Britain will not lower its standards or water down regulation in exchange for a trade deal with the US, the chancellor has confirmed.
Rachel Reeves was speaking ahead of a pivotal meeting with her American counterpart in Washington DC.
In an interview with Sky News, Ms Reeves said she was “confident” that a deal would be reached but said she had red lines on food and car standards, adding that changes to online safety were “non-negotiable for the British government”.
The comments mark the firmest commitment to a slew of rules and regulations that have long been a gripe for the Americans.
Image: Rachel Reeves spoke to Sky’s Gurpreet Narwan
The US administration is pushing for the UK to relax rules on agricultural exports, including hormone-treated beef.
While Britain could lower tariffs on some agricultural products that meet regulations, ministers have been clear that it will not lower its standards.
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However, the government has been less firm with its stance on online safety.
A tech red line
The US tech industry has fiercely opposed Britain’s Online Safety Act, which was introduced in 2023 and requires tech companies to shield children from harmful content online.
In an earlier draft UK-US trade deal, the British government was considering a review of the bill in the hope of swerving US tariffs.
However, the chancellor suggested that this was no longer on the table.
“On food standards, we’ve always been really clear that we’re not going to be watering down standards in the UK and similarly, we’ve just passed the Online Safety Act and the safety, particularly of our children, is non-negotiable for the British government,” she said.
She added that Britain was “not going to water down areas of road safety”, a move that could pave the way for American SUVs that have been engineered to protect passengers but not pedestrians.
While non-tariff barriers will remain intact, it was reported on Tuesday night that the UK could lower its automotive tariff from 10% to 2.5%.
What can Britain offer the Americans if it’s not prepared to lower its standards?
Donald Trump has previously described non-tariff barriers that block US exporters as “cheating”.
Britain does have some scope to bring down tariff rates – and Rachel Reeves suggested that this was her focus – but ours is already a highly open economy, we don’t have huge scope to cut tariff rates.
The real prize for the Americans is in the realm of these non-tariff barriers.
There has been much speculation about what the UK could offer up, but the chancellor on Wednesday gave a comprehensive commitment that she would not dilute standards.
There are many who will breathe a collective sigh of relief – from UK farmers to road safety campaigners and parents of young children.
While the government is sensitive to any potential public backlash, it also has another factor to think about.
When Ms Reeves arrives back home, she will begin preparations for a UK-EU summit in London next month.
The UK’s food and road safety standards are, in many areas, in sync with Europe, and Britain is seeking even deeper integration.
Lowering standards for the Americans would make that deeper alignment with the Europeans impossible.
The chancellor has to decide which market is more valuable to Britain.
The answer is Europe.
Back at home, the chancellor suggested that she was still open to relaxing rules on the City of London, even though global financial markets have endured a period of turmoil, triggered by President Trump’s trade war.
Reforms at home?
In her Mansion House speech last November, the chancellor said post-2008 reforms had “gone too far” and set the course for deregulating the City.
Asked if that was a wise move in light of the recent sharp swings in the financial markets, Ms Reeves said: “I want regulators to regulate not just for risk but also for growth.
“We are making reforms and we have set out new remit letters to our financial services regulators.”
Britain’s borrowing costs hit their highest level in almost 30 years after Mr Trump’s Liberation Day tariffs announcements, a stark reminder that policy decisions in the US have the power to raise UK bond yields and in turn, affect the chancellor’s budget, dent her already small fiscal headroom and derail her plans for tax and spend.
However, the chancellor said she would not consider adapting her fiscal rules, which include a promise to cover day-to-day spending with tax receipts, even if it gives her more room to manoeuvre in the face of volatility.
“Fiscal rules are non-negotiable for a simple reason, that Britain must offer under this government fiscal and financial stability, which is so important in a world of global uncertainty,” she said.
The US housing regulator’s decision to recognize crypto assets in mortgage applications marks a historic shift from exclusion to integration, opening new pathways to homeownership.
“A wave of new cafes, bars, music venues and outdoor dining” could come to the UK – as the government unveils plans to overhaul planning rules and “breathe new life into the high street”.
Under the proposals, ministers also want to reform licensing rules to make it easier for disused shops to be converted into hospitality venues.
In a statement, Chancellor Rachel Reeves said she planned to scrap “clunky, outdated rules… to protect pavement pints, al fresco dining and street parties”.
The reforms also aim to prevent existing pubs, clubs, and music venues from suffering noise complaints when new properties hit the market.
Developers who decide to build near those sites will be required to soundproof their buildings.
Image: Reuters file pic
As part of dedicated “hospitality zones”, permission for al fresco dining, street parties and extended opening hours will be fast-tracked.
The government says the reforms aim to modernise outdated planning and licensing rules as part of its Plan for Change, to help small businesses and improve local communities.
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The rough plans will be subject to a “call for evidence” which could further shape policy.
Business Secretary Jonathan Reynolds said the proposals will “put the buzz back into our town centres”.
“Red tape has stood in the way of people’s business ideas for too long. Today we’re slashing those barriers to giving small business owners the freedom to flourish,” he said.
The hospitality industry has broadly welcomed the changes but argued tax reform was also essential.
Kate Nicholls, chairwoman of UKHospitality, described the proposals as “positive and encouraging”.
However, she added: “They can’t on their own offset the immediate and mounting cost pressures facing hospitality businesses which threaten to tax out of existence the businesses and jobs that today’s announcement seeks to support.”
While supporting the reforms, Emma McClarkin, chief executive of the British Beer and Pub Association (BBPA), had a similar message.
“These changes must go hand in hand with meaningful business rates reform, mitigating staggering employment costs, and a cut in beer duty so that pubs can thrive at the heart of the community,” she said.
In July, BBPA estimated that 378 pubs will shut this year across England, Wales and Scotland, compared with 350 closures in 2024, which it said would amount to more than 5,600 direct job losses.
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Pubs closing at a rate of one a day
Bar chain Brewdog announced this week that it would close 10 sites, partly blaming “rising costs, increased regulation, and economic pressures”.
Andrew Griffith MP, shadow business secretary, said: “Though any cutting of red tape for hospitality businesses is welcome, this is pure hypocrisy and inconsistency from Labour.”
He said the government was “crippling the hospitality industry by doubling business rates, imposing a jobs tax and a full-on strangulation of employment red tape”.
A campaign group for a third runway at Heathrow that gets funding from the airport has been distributing “incredibly misleading” information to households in west London, according to opponents of the expansion.
The group, called Back Heathrow, sent leaflets to people living near the airport, claiming expansion could be the route to a “greener” airport and suggesting it would mean only the “cleanest and quietest aircraft” fly there.
It comes as the airport prepares to submit its planning application for a third runway ahead of the 31 July deadline, following the government’s statement of support for the expansion.
Image: A plane lands over houses near Heathrow Airport. Pic: PA
Back Heathrow calls itself a “local campaign group of over 100,000 residents” and does not mention the funding it receives from the airport in the newsletter.
Its website also does not mention the current financial support and says it “initially launched with funding from Heathrow Airport but we have since grown”.
Back Heathrow also told Sky News it had “always been open” about the support it receives from the airport.
At the bottom of every web page, the organisation says: “Back Heathrow is a group of residents, businesses and community groups who have come together to defend the jobs that rely on Heathrow and to campaign for its secure future.”
Heathrow Airport said it had always been clear about funding Back Heathrow, but would not disclose how much it provides.
Image: Parmjit Dhanda in 2009 at the hustings to be Speaker of the House of Commons. Pic: Reuters
Who’s behind Back Heathrow?
The group’s executive director is former Labour minister Parmjit Dhanda, who was MP for Gloucester from 2001 to 2010 and sits on the National Policy Forum – the body responsible for developing Labour policy.
Latest accounts for Back Heathrow show it had five employees, including its two directors, in the financial year ending 30 June 2024. The second director is John Braggins, a former campaign adviser to Tony Blair.
The business had £243,961 in cash, the accounts show.
What are the group saying?
In the newsletter, executive director Mr Dhanda said people ask if Heathrow is sustainable. In answering the question, he appeared to suggest the airport can dictate what types of planes use Heathrow.
“We can build a cleaner, greener and smarter airport – using more sustainable aviation fuel, ensuring only the cleanest and quietest aircraft fly here, reduce stacking in our skies and modernise our airspace to cut emissions in flight,” he wrote.
When asked by Sky News what Back Heathrow meant and what the source for the claim was, the organisation pointed to the airport’s traffic light system of noise and emission measurements for the 50 largest airlines serving Heathrow.
“The scheme helps to see what areas certain airlines are excelling in and where improvements can be made,” a spokesperson said.
But those “cleaner and greener” claims were dismissed as “myths” by one campaigner.
Image: Back Heathrow’s spring 2025 newsletter
Finlay Asher is an aerospace engineer and co-founder of Safe Landing, a group of aviation workers and enthusiasts seeking climate improvements in the industry.
He said the emissions savings from sustainable aviation fuel (SAF) were “highly debatable” – but added that even if they were taken at face value, use of these fuels is “relatively low” and so only provides small emissions reductions.
“Air traffic growth at Heathrow will wipe this out,” he said.
Mr Asher also disputed the claim that only the cleanest and quietest aircraft will fly at Heathrow. “There is no policy in place which prevents older generation aircraft from being operated out of any airport,” he said.
As for reducing “stacking” – where aircraft wait over an airport to land – Mr Asher said if that’s the goal, “adding more aircraft to the sky won’t make this easier”.
Opposition to Back Heathrow’s claims also came from Rob Barnstone, founder of the No Third Runway Coalition, which is funded by five local authorities surrounding Heathrow Airport.
He said that regardless of fuel efficiencies or new quieter engines, having the additional 260,000 flights Heathrow has said will be created with an extra runway – in addition to the airport’s current cap of 480,000 – would create “an awful lot of noise”.
“For all the best will in the world, Heathrow is a very, very, very noisy neighbour… When you’re adding a quarter of a million additional flights, that’s going to create an awful lot of emissions, even if they’re using planes that are ever so slightly less environmentally damaging than previous planes,” Mr Barnstone said.
Green claims
Under the heading of “UK sustainable fuel industry for Heathrow”, Back Heathrow said “advances in electric and hydrogen powered aircraft can ensure we meet our environmental targets”.
Elaborating on this, Back Heathrow told Sky News: “Zero-emission electric and hydrogen aircraft are very much the end goal for civil aviation and countries like Norway have set 2040 as the year that all of their short-haul flights will be by electric planes.”
The statement was called “incredibly misleading” by Dr Alex Chapman, senior economist at the left-leaning think tank New Economics Foundation (NEF).
“There’s just absolutely no confidence that those aircraft are going to have any meaningful impact on emissions and commercial aviation in any reasonable time frame. And, yeah, we can all speculate as to what may not happen in 50 years’ time. But I think the people living around the airport should be given the information about what’s actually realistic.”
Even if the technology were available, the runway may not be ready for it, Dr Chapman said.
“Perhaps more importantly, there’s been no indication so far that the proposed new runway is being built to cater for those types of aircraft, because a runway that caters to electrical, hydrogen powered aircraft would be very different to one that was for conventional fuel, particularly in terms of the fuelling infrastructure around it that would be required: pipes to pipe hydrogen, massive charging power facilities.”
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Heathrow CEO on expansion plans
While work is under way to develop electric aircraft, there are currently no commercial electric flights taking place. The best-case scenario is battery-powered flights that may be suitable for short journeys.
But as a major international airport, more than 40% of Heathrow’s flights are long-haul and medium-haul.
And while airlines such as easyJet have called for government funding to develop hydrogen flying suitable for short-haul flights, there are obstacles to making regular commercial flights a reality.
Providing enough hydrogen for the plane journeys from renewable sources will be challenging, as will transporting the fuel, and reworking airport infrastructure for hydrogen refuelling.
Plans for hydrogen aircraft are at least a decade away, with Airbus saying it wants to get a 100-seat hydrogen plane in the air by 2035 – although Back Heathrow’s estimates for a third runway have flights taking off in 2034.
For now, rising emissions from flying are risking the UK’s climate targets, according to the independent government advisers of the Climate Change Committee, who found flights contribute more greenhouse gas than the entire electricity supply sector.
Image: Back Heathrow’s spring 2025 newsletter
Expanding at ‘full capacity’
On the first page of the newsletter, Back Heathrow says “Heathrow is at full capacity”, but the company told Sky News the airport has been “operating at 98% capacity since 2005”.
Despite its 98% capacity, Heathrow Airport has broken passenger number records every year for the past 14 years – excluding the pandemic years of 2020 to 2023.
Dr Chapman said Heathrow is at capacity regarding the government-imposed flight cap, not at the capacity of the current runway infrastructure.
“So if the government were, for example, to lift that cap on the number of aircraft movements, it’s pretty likely that they could actually fly 10% to 20% more flights out of the existing infrastructure,” he said.
As aeroplanes have expanded to carry more passengers, the airport has welcomed more people, he added.
The airport earlier this month announced plans to increase its capacity by 10 million passengers a year, before a third runway is built, and to raise the charge paid by passengers to fund the investment.
A Heathrow spokesperson said: “Back Heathrow represents tens of thousands of local people who want to make their views known on the importance of Heathrow to their communities and livelihoods today and into the future.
“We have always been clear that, alongside individual residents, local business groups and trade unions, we provide funding for Back Heathrow to provide a voice for local people who historically have not been heard in the debate about expanding Heathrow.”
Speaking for the campaign group, Mr Dhanda said: “At Back Heathrow we are proud of our link to Heathrow Airport (the clue is in the name).
“We have always been open about the fact that we receive support from the airport and that they helped set the organisation up to balance the debate about expansion at a time when the voices of ordinary working people from the diverse communities around Heathrow were not being heard.”
“Back Heathrow also receives support from trade unions, local businesses and residents from amongst the 100,000 registered supporters it now has,” he added.
“We want an end to the dither and delay. Back Heathrow supporters want to see economic growth and the thousands of new jobs and apprenticeships a new runway will create.”