Treasury tells Michael Gove not to expect lots of new cash for levelling up
Michael Gove’s new levelling up department is being warned not to expect a large injection of new cash in the spending review hours after Boris Johnson called levelling up “our fundamental project”, Sky News understands.
Mr Gove‘s department, which covers housing, the Union, local government and elections, will be expected to negotiate its three-year budget on the basis of the bid put together by Robert Jenrick, who was sacked on Wednesday.
Although there is some scope for changes, Sky News has learnt the Treasury is playing down the ability of incoming cabinet ministers to radically rewrite their departmental spending bids or ask for dramatically more.
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One Whitehall source told Sky News that Mr Gove should therefore not be expecting an above average settlement.
A leading Tory MP, Jack Berry, said that the Treasury needed a new approach to levelling up or the Tories risk losing voters in the North.
Sky News has learned that the Treasury asked cabinet ministers to submit bids for the spending review at the start of the week, hours before the reshuffle was due to begin.
Now they are telling all departments they are still expecting to negotiate in some cases on the basis of bids submitted by cabinet ministers who lost their jobs or changed roles – which include Dominic Raab from the Foreign Office, Robert Buckland who has gone from Justice and Mr Jenrick from the Ministry of Housing.
This has caused surprise in parts of Whitehall, who point out there is a long way to go until the October 26 review and the arrival of a new Chief Secretary to the Treasury, Simon Clark, may change calculations.
Mr Gove may also benefit from machinery of government changes, such as the possible move of the Union unit to Mr Gove’s new ministry, which means Mr Jenrick’s budget submission cannot be adopted completely like for like.
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Having only been in place 48 hours, it is thought to be too early for Mr Gove to have decided what his budget needs and priorities will be.
This morning the prime minister used the first post-reshuffle cabinet meeting to emphasise the importance of levelling up.
He said: “By cutting crime, by making our streets safer across the country, by improving the quality of people’s lives, putting in fibre optic gigabit broadband sprouting through everybody’s homes, by tackling the skills deficit across our country, by giving people opportunity across the whole of the UK… combined with local leadership – we are going to fulfil our fundamental project of uniting and levelling up the entire country… because that is what our mission is.”
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Departments are already facing a squeeze.
Overall departmental spending will rise 4% a year in real terms (which is a 6% rise in cash terms before accounting for inflation) but a large share of this will be taken up by the Health and Social Care spending meaning other departments will get less.
Whitehall was braced for a tricky settlement as Rishi Sunak attempts to reclaim the mantle of fiscal discipline for the Conservative party after spending hundreds of billions on the pandemic.
Jake Berry, chairman of the Northern Research Group of Tory MPs who want greater commitment to levelling up, told Sky News: “I think what we’re learning is that the Treasury is yet to be convinced that levelling up is a government priority.
“Levelling up is about devolving power away from London, that tends not to be an agenda that the Treasury backs.”
Asked why there is resistance, he said: “They regard it as expensive.
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“Many of these projects in the North don’t stack up on traditional value for money spending.
“It’s just for that exact reason these communities need investment.
“The Treasury doesn’t need to so much tweak the Green Book.
“As they’ve done over the last few years – they need to rip it up, throw it in the shredder, and then chuck the waste away.
“They need a whole new approach.
“In all fairness to Mr Gove he has a track record of delivering… he has a track record of taking on what he’d call ‘the blob’ – and in this case the Treasury is the blob.”
The nine largest US banks restricted financial services to politically contentious industries, including cryptocurrency, between 2020 and 2023, according to the preliminary findings of the Office of the Comptroller of the Currency (OCC).
The banking regulator said on Wednesday that its early findings show that major banks “made inappropriate distinctions among customers in the provision of financial services on the basis of their lawful business activities” across the three-year period.
The banks either implemented policies restricting access to banking or required escalated reviews and approvals before giving financial services to certain customers, the OCC said, without giving specific details.
The OCC initiated its review after President Donald Trump signed an executive order in August, directing a review of whether banks had debanked or discriminated against individuals based on their political or religious beliefs.
Crypto issuers and exchanges caught in restrictions
The OCC’s report found that in addition to crypto, the sectors that faced banking restrictions included oil and gas exploration, coal mining, firearms, private prisons, tobacco and e-cigarette manufacturers and adult entertainment.
Banks’ actions toward crypto included restrictions on “issuers, exchanges, or administrators, often attributed to financial crime considerations,” the OCC said.
“It is unfortunate that the nation’s largest banks thought these harmful debanking policies were an appropriate use of their government-granted charter and market power,” said Comptroller of the Currency Jonathan Gould.
“While many of these policies were undertaken in plain sight and even announced publicly, certain banks have continued to insist that they did not engage in debanking,” he added.
The OCC examined JPMorgan Chase, Bank of America, Citibank, Wells Fargo, US Bank, Capital One, PNC Bank, TD Bank and BMO Bank, the largest national banks it regulates.
The OCC reported that it is continuing its investigation and could refer its findings to the Justice Department.
OCC debanking report leaves “much to be desired”
Nick Anthony, a policy analyst at libertarian think tank the Cato Institute, said in an emailed statement to Cointelegraph that the OCC’s report “leaves much to be desired” and didn’t mention “the most well-known causes of debanking.”
“The report criticizes banks for severing ties with controversial clients, but it fails to mention that regulators explicitly assess banks on their reputation,” he said.
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“Making matters worse, the report appears to blame banks for cutting ties with cryptocurrency companies, yet makes no mention of the fact that the [Federal Deposit Insurance Corporation] explicitly told banks to stay away from these companies,” Anthony added.
Republicans on the House Finance Committee reported earlier this month that the FDIC’s so-called “pause letters” it sent to banks under the Biden administration helped to spur “the debanking of the digital asset ecosystem.”
Caitlin Long, the founder and CEO of the crypto-focused Custodia Bank, said the “worst culprits” of crypto-related debanking under the Biden administration were the FDIC and Federal Reserve, “not OCC.”
“In OCC’s defense, this report covers large banks only. Crushing crypto wasn’t a supervisory priority for large banks like it was for small [and] mid-sized banks,” she added.
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Politics
Live music venues warn of ‘devastating consequences’ of budget tax changes in letter to Sir Keir Starmer
Tax changes announced in the budget could have “devastating, unintended consequences” on live music venues, including widespread closures and job losses, trade bodies have warned.
The bodies, representing nearly 1,000 live music venues, including grassroots sites as well as arenas such as the OVO Wembley Arena, The O2, and Co-op Live, are calling for an urgent rethink on the chancellor’s changes to the business rates system.
If not, they warn that hundreds of venues could close, ticket prices could increase, and thousands could lose their jobs across the country.
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Business rates, which are a tax on commercial properties in England and Wales, are calculated through a complex formula of the value of the property, assessed by a government agency every three years. That is then combined with a national “multiplier” set by the Treasury, giving a final cash amount.
The chancellor declared in her budget speech that although she is removing the business rates discount for small hospitality businesses, they would benefit from “permanently lower tax rates”. The burden, she said, would instead be shifted onto large companies with big spaces, such as Amazon.
But both small and large companies have seen the assessed values of their properties shoot up, which more than wipes out any discount on the tax rate for small businesses, and will see the bills of arena spaces increase dramatically.
In the letter, coordinated by Live, the trade bodies write that the effect of Rachel Reeves’s changes are “chilling”, saying: “Hundreds of grassroots music venues will close in the coming years as revaluations drive costs up. This will deprive communities of valuable cultural spaces and limit the UK creative sector’s potential. These venues are where artists like Ed Sheeran began their career.
“Ticket prices for consumers attending arena shows will increase as the dramatic rise in arena’s tax costs will likely trickle through to ticket prices, undermining the government’s own efforts to combat the cost of living crisis. Many of these arenas are seeing 100%+ increases in their business rates liability.
“Smaller arenas in towns and cities across the UK will teeter on the edge of closure, potentially resulting in thousands of jobs losses and hollowing out the cultural spaces that keep places thriving.”
The full letter from trade bodies to the prime minister.
They go on to warn that the government will “undermine its own Industrial Strategy and Creative Sector Plan which committed to reducing barriers to growth for live events”, and will also reduce spending in hotels, bars, restaurants and other high street businesses across the country.
To mitigate the impact of the tax changes, they are calling for an immediate 40% discount on business rates for live venues, in line with film studios, as well as “fundamental reform” to the system used to value commercial properties in the UK, and a “rapid inquiry” into how events spaces are valued.
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Sky’s Jess Sharp explains how the budget could impact your money
In response, a Treasury spokesperson told Sky News: “With Covid support ending and valuations rising, some music venues may face higher costs – so we have stepped in to cap bills with a £4.3bn support package and by keeping corporation tax at 25% – the lowest rate in the G7.
“For the music sector, we are also relaxing temporary admission rules to cut the cost of bringing in equipment for gigs, providing 40% orchestra tax relief for live concerts, and investing up to £10m to support venues and live music.”
The warning from the live music industry comes after small retail, hospitality and leisure businesses warned of the potential for widespread closures due to the changes to the business rates system.
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Sky’s political editor Beth Rigby challenged Prime Minister Sir Keir Starmer on the tax rises in the budget.
Sky News reported after the budget that the increase in business rates over the next three years following vast increases in the assessed values of commercial properties has left small retail, hospitality and leisure businesses questioning whether their businesses will be viable beyond April next year.
Analysis by UK Hospitality, the trade body that represents hospitality businesses, has found that over the next three years, the average pub will pay an extra £12,900 in business rates, even with the transitional arrangements, while an average hotel will see its bill soar by £205,200.
Read more: Hospitality pleads for ‘lifeline’
A Treasury spokesperson said their cap for small businesses will see “a typical independent pub pay around £4,800 less next year than they otherwise would have”.
“This comes on top of cutting licensing costs to help more venues offer pavement drinks and al fresco dining, maintaining our cut to alcohol duty on draught pints, and capping corporation tax,” they added.
The Chancellor Rachel Reeves has acknowledged there were “too many leaks” in the run-up to last month’s budget.
The flow of budget content to news organisations was “very damaging”, Ms Reeves told MPs on the Treasury select committee on Wednesday.
“Leaks are unacceptable. The budget had too much speculation. There were too many leaks, and much of those leaks and speculation were inaccurate, very damaging”, she said.
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The cost of UK government borrowing briefly spiked after news reports that income taxes would not rise as first expected and Labour would not break its manifesto pledge.
An inquiry into the leaks from the Treasury to members of the media is to take place. But James Bowler, the Treasury’s top official, who was also giving evidence to MPs, would not say the results of it would be published.
Committee chair Dame Meg Hillier asked if the group of MPs could see the full inquiry.
“I’d have to engage with the people in the inquiry about the views on that”, replied Mr Bowler, permanent secretary to the Treasury.
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OBR leak ‘a mistake of such gravity’
The entire contents of the budget ended up being released 40 minutes early via independent forecasters, the Office for Budget Responsibility (OBR).
A report into this error found the OBR had uploaded documents containing their calculations of budget numbers to a link on the watchdog’s website it had mistakenly believed was inaccessible to the public.
Tax rises ruled out
The chancellor ruled out future revenue-raising measures, including applying capital gains tax to primary residences and changing the state pension triple.
Committee member and former chair Dame Harriet Baldwin had noted that the chancellor’s previous statement to the MPs when she said she would not overhaul council tax and look at road pricing, turned out to be inaccurate.
During the budget, an electric vehicle charge per mile was introduced, as was an additional council tax for those with properties worth £2m or more.
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