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Daily Mail
5 days ago
- Business
- Daily Mail
Fightback for Square Mile: Change is happening - but a high tax economy doesn't help, says ALEX BRUMMER
Finally, Labour might be getting the message. Mistakes it has made on running the economy have been piling up and it needs to rethink. In her first intervention, the director of the Institute for Fiscal Studies Helen Miller will have her say today before Rachel Reeves addresses City panjandrums at the Mansion House. Miller notes that Labour came to office promising 'mission' driven government, but spent the first year limping from fiscal event to fiscal event 'obsessed with run of the mill revisions'. This echoes the International Monetary Fund's recommendation that the Chancellor confines herself to one major budget event a year. Reeves made a trap for herself. She empowered the Office for Budget Responsibility's (OBR) fiscal judgements – removing flexibility. Despite a £40billion tax increase, she left the Government little room to manoeuvre. Is the Chancellor now seeing the light? The Treasury is taking the IMF advice seriously and reviewing whether the OBR's role can be de-escalated, curtailing never-ending speculation about the next tax increases. A review of Treasury media operations is underway. When ministers fail to receive the positive interpretation of policy craved, they blame the messenger. There is something oddly backward-looking in the way Reeves prioritises attacking her predecessors rather than extolling and encouraging her growth mission. One solution might be to end Stalinist-like controls over press events. Questions often are confined to one per organisation. Not all outlets get called upon, and there is even evidence of officials seeking to establish what the questions might be ahead of time. Something more freewheeling might elicit more meaningful, confident and clearer outcomes. Useful changes are taking place. Reeves will sweep some red tape away at the Mansion House. Over-zealous rules, put in place post-Great Financial Crisis, are to be scrapped to boost home ownership. Another goal is to make it more attractive for overseas finance firms to come to the UK. Citadel is already heading in this direction. The difficulty is that changes already made to levies in wealth, and fears of more to come, means that it is a case of one in and 16,500 out. Lifting the red tape surrounding the choice of senior managers in financial companies would be a useful change. Even with the bureaucracy, it is not a regime that functions well, as the debacle over the flawed checks on Jes Staley as chief executive of Barclays illustrates. The City regulator, the Financial Conduct Authority, is seeking to bring listings back to the UK by demolishing barriers to fundraising by listed firms and making corporate bonds more accessible to retail investors. Change is happening but a flatlining, high tax economy doesn't scream come and get me. Testing times Unilever's latest chief executive Fernando Fernandez knows there is no time to lose with activist Nelson Peltz impatient to release value. Often overlooked is the strong heritage Unilever has in India, its second biggest market, where quoted offshoot Hindustan Unilever is a dominant force with a leading share in many categories. Fernandez is very conscious that India remains a fantastic opportunity. The country has a fast-expanding middle-class and the potential for 85 per cent output growth by 2033. Into the top job goes Priya Nair, group boss of beauty and wellbeing, among the group's fastest growing areas. Her task will be to maintain those market leading positions amid challenges from home-based beauty rivals, online sites such as Blinkit offering a great variety of brands and sales increases which lag rivals such as Nestle. Straddling the emotions of cricket fans, as England edges ahead in the Test series, could be part of the challenge. Water feature It was inevitable, one supposes, that burst-mains leakage specialists and champion polluters Thames Water would be quick to join Yorkshire and South-East Water with hosepipe bans. So far, it is upstream counties targeted. As negotiations over Thames' financial viability continue, it was probably best not to antagonise the City and its environs any further.
Daily Mail
10-07-2025
- Business
- Daily Mail
A MILLION Brits face being dragged into higher tax rates costing £10bn amid fears Rachel Reeves will break her vow and extend hated 'stealth tax'
A million Brits face being dragged into higher tax rates if Rachel Reeves breaks her vow to end the freeze on thresholds. Fears are mounting that the Chancellor will opt to extend the long-running stealth raid, as she faces an estimated £30billion hole in the government books. The policy, in place since 2022, is due to end in 2028-29. By that point it will have dragged an extra 4.2million people into the tax system as wages rise. There will be 3.5million more taxpayers in the higher-rate band, and 600,000 in the top rate. However, keeping the freeze in place for another two years could bring in an extra £10billion annually for the Treasury according to the IFS think-tank - significantly easing Ms Reeves' problems. Around another 400,000 more people would be paying income tax and 600,000 into higher and additional rates by 2029-30. The Treasury's OBR watchdog has predicted the thresholds freeze will have raised £48.9billion of additional tax by by 2029-30, 1.4 per cent of GDP. Around 14 per cent of adults will be paying the 40p rate, compared to under 4 per cent in the early 1990s. IFS director Helen Miller told BBC Radio 4's Today programme that extending the freeze 'absolutely would' be a tax on 'working people'. 'The big problem I have with that measure is the lack of transparency,' she said. 'It is a big tax rise but not one that people are going to see very easily.' Extending the freeze would seemingly contradict Ms Reeves' words at the Budget last year. She told MPs at the time: 'Having considered this issue closely, I have come to the conclusion that extending the threshold freeze would hurt working people. 'It would take more money out of their payslips. I am keeping every single promise on tax that I made in our manifesto. 'There will be no extension of the freeze in income tax and National Insurance thresholds beyond the decisions by the previous government from 2028-29.' Ms Reeves has insisted she will not come back for another big raid, but seems to be backed into a corner after guaranteeing to keep the fiscal rules on borrowing. She has also said Labour will keep the manifesto pledge not to hike taxes on income tax, employee national insurance or VAT. But experts have suggested that the stalling economy together with spending pressures could mean she has a £31billion funding gap to fill at the Autumn Budget. Challenged at PMQs yesterday to guarantee that thresholds will not be held again, Keir Starmer merely said: 'We will stick to our manifesto commitments, we will stick to our fiscal rules.'
