Cloudy with outbreaks of rain across parts of Scotland and northern England. Elsewhere, a mix of sunny spells and scattered showers. Showers will be heavy at times with some thundery downpours and hail. Feeling warm in any sunny spells. Tonight:
Editorial 08.10.24
Tuesday’s front pages feature images of Israelis marking the first anniversary of the October 7 attacks. The tributes are heavily covered on today’s front pages, mostly in images – with the latest from UK politics being the lead story for most publications.
There is ongoing coverage of Sue Gray quitting her No10 role as well as reports that UK troops could be sent to the Middle East.
Elsewhere, there’s a bit of showbiz news on the front pages.
The Guardian says the “sobs and murmured prayers” of mourners gathered at the site of the music festival where hundreds were murdered on October 7 2023. The paper says whilst mourners reflected on the killings at the festival site the “sound of artillery and machine guns being fired in nearby Gaza” were heard.
The Daily Mirror spoke to a British mother whose son was killed by Hamas whilst working as a security guard at the festival. She says he called her on the morning of the attack to say rockets were flying overhead. It was four days later she found out her son had been killed.
The Mail recounts the story of one of the survivors. Yovel Sharvit Trabelsi attended the event with her husband, only to be trapped beneath his body for five hours after he was shot dead.
The i newspaper says the prime minister refused to rule out involving the UK military in Israeli operations against Iran during a speech in the Commons. The paper says he didn’t close down suggestions of British bases or personnel being used. It says there are calls for any involvement to be approved first by MPs.
The Times continues its coverage of Sue Gray. The paper has spoken to senior figures in Whitehall who say the removal of Gray from her role as chief of staff will not resolve “systemic” issues in No 10. One source is quoted as saying the “dysfunction” is not Gray’s fault and that “just because she is gone” it does not mean things are going to improve. The paper says the PM will not reshuffle his cabinet this year.
The Sun also leads on domestic politics, the paper says donors were offered a chance to “mingle” with the prime minister and Angela Rayner at the recent party conference if they paid up to £50,000 to sponsor drinks parties. A Labour spokesperson tells the paper the offer wasn’t an “authorised party communication” and that it wasn’t “something that was taken up”.
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Former Lebanese PM: Lebanon abandoned by international community amid crisis Lebanon’s former Prime Minister, Fouad Siniora, has criticized the international community for abandoning his country during its current crisis. Speaking
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New York Sun owner Efune closes in on £550mn deal for UK’s Telegraph
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The UK economy risks jeopardising a £7bn contribution from female-founded companies unless there is stronger support for rising women entrepreneurs, a new EY report has warned.
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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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