Economy

The nation owes the former Labour leader Neil Kinnock an eternal debt for losing the 1992 general election when he was clear favourite to win it, thereby sparing us whatever socialist folly he might have brought to Downing Street. I salute him again for popping up to propose a 2 per cent wealth tax on fortunes above £10 million that might raise a supposed £11 billion for the hard-pressed Chancellor – thereby bringing into sharp focus the vague threat that several cabinet ministers have studiously refused to rule out. Pressure is building on Rachel Reeves from backbenchers, unions and anti-poverty campaign groups to mount a raid on the rich in

When the history of the next election comes to be written, we may end up asking: was the turning point for its outcome the moment that Keir Starmer’s government backtracked on its welfare reforms in the face of a backbench revolt? The fiasco, which eliminated the government’s hopes of saving £5 billion a year, has made any welfare reform during the current Parliament impossible.   Britain has become the benefits office of the world The cost of that is becoming more evident by the day. Figures revealed this morning show that there are currently 3.6 million people receiving Universal Credit who are under no obligation whatsoever to look for work. They

Rachel Reeves wants Britain to become a shareholder democracy. In her annual Mansion House speech to the City’s bankers, accountants and financial advisors, she said ‘for too long, we have presented investment in too negative a light’. She’s right. These changes are unlikely to unleash the ‘big bang’ of prosperity and tax revenues the Chancellor badly wants and badly needs The Chancellor meant that regulation – which she called the ‘boot on the neck of business’ – has led to too many scary warnings about the risks of investing and not enough talking up of the benefits. She’s referring to the legally mandated ‘investment carries risk’ type messages you hear

The string of bleak economic updates continues. First we had the dire report by the Office for Budget Responsibility (OBR) into fiscal risks, which showed how we’re hurtling towards financial disaster. Now we’ve got figures from the Office for National Statistics (ONS) that reveal the economy shrank in May – the second month in a row. The data, released this morning, shows that GDP fell by 0.1 per cent in May after shrinking by 0.3 per cent in April. The ONS said the most notable contractions were in production and construction, while services (the backbone of our economy) managed to grow slightly. The contraction in production (down 0.9 per cent)

‘We are becoming a welfare state with an economy attached,’ said Kemi Badenoch in a speech on sickness benefits today. She’s right, though anyone who read the Office for Budget Responsibility’s (OBR) dire report this week knows we’re past becoming: we already are. The figures are staggering. The bill for sickness benefits is heading towards £100 billion a year. Soon, one in every four income tax pounds will go just to cover these payments. Meanwhile, a million young people are doing nothing at all –not in work, not in education, not in training. Badenoch called this not only ‘unaffordable and unjustifiable, but immoral’. Again, she’s right. In a fiery speech hosted

The public won’t forgive and nor will I, said Health Secretary Wes Streeting of plans by junior doctors to strike over his refusal to cave to demands for 29 per cent pay rises. Speaking to the Times he said: ‘There are no grounds for strike action now. Resident doctors have just received the highest pay award across the entire public sector. The Government can’t afford to offer more and it wouldn’t be fair to other NHS workers either, many of whom are paid less’. He’s completely right.  Just shy of half of the British Medical Association’s (BMA) junior doctors (they’re now called resident doctors) voted for strike action, but because of low turnout it

Keir Starmer’s government is heading for trouble – again. Last time it was welfare reform, now it’s SEND (special educational needs and disabilities) funding in schools. It’s being widely reported today that Labour MPs are kicking off over ministers’ refusal over the weekend to rule out cuts in SEND provision, by which councils are legally obliged to give extra support to such pupils, such as dedicated teaching assistants or taxi transport to and from school. The parallels with last week’s row over welfare reform and PIPs are striking. Most obviously, both proposals for cuts are the result of an explosion in the numbers in receipt of funding. 525,000 adults now

Health Secretary Wes Streeting says that the changes to the Welfare Bill will ‘give people peace of mind’. Perhaps for some, but certainly not economists. Britain’s welfare crisis is staggering – £313 billion a year is spent on disability payments, Universal Credit, winter fuel payments, Motability, child benefit, and, most expensive of them all, the state pension. Currently, the state pension costs  over £150 billion a year, and is engineered to grow at the highest of either inflation, wage growth, or 2.5 per cent. When you factor in our rapidly aging population, the welfare state is quite literally primed to blow. Whitehall is on a collision course of its own

The Chancellor Rachel Reeves was in far better form when she appeared again in public alongside the Prime Minister Sir Keir Starmer yesterday. The tears have been wiped away and she has a smile, even if a slightly forced one, back on her face. The reason is not hard to work out. She has started preparing the ground for another round of big tax rises in the autumn. And that is the one thing she is good at. Reeves is back in her comfort zone.  In the wake of the backbench rebellion that forced the government to abandon its welfare reforms, and with the U-turn on the winter fuel allowance,