Latest news with #publicfinances
Irish Times
5 hours ago
- Business
- Irish Times
The Irish Times view on infrastructure provision: report is a sad indictment of the system
The report published by the Department of Public Expenditure and Reform this week on accelerating the provision of infrastructure in Ireland must lead to change. And pushing this through is a key task for Ministers. However, reading it also leads to some reflection on the scale of the opportunity Ireland has missed in recent years. During a time of plenty in the public finances, the scale of which may never be repeated, Ireland has not made the most of the available resources. The previous government took its eye off the ball. Major projects were not progressing, caught in a diplomatic and legal quagmire. Yet little was done and the result is now clear; a housing crisis and creaking infrastructure in areas like water and energy which threaten the policy response to this, as well as undermining the confidence of business investors. A host of problems identified in the report have been clearly evident for years: overly-complicated regulation, often with little purpose; decisions left to the courts due to judicial reviews; and an administrative system stuck in a pattern of risk aversion. The number of judicial reviews of planning decisions continues to rise, up 20 per cent this year on 2024. Many of these are on environmental grounds, but the report finds 'little evidence' that they are leading to better outcomes. The threat of legal review is also found to be driving an overly-cautious approach among regulatory bodies. The report might also have taken a closer look at the role of the Department of Public Expenditure and Reform itself. After all, it is the body responsible for the spending of State money and this goes beyond a requirement to watch the pennies. READ MORE This report, completed by the new infrastructure division in the department, is now to be forwarded to a special Accelerating Infrastructure Taskforce, a mix of private sector expertise and the key players from the public sector, chaired by Sean O'Driscoll, former chairman and chief executive of the Glen Dimplex Group. An action plan and recommended policy changes are to follow. There is clearly much to be done. The Government will hope that the new Planning Act can help, including by tightening the rules on judicial reviews. But a sweep of Ireland's regulatory practices is also needed. The planning application for Uisce Éireann's big project taking water from the Shannon to serve the Midlands and Dublin regions will likely extend to more than 30,000 pages. Proper oversight of such a major project is essential, but this scale of paperwork serves no useful purpose. Senior ministers, presenting the revised National Development Plan, made great play of talking about reforming delivery. They made no reference to the fact that they had all been in government when these problems were hiding in plain sight.
The Guardian
9 hours ago
- Business
- The Guardian
Starmer and Reeves should consider wealth tax, says former shadow chancellor
The Treasury should consider a wealth tax to close the growing gap in the public finances, according to a Labour former shadow chancellor. Anneliese Dodds, who held the role under Keir Starmer in opposition, said ministers must have a 'full and frank discussion' with the public about the 'really big decisions' they had to take at this autumn's budget. With Rachel Reeves aiming to fill a financial hole that economists say could exceed £20bn, the senior Labour MP said there was 'no silver bullet' to funding big-ticket items such as defence but the chancellor should consider tax rises. Dodds quit her post as international development minister in February over a decision to slash the aid budget to pay for increased defence spending – a move she said was a mistake that would have a big impact on global security. With Russia and China already stepping into the gap to boost their own global influence, she said now was not the time for the UK to be 'walking back' from using soft power. In her first interview since standing down, Dodds told the Guardian: 'It's important that we have a longer-term approach. That does mean asking and confronting difficult questions around our fiscal position, around taxation. But if we're open and honest about the nature of the challenge that we face, we cannot duck that. 'Now is a time when we're seeing forces outside our country's control impacting on our security. It's important to have an open conversation with the public and say that means we will need to change when it comes to tax. That needs to be done in a way where those with the broadest shoulders take more responsibility.' While she did not set out exactly where wealth taxes might fall, Dodds urged the Treasury to 'look carefully' at the work of economist Arun Advani, whose wealth tax commission in 2020 recommended a one-off levy on millionaire households as a better way of raising revenue than increasing taxes on workers or consumers. She joins a growing chorus of Labour MPs, not all from the left of the party, calling for further wealth taxes this autumn. However, proposals for an annual 2% tax on assets over £10m have been denounced as 'daft' by the business secretary, Jonathan Reynolds. Government insiders have questioned whether it would raise any funds. Dodds acknowledged there would be consequences from any new wealth tax and said she did not underestimate the challenges involved. However, she played down suggestions the policy would automatically lead to a reduction in the tax base as people moved assets overseas. She added: 'There's no silver bullet here, and I've been quite cautious about claims in the past that there's one single change to tax that could suddenly, immediately inject enormous amounts of money into the government coffers without any further implications. That's simply not the case. There will be consequences.' Dodds also suggested that Reeves should look again at her fiscal rules to help deliver an increase in defence spending, rather than through further cuts to aid. The government has pledged to spend 2.5% of GDP on defence from 2027, with an ambition to reach 3% in the next parliament. It has not said how this would be paid for. She said it would be very difficult for the UK to change its fiscal rules to borrow more to invest in defence, as Germany – which was in a stronger economic position – did when it loosened its 'debt brake' in March. But she added: 'There's no route forward without some risk and without some cost.' Forecasts twice a year from the Office for Budget Responsibility have ended up driving fiscal policy, injecting more uncertainty into the system, she said. The IMF has suggested the government should consider having the public finances formally assessed only once a year instead. Dodds said she had little doubt the government would have to further increase defence spending. But she said this could not come from further cuts to the aid budget without an impact on global security and migration patterns. 'I believe the public know that also,' she said. 'We need to have a really full and frank discussion now nationally about how we will deliver that more secure country, but also about the challenges of doing that at the same time as getting our public services up off their knees. 'We did see a reduction in our soft power, and we saw a reduction in what makes our country stronger. Especially now with the rise of China, Russia, becoming far more involved in the continent of Africa, and many other geopolitical pressures, now isn't the time to be walking back from those commitments. 'We will also see the impact on global security. We also see the impact of it in population movements. It's no surprise that the number of people seeking asylum in the UK from Sudan, for example, has increased. There is eventually that knock-on impact. There's no question about that.' Dodds said there was 'no magic wand' to bring down the number of asylum hotels, which have been funded from the aid budget. Suggestions that the government could make big savings from quick closures were 'just not credible'. She did not criticise Starmer directly for his 'island of strangers' remarks, which the prime minister has since said he regretted, and said it was 'right to acknowledge people's concerns' about small boat crossings but she urged ministers 'to be clear that we are talking ultimately about human beings'. As a former Labour chair, Dodds suggested the party had to do more to explain what it stood for to take on the rise of Nigel Farage's Reform UK. She said: 'What I find time and again when I speak with people who are considering Reform is that they want politicians to say what they think. They want politicians who are upfront about what they believe and who act on their beliefs.' She described Jeremy Corbyn's new movement as 'a bit like the People's Front of Judea' from Monty Python's Life of Brian but warned that it could end up splitting the vote: 'We have seen in some other countries, a splintering of the left, and centre-left parties doing very badly.'
Yahoo
3 days ago
- Business
- Yahoo
Should the UK introduce a wealth tax? Have your say
The UK government has faced calls to introduce a "wealth tax", as chancellor Rachel Reeves looks at ways to raise revenue ahead of the autumn budget to plug a hole in public finances. Higher borrowing costs, low economic growth and the recent u-turn on welfare spending cuts have added to pressure on public finances, raising speculation that Reeves will be forced to raise taxes in the autumn budget to balance the books. To help the UK's financial situation, former Labour leader Neil Kinnock recently suggested that the government impose a 2% tax on assets valued above £10m. This was something put forward by a group of cross-party MPs in letter to Reeves ahead of her first autumn budget last October. Reeves has refused to rule out a wealth tax in the upcoming autumn budget, though business secretary Jonathan Reynolds said on Friday that such a levy would be "daft". Read more: UK set to lose 16,500 millionaires this year as non-dom status ends One concern that has been raised about introducing a wealth tax is that this could prompt more high-net-worth individuals to leave the UK. A report released by Henley & Partners last week showed that the UK is already expected to suffer the largest outflow of millionaires globally in 2025. The Henley Private Wealth Migration Report 2025 forecasts a net loss of 16,500 high-net-worth individuals (HNWIs) from the UK this year, the highest such outflow ever recorded by the firm in the past decade of tracking global wealth migration trends. Juerg Steffen, CEO at Henley & Partners, said: "For the first time in a decade of tracking, a European country leads the world in millionaire outflows. 'This isn't just about changes to the tax regime. It reflects a deepening perception among the wealthy that greater opportunity, freedom, and stability lie elsewhere." In April, the Treasury confirmed plans to abolish the longstanding non-domicile regime, a move widely seen as a trigger for an accelerating outflow of wealthy residents. At the same time, an analysis published in June by the Tax Justice Network found that the 9,500 millionaires that were reported to be leaving the UK in 2024 represented just 0.3% of the UK's 3.06 million millionaires. Do you think the UK should introduce a wealth tax? Vote in the poll below. Yahoo UK's poll of the week lets you vote and indicate your strength of feeling on one of the week's hot topics. After the poll closes, we'll publish and analyse the results each Friday, giving readers the chance to see how polarising a topic has become and if their view chimes with other Yahoo UK in to access your portfolio
The Guardian
3 days ago
- Business
- The Guardian
Starmer and Reeves should prepare UK for wealth tax, say top economists
Keir Starmer and Rachel Reeves have been urged by a group of the world's leading economists to use the autumn budget to prepare Britain for the introduction of a new wealth tax to tackle 'extreme' levels of inequality. With the government under pressure to raise taxes, the group of economists, including the French expert on wealth inequality Thomas Piketty, said the UK prime minister could raise 'tens of billions of pounds' while positioning Britain as a progressive leader on the world stage. In a letter shared with the Guardian, the experts warned that wealth in Britain – like many rich countries – had become concentrated in fewer and fewer hands in recent decades at the expense of the nation at large. It comes as the chancellor, Rachel Reeves, faces mounting pressure from senior Labour figures and trade unions to raise taxes on wealth to cover a multibillion-pound shortfall in the public finances. 'Keir Starmer and Rachel Reeves can build a tax system fit for the 21st century – that promotes fairness, first-class public services and good living standards for everyone,' the economists wrote. 'We cannot allow extreme wealth inequality to deepen while millions of people are consigned to struggle for a basic quality of life. A progressive wealth tax is a critical step forward, and one that we urge the UK government to take.' Signatories of the letter include the leading Indian development economist Jayati Ghosh, José Antonio Ocampo, a former Colombian finance minister and ex-UN undersecretary-general for economic and social affairs, and the globally acclaimed economist Ha-Joon Chang. The group of more than two dozen signatories said a 'modest' net wealth tax on assets of more than £10m could raise 'enormous sums of money' that could be used to avoid a return to austerity while tackling rampant inequality. Reeves is reportedly prepared to reject backbench Labour demands for the introduction of a new tax on wealth, although has so far publicly refused to rule out the measure. Advocates include Neil Kinnock, the former party leader. Several of her cabinet colleagues have poured cold water on the idea, including the business secretary, Jonathan Reynolds, who last week publicly denounced a new levy as a 'daft' idea that would not work. It is believed the Treasury would prefer to use existing features of the tax system – including levies on capital gains, inheritances and pensions – to raise money from rich individuals, rather than dedicate resources to create and administer a new levy, which could have mixed results. The Institute for Fiscal Studies has argued that a dedicated new levy could deter investment in Britain and would be a 'poor substitute for properly taxing the sources and uses of wealth' through other means. It said that implementing a wealth tax would be difficult, requiring a new administrative apparatus to value assets, which could be open to rich, well-advised individuals shifting around their holdings to game the system. Critics also say super-rich individuals could leave the UK. While stand-alone wealth taxes are used in some European countries – including Spain, Norway and Switzerland – several other leading nations – including Austria, Denmark and Germany – have abandoned them. Sign up to Business Today Get set for the working day – we'll point you to all the business news and analysis you need every morning after newsletter promotion However, the leading economists said it would be possible to overcome the difficulties associated with the design and administration of a new wealth tax, urging the UK government to launch a consultation at the autumn budget. 'Starting at the autumn budget the pieces of the puzzle – from consultation to design – can be collected to allow the government to roll out a wealth tax within this parliament. This could improve people's lives in years to come and avoid austerity for key services we all benefit from,' they said. The campaign group Tax Justice UK, which coordinated the letter, has estimated that a 1%-2% wealth tax on assets of more than £10m would affect only 0.04% of the population, and could raise up to £22bn for the exchequer a year. Ghosh, backing the call for a wealth tax in the UK, said: 'Not only is a net wealth tax a vital step to tackle inequality and improve living standards, but it is obviously best done with international cooperation. 'Keir Starmer and Rachel Reeves can position the UK as a progressive leader on the world stage. We urge them to work collaboratively with the international community to ensure that the super-rich pay their fair share, wherever they reside.' A Treasury spokesperson said Reeves was focused on growing the economy to strengthen the public finances. 'We are committed to keeping taxes for working people as low as possible, which is why at last autumn's budget, we protected working people's payslips and kept our promise not to raise the basic, higher or additional rates of income tax, employee national insurance or VAT,' the spokesperson said.
Daily Mail
6 days ago
- Business
- Daily Mail
IMF warns Rachel Reeves will have to raise taxes or make cuts such as axing the pensions triple lock and means-testing NHS services
faces having to take drastic action on spending unless she abandons her pledge not to hike taxes on 'working people', the IMF warned today. The international body highlighted the 'difficult decisions' facing the Chancellor in its latest assessment of the UK's position. The report pointed to medium-term pressures from the aging population, suggesting that unless more revenue is raised the pensions triple lock could have to be axed, or NHS services means-tested. The verdict came as Ms Reeves desperately hunts for options to increase taxes as she faces an estimated £30billion black hole in the public finances at the Autumn Budget. Labour has ruled out increasing income tax, employee national insurance or VAT. The tax burden is already set to hit a new high as a proportion of GDP after the last Budget imposed a £41billion increase - the biggest on record for a single package. The IMF praised Ms Reeves for committing to stick to her fiscal rules, and suggested her plans struck a balance between 'supporting growth and safeguarding fiscal sustainability'. The watchdog also commended reforms to curb benefits costs. However, since the assessment was penned the government has humiliatingly dropped the proposals in the face of a Labour revolt. The report said: 'While the UK has scope to raise revenue, which is lower than in some G7 peers, its revenue ratio is close to a post-WWII high. 'Unless the authorities revisit their commitment not to increase taxes on 'working people,' further spending prioritization will be required, to align better the scope of public services with available resources. 'The authorities have already embarked on this process through recent reforms to incapacity and disability benefits, but other avenues for savings need to be considered. 'In particular, the triple lock could be replaced with a policy of indexing the state pension to the cost of living... 'Access to public services could also depend more on an individual's capacity to pay, with charges levied on higher-income users, such as copayments for health services, while shielding the vulnerable. There may also be scope to expand means testing of benefits.' Ms Reeves said: 'Today's IMF report confirms that the choices we've taken have ensured Britain's economic recovery is underway, and that our plans will tackle the deep-rooted economic challenges that we inherited in the face of global headwinds. 'Our fiscal rules allow us to confront those challenges by investing in Britain's renewal. 'We're committing billions of pounds into improving transport connections, providing record funding for affordable homes, as well as backing major projects like Sizewell C to drive economic growth. 'There's more to do, and that's why we're slashing unnecessary red tape and unblocking investment to let British businesses thrive and put more money in working people's pockets.'
