Latest news with #SpringStatement
The National
20 hours ago
- Business
- The National
Gilt yields spike following Rachel Reeves's tears during PMQs
Her sister Ellie Reeves, also an MP, was seen holding her hand as she left the chamber on Wednesday. Following PMQs ten-year gilt yields, which move inversely to the price of UK Government bonds and affect the cost of borrowing for the government, rose above 4.6%. (Image: UK Parliament) Reeves is facing intense scrutiny over her handling of public finances after the welfare bill was watered down, with rebel Labour backbenchers reportedly claiming the Chancellor intervened on reforms and looked for quick savings ahead of the Spring Statement. Labour's welfare U-turn last night will cost the UK Government £3 billion extra, according to the Resolution Foundation, while the restoration of winter fuel payments will add a further £1.3bn to government bills. Following the Spring Statement, economists warned that Reeves had left herself too little headroom, leaving public finances on shaky ground. The Institute for Fiscal Studies (IFS) also warned that extra spending commitments would lead to tax rises. Meanwhile, City analysts have previously estimated that the government could be forced to raise in excess of £20bn in order to restore her fiscal buffer. Other economists have suggested that the Chancellor could revise fiscal rules to allow for more spending, but higher borrowing commitments could rattle bond markets, with current debt interest payments set to total £104bn, more than double the levels seen in the 2010s.
ITV News
a day ago
- Business
- ITV News
Welfare U-turn leaves chancellor with financial blackhole that could lead to further humiliation
Economics Editor Joel Hills breaks down the financial repercussions of the government's welfare U-turn The welfare bill U-turn is politically embarrassing for the government, and it also leaves the chancellor with a significant financial problem. If you recall, the original plan was rushed out before the Spring Statement in March because Rachel Reeves was in danger of breaking the borrowing and debt rules she had just set, at the first time of asking. The government envisaged saving £4.5 billion a year by making it harder to qualify for Personal Independence Payments. And a further £2.7 billion by cutting future spending on incapacity benefit - the 'health' element of Universal Credit. The government also wanted to increase the generosity of universal credit for those out of work without health problems - benefit support for jobseekers in the UK is pretty mean by comparison with other wealthy European nations. This netted out at total savings of £5.5 billion by 2029/30. The PIP changes were tweaked and have now been shelved. The changes to the incapacity benefit have been watered down. The uplift to the standard allowance goes ahead as planned, so savings are now the sum total of zero. As things stand, the changes are likely to cost the government money. 'After [yesterday's] climbdown, the government is effectively returning to the drawing board,' says Helen Miller of the Institute for Fiscal Studies. 'The Timms Review may lead to savings, although Sir Stephen Timms, minister of state for social security and disability, has said that the review is not intended to save money. And this review is not due to report until autumn 2026.' Let us be clear, there has been a HUGE increase in the number of people claiming disability and incapacity benefits in the last five years. We don't really know why. It's definitely not Long Covid. It's probably not entirely down to the cost of living crisis, although higher inflation will have been painful for anyone on benefits. We do know this hasn't happened in other countries. It's perfectly normal for a government to be concerned about a surge in claims and to seek to reform the system, but goodness, this has been a fiasco. Back in March, according to the OBR, the chancellor had £10 billion of headroom against her self-imposed fiscal rules. £5.5 billion of that has gone. Another U-turn on winter fuel will cost the government another £1 billion. The outlook for economic growth (and therefore tax revenues) is weak. Borrowing is overshooting, and the government's borrowing costs are high. The news doesn't look good. As things stand, there's a good chance Rachel Reeves will have to increase taxes in the autumn, if she is still chancellor. Unless something changes, there's the prospect of further political humiliation ahead. From Westminster to Washington DC - our political experts are across all the latest key talking points. Listen to the latest episode below...
Scotsman
3 days ago
- Business
- Scotsman
What to do if your cash ISA allowance is under threat
ISAs under threat? | Alex Hinds - WEALTH CONFIDENTIAL Financial planner Sean Lowson asks if your future cash ISA allowance is under threat Sign up to our daily newsletter – Regular news stories and round-ups from around Scotland direct to your inbox Sign up Thank you for signing up! Did you know with a Digital Subscription to The Scotsman, you can get unlimited access to the website including our premium content, as well as benefiting from fewer ads, loyalty rewards and much more. Learn More Sorry, there seem to be some issues. Please try again later. Submitting... Although the Autumn Budget is still some four months away, the media rumour mill is already awash with fears that tax breaks offered to future Cash ISA savers might now be under threat. Rachel Reeves' Spring Statement fuelled these concerns when it revealed that ISA reform is now very much in the UK Government's sights. But, why might the Chancellor reduce the overall attraction of Cash ISAs ? BOOSTING UK ECONOMIC GROWTH The answer is quite simple. The Labour Government is committed to kickstarting economic growth, and one way of helping that is to encourage private investors to save more in stock market ISAs than in cash. The current annual maximum that you can invest into tax-free ISAs is £20,000. This can be invested across cash, stocks and shares and up to £4,000 in Lifetime ISAs. Martin Lewis, Money Saving Expert, suggests that the Chancellor might restrict the Cash ISA allocation to as little as £4,000. CASH ISAS AND STRATEGIC SAVING According to the Bank of England, a record £14 billion was deposited inside these mini tax havens in April of this year alone. Some Cash ISA interest rates are currently as high as 4.85 per cent, so it is easy to understand the attraction. Cash savings are a cornerstone to any successful financial planning strategy. They provide a risk-free pot of money against unexpected bills or financial crises, such as illness or redundancy. However, a broader investment strategy is required to provide more attractive long-term returns to grow your wealth at a rate required to adequately fund your later life. IGNORANCE MAY NOT BE BLISS Even though ISAs celebrated their 26th birthday earlier this year, recent research from the Investment Association confirms that 17 per cent of the UK adult population has never even heard of a Stocks and Shares ISA. A history lesson might help throw some light here. The IFA Magazine provided some interesting ISA performance comparisons in February, confirming such ignorance has indeed proved costly. It found an investor who made an annual investment of £1,000 into an ISA in the global sector when the government originally introduced ISAs in April 1999 would have made £49,211 more compared to someone saving exclusively in an average Cash ISA. Past performance is, of course, no guide to future returns and your capital is at risk when invested in stocks and shares. Long-term history shows that stock market returns are more likely to grow your capital to outstrip inflation than the alternative of leaving it in a cash deposit. THE RULE OF 72 The 'rule of 72' is a straightforward way of using the power of compound interest to estimate how long it could take to double the value of invested capital. You simply divide the number 72 by the fixed annual investment rate of return you are earning. The answer is the number of years it will take to double your rule illustrates how an overdependence on cash returns can lead to an underperforming investment strategy. For example, even at a fixed interest rate of 5 per cent it will still take you almost14 and a half years to double your money in a Cash ISA. By contrast, the average annual return from an investment in the MSCI World Stock market Index over the last 20 years was 10.9 per cent. This level of return could double your money every6.6 years, assuming it's fixed. A change in the Autumn Budget that prompts you to reconsider your current ISA investment weighting between cash and stocks and shares might prove to be a profitable over the long term. An investment in the stock market is more volatile than a cash deposit, so you need to be happy with putting your capital at risk before considering it. Clearly defining your appetite for investment risk as well as establishing your long-term financial planning goals are key to any could be an opportune time to have a chat about this with your financial planner. New name. Same team. Broader capabilities Following the merger of London & Capital and Waverton Group, Waverton Wealth is now W1M. As a unified team operating under one brand, we can now bring you the very best of everything we do – an exceptional breadth and depth of global wealth management, combined with institutional-quality investment management.
Wales Online
21-06-2025
- Politics
- Wales Online
DWP major reforms will not affect more than 600,000 people says minister
DWP major reforms will not affect more than 600,000 people says minister The Department for Work and Pensions (DWP) has confirmed that the upcoming changes to Personal Independence Payment (PIP) will not apply to a certain group of people The DWP will carry out a number of changes to the system (Image: Getty Images ) The Department for Work and Pensions (DWP) is rolling out changes to the eligibility and assessments for Personal Independence Payment (PIP) starting from November 2026. The changes to welfare will affect both new applicants and those already receiving benefits. But Minister for Social Security and Disability Sir Stephen Timms says people who are of State Pension age will remain unaffected by these updates. Current data from the DWP states that as of the end of April, approximately 608,346 individuals between the ages of 65 and 79 were in receipt of PIP, with those approaching the current State Pension age of 66 often granted a 10-year award of PIP, reports the Daily Record. Sir Stephen gave more details of how these changes will affect pensioners in his written reply to Labour MP Paula Barker's enquiry about how people of State Pension age might be impacted by the proposed modifications in PIP regulations. Sir Stephen said: "Our intention is that the new eligibility requirement in Personal Independence Payment (PIP) in which people must score a minimum of four points in one daily living activity to be eligible for the daily living component, will apply to new claims and award reviews from November 2026, subject to parliamentary approval." He continued: "In keeping with existing policy, people of State Pension Age are not routinely fully reviewed and will not be affected by the proposed changes." He remarked that "information on the impacts of the Pathways to Work Green Paper will be published in due course" and stated that some information had already been released with the Spring Statement in March." He added: "A further programme of analysis to support development of the proposals in the Green Paper will be developed and undertaken in the coming months." In a separate written response to Independent MP Apsana Begum, the DWP minister confirmed that there will be no changes for those nearing end of life who apply for PIP through the current fast-track system. Article continues below Talking to the MP for Poplar and Limehouse, Sir Stephen said: "We recognise that people nearing the end of their life are some of the most vulnerable people in society and need fast track and unqualified support at this difficult time." For those claiming or receiving Personal Independence Payment (PIP) and facing their final 12 months, Sir Stephen said: "People who claim, or an in receipt of, Personal Independence Payment (PIP), and are nearing the end of their life with 12 months or less to live, will continue to be able to access the enhanced rate of the daily living component of PIP." Moreover, Sir Stephen said: "We will also maintain the existing fast-track route under the Special Rules for End of Life and where claims are currently being cleared in two working days. This fast-track route will not be impacted by the new eligibility requirement for PIP." Article continues below Alongside the publication of a Green paper in Parliament at the early stages of the Commons process, the DWP launched an online consultation on the new proposals. The consultation is open to everyone and will run until June 30, 2025 - full details can be found on here.
Observer
18-06-2025
- Business
- Observer
Finance chiefs call for ‘clearer' tax policy
UK Chancellor, Rachel Reeves, is facing pressure to provide a 'clearer, more stable tax environment,' when she delivers her growth strategy next month. The Chancellor is once again in the spotlight after a damning report from finance bosses indicated the industry was prepped to support growth ambitions, but structural barriers were holding them back. Top players in the financial services ecosystem – KPMG, UK Finance and PIMFA (Personal Investment Management & Financial Advice) – said 'potential will remain untapped unless underlying structural challenges' are addressed'. The report said reforms to tax policy posed a 'valuable opportunity' to drive up greater confidence'. Business confidence sank in the fall out of Reeves' maiden Budget, where taxes were hiked £40bn. The Chancellor's controversial change to employer's national insurance came into effect last month, with rates for firms upped 1.2 per cent to 15 per cent. Managing director of personal finance at UK Finance, Eric Lendeers, said: 'Investors and firms need stability to make informed decisions and to invest for the future. Mixed signals on taxation only compound the problem.' He added it was crucial to avoid 'knee-jerk reactions' on tax policy. The Chancellor is facing mounting speculation of another tax hike after it was calculated half of her £9.9bn in fiscal headroom had been wiped out just 48 hours after the Spring Statement. Chief executive at PIMFA, Liz Field, said: 'Uncertainty surrounding non-dom tax status has driven more capital and talent overseas which impacts UK investment and competitiveness.' Field added: 'Frequent shifts and speculations around issues like tax-free cash, pensions, and ISAs undermine confidence and disrupt financial planning for clients.' Reeves inaugural Financial Services Growth and Competitiveness Strategy is pencilled in for 15 July, where the industry will be anticipating the Chancellor's plans to boost the economy. Chancellor of the Exchequer Rachel Reeves gives a speech at the Treasury in London, Britain. — Reuters Partner at KPMG UK, Daniel Barry, said: 'As risk to the UK's finance stability are rising, the government has a significant opportunity to instil greater confidence among sector leaders at a time of great uncertainty and geopolitical volatility.' The report from KPMG, UK Finance and PIMFA compiles views from chief executives and senior leaders across the private bank and wealth management industry, as well as financial advice and related services. The sector holds over £1.6 trillion in assets and bosses said reforms were needed to 'unlock the full potential'. Field said: 'There's a concern across our sector that without a more stable, proportionate and joined-up policy environment, we risk missing a vital opportunity to unlock investment, drive innovation, and promote greater financial resilience across society.' A separate issue that is causing concern to firms in the UK is the Employment Rights Bill which is currently progressing through parliament and expected to become law in the coming months. Small business owners would continue hiring new staff despite fears around the government's workers' rights package if it contained a rebate on the overhaul's new sick pay rules. According to a poll by the Federation of Small Businesses (FSB), 35 per cent of entrepreneurs and small business owners believe that a rebate for their firms over sick pay would make them to employ people currently out of work. The government claims its Employment Rights Bill represents the biggest overhaul of workers' rights in a generation. Other important changes within the package include outlawing 'exploitative' zero-hours contracts and so-called 'fire and rehire' practices. Under the current package, bosses have to grant staff statutory sick pay from their first day of employment, removing the current waiting period of three days. But small businesses fear the sick pay reform will cost them millions and deter them from taking on new employees. Of the 92 per cent of FSB members that have concerns about the workers' rights bill, 74 per cent believe they will recruit fewer workers. Executive director of the FSB, Craig Beaumont, said the spending review was an opportunity for the Chancellor to incorporate the sick pay demands of small businesses.
