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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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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”.

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Why Boris’s best mate is off to Reform

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Why Boris's best mate is off to Reform

👉Listen to Politics at Sam and Anne’s on your podcast app👈       

Former Conservative chairman and friend of Boris Johnson – Sir Jake Berry – is defecting to Reform UK, causing more problems for Tory leader Kemi Badenoch.

On today’s episode, Sky News’ Sam Coates and Politico’s Anne McElvoy discuss if his defection will divide parts of Reform policy.

Elsewhere, the Anglo-French summit gets under way, with Prime Minister Sir Keir Starmer hoping to announce a migration deal with French President Emmanuel Macron to deter small boat crossings.

Plus, chatter around Whitehall that No10 are considering a pre-summer reshuffle, but will it have any value?

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Australia to test CBDCs, stablecoins in next stage of crypto play

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Australia to test CBDCs, stablecoins in next stage of crypto play

Australia to test CBDCs, stablecoins in next stage of crypto play

The trial is part of Project Acacia, an initiative from the RBA exploring how digital money and tokenization could support financial markets in Australia.

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Starmer and Macron agree need for ‘new deterrent’ to stop small boat crossings

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Starmer and Macron agree need for 'new deterrent' to stop small boat crossings

Sir Keir Starmer and Emmanuel Macron have agreed the need for a “new deterrent” to deter small boats crossings in the Channel, Downing Street has said.

The prime minister met Mr Macron this afternoon as part of the French president’s state visit to the UK, which began on Tuesday.

High up the agenda for the two leaders is the need to tackle small boat crossings in the Channel, which Mr Macron said yesterday was a “burden” for both the UK and France.

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The small boats crisis is a pressing issue for the prime minister, given that more than 20,000 migrants crossed the English Channel to the UK in the first six months of this year – a rise of almost 50% on the number crossing in 2024.

Sir Keir is hoping he can reach a deal for a one-in one-out return treaty with France, ahead of the UK-France summit on Thursday, which will involve ministerial teams from both nations.

The deal would see those crossing the Channel illegally sent back to France in exchange for Britain taking in any asylum seeker with a family connection in the UK.

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However, it is understood the deal is still in the balance, with some EU countries unhappy about France and the UK agreeing on a bilateral deal.

French newspaper Le Monde reports that up to 50 small boat migrants could be sent back to France each week, starting from August, as part of an agreement between Sir Keir and Mr Macron.

A statement from Downing Street said: “The prime minister met the French President Emmanuel Macron in Downing Street this afternoon.

“They reflected on the state visit of the president so far, agreeing that it had been an important representation of the deep ties between our two countries.

“Moving on to discuss joint working, they shared their desire to deepen our partnership further – from joint leadership in support of Ukraine to strengthening our defence collaboration and increasing bilateral trade and investment.”

It added: “The leaders agreed tackling the threat of irregular migration and small boat crossings is a shared priority that requires shared solutions.

“The prime minister spoke of his government’s toughening of the system in the past year to ensure rules are respected and enforced, including a massive surge in illegal working arrests to end the false promise of jobs that are used to sell spaces on boats.

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“The two leaders agreed on the need to go further and make progress on new and innovative solutions, including a new deterrent to break the business model of these gangs.”

Chris Philp, the shadow home secretary, seized on the statement to criticise Labour for scrapping the Conservatives’ Rwanda plan, which the Tories claim would have sent asylum seekers “entering the UK illegally” to Rwanda.

He said in an online post: “We had a deterrent ready to go, where every single illegal immigrant arriving over the Channel would be sent to Rwanda.

“But Starmer cancelled this before it had a chance to start.

“Now, a year later, he’s realised he made a massive mistake. That’s why numbers have surged and this year so far has been the worst in history for illegal channel crossings.

“Starmer is weak and incompetent and he’s lost control of our borders.”

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