Latest news with #taxrise
Daily Mail
2 days ago
- Business
- Daily Mail
A reckless splurge we (and our children) will be paying off for years: Voters brace for tax hikes as Rachel Reeves embarks on unprecedented spending spree
Voters were last night braced for swingeing tax rises, after Rachel Reeves embarked on an unprecedented spending spree. In a return to Labour 's tax-and-spend approach, the Chancellor set out plans to 'invest' a staggering £4 trillion to fund 'the renewal of Britain'. She said the plans, which include another huge dollop of cash for the NHS, would end the 'destructive' austerity of the last government and boost economic growth. Labour strategists hope the costly gamble will pay off by cutting hospital waiting lists, improving the creaking infrastructure and pump-priming the economy. But experts warned the scale of the spending, coupled with the deteriorating public finances, will pave the way for another round of damaging tax rises this autumn. The Conservatives accused Ms Reeves of adopting a reckless 'spend now, tax later' approach. The Chancellor insisted her plans could be funded by the eye-watering tax rises she imposed last year. She refused to rule out tax rises this autumn, saying only that taxes 'won't have to go up to pay for what's in this Spending Review'. But the small print of yesterday's Treasury document already includes one significant new tax hike, with the Chancellor pencilling in council tax hikes that will add more than £350 to an average Band D bill by 2029 to help fund local services and the police. Asked to rule out further tax rises, Treasury minister Emma Reynolds said: 'I'm not ruling it in, I'm not ruling it out.' Shadow Chancellor Mel Stride said Ms Reeves had 'completely lost control' of the public finances and the Spending Review was 'not worth the paper it is written on'. He predicted that a 'Corbynist catalogue' of tax rises would follow this autumn. Mr Stride told MPs: 'This is the spend now, tax later review, because the Chancellor knows that she will need to come back here in the autumn with yet more taxes, and a cruel summer of speculation awaits.' Paul Johnson, director of the Institute for Fiscal Studies, said the public finances were so tight that the Chancellor would need further tax rises if 'anything at all goes wrong with the current economic forecasts'. Tom Clougherty, of the Institute of Economic Affairs, said Ms Reeves had failed to address the crisis in the public finances, adding: 'We should brace ourselves for tax increases in the autumn, and a summer of speculation over exactly where they will fall.' On a day that will frame the political debate for the next election: Police chiefs warned of cuts to the front line, after Yvette Cooper emerged as one of the few losers from the spending bonanza; Ms Reeves piled further pressure on the Home Secretary by announcing a target to empty Britain's asylum hotels by the next election; The Chancellor said new funding for the health service would deliver an extra four million tests and procedures by the end of the decade; NHS chiefs said much of the extra cash would go to fund above-inflation pay rises for doctors and nurses; Ms Reeves suggested defence spending will be frozen at 2.6 per cent of GDP in the latter years of this parliament, despite Nato pressure to double it to 5 per cent; Deputy Prime Minister Angela Rayner secured a £39 billion boost for social housing after weeks of bruising battles with the Treasury; Ms Reeves ripped up the Treasury's value-for-money rules in order to pour cash into Red Wall seats where Labour is being challenged by Reform; She announced £15 billion for transport projects including a revamped 'Northern Powerhouse' rail project. Yesterday's Spending Review covers government plans for the next three years. Treasury sources said it totalled £4 trillion. Day-to-day spending is £190 billion higher than planned by the last Conservative government, while spending on capital projects is £113 billion higher. But the figures do not include the soaring welfare bill, or the cost of servicing the UK's debt mountain, which totals more than £100 billion a year. The review also relies on implausible plans to achieve efficiency savings of £12 billion a year. Any of these factors could tip Ms Reeves into breaking her fiscal rules later this year. She has yet to set out how she will pay for a U-turn on winter fuel payments, which is forecast to cost £1.25 billion. And she is under pressure from Labour MPs to end the two-child benefit cap at a cost of £3.5 billion and to scrap planned cuts to disability benefits totalling £5 billion. Labour's former shadow chancellor John McDonnell welcomed the spending on long-term capital investment but said Labour had to 'learn the lessons' of the winter fuel debacle and loosen the purse strings on welfare. He told Sky News: 'We cannot be seen as the austerity party by imposing cuts on the poorest in society... There will have to be tax increases – we need redistribution.' The spending package follows months of bitter Cabinet infighting over how to allocate government spending for the coming years. The Chancellor yesterday said her choices would deliver on the public's priorities. She said her 'driving purpose' was 'to make working people, in all parts of our country, better off'. But she acknowledged that many voters had yet to feel any difference from Labour's first year in office.
Telegraph
22-05-2025
- Business
- Telegraph
Live Reeves's April borrowing bill hits £20bn despite tax raid
Rachel Reeves borrowed £20.2bn last month, as spending on public sector pay and benefits outstripped the extra tax revenues from her National Insurance (NI) raid. Public sector net borrowing, excluding banks, hit £20.2bn in April, the fourth-highest figure for the month since records began in 1993. This was up from £16.4bn in March. Public sector borrowing hit £148.3bn in the financial year that ended in March, which was £3.7bn lower than previous estimates, but £11bn more than predicted by the Office for Budget Responsibility (OBR). April was the first month that employers were forced to pay higher NI contributions since the tax rise was unveiled in Labour's October Budget. Bosses have warned the tax rises will stymie investment and hiring. Meanwhile, the surge in borrowing in the first month of the new tax year comes after the Prime Minister on Wednesday failed to rule out further tax rises this year, after it emerged Angela Rayner had pushed for a new raid on savers. The Telegraph revealed Ms Rayner, the Deputy Prime Minister, had sent a secret memo to Rachel Reeves, the Chancellor, in which she proposed eight tax increases. During Prime Minister's Questions, Sir Keir dodged a question from Kemi Badenoch, the Tory leader, on whether he would rule out tax rises later this year. Ms Badenoch also accused Labour of fuelling inflation with their Budget tax raid in the commons, after it emerged the rate of price rises grew to 3.5pc in April. Darren Jones, chief Treasury secretary, said: 'After years of economic instability crippling the public purse, we have taken the decisions to stabilise our public finances, which has helped deliver four interest rate cuts since August, cutting the cost of borrowing for businesses and working people. 'We're fixing the NHS, with three million more appointments to bring waiting lists down, rebuilding Britain with our landmark planning reforms and strengthening our borders, delivering on the priorities of the country through our Plan for Change.'
Times
16-05-2025
- Business
- Times
Emma Bridgewater calls for Rachel Reeves to rethink tax rise
Emma Bridgewater has called on Rachel Reeves to rethink the increase in employers' national insurance contributions, warning that the tax rise would have 'a very, very, poor effect' on British businesses. Bridgewater, known as Britain's queen of pottery, told Times Radio that the 'huge extra contribution' required from firms as a result of the chancellor's budget in October made creating jobs 'significantly harder'. Operating out of Stoke-on-Trent as a proudly homegrown manufacturer, Bridgewater, 64, and her self-titled company gained notoriety for creating colourful ceramic homeware which has been praised by the King and the Princess of Wales and given by prime ministers to several US presidents. • In depth: can companies absorb the national insurance increase? She said she had not seen 'any' government 'lean
