UK weather today: Rather cloudy and breezy across much of Scotland and perhaps the far north of Northern Ireland today, with outbreaks of rain moving eastwards. Largely dry elsewhere, with sunny spells, especially across the south. Rather cold, but the
Editorial 11.10.24
Friday’s headlines continue to be dominated by domestic politics, with much of the coverage lent to the Employment Rights Bill and the chancellor’s tax hike plan, The October budget pain.
There is a cold war going on between the Labour Chancellor and Business and markets. Corporate businesses are using threats and signals to push the Chancellor’s policies in its favour, beyond what the Tories would have done, with the threat of a Liz Truss revolt where the economy will nose-dive.
Princess Kate has blossomed on the front pages of the tabloids as she returns to work following her cancer treatment. Pictures of the Princess of Wales in Southport are splashed on the front of many publications this morning.
In international coverage, a few front pages feature pictures of the devastation in Florida following the recent hurricane. Elsewhere, the latest from the Middle East conflict also finds some coverage on today’s front pages.
The Times says the reforms will give unions “wider powers to recruit members and stage strikes”. The paper goes on to claim the reforms will make it easier for unions to raise money for Labour, but falls short of suggesting this to benefit big business, not the employee.
The budget speculation bill means all members would pay into funds that contribute “millions” to the Labour Party – unless they opt-out. The paper says unions have given the party “almost £10m” in the past year.
The i newspaper says under the new bill, carers would get a pay rise. The paper says salaries agreed on by the new adult social care negotiation body must be paid across the sector. The bill also includes “similar measures” to increase pay and prospects for teaching assistants.
The Mail says the chancellor’s tax hike plan “will cost billions.” The paper quotes the warning from the HMRC who said a percentage point increase of ten or more could cut revenue by around £2bn because many investors would quit the UK.
The Guardian says Chancellor Reeves is considering raising capital gain tax as high as 39% in the Budget as concern grows within Whitehall about the limited options for tax rises to fund what the paper calls “crumbling” public services.
The Times says ministers are also concerned that a rise will see the rich delay selling assets, rather than pay the higher rate.
The Daily Express continues its coverage of the winter fuel payments saying pensioners fear having to choose between heating their homes or eating. The warning to the chancellor came from campaigners who have urged Chancellor Rachel Reeves to drop the plan, the paper adds.
The Telegraph lead story reports that private hospitals will “rescue” the NHS by easing the waiting list crisis in government plans currently under consideration. A source tells the paper that the government would “grab with both hands” any spare capacity that would see patients receive treatment quicker.
The shock elimination of James Cleverly from the Conservative leadership race continues to be discussed by the editors.
The Daily Telegraph reports moderate Tories are threatening to throw away their leadership ballots now Kemi Badenoch and Robert Jenrick are the only two options for party leader. Both candidates are seen as being part of the hard right side of the party, leaving no room for the centre-ground.
The paper says the loss of centre-right Cleverly means there is a real prospect of a damaging split in the party.
The Daily Express says Jenrick has warned that the Conservatives must get serious about migration to survive.
The Daily Mail says “Kate dazzles,” and the Mirror says: “Smiling, caring, hugging Kate is back.” The Sun says the princesses meeting in Southport was a sign of “Kate’s growing strength” following her cancer diagnosis.
The Guardian leads on international news. The paper reports on the UN saying Israel “deliberately” fired on its peacekeepers in Lebanon on Thursday, injuring two. It comes as Israel conducted “repeated ground incursions” into the country in its war with Hezbollah. The UN member states have expressed outrage at the alleged attack, the paper says, which has come at a time when Israel is facing “scrutiny for alleged war crimes and crimes against humanity” for its conduct in Gaza.
The paper’s front page features an image of damage in the US from Hurricane Milton, which distracts from the terrors Israel is committing in the middle east.
The Metro leads on Mitlon saying “hammered” Florida – still reeling from Hurricane Helene a few weeks earlier – dodged the “worst case scenario” with Hurricane Milton.
The paper says more than 3 million are without electricity in Florida and at least eight people are confirmed dead.
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Rachel Reeves is being warned that a massive hike in capital gains tax could endanger her hopes of creating economic growth.
It comes as a row has broken out over claims that the chancellor has asked Treasury officials to model capital gains tax rates of 39 per cent and 33 per cent, well above the second home rate of 24 per cent.
While sources close to Ms Reeves have tried to dismiss Budget speculation and allegations of disarray, the concerns have dropped at a time of intense pressure for the chancellor and Sir Keir Starmer. It follows:
The Institute for Fiscal Studies warning that she will need to raise £25bn in extra taxes to meet Labour’s spending commitmentsLabour support dropping to less than 30 per cent in Techne UK’s weekly tracker poll for the first time in more than two and a half years as voters turn their backs on the new governmentStarmer repeatedly refusing to rule out a hike on employer contributions to national insurance – a move critics believe will destroy jobsPersistent question marks over Labour plans to tax non-doms and add VAT to private school fees.Criticism that Reeves should have held her first Budget sooner
The row over capital gains was broken in The Guardian, which claimed to have seen papers on modelling requested by Ms Reeves on an increase of up to 39 per cent.
A source close to the chancellor dismissed the story and denied the government was in “disarray” over its tax plans, adding that they would “not be drawn on Budget speculation”.
But with the Budget set for 30 October, time is running out for Ms Reeves to close a £25bn gap in her spending commitments and available financing identified by the Institute for Fiscal Studies (IFS). This is on top of the £22bn “black hole” that Ms Reeves claims to have been left by the Tory government.
The IFS has speculated Ms Reeves might try to change her fiscal rules to loosen up her ability to borrow but its director Paul Johnson warned “this could spook the markets”.
Instead, having already slashed spending on items like winter fuel payments for 10 million pensioners and cancelling future care for the elderly scheme, it is believed Ms Reeves will have to look at raising taxes.
However, her hands are tied because of Labour’s election promise “not to raise taxes on working people” including income tax, VAT or national insurance employee contributions.
But Ms Reeves is being warned that her hopes of creating economic growth will be harmed by raising capital gains taxes, although experts believe she could make it fairer.
Currently, capital gains tax (CGT) accounts for £15bn a year to the Treasury, less than 2 per cent of revenue, and is raised from around 350,000 people.
Two-thirds of CGT revenue comes from just 12,000 people (0.02 per cent of the adult population) who have average gains of £4m.
Stephen Millard, deputy director of the National Institute of Economic and Social Research, said: “CGT is a tax on savings, something that UK households do not do enough. By increasing CGT, the government would discourage saving, which could have a knock-on effect on investment.
“And, given the emphasis that the current government has put on growth, this would not be something they would want to do.
“Of course, the big question is the extent to which a rise in CGT to the 33 to 39 per cent would put off savings. For instance, it might just result in households transferring their savings from second homes and shares into pension funds or ISAs with no impact on total savings.”
He added: “More generally though, there is a need to simplify the way CGT works. Another principle of good taxation is to widen the base and lower the rate; a reform of CGT along those lines – ie, reducing the number of assets that are exempt from CGT while lowering the rate – would be better than raising the rate on shareholdings and second homes.”
Helen Miller, deputy director at the IFS, said: “Capital gains tax is a small but important tax. Its design is flawed and this matters for both the efficiency and fairness of the tax system.
“The new chancellor should use her first Budget to create a capital gains tax that is fairer and more growth-friendly. The only way to do this is to reform the tax base alongside increasing tax rates. Getting the design of any reform right is crucial. But a sensibly reformed CGT would be a significant prize and should be a priority regardless of how much revenue she would like to raise overall. Good reform would also make it easier to raise significant additional revenue.
“If the chancellor chooses to raise CGT rates while leaving the flawed tax base unchanged, she would be choosing to raise some, limited, revenue at the expense of weakening saving and investment incentives and further distorting which assets people buy and how long they hold them for. That would not be the decision of a chancellor who was serious about growth.”
https://www.independent.co.uk/news/uk/politics/rachel-reeves-budget-capital-gains-tax-b2627393.html
The UK economy grew in August after two months of being flat, the latest official figures show.
Gross domestic product (GDP) has recorded a 0.2 per cent growth in August, an increase on no growth in June and July, figures from the Office for National Statistics (ONS) said.
While growth was already forecast in economic predictions, it will come as a boost for new Chancellor Rachel Reeves ahead of the autumn budget at the end of October.
But ONS warned that the “broader picture” still reflects one of “slowing growth” compared to the first half of this year.
ONS director of economic statistics Liz McKeown said: “All main sectors of the economy grew in August, but the broader picture is one of slowing growth in recent months, compared to the first half of the year.
“In August, accountancy, retail and many manufacturers had strong months while construction also recovered from July’s contraction. These were partially offset by falls in wholesaling and oil extraction.”
Prime minister Keir Starmer previously warned in August of a “very painful Budget” ahead as Labour pushed the line that things were “worse than we ever imagined”, and Reeves has since been weighing up how to finance Labour’s financial commitments.
But Paul Johnson, director of the Institute for Fiscal Studies (IFS), previously said Labour were aware of the financial challenges in the run-up to the election but “refused to confront them in its manifesto and pre-election statements”.
The government will need to raise £25 billion in extra taxes in order to meet Labour’s spending commitments, the IFS warned when Labour took power.
Labour’s election promise to not raise income tax, VAT or national insurance employee contributions has left Reeves looking for more creative methods to fill the “black hole”.
Reeves could raise capital gains tax to 39 per cent and the second home rate to 24 per cent, it has emerged, while Starmer has refused to rule out an increase on employer contributions to national insurance.
The chancellor is reportedly also considering an adjustment to the fiscal rules to allow her to borrow billions for infrastructure investment, unlocking up to £57 billion.
Before the election, Labour pledged to follow two fiscal rules: that costs are met by revenues such as tax, and that debt must be falling as a share of the economy by the fifth year of the economic forecast.
According to Johnson, fiscal rule changes could risk “spooking the markets”, adding: “I don’t think you are going to pull the wool over anybody’s eyes by redefining debt.”
If adopted, the fiscal rule changes will be announced within the autumn budget on October 30.
https://www.independent.co.uk/news/uk/home-news/economy-growth-stagnant-gdp-ons-b2627636.html
Earlier this morning Israel launched its invasion of Lebanon, despite the calls and protests from world leaders. Netanyahu is determined to push forward his agenda for creating a greater Israel and gain more land.
Despite the conflicts with Starmer on the issue, this provides a political opportunity that politicians will exploit. First and foremost it will take the limelight away from domestic policies. So politicians will use every soundbite to talk about the issue.
Additionally, politicians will use this opportunity to drive home the cuts at home. Although they are determined not to use words like ‘austerity’ – Labour will be making big spending cuts starting with winter fuel payments.
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