Money

Ross Clark

Bribing motorists to buy electric vehicles is an expensive mistake

At last, the government has found a use for that large pile of surplus money which has been causing it such a headache: it is going to bribe motorists with grants of up to £3,750 to buy an electric car. If that sounds familiar, it is because the previous, Conservative government had a similar scheme, offering grants of up to £4,000 before they were whittled down and withdrawn in 2022. Chucking money at EV-buyers is going to cause a lot of trouble for very little gain If the government is going to subsidise the purchase of electric cars on the grounds that they are less environmentally-damaging than petrol and diesel

Rachel Reeves’s ‘Big Bang’ is doomed

We probably won’t see the return of shoulder pads, big hair, or yuppies swilling champagne in the bars around Liverpool Street. Even so, the Chancellor Rachel Reeves will promise a return to the go-go spirit of the 1980s in her Mansion House speech this evening, with a pledge of ‘Big Bang’ style deregulation to boost growth and get the financial markets moving again. There is just one catch – and it’s a big one: Reeves is making the wrong reforms, and all Labour’s other policies are destroying confidence. The Chancellor’s shake-up is doomed to fail. There is no point in promising a ‘Big Bang’ for the City while also driving

Michael Simmons

Badenoch is right: the benefits bill could cripple Britain

‘We are becoming a welfare state with an economy attached,’ said Kemi Badenoch in a speech on sickness benefits today. She’s right, though anyone who read the Office for Budget Responsibility’s (OBR) dire report this week knows we’re past becoming: we already are. The figures are staggering. The bill for sickness benefits is heading towards £100 billion a year. Soon, one in every four income tax pounds will go just to cover these payments. Meanwhile, a million young people are doing nothing at all –not in work, not in education, not in training. Badenoch called this not only ‘unaffordable and unjustifiable, but immoral’. Again, she’s right. In a fiery speech hosted

Michael Simmons

Wes Streeting is right to take on the doctors

The public won’t forgive and nor will I, said Health Secretary Wes Streeting of plans by junior doctors to strike over his refusal to cave to demands for 29 per cent pay rises. Speaking to the Times he said: ‘There are no grounds for strike action now. Resident doctors have just received the highest pay award across the entire public sector. The Government can’t afford to offer more and it wouldn’t be fair to other NHS workers either, many of whom are paid less’. He’s completely right.  Just shy of half of the British Medical Association’s (BMA) junior doctors (they’re now called resident doctors) voted for strike action, but because of low turnout it

Michael Simmons

Britain is heading for economic catastrophe

Britain is in trouble. That’s the judgement of the Office for Budget Responsibility (OBR) in their ‘fiscal risks and sustainability’ document released this morning. The language is polite, matter of fact and bureaucratic. But read between the lines, look at the numbers and it paints a damning picture of the risks we face as a country. In the 1950s, the state pension accounted for 2 per cent of GDP. Within 50 years it will cost nearly 8 per cent. This is not something an aging population can afford After a series of economic shocks, the report says, Britain is in a ‘relatively vulnerable position’. Our deficit (nearly 6 per cent of

Britain’s state pension is about to blow

Health Secretary Wes Streeting says that the changes to the Welfare Bill will ‘give people peace of mind’. Perhaps for some, but certainly not economists. Britain’s welfare crisis is staggering – £313 billion a year is spent on disability payments, Universal Credit, winter fuel payments, Motability, child benefit, and, most expensive of them all, the state pension. Currently, the state pension costs  over £150 billion a year, and is engineered to grow at the highest of either inflation, wage growth, or 2.5 per cent. When you factor in our rapidly aging population, the welfare state is quite literally primed to blow. Whitehall is on a collision course of its own

If AstraZeneca quits the London Stock Exchange, it will be a disaster

It was already a bad enough week for the Prime Minister Sir Keir Starmer and the Chancellor Rachel Reeves, what with the collapse of their welfare reforms. But now news has leaked that AstraZeneca’s CEO Sir Pascal Soriot has reportedly discussed moving its listing from London to New York. There is nothing official yet, and no decision has been made. But for the boss of Britain’s most valuable listed company to even contemplate upping sticks spells trouble for the UK economy. It is not hard to blame him. Over-regulation has turned the London market into a relative backwater. Meanwhile, Wall Street has been booming. The business would be more highly

Simon Cook

Labour MPs need a reality check on Britain’s ballooning benefits bill

‘No one votes Labour to cut the welfare state. People vote Labour to grow the welfare state. That’s the role of the party.’ That’s what John McTernan, Labour strategist, said on Coffee House Shots last week. He’s absolutely correct, of course. But the ballooning cost of the benefits bill means that Labour now faces an uncomfortable decision, for which many of its MPs seem ill prepared. The total cost for Personal Independence Payments (PIP) alone is expected to reach £35 billion by the end of this decade, up from £16 billion in 2019-20 and £26.5 billion in 2024-25. The total benefits bill, including the state pension, universal credit and other

Northern Ireland is still paying a heavy price for Brexit

This week heralds the arrival in Northern Ireland of yet more overregulation, bureaucratic overreach, and political incompetence. No, Keir Starmer isn’t making an unannounced visit to Belfast. From this month, many thousands of food products imported from Great Britain to Northern Ireland will have to display warnings on their packaging highlighting that these goods are not to be brought into the European Union. The reason why is essentially a bungled Brexit deal for which thousands of businesses – and millions of customers – will pay the price. It is yet another reason for British firms to stop doing business in Northern Ireland The Windsor Framework – the result of the UK’s

Michael Simmons

Britain is racing towards a fresh cost-of-living crisis

The poorest Brits now owe £6.6 billion in unpaid council tax – a record high and up some 85 per cent since before the pandemic. That’s according to data released this morning by the Ministry of Housing, Communities and Local Government, which suggests Britain is plunging back into a cost-of-living crisis. What’s more, a report also out today by the Centre for Social Justice (CSJ) finds that between 2022 and 2024, some 400,000 more households slipped into arrears, taking the total number of people in debt to their local council to 1.8 million. The CSJ’s report also finds that 97 per cent of those in arrears have at least one

Your pension fund is right to flee Labour’s Britain

One of Chancellor Rachel Reeves’s few big ideas for boosting growth was to persuade pension funds to invest more of their assets in Britain. But hold on. Today, we learned that Scottish Widows, one of the biggest funds, is dramatically reducing its exposure to this country – and it is quite right to do so. Over the last decade, the S&P 500 has delivered a total return of 235 per cent, compared with just 92 per cent for the FTSE 100 The fund managers at the Lloyds-owned Scottish Widows, which controls £72 billion of workplace pensions assets, clearly didn’t get the memo about how this was the moment to put

Michael Simmons

Why is the ONS saying inflation has gone down?

The rate of inflation remained flat at 3.4 per cent in May – still well above the Bank of England’s 2 per cent target. Bizarrely, the Office for National Statistics (ONS), in their figures released this morning, claims this is down from 3.5 per cent the month before, even though just a couple of weeks ago they admitted that figure was overstated due to an error. Because of a policy not to revise inflation figures, that error lives on – leading them to announce the fiction that inflation has fallen. The reality is it has not. The result of stubbornly sticking to this no-revisions policy is a slew of misreporting

Michael Simmons

Rachel Reeves’s non-dom crackdown has truly backfired

Rachel Reeves may finally have seen sense. A report in this morning’s Financial Times suggests she is ‘exploring’ performing a 180 on the changes to inheritance tax rules which meant non doms would have to pay the death tax on their global assets – even on wealth earned before they came to the UK. As I explained in our magazine cover piece last month, the fact that these changes – which came into force in April – would apply retroactively is what really sent non-doms over the edge and led them to flee the country in large numbers, taking their wealth and not insignificant tax revenues with them. Rachel Reeves has to deal

Michael Simmons

The good and bad news about the UK-US trade deal

Donald Trump and Keir Starmer’s transatlantic trade deal has finally been signed. Before making an early exit from the G7, the US president approved an executive order giving legal effect to parts of the US-UK deal. The outline of the agreement was settled weeks earlier during a conference call, with Trump in the White House and Peter Mandelson, the UK ambassador in Washington, standing, slightly creepily, over his shoulder, as Starmer dialled in from 4,000 miles away. If the deal is to progress further, an almighty row could be brewing The delay in any further announcement left conservatives, and businesses, wondering whether the deal outline a month ago was turning

Motability won’t give up its lucrative business without a fight

Motability, the scheme set up to provide vehicles, scooters and powered wheelchairs to disabled people, has become something of a monster. By the end of 2024, Motability supported a staggering 815,000 vehicles, up by 200,000 in the last two years alone. It is clear that the scheme has extended way beyond its original purpose and is in dire need of reform. But Motability is determined not to give up its lucrative business model without a fight. Only five per cent of Motability cars are adapted for those with physical disabilities Andrew Miller, the scheme’s chief executive, has hit back at criticism of Motability. ‘We’ve been a business all along. Any sense

Michael Simmons

Reeves needs to tell the public that they’re wrong

Writing about Britain’s spending plans has started to feel a bit like swimming through treacle. It’s not that there aren’t lots of interesting observations to make about Wednesday’s £300 billion spending announcement. Such as the fact that the NHS sucks up the bulk of the resource spending with a 3 per cent rise in real terms, while every other department combined only grows by 0.2 per cent. Or that the health service will soon take up nearly half of all day-to-day government spending on services. Or that only 13 per cent of Rachel Reeves’s capital spending increase is classed as ‘growth-focused’. It’s hard to pay attention to this because of the sense

Michael Simmons

Britain’s GDP decline is bad news for Rachel Reeves’s spending plans

Rachel Reeves delivered her spending plans for the next three years less than 24 hours ago, but already the credibility of the Chancellor’s plans are in doubt. GDP fell by 0.3 per cent in April, according to figures released this morning by the Office for National Statistics (ONS). It spells the end of a run of more positive economic readings that Reeves had hoped would buy her room to manoeuvre in the run up to the autumn budget – when she will have to explain to the Office for Budget Responsibility, and the nation, how her spending review sums add up. The economy contracted across both services and manufacturing with

Ross Clark

Rachel Reeves’s spending review is a recipe for trouble

Rachel Reeves will apparently tell us today that she has chosen stability over chaos. It is one of the Chancellor’s standard lines, but it is very much beyond her control. Bond markets will have the ultimate say. They didn’t much like her Budget in October – indeed, long-term borrowing costs are higher now than they were in the wake of Kwasi Kwarteng’s mini Budget in September – and they might not like the spending review much more. That is a potent mixture for economic gloom – it is the economy’s mental health we should be worried about most The underlying synopsis behind today’s fiscal event is that the government is

Ross Clark

Sizewell C won’t save Ed Miliband

Ed Miliband has suddenly realised that you cannot run an electricity grid on intermittent renewables alone. The Energy Secretary’s announcement this morning of £14.2 billion worth of funding for a new plant at Sizewell C, together with cash for Small Nuclear Reactors (SMRs) and continued research into the holy grail of nuclear fusion, is an admission that energy policy so far has been far too concentrated on wind and solar. Ed Miliband has promised that his green energy policy will reduce our bills by £300 a year by the end of this Parliament But nothing that Miliband has unveiled does anything to help the energy and climate secretary achieve his

Michael Simmons

Labour’s National Insurance hike is starting to bite

The unemployment rate has risen to 4.6 per cent, the Office for National Statistics has revealed. This morning’s figures mark the first proper reading of the jobs market since April, when the minimum wage was hiked and the £25 billion raid on employer National Insurance started. It’s not just the joblessness rate rising: the number of payrolled employees fell by 55,000 between March and April, and by 115,000 compared to a year earlier. A flash estimate for May (which will be revised) shows an even starker picture: down 109,000 in a single month and 274,000 year-on-year. In other words, a city the size of Southampton has effectively been wiped off