Latest news with #InstituteForFiscalStudies
Telegraph
20 hours ago
- Business
- Telegraph
Rayner ‘wants council tax rise in the south to fund the north'
Council tax bills will rise in the south to fund investment in the north, it has been reported. Angela Rayner, the deputy prime minister, is to announce plans for a 'progressive' funneling of Government grants to authorities in deprived areas. According to The Times, Ms Rayner will set out a new formula which will see the grants redistributed depending on local needs. The changes are expected to reduce the grant funding received by wealthier local authorities in London and the south east, which experts said would likely prompt council tax hikes to make up for any shortfalls. Approximately half of council incomes currently come from Government grants. Ms Rayner will reportedly cite discrepancies in council tax levies between richer and poorer areas. A three-bedroom semi-detached house in Hartlepool, Co Durham, comes with a higher levy than an £80 million mansion in Westminster. David Phillips, of the Institute for Fiscal Studies, told the newspaper that reform was overdue. 'It's been 20 years since we've had an effective system to allocate funding between councils so it is out of whack and the changes are going to be big,' he said. 'We would expect urban areas in the Midlands and north to benefit, and maybe some of the east London boroughs. But the Westminsters and Wandsworths of this world, which set very low council tax, will lose.
The Independent
6 days ago
- Business
- The Independent
Rachel Reeves has bet all our money on Wes Streeting saving the NHS
The thinking behind Rachel Reeves's spending plans for the next three years was revealed in her statement on Wednesday. It is crude and probably correct. Of the government's three priorities, there is only one that ministers can control so she will throw money at that one. The voters care about the cost of living, immigration and the NHS. There is not much the governmen t can do about the first. It has to talk about growth and hope for the best. We are at the mercy of Donald Trump, various wars and the bond markets. Nor do ministers think, in their heart of hearts, that there is much they can do about the Channel crossings. They have to talk about falling legal immigration, a trend they inherited from the Conservatives, while getting cross with the French for not doing enough to stop the small boats – but not so cross that the gendarmes shrug and fold their arms. That leaves the NHS. The chancellor has put all her chips on the blue and white oblong on the casino table. The health service received the most generous settlement on Wednesday, planned to grow by three per cent more than inflation over this parliament. There are those – and Nigel Farage is one of them – who will mutter 'bottomless pit' and 'good money after bad'. Those of us who are a bit more sophisticated will mention the NHS productivity crisis. Before the spending review, for example, I pointed to figures from the Institute for Fiscal Studies showing huge increases in the numbers of doctors and nurses in the NHS over the past five years, and small increases in the number of patients seen. But I also cited evidence that NHS productivity was improving after the one-off shock of the pandemic and now there is more hopeful news to share. Reports are beginning to emerge about what is in the 10-year plan for the NHS to be published by Wes Streeting, the health secretary, next month. It sounds like a good and ambitious plan to shift incentives so that patients are kept out of hospitals and needless in-person appointments are abolished. Speaking to The Times, Streeting said: 'Much of what's done in a hospital today will be done on the high street, over the phone, or through the app in a decade's time.' It might seem a bit slow. He has been in government for nearly a year and is only now coming up with a plan? Government is slow – Keir Starmer has taken to asking repeatedly, 'Why not today?' – but it is important to get big changes right, and Streeting has thrown himself at a lot of the less visible work in his first 11 months, including abolishing the NHS England bureaucracy and taking the NHS back under the direct control of his department. He has learned the lessons from the last time Labour saved the NHS under Tony Blair, including bringing back some of the key people who did it: Alan Milburn, Blair's health secretary, and Michael Barber, the head of his delivery unit. The blueprint is all there in a new book, The Art of Delivery by Michelle Clement, my colleague at King's College London. It is based on Barber's diaries and is the fullest account of how the public services were turned around in Blair's second term as prime minister. The book makes clear what ought to be obvious, which is that it takes time for the combination of more money and reform to start to change measurable outputs, and even longer before the general public notices an improvement. Nor is improvement a steady upward gradient, because there are policy mistakes and personality clashes along the way. One of Barber's greatest strengths was his ability to manage relationships put under strain by politicians' impatience for delivery. When one permanent secretary ranted at him for giving his department a traffic-light rating in a note to Blair without consulting him, Barber said: 'This has always happened. I'm just telling you.' Now it is happening again. The good civil servants and NHS managers will realise that it helps them to have objective performance indicators and stretching targets if the whole service is starting to move in the right direction. Barber had to persevere for two years before the indicators started to shift, but in the NHS the momentum of change gathered pace thereafter. By 2004, Barber told the cabinet that an episode of EastEnders showed Ian Beale complaining that 'people spend at least five hours in A&E', to which Jane, his wife, responded, 'It's a lot better nowadays.' Barber began to talk confidently about how the changes in just three years were becoming 'irreversible' – a claim that was mocked by the parsimony and incompetence of the Tory years, which managed to reverse the Labour gains eventually. The point is that the NHS can be changed in a single parliament. The challenges are different now, and so are the technologies. But the principles are the same: more money accompanied by devolution of power to successful managers and aligning staff incentives with the interests of patients. Time is already running out for this government, and the stakes are high. Most cabinet ministers understand that. One of them was quoted anonymously by The Times today. If it wasn't Streeting himself, it was someone who thinks just like him: 'The truth is there are a lot of people whose lives have been shit for a long time. They rolled the dice with Brexit, they rolled the dice with Boris and then they rolled the dice again with us. They need to see results otherwise they will roll the dice again with Reform.' Time is running out, but Streeting is one of the few cabinet ministers to have made good use of it so far.
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The Independent
13-06-2025
- Business
- The Independent
‘Tax the rich first': Readers demand fairer burden as Reeves faces fiscal squeeze
As Britain faces sluggish growth and rising fiscal pressures, Independent readers have been vocal about who should foot the bill – and how. A broad consensus has emerged: the wealthy must pay more. Rachel Reeves's £100bn spending plans for housing, defence, and the NHS were met with approval in principle, but there is concern over how they'll be funded in practice. Readers rejected the idea that taxing millionaires would spark a mass exodus, calling this a long-standing myth. Instead, many urged Reeves to shift the tax burden from workers to billionaires, property investors, and tech giants. Others argued that years of austerity, rising house prices, and privatised utilities have left the public footing the bill, while the richest accumulate wealth. Meanwhile, the Institute for Fiscal Studies has warned that any further economic downturn will 'almost certainly' trigger fresh tax hikes, with council tax already set to rise at the fastest rate in a generation. Here's what you had to say: Trickle-down economics is a falsehood. 0.3 per cent of the UK's millionaires have left. A tiny proportion who probably didn't even pay the same rate of tax as a worker. They obviously don't care about the UK. I bet their assets and businesses still operate here, though. The USA has a capital flight tax, and China wouldn't allow someone to make millions in China while sipping piña coladas in Dubai without paying tax. Stop with the faux fear that millionaires are our saviours – they pay as little as possible, and trickle-down economics is a falsehood. Silvafox Sales tax on all foreign tech companies If Reeves put a 10 per cent sales tax on all foreign tech companies (Google, Amazon, Facebook and Twitter) we could not only afford the benefits and health bills, we could also afford to take the majority of workers out of Income Tax altogether. She CHOOSES not to. Pablo How will £100bn be raised? Tax hikes will come because Reeves has just announced over £100bn investment in housing, the NHS, defence and energy without saying how all this is going to be paid for. The 'spending review' is barely worth the paper it's written on without a detailed analysis of how this additional £100bn is raised. For me this spending is necessary and correct, but it has to be paid for. A responsible and sensible chancellor would already have plans in place, but so far Reeves has nothing to say on this. ChrisMatthews Tories added £1.6 trillion to the National Debt 2010–2024: the Tories add £1.6 trillion to the National Debt and the press barely raises an eyebrow. What do we get for it? Devastation of all our existing essential services, under-investment, a small number of new billionaires. 2025: Labour adds £194 billion to the National Debt. What for? Multiple long-term infrastructure projects. The press, orchestrated by the appalling 'Sir' Mel Stride, goes crazy. And we wonder why the place is falling apart. Carnabyswhiskers Things cost money Things cost money. If we want more things, we have to give more money Tax the rich first. Godricson82 Take it from the hoarded billions If you need the cash, then you take it from the hoarded billions that sit there doing nothing but gathering interest for the rich. That's what the post-war Labour government did. You don't confiscate their wealth – you merely make use of it while they don't make use of it. Donalds Troosers Handing debt straight back to the private sector All the money that would have gone to the Treasury via electricity, gas, water, etc. has all gone to shareholders. What a great idea – at the cost of the consumer. We're about to sort the debt out of Thames Water and hand it straight back to the private sector so someone else can rip the consumer off. It's called capitalism. LesMisrables The obvious only way to repair the economy is to reverse the damage done by Brexit – more than £100 billion and counting... Nicko Either rejoin or get over it The economy has been shrinking ever since we left the EU. Either rejoin or get over it and accept the inevitable. Boy from ceiber Taxing for public services is fundamental Tax those of us who can afford it already Taxing people (fairly) to fund public services is the fundamental point of the government. SkigtheRat Millionaire exodus is a long-standing myth The answer is simple: the super-wealthy need to start paying their fair share in taxes. The idea that fairer taxation provokes some kind of millionaire exodus is a long-standing myth. In reality, millionaires tend to be more immobile than the population as a whole, and there is no evidence that taxation has a significant impact on their movements. It is important to push back against the fearmongering and demand that the super-wealthy pull their weight. selkie Shift the tax burden As long as those tax hikes are on the wealthy side of the population, they are welcome. It's time to shift the tax burden from the bottom to the top. AndrewB Hoarding of wealth in housing The safest and best investment over the last 30 years has been housing... the wealthy have been making money hand over fist on rising house prices. Unfortunately, this has come at a price – young people and the poorest can no longer afford housing. Taxes should be raised on this hoarding of wealth in housing to redress the balance. Of course, it will never happen, but until it does, the UK economy will be a basket case as increasing numbers of people spend higher proportions of their income on accommodation, with £0 left to spend in the economy. ChrisMatthews Billionaires will be leaving for Trumpland Billionaires will be leaving the country and heading for Trumpland where their huge wealth will be better recognised as a great asset – to themselves. stillaardvark3 You cannot cut your way to growth Austerity being so effective. The national debt was hiked up during Cameron's austerity drive. You cannot cut your way to growth. You cannot sack your way to full employment. Economists have plenty of source data from previous economic crashes – they know what works and what does not. Cutting spending does not create demand. Jim987 You would be much better raising VAT and at the same time raising the tax threshold for the poorest to compensate. They spend their money promoting growth. The issue would be having strong government fiscal discipline to avoid stimulating the inflationary effect. Kwame Want to share your views? Simply register your details below. Once registered, you can comment on the day's top stories for a chance to be featured. Alternatively, click 'log in' or 'register' in the top right corner to sign in or sign up.
Telegraph
13-06-2025
- Business
- Telegraph
Rachel Reeves has lost control
On Tuesday, Sir Keir Starmer told the nation that the Government's U-turn on cuts to winter fuel payments was the result of 'better growth'. On Wednesday, Rachel Reeves felt able to announce billions of pounds of new spending on public services and infrastructure. And on Thursday, April's GDP figures showed the biggest monthly drop since 2023 as Labour's tax hikes came home to roost. It is hard to think of a better summary of the mess this Government has made of its messaging and this nation. After less than a year in office, Rachel Reeves and Sir Keir Starmer appear to have run out of ideas entirely. As Paul Johnson of the Institute for Fiscal Studies has pointed out, the notion that this was a careful exercise in cutting the waste in state spending is without merit. There is no 'particular area of spending' where the Government has decided to 'withdraw', with virtually every department facing 'exactly the same cut in its administration budgets'. Moreover, the plan for dealing with the NHS – an organisation that has translated massive rises in the number of hospital doctors and nursing staff employed into an 8 per cent fall in productivity since 2019 – is to simply throw more money onto the furnace. Yet while Sir Keir and Ms Reeves feel ready to start splashing the cash on the Government's favoured causes, the underlying state of Britain's finances remains parlous, with any knock to growth likely to trigger further tax rises. The blunt truth of the matter is that this country is on an unsustainable fiscal course, and that tough decisions will need to be faced if we are to rectify this. The evidence to date is that this Labour Government is unwilling and unable to take them.
The Sun
12-06-2025
- Business
- The Sun
Households face council tax hikes and £10billion stealth levies as Reeves gets boxed into corner by shrinking economy
HOUSEHOLDS face council tax hikes and £10billion in stealth levies as Rachel Reeves gets boxed into a corner by the shrinking economy, experts warn. The Chancellor, who wore protective goggles during a visit to the University of Derby yesterday, learned growth fell 0.3 per cent in April — less than 24 hours after her £113billion spending review splurge. 2 2 Businesses are reeling from the National Insurance rise, a jump in the minimum wage and ongoing uncertainty over Donald Trump's global trade war. Economists warned the circumstances meant tax hikes are almost certain this autumn — along with hard-pressed town halls having to up council tax rates by five per cent next year to pay for local services. Former Office for Budget Responsibility committee member Andy King said 'the writing was on the wall for another fiscal hole' — which would trigger tax rises or possible spending cuts in the Budget. Another expert accused Ms Reeves of 'making up numbers' in her spending review as there were few clues where savings would be found. Paul Johnson, from the Institute for Fiscal Studies, said her demands that all Whitehall departments cut administration budgets by ten per cent a year were not the result of a 'serious analysis'. He also said that if Ms Reeves was forced to raise taxes, the most politically straightforward approach would be to extend the freeze on income tax thresholds. Mr Johnson added that her plans will result in a 'sting in the tail' because local authorities would have to raise their levies. More than half of Brits — 52 per cent — reckon Ms Reeves' spending review will have a negative economic impact rather than positive. But one piece of good news did emerge yesterday, as it was revealed the UK was finally ready to sign its trade deal with the US.
