Latest news with #InstituteforFiscalStudies
The Herald Scotland
5 days ago
- Business
- The Herald Scotland
Getting rid of the two child cap is a small part of the bigger picture
Before last year's election, Labour committed itself to getting rid of the cap 'when fiscal circumstances permit'. They then found fiscal circumstances considerably worse than anticipated along with, very properly, a clamour of competing demands, some more emotive than others. Getting rid of an inherited piece of legislation is a lot more difficult than introducing it. The money has to be found from somewhere. According to the Institute for Fiscal Studies, abolishing the cap would cost three per cent of the working age benefits budget; another void to be filled by cutting something else. Read More On balance, I support the argument in the first paragraph for the reasons stated. However, I have no illusions about the fiscal balancing act which the Labour government faces and no belief in magic money trees. Getting rid of the cap may not even be the most effective use of billions to reduce absolute child poverty. But heigh-ho … politically, the choice is binary – either you keep it and take the flak or get rid of it, hope it makes the difference claimed and find out later. At least the intentions will have been good even if some less high-profile corners of social spending will have footed the multi-billion bill. In Scotland no such dilemmas or trade-offs are allowed for. It is all about superior morality and Scottish exceptionalism. At Holyrood this week, however, the usual story unfolded – that the 'legally binding' interim targets for child poverty reduction have been missed by a mile while the 2030 targets are 'not at all likely to be met', according to the Poverty and Inequality Commission. It is fair enough to point out that comparable figures for Scotland are lower than for other parts of the UK. However, we do not live in other parts of the UK. There are some measurements by which Scotland performs better and others worse. Devolution was never meant to be a competition. Unless it was going to deliver better outcomes in devolved policy areas, what was the point of it? It would be miraculous if, in the course 18 years, the SNP Government had not used its very generous budget to deliver any policy unique to Scotland which has created beneficial effects. The most obvious of these is the Scottish Child Payment which has enjoyed cross-party support from the outset and is a good use of the devolved budget. But its sole purpose should be to help children – not to be used as a political weapon in a never-ending claim to high moral ground. We have £2500 a head higher public expenditure, higher rates of taxation and higher social security budgets than the UK as a whole. In return, we are entitled to measure the performance of our devolved government by outcomes – particularly against 'legally-binding' commitments, whatever that means - rather than by a litany of denial, blame-shifting and political snash. 'Not at all likely to be met' applies to just about every target SNP Ministers have ever announced, with fanfares of trumpets. Yet the bravura continues unabated. The performance by the Cabinet Secretary for Social Justice, Shirley-Anne Somerville, was devoid of grace or humility in the face of these missed targets. It was all about attacking those who dared point out the gap between boasts and reality. It was pretty obvious her 'two-child cap' commitment had been thrown together hastily to provide cover for the missed targets. Asked the obvious question of where £156 million next year will come from, Ms Somerville replied: 'We recognise that challenge'. And that was it. As ever, what mattered was the headline and there will be an election round the corner by the time the commitment is supposed to kick in. Ms Somerville then contrasted the Scottish Government's virtues with 'the UK Government's determination to push children into poverty'. At this point, her tone moved from unpleasant to offensive. Labour governments can be accused of many things but a 'determination to push children into poverty' is not one of them, except in the prejudices of fanatics. There has never been a Labour government that has not reduced child poverty and most of the social reforms which have lifted people out of poverty in the post-war decades were introduced by them. There may be a reasonable political argument about which governments were to the benefit of those who had left poverty behind, but none at all about the political force which has had at its core the anti-poverty mission. If it was easy, it would have been accomplished long ago. In fact, if it was easy an awful lot more progress would have been made in Scotland over the past 18 years. The truth is that poverty – and particularly relative poverty – are moving targets of which benefits are only a symptom. The causes lie in education, skills, health, housing and multiple forms of deprivation, many of them inter-generational. Only a fool would think these can be transformed within a year or indeed the lifetime of a Parliament, regardless of fiscal environment and other demands. By all means, get rid of the two child cap. I hope it happens but it is a small part of a much larger picture. Maybe if Ms Somerville and her colleagues had the humility to recognise their own failures to move the dial in devolved policy areas which contribute to embedded poverty, fewer Scottish children would be in need of benefits which reflect hardship, not success. Brian Wilson is a former Labour Party politician. He was MP for Cunninghame North from 1987 until 2005 and served as a Minister of State from 1997 to 2003
Business Times
6 days ago
- Business
- Business Times
London's sky-high prices thin the ranks of room-to-rent seekers
[LONDON] The number of people looking for a room to rent in London has continued to slide, data from a property search website show, in a sign that high rents are pushing even that modest goal out of reach for many residents. The cost of renting a room in the capital has held above £1,000 (S$1,726) a month since 2022, when property seekers idled by Covid-19 flooded back into the market as the economy reopened. But the number of would-be flat sharers has declined steadily since and last month hit 57,600, a drop of about 6,500 from a year before, according to figures shared by SpareRoom, a rental website. That's half as many as there were at the peak in September 2022 and marked the slowest May – one of the busiest months for house hunters – since 2021. The drop comes as the outlook is being darkened by rising bills, a deteriorating labour market and the US trade war, which is showing some signs of undermining confidence in the economy. Some of the decline in room-rental demand may be due to prospective homeowners resuming their searches as the Bank of England lowers interest rates. But the larger driver is likely the fact that many young people are opting for the cheaper option of living with their parents instead: An analysis by the Institute for Fiscal Studies showed that almost a third of UK residents aged 25 to 29 lived at home in 2024, up from just one in five in 2007. That may reflect the worsening job prospects for some young people as employers cut back on entry-level positions and recent tax hikes exert a drag on hiring in the hospitality sector. SpareRoom said that 40 per cent of those under 25 spend more than half of their income on rent, well above what's considered affordable. 'All those people in their 20s who would be driving up demand just aren't there,' said Matt Hutchinson, director at SpareRoom. 'Many young people can't afford to rent or save the required deposit on today's starting salaries so they have no choice but to stay put.' BLOOMBERG
Yahoo
7 days ago
- Business
- Yahoo
Starmer: Spending review marks new phase after first year of ‘cleaning up mess'
Sir Keir Starmer said the spending review has ushered in a new phase of his Government after a year of clearing up the 'mess' to stabilise the economy. The Prime Minister said Labour spent most of its first year since winning power in July 2024 taking 'tough but necessary decisions' and suggested the economy has now turned a corner. But local authorities warned an expected rise in council tax of up to 5% was 'not the solution' for making ends meet and would be a 'significant burden' for the public. 'We spent the best part of the first year taking the tough but necessary decisions in relation to, not just our broken economy but everything was broken, I could go on for the rest of this journey just listing things that were broken,' Sir Keir told reporters travelling with him to the G7 summit in Canada. 'Nobody actually argues with that, they might say that it's your job to get on and fix it, but nobody argues that it's broken. 'Year one was cleaning up that mess, stabilising the economy and creating the conditions for the spending review,' he said. The Chancellor unveiled the review last week, arguing that improvements to the economy have allowed a change of course as she announced plans to pump money into the NHS and give extra cash for schools and transport. However, experts have warned that tax rises will be needed in the autumn to balance the books if the economic growth Ms Reeves is counting on fails to materialise. Council tax bills could rise at their fastest rate for two decades as the review appears to assume that local authorities will raise it to the maximum of 5%, the Institute for Fiscal Studies has warned. The Local Government Association, which represents councils across England, estimates that councils in England were already facing a funding gap of more than £8 billion by 2028/9 before the spending review. 'All councils remain under severe financial pressure. Many will continue to have to increase council tax bills to try and protect services but still need to make further cutbacks,' an LGA spokesperson said. 'Council tax is not the solution for meeting long-term pressures facing high-demand national services. 'An increase in council tax of up to 5% will place a significant burden on households. In addition, increasing council tax raises different amounts of money in different parts of the country not related to need.' The Prime Minister said council tax rises are for councils to decide and pointed to investments in infrastructure and transport as examples of the moves now being made. 'What the spending review shows is that because of the decisions we've made, now you can see what difference a Labour government makes. 'And this is very 'Starmerite' if you like, those phases, I did it in opposition through to the election. 'The first job is always to clear out, clear up, and then move on from there. That's the stage that is ushered in by the spending review, into the next phase.'
Powys County Times
16-06-2025
- Politics
- Powys County Times
Letter: Prime Minister has misled voters since his election
All politicians stretch the truth, but few do it with the frequency and shamelessness of Keir Starmer. He came to power promising 'honesty and integrity', a pledge that may turn out to be his most misleading of all. From the moment he ran for Labour leader, Starmer misled the public. He pledged to uphold Jeremy Corbyn's policies, abolishing tuition fees, lifting the two-child benefit cap, and nationalising key services. All were swiftly abandoned once he secured the leadership. It seems this has worked for him, so he's made it a habit. During the election campaign, Starmer gave the impression that Winter Fuel Payments and a cap on social care costs would be safe. Both have now been dropped. He said taxes wouldn't rise for working people, yet his Budget hits them through higher prices and lower wages, thanks to a £25 billion national insurance hike. He promised swift compensation for 1950s-born Waspi women. That too has vanished. Farmers were told they'd get certainty, instead, they've been hit with new inheritance taxes. Even his touted EU deal lacks detail, with vague claims and no transparency about what the UK is giving up, including 12 more years of access to British fishing waters. As the Institute for Fiscal Studies noted, the £22 billion black hole in Labour's Budget 'was obvious to anyone who dared to look.' But Starmer and his Chancellor pretended not to see it. Voters aren't fooled. When leaders routinely tell us things we know aren't true, and do so with utter confidence, it's not just dishonest, it's corrosive. Britain deserves better than this calculated deceit. Roman Jones
Spectator
15-06-2025
- Business
- Spectator
Why the Israel-Iran war could raise your taxes
If Rachel Reeves is to have any chance of making it to her autumn budget without U-turns or raising taxes, the improved economic forecasts of recent months need to come true. Missiles flying between Israel and Iran may destroy that hope. Things had been getting better for the Chancellor. Look at economic forecasts from the aftermath of Trump's 'liberation day', and there was a common theme when it came to Britain. Because of the nature of our economic relationship with America – as a massive exporter in services (we're their call centre) and with more or less balanced trade in goods – we would be shielded against the worst impacts of a trade slowdown. Global GDP growth would suffer, but the effects would not come to Britain. The real boon, if one was being positive, though was what effect these tariffs might have on inflation. While raising prices in the shops for American consumers, the view of the economic world was that for the UK they may in fact be disinflationary. That's because, as the consultancy firm Oxford Economics explained to their clients last month, dampening demand for commodities such as oil and gas would reduce the cost of products consumed in Britain. But all that was before the first Israeli missiles landed in Iran. A barrel of Brent crude now goes for over $70. On Monday it went for $65 – so there has been a 9 per cent in just five days. On Friday morning, it briefly spiked to nearly $80 in what was the sharpest price spike since Russia invaded Ukraine three years ago. Within hours of Reeves delivering what director of the Institute for Fiscal Studies Paul Johnson yesterday called an 'incomprehensible' spending review speech, economists were warning that tax rises in the autumn were becoming likely. Just a day later, a worse-than-expected GDP contraction turned likely into very likely. If oil prices continue climbing as the war escalates, tax rises could become certain. Some 20 billion barrels of oil pass through the Strait of Hormuz, or about 30 per cent of total global trade. So it's easy to see how if Tehran tried to attempt to close the Strait – as Iranian news reports it is considering – or even attacked a few tankers, the oil price would quickly head northwards again. Indeed the FT reported yesterday that the world's largest oil tanker company has stopped accepting new contracts to sail through the Strait. If oil prices do continue to rise – and some say disruption in the Strait could send the price over $100 a barrel – it would be mere days before Brits start paying the cost at the petrol forecourt. But oil supplies are crucial to much more than petrol and diesel and taken together, it's easy to see how the rate of inflation remains sticky or even begins to rise again. Given that the bond markets are keeping the cost of UK debt far higher than the Treasury has been used to – much more because of inflation worries and the after effects of money printing than is understood in Westminster – any signal that prices were rising again are not going to give them faith in Britain as a debtor. If that were to happen and gilt yields remain high, or even climb further, then Reeves could find herself in heaps of trouble. It surprises many City economists just how unequivocal the government has been about sticking to fiscal rules and indeed keeping Labour's manifesto promise not to 'raise taxes on working people' given how hard that is when Reeves only has £9.9 billion of headroom. Before her Spring Statement the chancellor talked of the economic challenges posed by a 'changing world'. Things in the middle east have a habit of spilling over and the world seems to be changing again. Could this once more be the excuse the chancellor has to reach for?
