Labour will not bail out bankrupt councils, Rachel Reeves says
Labour will not bail out bankrupt councils, the shadow chancellor has said.
“I’m not going to be able to fix all the problems straightaway,” Rachel Reeves said during an interview on Sky News’ Sunday Morning With Trevor Phillips.
Her comments follow Birmingham City Council effectively declaring bankruptcy after being hit with a £760m bill to settle equal pay claims.
In response, the council approved plans to hike council tax by 21% over the next two years, as well as £300m in cuts over the same period.
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Asked if she would bail out the councils, allow them to raise taxes or tell them to sink or swim, Ms Reeves said: “I’m under no illusions about the scale of the challenge that I will inherit if I become chancellor later this year and I need to be honest with people.”
She added: “My focus is on reforming the planning system to get Britain building again…
“If we do those things, we will bring in the tax revenue and we will be able to invest in public services again. There’s no shortcuts. That is the way.”
During the Sky News interview, Ms Reeves also said scrapping the non-dom tax status is “an utter humiliation for this government”.
“The last budget of this parliament – they’ve had 14 years and they use this moment to close a non-dom tax loophole that everyone has been aware of for years,” she added.
Shadow chancellor Rachel Reeves and Labour leader Sir Keir Starmer. Pic: PA
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Other councils have effectively declared bankruptcy
Several other councils have effectively declared bankruptcy, with Hackney Council issuing a section 114 notice in 2000 and Northamptonshire County Council following suit in 2018.
Croydon Council issued its third section 114 notice in two years in November 2022. Thurrock in Essex made the same move in December 2022 after it got into difficulties over borrowing large sums to invest in solar energy.
Woking issued a section 114 in June 2023 due to what it said was “an extremely serious financial shortfall owing to its historic investment strategy that has resulted in unaffordable borrowing, inadequate steps to repay that borrowing and high values of irrecoverable loans”.
Politics
Starmer needs to publicly say Trump is wrong and give more reassurance over tariffs, Harriet Harman urges
Sir Keir Starmer needs to reassure the public more over tariffs – and tell them Donald Trump is wrong, Harriet Harman has said.
Speaking to Beth Rigby on Sky News’ Electoral Dysfunction podcast, the Labour peer said ministers were avoiding the “elephant in the room, which is that Trump is wrong on this, we don’t agree with him”.
The US president placed 10% tariffs on all UK goods exported to the US, and while other countries were much worse hit, the FTSE 100 fell by about 1,000 after Mr Trump’s “liberation day” announcement last week.
It then kicked off its best day in five years on Thursday after Mr Trump decided to defer the worst of his tariffs for 90 days. Financial markets around the world reacted similarly.
Baroness Harman said there was no need for “gratuitous insults” but that the prime minister needed to “own the narrative” because there is “a danger” if the leader of the country is not saying what is actually happening.
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PM reacts to tariffs at liaison committee
A minister under Tony Blair and Gordon Brown, Baroness Harman said that when the US put steel tariffs on imported steel in 2002, Mr Blair “did say ‘this is unacceptable, this is wrong, it’s unjustified, it is breaching the World Trade Organisation rules'”.
“He was able to say ‘we do not believe this is how you should be within the world organisation and Bush has got it wrong’,” she added
“I think it feels as if there’s a kind of restricted vocabulary amongst ministers at the moment where they are speaking in code.”
The Labour peer said she also thought Sir Keir should be “being more positive and giving reassurance”.
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Sir Keir Starmer and Donald Trump at the White House in February. Pic: AP
She acknowledged there was “a lot of criticism” in the first six months of Labour’s tenure and the government “didn’t help the economy by rather talking it down”.
There is a danger of being “too pessimistic”, she said, and Sir Keir needs to be “realistic”.
“But I think that giving people reassurances – we’re not going to panic, we’re not going to make mistakes by knee-jerk retaliation,” she said.
“I think the story needs to be told to the country that this is a really difficult problem and Trump has caused it and he is wrong to do this, but we will be okay with this government.
“And I think he’s entitled to say that, and I think people will want to hear that.”
Crypto-critical US Senator Elizabeth Warren has led six Senate Democrats in urging the Department of Justice to reverse its decision to terminate its crypto investigations and prosecutions division.
In an April 10 letter to Deputy Attorney General Todd Blanche, the Senators said the decision to disband the department’s National Cryptocurrency Enforcement Team was a “grave mistake” that would support “sanctions evasion, drug trafficking, scams, and child sexual exploitation.”
Senators Richard Durbin, Mazie Hirono, Sheldon Whitehouse, Christopher Coons and Richard Blumenthal signed the letter in addition to Warren.
On April 7, Blanche shuttered the DOJ’s crypto enforcement team, saying in a memo that “The Department of Justice is not a digital assets regulator.”
The senators claim that the decision gave a “free pass to cryptocurrency money launderers” and claimed that crypto mixing services — used to obfuscate blockchain transactions — are “go-to tools for cybercriminals.”
“It makes no sense for DOJ to announce a hands-off approach to tools that are being used to support such terrible crimes,” the letter said.
An excerpt of Democrat’s letter to the DOJ. Source: US Senate Committee on Banking, Housing, and Urban Affairs
The senators also questioned why the Justice Department had decided not to prosecute a “host of crimes involving digital assets, including violations of the Bank Secrecy Act.”
They claimed that this creates a “systemic vulnerability in the digital assets sector,” which “drug traffickers, terrorists, fraudsters, and adversaries” will exploit on a large scale.
The lawmakers requested a staff-level briefing no later than May 1, providing “detailed information on the rationale behind these decisions.”
Targeting Trump family crypto endeavors
The letter also took a swipe at the Trump family’s crypto projects, suggesting potential conflicts of interest.
Related: SafeMoon boss cites DOJ’s nixed crypto unit in latest bid to toss suit
A press release accompanying the letter stated that the senators are raising concerns about the “potential connections” between the DOJ’s actions and the crypto ventures of President Donald Trump and his family.
The Trumps have an interest in and have backed the crypto platform World Liberty Financial along with its token. The platform is also planning to launch a stablecoin while President Trump’s sons, Eric Trump and Donald Trump Jr., are working to launch a crypto-mining company called American Bitcoin.
“Your decisions give rise to concerns that President Trump’s interest in selling his cryptocurrency may be the reason for easing law enforcement scrutiny,” the Democrats stated.
In a memo announcing the crypto enforcement team’s disbandment, Blanche accused the Biden administration of using the Justice Department to “pursue a reckless strategy of regulation by prosecution.”
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New York Attorney General Letitia James has sent a letter to US congressional leaders urging “common sense” federal crypto regulations and to keep digital assets out of US pensions.
“I am urging Congress to pass legislation that would strengthen federal regulations on the cryptocurrency industry to protect investors, strengthen financial markets, and stop fraud,” James said in a 14-page letter shared on April 10, outlining six major risks if the sector remains unregulated.
She said that without appropriate safeguards, the “unchecked proliferation of digital assets” undermines US dollar dominance, weakens national security due to criminal activity, and “undermines the stability of financial markets.”
Unregulated crypto also subjects investors to “price manipulation and rigged markets,” facilitates fraud that “drains billions of dollars from hardworking Americans, and extracts assets and investments from the American economy,” she said.
An excerpt of James’ letter to Congress. Source: Office of the New York State Attorney General
James made a number of recommendations and pushed Congress for legislation that would require stablecoin issuers to have a US presence and regulatory oversight and mandate backing stablecoins with US dollars or treasuries.
She also wants regulations that require platforms to work only with anti-money laundering-compliant entities, establish registration requirements for issuers and intermediaries, protect against conflicts of interest and promote price transparency and require fraud prevention measures.
No crypto assets in pension funds
The New York’s top lawyer also aired her concerns about including crypto in pension funds.
“Digital assets are uniquely unsuitable for retirement savings due to their high volatility,” she said, claiming that they have no value.
“The underlying value of cryptocurrency is unpredictable and not determined by true price discovery because they have no intrinsic value on which their prices are based.”
James also urged against retirement funds investing in crypto-tracking exchange-traded funds, stating that “unlike traditional exchange-traded funds backed by stocks and bonds, cryptocurrency held to back cryptocurrency ETFs are at risk of permanent theft.”
Related: US lawmaker will reintroduce crypto retirement bill to help Trump agenda
“As Congress takes the mantle to propose legislation governing the cryptocurrency industry, we hope it also takes action to mitigate the risks posed by the industry to America’s national security, financial stability, and citizens,” James said.
The call for regulation follows the US Department of Justice’s reported dismantling of its federal criminal cryptocurrency fraud enforcement division.
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