Latest news with #governmentbudget
Daily Mail
03-07-2025
- Business
- Daily Mail
Reeves 'could be forced into £40BILLION of extra tax hikes' by stalling economy and Labour's benefits shambles
could be forced into a repeat of her massive tax raid Budget in a desperate bid to balance the government's books, economists have warned. The Chancellor is trying to move on after her outburst of emotion during PMQs yesterday. But she is facing an increasingly grim position after a Labour revolt forced the dropping of £5billion curbs to benefits. Ministers have already humiliatingly U-turned on slashing winter fuel allowance for pensioners, while restive MPs are demanding an end to the two-child benefit cap and more defence spending. The stalling economy and rising debt interest costs - reflecting market nerves at the prospect of more borrowing - look to be backing Ms Reeves into a corner ahead of her fiscal package this Autumn. The Chancellor has been adamant that she will not break her fiscal rules or the Labour manifesto commitment not to increase income tax, VAT or employee NICs. She has also stated she will not bring in a tax bomb as big as the £41billion imposed last year. Keir Starmer repeated this morning that the government had already taken the 'big and heavy decisions', although he refused to rule out tax increases. However, Ben Zaranko of the respected IFS think-tank said the increase in the burden could be of a 'similar scale'. He told The Times 'avenues are closing' after department spending plans were fixed for the next three years and the government backed down on welfare. 'It's not hard to imagine a world where they are of a ballpark similar scale to last autumn,' Mr Zaranko said. 'If you have the perfect storm of economic forecasts being downgraded, additional spending commitments because these reforms haven't got through parliament and the world is in a gloomier place generally, you could comfortably be into double figures billions even before you talk about any retail offers. 'A £20, £30, £40billion budget is not what the government would want but it's not impossible by any means.' The Budget last year was the biggest tax raising package on record, including an eye-watering hike to employer national insurance that has been blamed for crushing business investment and recruitment. Analysis by Deutsche Bank suggested that the hole Ms Reeves needs to fill could be between £18billion and £32billion. It pointed to market conditions adding £2-£3billion to borrowing by 2029, and Donald Trump's trade war impact costing approximately £5billion. Productivity growth downgrades could degrade the fiscal position by another £15billion, while welfare backtracking is estimated to add up to £9.5billion to spending. 'We continue to see £10-15billion in tax hikes announced as part of the forthcoming Budget. But this should now be seen as the floor for tax hikes in the autumn. The risk is that Chancellor Reeves needs to dig deeper to deliver even more,' the bank's note said. The analysts speculated that revenue-raising measures could include extending the hated freeze on income tax thresholds, with that stealth raid potentially raising £7billion a year. Council tax reform was mooted to bring in £1 billion, raising the Bank Levy another £1.5billion and pension tax reliefs £2 billion. Other measures including tax collection could drum up some more cash towards the gap. But Deutsche Bank cautioned that if the shortfall is more than £20billion breaking the Labour manifesto and hiking income tax, VAT or NICs could be unavoidable. In May it emerged that Angela Rayner had written to the Chancellor in March urging eight tax hikes, seemingly as a way to avoid benefits curbs. They included reinstating the pensions lifetime allowance, changes to dividend taxes, a raid on a million people who pay additional rate income tax and a higher corporation tax level for banks. Allan Monks, an economist with JP Morgan, told Reuters earlier this week that the OBR had hinted at downgrades in its forecast evaluation report. 'The key question now is magnitude,' Mr Monks said, adding that cutting 0.1 to 0.2 percentage points off the forecast for annual potential economic growth could cost the public finances between £9billion and £18billion pounds a year. At an NHS event this morning, Sir Keir said: 'No prime minister or chancellor is going to write a budget in advance, but we did really tough stuff in that budget last year. 'We made sure that we stabilised the economy and we took the big and heavy decisions early on. 'And that's what we meant by what we said when the Chancellor said that before, it's what I mean and say again today. 'We've done a lot of the heavy lifting, we've done a lot of the hard yards. 'As a result of that turning our economy around: the fastest growth in the G7 in the first quarter of this year, business confidence at a nine-year high and record investment.'
The Independent
11-06-2025
- Business
- The Independent
Rachel Reeves sounded like she was fighting for her political life
Rachel Reeves's spending review, setting out budgets for government departments, was peppered with references to her backbench colleagues, as she thanked her 'honourable friends' from one constituency after another for making the case for more investment in their area, and announced that she was happy to oblige. This is a trend that has grown in recent years. The great proponent of it was George Osborne, who used Budgets and other set-piece speeches to assert the Treasury's power and to build his network of supporters in the party. He copied it from Gordon Brown, who used the Treasury as a base from which to campaign for the succession. Reeves's tone was rather different. She has dominated the Commons in the past, fearlessly swatting aside Conservative onslaughts and rousing her own side with partisan slogans thunderingly delivered. Not today. Today, she seemed less confident, and her naming and thanking of Labour MPs sounded less like a ruler building her empire and more like a politician pleading for her political life. All the handouts to local schemes for transport, libraries and social housing seemed to be aimed at persuading MPs not to turn against her. She knows she is up against it, less than a year into a government with a huge majority. At the election, her steadiness under fire and insistence on fiscal responsibility with metaphors about rocks and iron cladding was an asset to Labour. Now, a well-timed heckle from the Tory side as she was talking about assets and liabilities on the government balance sheet captured the view of a growing number of Labour MPs that she is a 'liability'. Reeves knows that she has lost ground with public opinion, which might be expected of a new chancellor having to make tough choices to repair the public finances, which were left in terrible shape. But she has also lost popularity in the Labour Party. In last week's LabourList poll of party members carried out by Survation, she came bottom of the league table of cabinet ministers in favourability, below Liz Kendall, the work and pensions secretary, and Keir Starmer. Survation also asked Labour members: 'If Keir Starmer does not lead the Labour Party into the next general election, who do you think should be leader?' Reeves did not feature in the list of 14 names featured in LabourList, topped by Andy Burnham, Angela Rayner and Wes Streeting. Someone on social media asked about the omission of her name: was this because she was not included in the question or because she is so unpopular? Well, Survation has now published the full tables, so I can answer the question: it is because she is so unpopular. Only 0.5 per cent of Labour members chose her from a list of 25 names as their first preference as an alternative leader. She might protest that she has no ambition to be leader – as Rayner did at the weekend ('Absolutely not; I don't want to be leader of the Labour Party') – but that is not true in either case. And even if Reeves would be satisfied with being the first female chancellor, she doesn't want to be an unpopular one, wounded by speculation that the prime minister might decide that he agrees with the Tory heckler. It would be unfair if Starmer were to move her, given how unpopular he is, and how much he has contributed to Reeves's problems by pushing her to U-turn on the winter fuel payment cut. But politics is not fair, and so she has to fight to try to keep Labour MPs, and party members, onside. Hence her repeated insistence that the tough choices she has made are 'Labour choices.' She knows that Labour members and MPs think that the choices she and Starmer have made so far have not reflected the party's values. In a spending review statement in which she had nothing new to say – all the new detail was contained, in hard-to-understand form, in the document published when she sat down – she won the loudest cheers for mere rhetoric, repeating the party's attack on parents with children at private schools. But this was the first occasion since the election that the Conservatives had the edge in the Commons. Mel Stride, the shadow chancellor, is a little theatrical for some tastes, but his central argument seemed undeniably accurate: that she is a 'spend now, tax later' chancellor who will have to come back for more tax rises in the autumn. And Stride's peroration struck home: 'There she sits, powerless to resist her disillusioned MPs and her panicking prime minister, like a cork on the tide, the drumbeat for U-turns pounding in her ears.' Suddenly, this started to feel like a government, and a chancellor, that has been in power for a long time.
The Independent
11-06-2025
- Business
- The Independent
Spending review winners and losers: How each department fares
The spending review sets out how government budgets will grow by an overall average of 2.3% per year across the period 2023/24 to 2028/29 – but this figure masks some sharp differences between departments. While health, education and defence are all set to see an average rise in spending, the Home Office and the Foreign Office will see their budgets fall. Here is a list of how each department fares, according to figures published by the Treasury, starting with those areas with the largest increases. All percentages represent average annual growth in real terms – in other words, adjusted for inflation. – Energy Security & Net Zero The total departmental budget, excluding costs related to Sizewell C, is planned to rise by an average of 16.0% per year across the period 2023/24 to 2028/29, and up by a smaller average of 2.7% from 2025/26 to 2028/29. The total departmental budget for Sizewell C grows by an average of 15.6% per year from 2023/24 to 2028/29, but falls by an average of 3.7% from 2025/26 to 2028/29, reflecting a planned drop in spending from £3.2 billion in 2027/28 to £2.5 billion in 2028/29. Day-to-day spending by the department (also known as resource spending) is set to grow by a much smaller average of just 0.5% per year from 2025/26 to 2028/29. – Business & Trade The total budget is planned to grow by an average of 5.8% per year from 2023/24 to 2028/29, and by 3.0% per year from 2025/26 to 2028/29. However, day-to-day spending is set to fall by an average of 1.8% per year from 2025/26 to 2028/29. – Housing, Communities & Local Government Total spending just on local government is planned to rise by an annual average of 5.2% from 2023/24 to 2028/29 and by 1.1% from 2025/26 to 2028/29. The total departmental budget is set to rise by an average of 3.0% per year from 2023/24 to 2028/29, but fall by 0.6% per year from 2025/26 to 2028/29. Day-to-day spending by the department is planned to fall by an average per year of 1.4% from 2025/26 to 2028/29. – Defence The total departmental budget is set to rise by an annual average of 3.6% from 2023/24 to 2028/29, and by 3.8% from 2025/26 to 2028/29. Day-to-day spending is planned to increase by the smaller average of 0.7% per year from 2025/26 to 2028/29. – Health & Social Care The total budget for the department is planned to grow by 2.8% per year from 2023/24 to 2028/29 and by 2.7% per year from 2025/26 to 2028/29. Day-to-day spending on NHS England is planned to rise by an average of 3.0% per year from 2025/26 to 2028/29. – Science, Innovation & Technology The total budget is set to rise by an average of 2.8% per year across the period 2023/24 to 2028/29, and by the smaller amount of 0.9% from 2025/26 to 2028/29. Day-to-day spending is set to rise by an average of 7.4% per year from 2025/26 to 2028/29. – Work & Pensions The budget is planned to grow by an annual average of 2.1% across 2023/24 to 2028/29, but is set to fall by an average of 0.2% per year from 2025/26 to 2028/29. Day-to-day spending rises by an average of 0.4% per year from 2025/26 to 2028/29. – Education The total departmental budget is set to rise by an average of 1.5% per year from 2023/24 to 2028/29, and by 0.8% from 2025/26 to 2028/29. Day-to-day spending rises by an annual average of 0.7% for 2025/26 to 2028/29. – Scottish Government The total budget rises by an average of 1.1% per year from 2023/24 to 2028/29 and by 0.8% from 2025/26 to 2028/29. Day-to-day spending grows by an average of 0.8% per year for 2025/26 to 2028/29. – HMRC The department's total budget grows by an average of 0.6% per year from 2023/24 to 2028/29, but falls by an average of 1.5% per year from 2025/26 to 2028/29. Day-to-day spending rises by an annual average of 0.7% from 2025/26 to 2028/29. – Welsh Government The annual budget grows by an average of 0.6% from 2023/24 to 2028/29 and by 0.7% from 2025/26 to 2028/29 Day-to-day spending grows by an average of 0.9% per year from 2025/26 to 2028/29. – Northern Ireland Executive The budget rises by an average of 0.5% per year from 2023/24 to 2028/29 and also by 0.5% from 2025/26 to 2028/29. Day-to-day spending grows by an average of 0.4% per year from 2025/26 to 2028/29. – Culture, Media & Sport The total departmental budget is planned to fall by an annual average of 0.2% across the period of 2023/24 to 2028/29, and by a larger 1.4% from 2025/26 to 2028/29. Day-to-day spending drops by an annual average of 1.2% from 2025/26 to 2028/29. – Transport Excluding costs related to HS2, the total budget is set to fall by an average of 0.4% per year for the period 2023/24 to 2028/29, but rises by 0.5% per year for 2025/26 to 2028/29. Spending on HS2 falls by an average of 8.6% per year for 2023/24 to 2028/29, and drops by 9.3% for 2025/26 to 2028/29. Day-to-day spending by the department is set to fall by an average of 5.0% per year from 2025/26 to 2028/29. – Environment, Food & Rural Affairs The total budget drops by an annual average of 0.7% from 2023/24 to 2028/29 and falls by 2.3% from 2025/26 to 2028/29. Day-to-day spending is set to fall by an average of 2.7% per year from 2025/26 to 2028/29. – Home Office The department's total budget is planned to fall by an annual average of 2.2% for the period 2023/24 to 2028/29, and down by 1.4% for 2025/26 to 2028/29. Day-to-day spending by the Home Office is set to fall by an average of 1.7% per year from 2025/26 to 2028/29; when excluding forecast costs on asylum, this figure rises by by an average of 0.4% from 2025/26 to 2028/29. Core spending by the police is planned to rise by an average of 2.3% per year across 2023/24 to 2028/29, and by 1.7% for 2025/26 to 2028/29. – Foreign, Commonwealth & Development Office The total budget is set to drop by an annual average of 5.0% from 2023/24 to 2028/29, and by the larger annual average of 8.3% from 2025/26 to 2028/29. Day-to-day spending is set to drop by an average of 6.9% per year from 2025/26 to 2028/29.
Sky News
04-06-2025
- Business
- Sky News
Rachel Reeves is about to make huge spending decisions - these could be the winners and losers
A week today, Rachel Reeves presents the spending review; how the budget is divided between government departments between 2026 and 2029 - the bulk of this parliament. It's a foundational moment for this government - and a key to determining the success of this administration. So, what's going to happen? The chancellor did boost spending significantly in her first year, and this year there was a modest rise. However, the uplift to day-to-day spending in the years ahead is more modest - and pared back further in March's spring statement because of adverse financial conditions. Plus, where will the £113bn of capital - project - spending go? So, we've done a novel experiment. We've taken Treasury documents, ministerial statements and reports from the Institute for Fiscal Studies. We put them all into AI - into the deep research function of ChatGPT - and asked it to write the spending review, calculate the winners and losers and work out what goes where, and why. It comes with a health warning. We're using experimental technology that is sometimes wrong, and while ChatGPT can access up-to-date data from across the web, it's only trained on information up to October 2023. There are no answers because discussions are still going on. Think of it like a polling projection - clues about the big picture as things move underneath. But, critically, the story it tells tallies with the narrative I'm hearing from inside government too. The winners? Defence, health and transport, with Angela Rayner's housing department up as well. Everywhere else is down, compared with this year's spending settlement. The Home Office, justice, culture, and business - facing real terms squeezes from here on in. The aid budget from the Foreign Office, slashed - the Ministry of Defence the beneficiary. You heard about that this week. Health - a Labour priority. I heard from sources a settlement of around 3%. This AI model puts it just above. Transport - a surprise winner. Rachel Reeves thinks this is where her capital budget should go. Projects in the north to help hold voters who live there. But, could this spell trouble? Education - down overall. Now this government will protect the schools budget. It will say 'per pupil' funding is up. But adult education is at risk. Is this where they find the savings? So much else - Home Office down, but is that because asylum costs are going down. Energy - they're haggling over solar panels versus home insulation. Justice should get what it wants, I am told. This isn't about exact percentages. But you can see across lots of departments - things are tight. Even though Rachel Reeves has already set the budgets for last year and this, and only needs to decide spending allocations from 2026 onwards, the graphs the Treasury will produce next week compare what will be spent to the last set of Tory plans. This means their graphs will include the big spending increases they made last year - and flatter them more.
RNZ News
25-05-2025
- Business
- RNZ News
Budget 2025: None of year's child poverty targets met
Child poverty rates will barely shift in the coming years, latest Treasury forecasts show. Photo: 123rf Child poverty rates will barely shift in the coming years, the latest Treasury forecasts show. The new forecasts, which include some of the effects of Thursday's government Budget, showed no statistically significant change, a report published by finance minister Nicola Willis' office said . Since 2018, the government has had to report on progress towards child poverty targets and whether the Budget will help to address child poverty rates. The latest figures, for the year ending in June 2024, were released in February this year . The rates, which did not significantly change from the previous year, showed: None of the target rates for 2023/24 were met. This was "at least in part" because of the effect of inflation on the cost of living. the report said. Treasury forecasts show the targets for 2026/27 and 2027/28 are also seriously in doubt, with poverty rates set to remain roughly at their current levels until at least 2029. The 2027/28 targets set by the government were for only 5 percent of children to be living in poor households before housing costs were taken into account, and 10 percent of children once housing costs were included. The report pointed to lifting the Working for Families threshold, and increasing the accommodation supplement in some regions, as measures that the government had introduced to support families living in poverty. However, Treasury forecasts found that neither measure would have a statistically significant impact. Other government initiatives, such as the new Social Investment Fund and early intervention for children with additional learning needs, could not be included in the modelling.
