Politics

A March budget has been delivered – but still not a spring in the Tories’ step

Published

9 months ago

March 7, 2024

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If you were looking for pre-election fireworks in this budget, look away now.

There was neither soaring rhetoric to win the hearts and minds of the nation nor eye-catching policies to back it up.

Jeremy Hunt was true to himself, choosing fiscal responsibility over political excitement.

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The shadow of Liz Truss’s mini-budget still looms large. Mr Hunt was taking no risks with the public finances in a budget that was far smaller in tax cuts and policy decisions than the autumn statement.

Normally, when insiders tell you that the chancellor is limited in what he can do – in the context of the economic backdrop and that this budget will be “a proof point” that the prime minister is delivering on his plan, rather than a “poll gamechanger”, a few months from an election – you take it with a pinch of salt.

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I wasn’t the only one, with senior Tories telling me they were still expecting more than the two percentage point cut to national insurance on the day.

When the chancellor didn’t offer up more, the verdict from some senior Tories was swift: “Terrible,” texted one former cabinet minister, “this won’t shift the needle”. Another told me that this budget would make “zero difference” and MPs would be unhappy: “They were hoping for more.”

What this does tell us is that when Rishi Sunak said his “working assumption” was for an autumn election, he meant it: this was not a budget trying to set the political weather, rather it was aimed at keeping a steady ship.

“Safety first,” is how one former Treasury insider described it, pointing out that the chancellor could have been more aggressive on tax cuts if he had decided to cut back on future spending commitments.

Ahead of the budget there had been lots of chatter that the chancellor was going to shave 0.25 percentage points off departmental spending plans after 2025 to raise another £5bn or so for tax cuts (this could have gone towards another 1 percentage point cut in national insurance) but decided not to do it.

Perhaps he was mindful of polling suggesting the public doesn’t much like the idea of cutting spending on public services, but his decision not to set this trap for an incoming Labour government has left some Tories pulling out their hair.

One told me: “He could have created a wedge issue by cutting spending assumptions, by a quarter point or even a half point to then use on tax cuts.

“Labour would then have to back tax cuts or spending cuts, and perhaps we could have then pressed them on higher tax question.

“But we’ve done just enough on tax cuts for Labour to accept it. They didn’t create a wedge and MPs were looking for that from an electoral perspective.

“Maybe he had one eye on the Kwateng mini-budget, so didn’t want to take on more risk when it came to the fiscal forecasts.”

Politically too, the tax-cutting chancellor is still facing the double whammy of the overall tax burden of GDP still going up and heading for a 70-year-high by the end of the forecast period (2028-9), while the Institute of Fiscal Studies noted in its budget wash-up that average households would still be worse off going into the next general election than they were in 2019.

Safety first when you are 20 points ahead (Sir Keir Starmer) makes some sense, you don’t want to squander your lead.

But when you’re 20 points behind, your party are clamouring for you to go all out and try to close the gap.

The chancellor and his prime minister have clearly decided that the route to better polling is steady as she goes: a January national insurance cut, followed by another cut in April when energy bills should be coming down too.

The interest rates could be falling, alongside inflation in the summer.

The hope will be then that the feel-good factor is on the up, and the financial forecasts are improving to perhaps give the government the option of more tax cuts.

But right now, this budget doesn’t look like a moment for renewal. A March budget delivered, but still not a spring in the Tories’ step.

Politics

Coinbase CEO to meet with Trump to discuss personnel appointments — WSJ

Published

3 hours ago

November 18, 2024

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Coinbase CEO to meet with Trump to discuss personnel appointments — WSJ

Before US Election Day, Brian Armstrong said Coinbase was “prepared to work” with either a Kamala Harris or Donald Trump administration.

Politics

Row over how many farms will be affected by inheritance tax policy – as PM doubles down ahead of farmers protest

Published

4 hours ago

November 18, 2024

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Row over how many farms will be affected by inheritance tax policy - as PM doubles down ahead of farmers protest

Sir Keir Starmer has insisted the “vast majority of farmers” will not be affected by changes to Inheritance Tax (IHT) ahead of a protest outside parliament on Tuesday.

It follows Chancellor Rachel Reeves announcing a 20% inheritance tax that will apply to farms worth more than £1m from April 2026, where they were previously exempt.

But the prime minister looked to quell fears as he resisted calls to change course.

Speaking from the G20 summit in Brazil, he said: “If you take a typical case of a couple wanting to pass a family farm down to one of their children, which would be a very typical example, with all of the thresholds in place, that’s £3m before any inheritance tax is paid.”

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The comments come as thousands of farmers, including celebrity farmer Jeremy Clarkson, are due to descend on Whitehall on Tuesday to protest the change.

And 1,800 more will take part in a “mass lobby” where members of the National Farmers’ Union (NFU) will meet their MPs in parliament to urge them to ask Ms Reeves to reconsider the policy.

Speaking to broadcasters, Sir Keir insisted the government is supportive of farmers, pointing to a £5bn investment announced for them in the budget.

He said: “I’m confident that the vast majority of farms and farmers will not be affected at all by that aspect of the budget.

“They will be affected by the £5bn that we’re putting into farming. And I’m very happy to work with farmers on that.”

Sir Keir’s spokesman made a similar argument earlier on Monday, saying the government expects 73% of farms to not be affected by the change.

Environment, Farming and Rural Affairs Secretary Steve Reed said only about 500 out of the UK’s 209,000 farms would be affected, according to Treasury calculations.

However, that number has been questioned by several farming groups and the Conservatives.

Government figures ‘misleading’

The NFU said the real number is about two-thirds, with its president Tom Bradshaw calling the government’s figures “misleading” and accusing it of not understanding the sector.

The Country Land and Business Association (CLA) said the policy could affect 70,000 farms.

Conservative shadow farming minister Robbie Moore accused the government last week of “regurgitating” figures that represent “past claimants of agricultural property relief, not combined with business property relief” because he said the Treasury does not have that data.

Agricultural property relief (APR) currently provides farmers 100% relief from paying inheritance tax on agricultural land or pasture used for rearing livestock or fish, and can include woodland and buildings, such as farmhouses, if they are necessary for that land to function.

Farmers can also claim business property relief (BPR), providing 50% or 100% relief on assets used by a trading business, which for farmers could include land, buildings, plant or machinery used by the business, farm shops and holiday cottages.

APR and BPR can often apply to the same asset, especially farmed land, but APR should be the priority, however BPR can be claimed in addition if APR does not cover the full value (e.g. if the land has development value above its agricultural value).

Mr Moore said the Department for the Environment, Farming and Rural Affairs (DEFRA) and the Treasury have disagreed on how many farms will be impacted “by as much as 40%” due to the lack of data on farmers using BPR.

Lib Dem MP Tim Farron said last week1,400 farmers in Cumbria, where he is an MP, will be affected and will not be able to afford to pay the tax as many are on less than the minimum wage despite being asset rich.

Politics

Cabinet split over assisted dying as Education Secretary Bridget Phillipson latest to reveal she will vote against bill

Published

4 hours ago

November 18, 2024

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Cabinet split over assisted dying as Education Secretary Bridget Phillipson latest to reveal she will vote against bill

A split is emerging in the cabinet, with Education Secretary Bridget Phillipson revealing she will join several of her colleagues and vote against the bill to legalise assisted dying.

Ms Phillipson told Sky News she will vote against the proposed legislation at the end of this month, which would give terminally ill people with six months to live the option to end their lives.

She voted against assisted dying in 2015 and said: “I haven’t changed my mind.

“I continue to think about this deeply. But my position hasn’t changed since 2015.”

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MPs will be given a free vote on the bill, so they will not be told how to vote by their party.

The topic has seen a split in the cabinet – however, Prime Minister Sir Keir Starmer has yet to reveal how he will vote on 29 November.

Ms Phillipson joins some other big names who have publicly said they are voting against the bill

These include Deputy PM Angela Rayner, Health Secretary Wes Streeting, Justice Secretary Shabana Mahmood and Business Secretary Jonathan Reynolds.

Border security minister Angela Eagle is also voting against the bill.

Senior cabinet members voting in favour of assisted dying include Energy Secretary Ed Miliband, Science Secretary Peter Kyle, Work and Pensions Secretary Liz Kendall, Culture Secretary Lisa Nandy, Northern Ireland Secretary Hilary Benn, Transport Secretary Louise Haigh and Welsh Secretary Jo Stevens.

The split over the issue is said to be causing friction within government, with Sir Keir rebuking the health secretary for repeatedly saying he is against the bill and for ordering officials to review the costs of implementing any changes in the law.

Sky News’ deputy political editor Sam Coates has been told Morgan McSweeney, the PM’s chief of staff, is concerned about the politics of the bill passing.

He is understood to be worried the issue will dominate the agenda next year and, while he is not taking a view on the bill, he can see it taking over the national conversation and distracting from core government priorities like the economy and borders.

Details of the bill were published last week and include people wanting to end their life having to self-administer the medicine.

It would only be allowed for terminally ill people who have been given six months to live.

Two independent doctors would have to confirm a patient is eligible for assisted dying and a High Court judge would have to give their approval before it could go ahead.