important to remember this deal won't be for everyone and they can be seen as quite controversial home loans. 100% mortgages mean you don't need a deposit - but it also puts buyers at higher risk of negative equity. This is when your mortgage is more than the total value of your home, which can happen if house prices fall. If you're in this position it can make it harder to remortgage, sell your home and get competitive rates from lenders. Typically they also have higher interest rates, making them more expensive. The general rule is that the smaller your deposit the higher your monthly mortgage repayments will be. Therefore because you won't have a deposit, your monthly repayments are likely to be more expensive compared with someone who did put down a deposit. You will need to be sure you can keep up with the payments and account for any potential financial shocks. 100% mortgages disappeared after the financial crisis in 2008, as they were seen a contributor to the sub-prime housing bubble and subsequent collapse. What other schemes are available? There are other government schemes available for first-time buyers alongside the Mortgage Guarantee Scheme. It's important to carefully explore each option, weighing the benefits and potential drawbacks, before making a decision. Here are some of the available options... First Homes First-time buyers can get a home for between 30 to 50% less than its market value through the First Homes scheme. You can buy a new build home from a developer or a property from someone who's used the scheme before and is now selling. The scheme is only available in England and you'll have to be 18 or older to qualify. Your total household income must be £80,000 or less, or £90,000 in London. You'll also need to be able to get a mortgage for at least half the price of the home. Shared ownership If you can't afford all of the deposit and mortgage payments for a home that meets your needs, you could consider shared ownership. This is when you buy a share of the property and pay rent to a landlord on the rest. You'll also likely need to pay a service charge to maintain common areas shared between you and your neighbours. Buyers can usually get a share of between 10 and 75% of the home's full value. You can buy more of the home later on in a process called staircasing. However, some people who have used shared ownership have struggled to buy bigger portions of their homes due to being forced to pay increasing rents and service charges. Lifetime ISA People struggling to save for a deposit can get extra help from the Government by saving into a Lifetime ISA (LISA). You can save up to £4,000 a year into it and the Government will give you a free bonus worth 25% of whatever you save. You have to be between 18 and 39 to open a LISA and you can pay in and get the bonus until you're 50. It's worth knowing that if you withdraw your money before you're 60, it must be spent on buying your first home. If you withdraw it for any other reason you'll lose your bonus and also effectively pay a 6.25% penalty - so you'll end up with less than you put in. You should also be aware that you can only use a LISA on homes worth up to £450,000. Right to Buy This scheme was brought in during the 1980s and allows most council tenants the right to buy their council house at a discount. There are different rules for Wales, Scotland and Northern Ireland. You can make a joint application with up to three family members who have lived with you for the past 12 months. If you rent from a Housing Association you may also have the right to buy it at a discount under the Government's Right to Acquire Scheme. Deposit Unlock This lets you buy a new build home from any developer registered with the scheme as long as you have a 5% deposit. The scheme is available to both first-time buyers and home movers. It's available on new-build homes up to the price of £833,250. Deposit Unlock is currently available with participating lenders including Nationwide and Accord Mortgages. How to get the best deal on your mortgage IF you're looking for a traditional type of mortgage, getting the best rates depends entirely on what's available at any given time. There are several ways to land the best deal. Usually the larger the deposit you have the lower the rate you can get. If you're remortgaging and your loan-to-value ratio (LTV) has changed, you'll get access to better rates than before. Your LTV will go down if your outstanding mortgage is lower and/or your home's value is higher. A change to your credit score or a better salary could also help you access better rates. And if you're nearing the end of a fixed deal soon it's worth looking for new deals now. You can lock in current deals sometimes up to six months before your current deal ends. Leaving a fixed deal early will usually come with an early exit fee, so you want to avoid this extra cost. But depending on the cost and how much you could save by switching versus sticking, it could be worth paying to leave the deal - but compare the costs first. To find the best deal use a mortgage comparison tool to see what's available. You can also go to a mortgage broker who can compare a much larger range of deals for you. Some will charge an extra fee but there are plenty who give advice for free and get paid only on commission from the lender. You'll also need to factor in fees for the mortgage, though some have no fees at all. You can add the fee - sometimes more than £1,000 - to the cost of the mortgage, but be aware that means you'll pay interest on it and so will cost more in the long term. You can use a mortgage calculator to see how much you could borrow. Remember you'll have to pass the lender's strict eligibility criteria too, which will include affordability checks and looking at your credit file. You may also need to provide documents such as utility bills, proof of benefits, your last three month's payslips, passports and bank statements.
Scottish Sun
a day ago
- Business
- Scottish Sun
Huge boost for railways as Rachel Reeves' spending review reveals more funding for NEW train lines across UK
RACHEL Reeves has promised to provide a major boost for the UK's train network - with a fresh vow to pump in billions more pounds into new lines and upgrades on key routes. The Chancellor delivered the first Spending Review in nearly four years this afternoon - vowing to splurge a mega £300 billion into the likes of the NHS, defence and travel. 3 Chancellor of the Exchequer Rachel Reeves delivers her Government's spending review Credit: PA 3 Reeves' review was the first in nearly four years by a UK government Credit: PA 3 A train arriving at New Street Station in Birmingham Credit: Alamy Follow The Sun's live blog on the Spending Review here. However, she has not provided a clear plan for how Labour will pay for it. In a clear tack to the Left, she used her Spending Review to defend higher taxes and borrowing to fund the cash shower. Referring to travel expansions, she said it was the Government's intention to "undo a generation of underfunding and neglect" under the Tories, 12 months on from Labour's General Election victory. Read more news CHILD'S PLAY Free school meals for half a million for kids confirmed in spending review Speaking in the Commons today after the weekly PMQs, Ms Reeves said the trains boost aims to "unlock the potential of all parts of Britain". "We are going further: investing in major rail projects to connect our towns and cities." The Spending Review includes: A pledge to end the use of migrant hotels by the next election Confirmation that nine million pensioners will get the winter fuel allowance this year Free school meals for half a million more children An extra £39billion over the next decade for social housing A £15billion boost to transport to "properly connect" Britain's towns and cities £22billion investment in research and development and £2billion in Artificial Intelligence A £30billion injection in clean energy including £14billion for nuclear energy A rise in departmental budgets by 2.3 per cent a year totalling £190billion more than the Tories The Defence budget hiked to 2.6 per cent of GDP by 2027 She referred back to the Autumn Budget in October last year when she announced funding for the Transpennine Route Upgrade. "The backbone of rail travel in the North... linking York, Leeds and Manchester... with a quarter of the route expected to be electrified by this summer," the Chancellor continued. Chancellor says spending review will be about 'making working people better off' "I know the commitment of the HFs, the Members for Huddersfield, York Outer, and Colne Valley to this issue …and today, I can announce a further £3.5bn of investment for that Route. "But my ambition and the ambition of people across the North is greater still …and so in the coming weeks I will set out this government's plans to take forward our ambitions on Northern Powerhouse Rail." Ms Reeves went on to say: "I have also heard the representations of my HFs, the Members for Milton Keynes North, Milton Keynes Central, and Buckingham and Bletchley. "And I can tell the House today to connect Oxford and Cambridge... and to back Milton Keynes' leading tech sector... I am providing a further £2.5bn for the continued delivery of East-West rail." She added: "On a matter I know is of great importance to HF Members for Lichfield, Birmingham Northfield, and Birmingham Erdington I can announce today that I am providing funding for the Midlands Rail Hub… the region's biggest and most ambitious rail improvement scheme for generations..." This will strengthen connections to Birmingham, across the West Midlands and into Wales. The Chancellor then told the Speaker: "For 14 years, the Conservatives failed the people of Wales. Those days are over. "Following representations from my RHF the Welsh Secretary, the First Minister of Wales and Welsh Labour MPs... I am pleased to announce £445m for railways in Wales over 10 years, including funding for Padeswood Sidings and Cardiff West Junction. "That, Mr Speaker, is the difference made by two Labour governments... working together to undo a generation of underfunding and neglect." It comes as Ms Reeves also promised to provide hundreds of millions to tackle illegal migration. pledged to end the use of expensive asylum hotels - that are costing taxpayers £4million a day - before the next election. But it risks infuriating voters who want to see action to stop using them now rather than in four years time. And critics have warned Ms Reeves mega spending blizzard will drive Britain even further into debt and raise the prospect of more tax hikes. Laying out her package in the Commons, Ms Reeves said: 'My choices are different. My choices are Labour choices."
Scottish Sun
a day ago
- Business
- Scottish Sun
All the winners and losers in today's spending review – from pensioners to parents… everything you need to know
Click to share on X/Twitter (Opens in new window) Click to share on Facebook (Opens in new window) RACHEL Reeves today splurged £300bn on public services in a make-or-break attempt to appease her party and the country. Ms Reeves reversed winter fuel cuts, restoring the £200-£300 sum to nine million pensioners at a cost of £1.25bn. 2 Rachel Reeves announced £113bn worth of spending commitments today Credit: Alamy 2 The Chancellor splashed the cash on free school meals, affordable housing and the NHS Credit: Crown Copyright She also committed £39bn to affordable housing and confirmed free school meals will be given to all kids living in households that claim universal credit. But the Chancellor refused to reveal how her spending spree will be paid for, triggering fears of huge tax rises in the Autumn Budget. Here are the major winners and losers from today's Spending Review announcement. WINNERS HOUSING The Chancellor confirmed a £39bn cash injection over the next decade into social and affordable housing. She said the plan would 'match the scale of the housing crisis,' with direct funding focused on homes for social rent. An extra £10bn will also go to Homes England to unlock private investment and deliver hundreds of thousands more homes. SCHOOL MEALS Half a million more kids will be entitled to free school meals under a massive expansion of the scheme. Every child in a household on Universal Credit will now be eligible for state sponsored lunches, in a move that should lift 100,000 children out of poverty. Expanding free school meals will save parents on benefits £500 per child every year, according to the Department for Education. Kids in UC households currently not eligible will be able to start claiming lunches from the start of the 2026 school year. Meanwhile, more than 750 free breakfast clubs will be rolled out across the country. Defence The Chancellor unveiled a major hike in defence spending today, raising it to 2.6 per cent of GDP by 2027 — up from the previous 2.5 per cent pledge. She confirmed an £11bn boost for the Ministry of Defence and £600m for the UK's intelligence services, calling it essential in an 'age of insecurity.' An additional £6bn will be spent to upgrade nuclear submarine production, which will support thousands of jobs across Barrow, Derby and Sheffield. Ms Reeves said: "The investment will deliver not only security, but also renewal." NHS The NHS will benefit from a whopping £30bn cash boost for day-to-day spending. The technology budget for the health service has been raised by 50%. A mega £10bn will be invested into dragging the NHS into the digital age, including improving the app. Transport The Chancellor confirmed a £15bn package to 'properly connect' Britain's towns and cities The cash includes upgrades to buses in Rochdale, stations in Merseyside and Middlesbrough, and mass transit in West Yorkshire, Tyne and Wear, Birmingham and Stockport. She also announced a four-year settlement for Transport for London, a fourfold increase in Local Transport Grants, and a £3.5bn boost for the Transpennine Route Upgrade. A further £2.5bn is going into East-West Rail and new funding was confirmed for the Midlands Rail Hub and £445m for Welsh railways. Pensioners The Chancellor confirmed that over three quarters of pensioners will receive the Winter Fuel Payment this year, as part of efforts to ease the cost of living. She also pledged to cut bills in future winters through an expanded Warm Homes Plan, including £30m for Blackpool, £11m for Rugby, and £7m for Bradford. To help families now, the £3 bus fare cap will be extended until at least March 2027, and school uniform costs will be capped. She said: "I know that for many people the cost of living remains a constant challenge. "Which is why we are capping the cost of school uniforms. "And I can tell the House today that I am extending the £3 bus fare cap until at least March 2027. "Earlier this week, we announced that over three quarters of pensioners will receive the Winter Fuel Payment this year. "And there is more, to get bills down not just this winter but in winters to come, we have expanded the Warm Homes Plan to support thousands more of the UK's poorest households, including providing £7 million to homes in Bradford; £11m to homes in Rugby; And £30m to homes in Blackpool." Nuclear Energy The Chancellor has pledged the "biggest roll-out of nuclear power for half a century" - with a £30bn commitment to clean, homegrown energy. She confirmed £14bn for Sizewell C to power six million homes and create over 10,000 jobs, including 1,500 apprenticeships. An extra £2.5bn will fund Small Modular Reactors with Rolls Royce as the preferred partner, and a further £2.5bn will go into nuclear fusion in Nottinghamshire. LOSERS POLICE Despite a major lobbying effort by police chiefs, spending power for forces will only rise by an average 2.3% per year in real terms. The £2bn funding hike has been slammed as no where near enough to meet pledges from the government to halve knife crime and end violence against women and girls. commitment of putting 13,000 additional police officers, PCSOs and special constables into neighbourhood policing roles across England and Wales. FARMING Family farms will continue to be clobbered by a 20% inheritance tax raid. Environment Secretary Steve Reed has had to accept funding for farms will be reduced, money restricted to just a small number. Meanwhile, DEFRA hasn't manage to secure huge funding for flood defences. EDUCATION Education Secretary Bridget Phillipson has been forced to accept a major squeeze on school spending in the years ahead. Head teachers will have to raid existing budgets to help fund a 4 per cent pay rise for staff next year. Ministers have pledged £615m to help pay for the rise - but that will only cover around three quarters of the cost.
