Latest news with #taxrises
Daily Mail
2 days ago
- Business
- Daily Mail
Rachel Reeves's £30bn tax bomb is about to drop on the middle classes, says JEFF PRESTRIDGE - Here's how to protect YOUR wealth
Despite all the promises not to in the aftermath of last autumn's calamitous Budget, it now looks a near certainty Rachel from Accounts will be picking our pockets later this year. Tax rises, £30 billion of them, are heading the way of the middle classes like a gathering storm, impacting on everything from the tax we pay on our income, the pension funds we assiduously pay into and the wealth we have accumulated over many years. Help! Thirty billion helps!
Telegraph
3 days ago
- Business
- Telegraph
Healey refuses to rule out tax rises to pay for defence spending
The Defence Secretary has refused to rule out tax rises to pay for the Government's increase in defence spending. John Healey said ministers would 'set out how we will pay for future increases in the future' when asked how he would fund the plans set out in the Strategic Defence Review. His comments came after Paul Johnson, the director of the Institute for Fiscal Studies, said Sir Keir Starmer would need 'really quite chunky tax increases' to pay for the uplift. The Prime Minister unveiled the Strategic Defence Review, which sets out the Government's spending plans for the military for the next decade and beyond, on Monday. Sir Keir recommitted to increasing defence spending to 2.5 per cent of GDP by 2027 and reiterated his 'ambition' to reach three per cent by 2034. The push to 2.5 per cent has been funded by cutting the foreign aid budget, but it is unclear how the Government will fund the move to three per cent. Asked whether he believed tax rises would be an acceptable way of paying for the increase, Mr Healey told Times Radio: 'We'll set out how, just as we've done with our 2.5 per cent commitment where we have made that tough decision to switch money out of overseas development aid into defence, because that's the priority to meet the threats that we face as a country, that's the priority for building up our Armed Forces. 'We will set out how we will pay for future increases in the future. The key to this, of course, is a growing economy and defence can be part of growing the economy for the future, an investment in British jobs, British skills, new technology and new British businesses.' Uncertainty over how the Government will pay for the proposed increase in defence spending has reignited speculation about potential future tax rises. Mr Johnson said increases were likely to be the 'only choice that is available' to the Prime Minister, telling Times Radio: 'It looks like the Government wants to reinstate the winter fuel payment. It's thinking about the two-child limit for benefits. 'We've got a spending review next week. And if we're really going to spend another £10-15 billion a year on defence, whilst inevitably we're going to spend more and more on health and pensions and so on, you really do have to ask that question – what are the choices that you're going to make? 'And I mean, bluntly, it really does seem to me that the only choice that is available, if we're going to go through all of those things, is some really quite chunky tax increases to pay for it. But of course that's not something the Prime Minister or the Chancellor is willing actually to say.' The Strategic Defence Review called for a £63 billion spending spree that includes upgraded nuclear warheads, stealth fighters and a fleet of submarines. It also said the Army must increase troop numbers to 100,000 to combat the growing threat from countries such as Russia. Mr Healey said the Government was 'committed to spending what we need to deliver this review', but failed to guarantee that the three per cent target would be hit. He added: 'This review sets out the vision for the next 10 years and beyond. We can deliver it, we will deliver it. Just look at our record.'
Daily Mail
3 days ago
- Business
- Daily Mail
John Healey refuses to rule out tax rises to fund £12bn drive to make Britain 'war-ready' as he says he is '100% confident' money will be found
John Healey refused to rule out tax rises to fund the drive to make Britain 'war-ready' today. The Defence Secretary insisted he was '100 per cent confident' that the government will be able to ramp up spending to 3 per cent of GDP. That would be around £12billion more than the current 2.5 per cent target. But Mr Healey was unable to give a timetable for when the 'ambition' will be reached, or how the money will be found. Economists have been warning that 'chunky' tax hikes will almost certainly be needed, potentially smashing the Labour manifesto. The Strategic Defence Review published yesterday painted a grim picture of the UK's capabilities, recommending sweeping changes including a greater focus on new technology such as drones and AI. The authors suggested reaching the 3 per cent target is vital to delivering their recommendations. Donald Trump has pushed for Nato allies to spend 5 per cent - significantly more than the US does. The Government has committed to increase spending to 2.5 per cent of gross domestic product from April 2027. But it only has an 'ambition' to reach 3 per cent during the next parliament, due to end by around 2034. Touring broadcast studios this morning, Mr Healey denied the government is gambling on economic growth to meet the goal. 'I'm 100 per cent confident that we'll hit that 3 per cent,' he told BBC Breakfast. 'The important thing for now is what we can do, and we can do now more than we've been able to do before, because of an extra £5billion the Chancellor has put in to the defence budget this year and the 2.5 per cent that we will deliver three years earlier than anyone expected. 'It means that a £60billion budget this year will rise throughout this parliament and beyond.' Pressed on Times Radio whether tax rises would be part of the solution, Mr Healey said: 'We'll set out how, just as we've done with our 2.5 per cent commitment where we have made that tough decision to switch money out of overseas development aid into defence... 'We'll set out how we'll pay for future increases in the future.' The Ministry of Defence announced a £5billion investment in the 'kit of the future' following the publication of the review on Monday. The funding includes £4billion for drones and autonomous systems, and an extra £1billion for lasers to protect British ships and soldiers. Mr Healey said the investment would provide 'the most significant advance in UK defence technology in decades' and 'ensure our armed forces have the cutting-edge capabilities they need to meet the challenges of a rapidly changing world'. Part of the investment will see the establishment of a new 'drone centre' to accelerate the deployment of the technology by all three branches of the armed forces. The focus on drones comes as the technology has proved increasingly lethal on the battlefield in Ukraine, where it now kills more people than traditional artillery. At a meeting of allied defence ministers in April, Mr Healey said the UK estimated drones were inflicting 70-80 per cent of battlefield casualties, while on Sunday Ukraine launched a major attack on Russian airfields deep behind the front line using a fleet of small drones. In addition to investment in drones and AI, the Government has announced an additional £1billion for the development of 'directed energy weapons' (DEWs) during the current parliament. This includes the DragonFire laser scheduled to be fitted to the Royal Navy's Type 45 destroyers from 2027, with a similar system provided for the Army by the end of the decade. DragonFire and other DEWs are intended to provide a lower-cost form of air defence against targets including drones, costing just £10 per shot compared with the thousands of pounds it costs to fire existing weapons. These are the key ambitions outlined in the SDR: Army to be 'ten times more lethal' This ambition relies on the harnessing of new technologies and weapon systems, particularly drones. Lethality is difficult to measure and the claim is strong on political rhetoric. Only a couple of months ago, the Chief of the Defence Staff, Admiral Sir Tony Radakin, said the ambition was to double lethality by 2027 and triple it by 2030. The new Archer artillery system, the belated introduction of the Ajax vehicle and Challenger 3 tanks will increase lethality… but to what extent? Three forces to be integrated into one The Integrated Force, unveiled as part of the SDR, is not a merger of the Armed Forces, but they will lose much of the traditional independence as they are moulded into a centralised Integrated Force. The SDR suggested the services were 'siloed'. The need for them to train together and prepare for war shoulder to shoulder was essential in the months and years ahead. £15billion boost for nuclear warheads Britain's nuclear deterrent has long been in need of recapitalisation. The £15billion will pay for these weapons to be upgraded or replaced. It will also see the significant modernisation of infrastructure at the Atomic Weapons Establishment at Aldermaston, supporting more than 9,000 jobs at the Berkshire site. Up to 12 new nuclear attack submarines The as yet uncosted pledge to develop 'up to' 12 new attack submarines has been welcomed by military observers but the first boat is not expected to enter service before the late 2030s. The submarines will support the AUKUS security alliance between the UK, Australia and the United States and will be used to protect the Pacific from Chinese aggression. Over the decades ahead, the boats will replace the Royal Navy's current fleet of seven Astute-class submarines. They will be built at key sites such as BAE in Barrow-in-Furness. Six new factories to make munitions The SDR proposes at least six factories making munitions and energetics such as explosives and propellants for weapons. The SDR recommends creating an 'always on' munitions production capacity in the UK, allowing production to be scaled up at speed if needed. Britain's military warehouses are bare after £5billion in weaponry and munitions was provided for Ukraine since the start of the conflict in 2022. The programme will create more than 1,000 skilled jobs, according to the SDR. Robotics, cyber warfare and AI The review says AI will improve the quality and speed of decision-making and operational effectiveness for Britain's military, its allies… and its enemies. It should be an immediate priority to 'shift towards greater use of autonomy and AI within the UK's conventional forces'. This has shown to be transformational in Ukraine. Chiefs will launch a Defence AI Investment Fund by February 2026. The report warns cyber threats will become harder to mitigate as technology evolves, with government departments, military hardware, communications, increasingly vulnerable. Hardening critical defence functions to cyber-attack is crucial. Directed Energy Weapon systems, such as the UK's DragonFire, a world-leading laser ground to air system being developed at Porton Down, Wiltshire, can save millions of pounds in expenditure on ordnance systems. The review also calls for the MoD to seize the opportunities presented by technologies such as robots and lasers. £4billion expansion of the drone force The Government unveiled a £4billion investment package for drones and autonomous systems. Drones are dominating the conflict in Ukraine and in Russia, following the audacious Ukrainian attack on Russian airfields in Siberia just days ago. They provide proved lethality at minimal financial cost and would spare the lives of British troops because they are not required to engage with the enemy at close proximity. Cheap to produce drones can be effective against 'legacy' military systems worth billions of pounds and are necessary to protect and augment the UK's manned military systems, such as aircraft, helicopters and armoured vehicles. Fighter jets to carry nuclear bombs Britain is exploring the potential return of air-delivered nuclear weapons in collaboration with the United States. America's F-35A Lightning II aircraft is capable of carrying tactical gravity nuclear bombs. The proposal marks the most significant shift in UK nuclear posture since the Cold War. Currently, this country's nuclear deterrent is carried by the Royal Navy's 'bomber' submarines. The air-launched nuclear weapons would carry a much smaller payload. The lower yield B61 munitions are already integrated into US aircraft stationed on continental Europe and could be brought to Britain. Thousands of new long-range weapons At least 7,000 long-range weapons will be made to restock UK military warehouses and to prepare for an extended conflict against an adversary such as Russia. Children taught value of the military Defence chiefs will work with the Department for Education to develop understanding of the Armed Forces among young people in schools, by means of a two-year series of public outreach events across the UK, explaining current threats and future trends. Schools and community-based cadet forces will also be expanded, with an ambition of a 30 per cent rise by 2030 with a view to the UK having 250,000 cadets, many of whom will then go on to join the armed forces. More reservists and investment in them To meet the challenge of engaging in a lengthy conflict, the report identified the need to boost the number of reservists. These part-time personnel, many of whom are former regulars with operational experience, would join full-time troops on the frontline. The report identified the need to increase the size of the UK's Active Reserve forces by at least 20 per cent 'when funding allows, most likely in the 2030s'. The UK has around 25,000 Army reservists, 3,500 Royal Navy and Royal Marines reservists and 3,200 RAF reservists.
Daily Mail
28-05-2025
- Business
- Daily Mail
ANDREW NEIL: Rachel Reeves has condemned us to a doom loop of economic despair. Brace yourself for a £30BILLION tax raid
Mark my words: there will be tax rises in the autumn. Big ones. Perhaps not quite as big as the £40billion in extra taxes Chancellor Rachel Reeves slapped on us in her first Budget last October, after promising no major tax rises to get elected. But pretty hefty nonetheless. Big enough to hurt most folks, even the 'working people' Keir Starmer is always going on about but is no more able to define than he's been able to tell us what constitutes a 'woman' (at least not until the Supreme Court helped him out).
Telegraph
26-05-2025
- Business
- Telegraph
Rayner got maths wrong on tax rises, say Reeves allies
Angela Rayner got her maths wrong in a leaked memo calling for tax rises, allies of Rachel Reeves, the Chancellor, have claimed. The Deputy Prime Minister's proposals would raise far less money than she suggested, Treasury figures believe. Their scepticism has been echoed by economists, who have publicly questioned Ms Rayner's estimates since the leaked document was published by The Telegraph last week. Ms Rayner's proposals, initially circulated in mid-March, countered the approach by Ms Reeves, who has instead sought to raise money through spending cuts. Suggestions that the tax proposals would not raise as much money as proposed could help No11 persuade Labour MPs to stay on side over politically difficult welfare cuts. The Rayner memo outlined eight options for tax rises. Estimates for the extra money that could be raised were given for most of the rises although not all of them. A total of between around £3 billion to £4 billion a year in tax revenue could be brought in, the memo suggested. Including estimates for measures not specifically costed would lead to a higher figure. However, Treasury insiders told The Telegraph they believed some of the numbers cited in the memo were too high and in reality the proposals would generate less money than claimed. It comes as Labour rebels pile pressure on the Government to loosen the purse strings, with Sir Keir Starmer last week promising that more pensioners would get winter fuel payments and considering scrapping the two-child benefit cap. Ms Rayner tried to smooth over the rift revealed in the leaked memo in TV interviews on Sunday, when she said she 'never' wanted to become Labour leader and backed Ms Reeves and Sir Keir '100 per cent'. Treasury sources did not point to specific examples of where the memo was wrong, but independent experts raised doubts about Ms Rayner's working. Dan Neidle, who has been a tax lawyer for 25 years and heads Tax Policy Associates, posted an article on the topic on Friday. He was cited in the memo for a proposal on removing inheritance tax relief for shares in the Alternative Investment Market (AIM), a subset of the London Stock Exchange that helps smaller companies raise capital. Ms Rayner suggested ending the 50 per cent inheritance tax relief on these shares. The memo claimed: 'Removing the relief completely for AIM shares could raise between £100 million – £1 billion per year.' But Mr Neidle has now said the money raised would at best be at the lower end of that range, adding: 'We'd be looking at around £100 million rather than £1 billion.' Estimates for the proposal to bring back the pensions lifetime allowance, scrapped by the then chancellor Jeremy Hunt in March 2023, were also criticised. The policy placed a cap of £1,073,100 on the amount of pension that could be amassed without triggering higher tax charges. There is now no lifetime limit. When the change was announced, it was estimated that it would cost the Treasury around £800 million a year. The Rayner memo suggested that reinstating the allowance at the same level would therefore lead to an £800 million a year boost, but pensions experts suggested that might not be the case. Steve Webb, a pensions minister during the Conservative-Liberal Democrat coalition government, said the move would raise less money than expected for two reasons. For reasons of fairness, steps would have to be taken to protect those who had saved under the assumption that the limit had been abolished, and said a carve-out would be needed for senior NHS figures. Labour had promised to do that when it initially pledged to bring back the allowance, but in the run-up to the general election it agreed to leave it untouched. Mr Webb, a partner at LCP, a pension consultant, said: 'Bringing back the lifetime allowance would not be a quick revenue raiser. 'To avoid charges of 'retrospective' taxation, the Treasury would need to protect people over the new limit and spend time designing that arrangement. They would also need to avoid the risk of NHS consultants retiring early because of pension tax limits. 'This either means a higher lifetime allowance, which reduces the tax take, or a messy carve-out for doctors which many would see as unfair. It could take years to get serious money from bringing back the lifetime limit.' Allies of Ms Rayner stood by the estimates when the leaked memo first emerged.
