Latest news with #UKfinances
Sky News
07-07-2025
- Business
- Sky News
Government declines to rule out wealth tax after ex-Labour leader Lord Kinnock calls for one
The government has declined to rule out a "wealth tax" after former Labour leader Neil Kinnock called for one to help the UK's dwindling finances. Lord Kinnock, who was Labour leader from 1983 to 1992, told Sky News' Sunday Morning With Trevor Phillips that imposing a 2% tax on assets valued above £10 million would bring in up to £11 billion a year. On Monday, Prime Minister Sir Keir Starmer's spokesperson would not say if the government will or will not bring in a specific tax for the wealthiest. Asked multiple times if the government will do so, he said: "The government is committed to the wealthiest in society paying their share in tax. "The prime minister has repeatedly said those with the broadest shoulders should carry the largest burden." He added the government has closed loopholes for non-doms, placed taxes on private jets and said the 1% wealthiest people in the UK pay one third of taxes. Chancellor Rachel Reeves earlier this year insisted she would not impose a wealth tax in her autumn budget, something she also said in 2023 ahead of Labour winning the election last year. Asked if her position has changed, Sir Keir's spokesman referred back to her previous comments and said: "The government position is what I have said it is." 16:02 On Sunday, Lord Kinnock told Sky News: "It's not going to pay the bills, but that kind of levy does two things. "One is to secure resources, which is very important in revenues. "But the second thing it does is to say to the country, 'we are the government of equity'. "This is a country which is very substantially fed up with the fact that whatever happens in the world, whatever happens in the UK, the same interests come out on top unscathed all the time while everybody else is paying more for getting services. "Now, I think that a gesture or a substantial gesture in the direction of equity fairness would make a big difference." The son of a coal miner, who became a member of the House of Lords in 2005, the Labour peer said asset values have "gone through the roof" in the past 20 years while economies and incomes have stagnated in real terms. 5:31 In reference to the chancellor refusing to change her fiscal rules, he said the government is giving the appearance it is "bogged down by their own imposed limitations", which he said is "not actually the accurate picture". A wealth tax would help the government get out of that situation and would be backed by the "great majority of the general public", he added. His comments came after a bruising week for the prime minister, who had to heavily water down a welfare bill meant to save £5.5bn after dozens of Labour MPs threatened to vote against it. With those savings lost - and a previous U-turn on cutting winter fuel payments also reducing savings - the chancellor's £9.9bn fiscal headroom has quickly dwindled. In a hint of what could come, government minister Stephen Morgan on Monday told Wilfred Frost on Sky News Breakfast: "I hold dear the Labour values of making sure those that have the broadest shoulders pay, pay more tax. "I think that's absolutely right."
Reuters
04-07-2025
- Business
- Reuters
Welfare cuts U-turn shows extent of UK's fiscal challenges, S&P says
LONDON, July 4 (Reuters) - The inability of Britain's government to make cuts to welfare spending this week underscores the extent of the challenges it faces in repairing its finances, credit rating agency S&P Global said on Friday. UK Prime Minister Keir Starmer was forced to scrap 5 billion pounds ($6.83 billion) worth of benefits cuts due to opposition from within his own government, reducing the already razor-thin margin it relies on to meet its self-imposed fiscal rules. "We consider the inability to make modest cuts to welfare spending, which has ballooned in the UK since the 2020 pandemic, underscores the UK government's very limited budgetary room for manoeuvre," S&P said in an analysis. S&P has a "stable" outlook on its AA UK credit rating and though it sees the fiscal position as "vulnerable" it said the direct effect of this week's last-minute policy reversal was small in the context of the country's "existing fiscal challenges". The now-cancelled 5 billion-pound-a-year of mainly disability allowance cuts would have amounted to 0.2% of 2025 GDP, by 2029. That compares with last year's headline government deficit of 5.9% of GDP - equivalent to almost 170 billion pounds. "Getting the deficit down to the pre-pandemic five-year average of 3% of GDP would require a roughly 70 billion pound consolidation effort," said S&P, which is next due to review Britain's rating on October 10. "We expect that the UK's fiscal consolidation will remain a slow process," it added. ($1 = 0.7321 pounds)
