Monday, October 14
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Editorial 14.10.24
Monday’s front pages report on a variety of topics with domestic politics and business being a lead story ahead of today’s investment summit in London.
There is some international coverage with reports on the Ukraine war and a third assassination attempt on former US President Donald Trump.
Elsewhere, England’s 3-1 win over Finland, King Charles’s upcoming trip to Australia and the latest from Strictly Come Dancing also make the front splashes.
Today’s UK Investment Summit is the focus for The Times which reports major banks and companies have written a letter to the paper saying it is “time to invest in Britain.” The letter says Britain now has a real opportunity to grow its economy. They argue that our universities, legal expertise and financial services have provided what they call the ‘bedrock of a strong investment proposition’.
The letter is signed by five of the world’s richest banks, private equity firms, leading insurers and tech giants.
They say Britain’s greater stability has increased its attractiveness to investment, which the paper says is a reference to Labour’s election victory at a time of uncertainty in many large economies.
The Daily Telegraph highlights concerns among City bosses saying the prime minister’s “tax raid” will scare businesses away. They say any government raid on National Insurance contributions could damage investment in the UK.
The Guardian takes a different angle, focusing on the prime minister’s promise to “rip out the bureaucracy that blocks investment”, ahead of the summit. After a troubled run-up to the event, including a bruising row with the Dubai-based owner of P&O Ferries, the prime minister will urge the world’s largest businesses to invest in the UK, promising them stable policy and low regulation as an incentive to do so.
The i leads with an exclusive on what UK university vice-chancellors are claiming on their expenses. The paper says revelations include £1 drinks and a herb chopper. It comes as the education sector faces a funding crisis, the paper adds.
The Daily Express continues its focus on immigration. The paper’s headline says the Labour government has “betrayed voters” as contracts at processing centres are set to expire in 2032. The paper sums it up as “eight more years of illegal migration.”
Metro reports on the upcoming parliamentary debate on assisted dying. It quotes the daughter of a campaigner who died in 2012 saying he would be frustrated by further delays.
The Daily Mail continues its ongoing coverage of what has been dubbed Taylorgate. The paper leads with ministers’ input on the Taylor Swift gigs in London as it continues to dig into who asked the attorney general to help get Taylor Swift a blue-light escort during her London tour dates.
The Sun also leads on showbiz news reporting on an exclusive about Masterchef host Gregg Wallace and allegations about conduct. Wallace’s reps have not commented, the Sun says, while the BBC has said it does not “tolerate any form of inappropriate behaviour and have robust processes in place.”
The Daily Mirror splashes on King Charle’s upcoming tour of Australia which has suffered a setback as “every one of the six Aussie state premiers” turn down an invitation to greet him and Camilla during their tour of Australia. “Not a g’day for Charles”, is how it headlines its front page.
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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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