Rachel Reeves: Taxes will rise to cover scrapped welfare reform
The chancellor told cabinet on Tuesday that the decision to abandon welfare reforms meant taxes would have to rise to cover the cost. She said the rises in her first budget, which included a £24 billion increase in employers' national insurance contributions, were 'painful' but were the 'low-hanging fruit'.
Tax rises in the autumn are likely to be smaller than last year's but she is expected to have to raise tens of billions of pounds more. Reeves told ministers that would be a 'big challenge' given that she has limited options for doing it.
Economists have warned that the scale of the hole in the public finances means that she may have to break Labour's manifesto pledge not to increase income tax, national insurance or VAT. There are also suggestions that she could raid pension savings, which was rejected before the last budget.
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Telegraph
21 minutes ago
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Just raise tax? No, there's only one way out of this mess
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The solution put forward by the Right is not to raise tax thresholds but to cut them. Have you not heard of the Laffer curve? They say that the way to increase tax receipts is to reduce tax rates. Both sides are wrong. Putting taxes up would not only be wildly unpopular, but it would further weaken Britain's already mediocre growth rate. Cutting taxes in a major way is also a non-starter – Liz Truss tried that already, and remember what happened. Across the whole spectrum of British politics, policymakers have become prisoners of their own economic ignorance when it comes to the causes and solutions of our present fiscal dilemma. Is this situation hopeless? Not at all. There is, in fact, a way to increase tax yields and hence finance higher public spending without raising tax rates. But the debate needs to refocus on the underlying causes of the fiscal gap and escape the siloed thinking about whether tax rates should go up or down, as if that is the only choice. The Government faces a serious constraint because of its promise not to raise rates on the big three taxes – on income, employee National Insurance and VAT. But this does not mean that policymakers have no options to increase the tax yields in these areas. Britain's persistent tax shortfall is a symptom of a persistent growth shortfall, caused by the excessive weight of misguided rules and regulations that arbitrarily slow and even prohibit all sorts of economic activities that would otherwise take place. Remove the economic straitjacket on our factors of production – land, labour, capital and entrepreneurship – and the fiscal problems will be solved. Needlessly restrictive and complex planning and zoning regulations prevent a much-needed increase in the stock of housing, transport infrastructure, factories and offices. We have left the EU only to discover that our Eurosclerosis is home-grown. 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BBC News
40 minutes ago
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Planners say the existing main entrance of the Grafton will be kept, with a corridor of shops leading to an outdoor courtyard that will take visitors to Burleigh Street, opposite the current Primark empty shops on Burleigh Street will be demolished to create another new entrance.A new life sciences building will replace Abbeygate House on East Road, with restaurants on the ground rear of the centre, where there are escalators and empty units, will become a "breakout area" for workers at the labs to will also be a new Premier Inn hotel opposite the former Vue on East Road. Why are the plans going ahead? 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BBC News
an hour ago
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