Reeves welcomes growth figures as former No 10 adviser says taxes will have to rise in budget – UK politics live | Politics
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Budget should be brought forward to avoid 'months of tax uncertainty', says former No 10 adviser
The Times article by Nick Williams mentioned earlier (see 9.07am) is worth reading in full. Williams gave up a job as a Treasury official to work as an economic policy adviser to Keir Starmer when he was opposition leader. He then worked for the PM in Downing Street as an adviser on planning, infrastructure and housing until last month.
Here are the main points he makes.
While the government builds momentum behind growth, the path of public spending is just not credible. Not to mend creaking local government. Not to tackle rampant crime. Not to meet the modern demands for defence. And certainly not to fill the fiscal hole from sharply cutting immigration.
The bottom line is that taxes will have to go up. There are ways this can be done which are fair and respect manifesto promises.
He says the budget should be brought forward, and combined with the spending review, to avoid “months of tax speculation and uncertainty”.
The government should instruct the OBR [Office for Budget Responsibility] to prepare for a joint budget and spending review before summer recess. Treasury officials would hate it – it is harder to negotiate on spending when savvy secretaries of state know tax is also in play. However, it would avoid months of tax speculation and uncertainty; spare the cabinet from defending unpopular cuts which ultimately may not be delivered; and offer an earlier opportunity to atone for past mistakes.
It will also allow the OBR to pass judgment on the labour market impact of the government’s proposed welfare changes. If they agree with the government’s expectations that more people will move into work, the parliamentary handling of the legislation will be easier. If they continue with their current assessment, then the government should alter the policy.
Members of both Blue Labour and the Socialist Campaign Group have gone further and called for Rachel Reeves to change her fiscal rules. This is seen as a free lunch, but it is an invitation to disaster.
No fiscal rules are perfect and all draw seemingly arbitrary lines. They frustrate because they are a constraint; that is their point. They are easy to criticise and have few advocates. Their purpose is simple but vital: demonstrate to those who buy government debt that the government will be good for it. To lose confidence is politically fatal. Remember, it was the bond market which brought President Trump to heel.
The government has also begun giving shape to its growth strategy. The revenue brought in by Matthew Pennycook’s planning reforms allowed more painful welfare cuts to be dropped, with more to be scored in the next budget and, later this month, the new shape of the UK’s relationship with the EU will be revealed.
The Times says Williams is referring to the government dropping a plan to freeze the value of Pip (the personal independence payments) as part of its welfare reform. The government is still drastically reducing Pip eligibility. But, for people who do get it, it won’t be frozen.
At 10.30am Robert Jenrick, the shadow justice secretary, has an urgent question in the Commons on “the public safety implications of the government’s plan to set a 28-day limit on prison sentences for recalled offenders”.
And later, after the business statement, the Foreign Office minister Stephen Doughty will make a statement on a review of sanctions implementation and enforcement. This will start at some point after 12pm
And Rachel Reeves, the chancellor, has delivered an almost identical message in a short, televised speech to workers at the Rolls-Royce factory in Derby. She said:
We’re set to be the fastest growing economy in the G7 in the first three months of this year and that’s incredibly welcome, but I know that there is more to do.
The cost of living crisis continues to affect families right across our country. I understand that and I hear that.
But despite the challenges that we face, our economy is strong.
Rachel Reeves speakng to workers at the Rolls-Royce factory in Derby this morning. Photograph: Darren Staples/PA
Starmer says growth figures show 'strength and resilience of British economy'
Keir Starmer is in Albania, where he has welcomed the growth figures. He told broadcasters:
These growth figures are very good and very welcome, and I think they show the strength and resilience of the British economy and the potential.
I don’t think they should be seen in isolation, because we have also had four interest rate cuts in a row, and what that shows is that in an uncertain world, particularly globally, this government is making the right decisions on growth.
I would be the first to accept there is more work to do so we will roll up our sleeves and get on with that, but this is very good news for the British economy, very good for working people across the country.
Keir Starmer talking to broadcasters in Albania this morning. Photograph: Sky News
Reeves welcomes growth figures as former No 10 adviser says taxes will have to rise in budget
Good morning. There is some good news for the government this morning. As Richard Partington reports, the UK economy grew by a bigger than forecast 0.7% in the first three months of the year, defying business warnings of a collapse in confidence ahead of Labour’s tax increases and Donald Trump’s sweeping tariffs.
In a statement welcoming the figures, Rachel Reeves, the chancellor, said:
Today’s growth figures show the strength and potential of the UK economy.
In the first three months of the year, the UK economy has grown faster than the US, Canada, France, Italy and Germany.
Up against a backdrop of global uncertainty we are making the right choices now in the national interest.
Reeves mentioned the US, Canada, France, Italy and Germany for a reason. They are all G7 members, and one of Keir Starmer’s “five missions” announced before the election was for the UK to have the highest sustained growth in the G7. The figures for the other G7 nation, Japan, are not available yet, although they are likely to show the Japanese economy shrinking. It is only one quarter, but you can see why Reeves is keen to talk about this. She is giving interviews to broadcasters this morning.
But some of them may want to ask her about an article in the Times by Nick Williams, a former Treasury official who worked as an adviser to Keir Starmer on economic policy, and then on planning policy, from 2023 until last month. Williams says that Reeves will have to raise tax in the budget. He says:
While the government builds momentum behind growth, the path of public spending is just not credible.
Not to mend creaking local government. Not to tackle rampant crime. Not to meet the modern demands for defence. And certainly not to fill the fiscal hole from sharply cutting immigration.
The bottom line is that taxes will have to go up. There are ways this can be done which are fair and respect manifesto promises.
The next opportunity to do so is the autumn budget. This is also realistically the last opportunity to make a meaningful change that the public has time to feel before the next election.
Here is the agenda for the day.
Morning: Rachel Reeves, the chancellor, is talking to broadcasters about the growth figures on a trip to Derbyshire.
9.30am: Heidi Alexander, transport secretary, takes questions in the Commons.
9.30am: NHS England publishes its monthly performance figures.
9.30am: The Ministry of Justice publishes quarterly figures on prosecutions and convictions.
10am: Kemi Badenoch takes part in a Q&A with former Canadian PM Stephen Harper at the International Democracy Union meeting in Brussels.
After 10.30am: Lucy Powell, leader of the Commons, takes questions on next week’s Commons business.
11.20am: Keir Starmer is in Albania where he is due to hold a joint press conference with the prime minister, Edi Rama. Later he will visit British troops and their Albanian counterparts training Ukrainian soldiers.
11.30am: Downing Street holds a lobby briefing.
Here is the agenda for the day.
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