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Rachel Reeves’s ‘taxi tax’ plans show how desperate she is

It will at least give the cabbies something to genuinely complain about. Amid all the wheezes that Chancellor Rachel Reeves is plotting to fix the ‘black hole’ in the public finances, she is now considering a ‘taxi tax’. Ahead of November’s Budget, it has been floated that VAT may well be applied on all cab rides. But this plan is likely to end up backfiring badly on Reeves – and the government more broadly.  According to reports this week, the Chancellor is likely to impose a blanket 20 per cent rate of VAT on all taxi rides. Right now, taxi firms outside of London do not have to charge VAT

Spotlight

Featured economics news and data.

Ross Clark

No, Ed Miliband: zonal pricing won’t cut energy bills

Is Ed Miliband going to announce a move towards a zonal electricity market, where wholesale prices would vary between regions of Britain? It would appear to be on cards following the Energy and Climate Secretary’s interview on the Today programme in which he said he was considering the idea. Miliband’s apparent support for the plan follows intense lobbying by Greg Jackson, CEO of Octopus Energy as well as support from the National Energy System Operator (NESO), the new government-owned company which oversees the grid. However, zonal pricing is bitterly opposed by others in the energy industry, including Chris O’Shea, the generously-moustached CEO of Centrica, and Dale Vince, CEO of Electrocity

Reform’s risky economic experiment

At last they have found it. Or, at least, they think they have. Sir Keir Starmer and Kemi Badenoch have been hunting around for months trying to find Nigel Farage’s Achilles’ heel. While they have been searching, the popularity of the Reform party has soared ahead of that of their own parties. But now, finally, they reckon to have identified the weak spot. In their shared enthusiasm, they both described Reform’s emerging tax plans as ‘fantasy economics’. Starmer gave the bemused workers at a glass factory a seven-minute harangue about it, declaring Reform’s plans a ‘mad experiment’. Badenoch fumed that ‘Jeremy Corbyn’s “magic money tree” is back’ with a Reform

Michael Simmons

Rachel Reeves risks killing off the family business

Changes to how inheritance tax and trusts are treated for non-doms have already put the nation’s finances on shakier ground – something I revealed in a cover story last month. Now, a new report suggests these anti-business Treasury policies may risk killing off Britain’s family firms too. Fresh analysis by the CBI’s economics consultancy, commissioned by Family Business UK, warns that these changes to inheritance tax could jeopardise more than 208,000 full-time jobs over the course of this Parliament. That’s more than the entire construction workforce in London. The report says that as small firms retreat from long-term investment, the wider economic consequences could be severe. The government may have unwittingly damaged

Why is your pension fund so obsessed with net zero?

Legal & General is Britain’s largest asset manager, with over £1 trillion on its books. Every pound it manages should be dedicated to achieving the highest possible returns. This matters a lot: L&G manages over five million pensions in the UK. But in recent years, the asset manager has been particularly concerned with fashionable causes, instead of being entirely focused on making sure your retirement is secure. Individuals already fund net zero schemes via their taxes. They should not be forced to pay an effective additional tax, via lower returns, to fund net zero with their retirement savings That is why I recently attended their AGM. I wanted to learn

Britain’s Gulf trade deal is not the place for virtue signalling

Rachel Reeves announced that a trade deal with the Gulf Co-operation Council (GCC) – in other words, Saudi Arabia and the Gulf states – was imminent last week. It was then leaked that, even though the deal was with unashamed petrostates with no time for net zero and, in some cases, a distinctly doubtful record on rights, the text imposed no legal duties in respect of human rights, modern slavery or the environment. The trade unions and human rights groups are unhappy. The TUC wants any deal to be conditional on workers’ rights protection; the Trade Justice Movement and other earnest humanitarian activists are demanding binding commitments on human rights

Ross Clark

Starmer’s welfare cuts are nothing like ‘Tory austerity’

Keir Starmer has already folded on the winter fuel payment, promising a partial reversal of the policy by reinstating it for pensioners in receipt of pension credit. How much longer before the proposed £4.8 billion cuts to welfare benefits go the same way? This morning, the Health Foundation think tank has issued a pronouncement that will be a red rag to critics of Labour’s welfare cuts: that the effect of Starmer’s reform of disability benefits will be four times as great as changes proposed by the Conservatives before the election and on a similar scale to George Osborne’s benefits cuts of 2015. Those cuts, announced in Osborne’s July budget of

Michael Simmons

Will the economy save the Tories?

This week Dominic Cummings said the Tories may have ‘crossed the event horizon’. He was trying to find a tech bro way of saying the game is up: they’re finished as an electoral force and it’s only Labour, Reform and the Lib Dems still in play. But might the Tories have one last chance? If they do, that chance will come from the economy. Next week the shadow chancellor, Mel Stride, will try to make the case for the Tories being the party of economic responsibility in a keynote speech to the Royal Society for Arts, Manufactures and Commerce. ‘Our country faces significant and increasing challenges both at home and

Michael Simmons

Is this the end of Trump’s tariffs? Don’t count on it

Overnight three federal judges on the United States Court of International Trade ruled that Donald Trump’s worldwide tariffs are unlawful and blocked them from going into effect. A group of businesses had taken the President’s administration to court, successfully arguing that the tariffs announced on ‘Liberation Day’ were beyond the powers of the presidency. The ruling made clear that the US Congress has sole authority on passing legislation affecting cross-border trade. The White House immediately appealed and argued that the court does not have the right to rule on the matter. The effect of the ruling will be to dismantle the entire tariff regime announced on Liberation Day The effect

James Heale

How to do a spending review

21 min listen

Labour’s spending review is expected on the 11th of June, when we will find out which government departments face cuts and which costs have been ringfenced. This can set the tone for politics for months to come as it gives a clue to which priorities matter most – especially in times of fiscal restraint – and which ministers are up, and which are down. But how is a spending review conducted? How does His Majesty’s Treasury balance the negotiations with those competing for its attention? And, following the leaked Angela Rayner memo, do we know which economic arguments are winning out? James Nation, formerly an official at HMT and then in

Michael Simmons

Is the welfare state about to expand?

18 min listen

James Heale and Michael Simmons join Patrick Gibbons to discuss the speculation that Labour could scrap the two-child benefit cap. Is this just red meat for the left of the party or is it a sign that public opinion around welfare has shifted? And, with mixed messages on the economy, can the country afford to scrap it? This comes just a week after Labour’s partial U-turn over the winter fuel allowance so, with pressure also increasing from Reform, is the welfare state about to expand? Produced by Patrick Gibbons.

Michael Simmons

IMF: Britain will need to raise taxes if it wants to keep spending

The International Monetary Fund (IMF) has warned Britain faces ‘difficult fiscal choices’ if it is to meet ever increasing spending pressures. The fund predicted a surge in public spending, driven largely by commitments to welfare, health, and pensions. According to the IMF, these policies will push public spending as a share of GDP up by 8 per cent by 2050. The message is clear: unless revenue is increased – i.e even more tax rises  – the UK will need to confront ‘tough policy decisions’ about the future role of the state and the scale of public services it can afford to deliver. Crucially, the IMF noted that the government’s ability to

Ross Clark

Is Rachel Reeves prepared to raise taxes?

Some of the most infamous words in politics are ‘read my lips, no new taxes’ – uttered by George H.W. Bush as he accepted the nomination as the Republican candidate for the 1988 US presidential election. It helped him win that year but contributed to his downfall in 1992 as he failed to stick to his promise. We can argue how much of Bush’s defeat by Bill Clinton had to do with the broken tax promise and how much was to do with recession, but ‘read my lips, no new taxes’ should certainly have been on Rachel Reeves’s mind in recent months. The tragedy of Starmer’s Labour is that it

Ross Clark

Britain is enjoying another Brexit dividend

Has there ever been a day when Brexit seemed such a good idea? The story of Brexit began to change on ‘Liberation Day’ on 2 April when Donald Trump announced a 10 per cent tariff on imports from the UK and a 20 per cent tariff on those from the EU. No longer was it possible for anyone to argue there were no tangible benefits from leaving the EU: here was one of them staring us in the face. Following that, all proposed tariffs were suspended for 90 days to allow negotiations. Since then, though, the story has changed dramatically – and in Britain’s favour. Thanks to the trade deal

Labour’s spending is out of control

To borrow a phrase that was once famously used about the Pentagon, ‘a billion here, a billion there and pretty soon you are talking real money’. The Labour government has certainly been spending some ‘real money’ this week. If you tot up the total amount it has added to spending over the last five days, it comes to an extraordinary £50 billion. The British state is rapidly losing control of its finances, and it is no surprise the bond markets that will have to finance it all are getting worried.  If the Chancellor Rachel Reeves decides, like many of us, to check her bank balance as the week ends, she

Ross Clark

Only now are Britain’s high streets busier than before Covid

Finally, in a horrible week for Rachel Reeves which has seen inflation surge, the public finances take a dive and her authority undermined by Angela Rayner’s memo and the Prime Minister’s U-turn on the winter fuel payment, a glimmer of good news. Retail sales rose by 1.2 per cent in April. The Office for National Statistics (ONS) did, however, revise down March’s figure from 0.4 per cent growth to 0.1 per cent. The quarterly figures, which are more reliable, show that sales volumes were up 1.8 per cent between February and April. There is now a clear trend. Retail sales volumes bottomed out in December 2023 and have been generally

Will Wall Street jitters stop Trump’s budget bill?

Donald Trump has already caved in on tariffs, pausing the ‘retaliatory levies’ he announced on ‘Liberation Day’ at the beginning of April. Now the President is under pressure from the markets on spending. As his ‘Big, Beautiful Bill’ on the budget goes through Congress, investors are panicking over the mix of spending and tax cuts, with bond yields spiking sharply upwards and equities falling. President Trump will now have to decide whether to yield to Wall Street again – or tough out a potential crash.  The US remains the biggest economy in the world, so investors cannot abandon it completely The post-tariff recovery on Wall Street came to a juddering

Ross Clark

Is Britain heading for bankruptcy?

We can thank Rachel Reeves for one thing: setting up a real-world experiment to show the Laffer curve in action. April’s figures for the public finances, like yesterday’s figures for inflation, are truly dreadful. April should have been a bumper month for tax receipts, being the month that the rise in Employers’ National Insurance Contributions (NICs) came into effect. Instead, borrowing surged to £20.2 billion in a single month. It took borrowing for the year 2024/25 to £148.3 billion, a smidgeon less that the Office for National Statistics (ONS) estimated last month but £11 billion higher than the Office for Budget Responsibility (OBR) had forecast. Government receipts in April did

Ross Clark

Thank God Angela Rayner isn’t Chancellor

Rachel Reeves may have killed off growth with her raid on employers’ National Insurance contributions, but today comes a reminder that she is nevertheless the relatively mild face of the Starmer government. We can at least be thankful that Angela Rayner is not Chancellor. Labour’s deputy leader has written a memo to Reeves suggesting a number of taxes she would like to see increased, and which she believes – somewhat hopefully – would obviate the need for spending cuts at the next Budget. There are cabinet ministers who are even more hostile to the idea of low taxes than Reeves herself is She wants inheritance tax relief on Alternative Investment

Ross Clark

Rachel Reeves is to blame for the 3.5% inflation spike

There is no positive spin to be put on this morning’s inflation figures, which show the Consumer Prices Index (CPI) rising from 2.6 per cent to 3.5 per cent in a single month. If you want to do the trick of stripping out energy and food prices to arrive at so-called ‘core’ inflation (how you can have a cost of living index which excludes two of the biggest costs faced by households defeats me) the picture is even worse – core inflation is even higher, at 4.5 per cent. The grim inflation figures are a sign that you cannot get something for nothing If you want to use the government’s

James Heale

What has reaction been to the UK-EU deal?

18 min listen

Fallout continues from yesterday’s summit and the announcement of a deal between the UK and EU – or is it fair to call it ‘fallout’ as, despite criticism over the deal from Nigel Farage and Kemi Badenoch, has the public got Brexit fatigue?  James Heale and Michael Simmons join Patrick Gibbons to talk about the reaction to the deal. Fisheries has taken up most discussion but Michael points out a lesser talked about commitment to energy policy. And, with the government keen to talk about it in tandem with recent deals with India and the US – and Gulf states soon, according to Rachel Reeves this morning – what’s the

Ross Clark

Miliband’s wind farms won’t ease Britain’s sky-high energy prices

Rachel Reeves is perhaps not a great fan of Donald Trump, but she should be grateful to him nonetheless, and Ed Miliband even more so. The trade war sparked by Trump’s ‘Liberation Day’ tariffs is about to lower energy prices for UK consumers. According to a forecast by consultants Cornwall Insight, Ofgem’s price cap will fall in July by 7 per cent – to a level at which the average home with a dual gas and electricity bill will be paying £1,720 a year. It will reverse the uplift in the price cap in April and moderate the rise in the Consumer Prices Index (CPI), giving Reeves a bit of