What we got from Rachel Reeves today was, in economic terms, a major departure from economic policy as we’ve known it in this country for the past decade-and-a-half.
We got the single biggest increase in taxes in any fiscal event since 1993. The tax burden itself is now heading up to the highest level in history. We got a significant departure from the policies and promises laid out in the Labour manifesto.
Only a few months ago, Labour pledged not to make dramatic changes to Britain’s economic policy – no significant tax rises, no dramatic changes to public spending. But today the chancellor delivered significant changes.
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The old fiscal rules are out and now this government plans to borrow many billions of pounds more. It plans to increase investment considerably.
It plans to raise taxes on those with investments, on those with assets who could previously pass them on to their children (including business owners and farmers). In the meantime, it plans to spend considerably more on the health service and on public investment than previously slated.
It’s worth saying: while the government inherited the public finances in a worse condition than they looked before the election, even the Treasury’s “black hole” of £22bn cannot explain the dramatic change in economic policy here.
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Reeves refuses to rule out future tax hikes
It does not explain the dramatic increase in borrowing, spending and taxes – these are policy decisions by the current government. And, many would say, quite right too. Surveys suggest the British public support higher taxes, especially if they are used to improve the National Health Service.
Many think the UK should be spending more on its public services, even if that means we all have to contribute more (though they are generally less enthusiastic if asked whether they would be happy to pay higher taxes themselves). And there is little dispute that this country’s investment levels have been too low for too long and could afford to be higher.
However, that wasn’t the pitch Reeves and Keir Starmer made at the election. They promised, in their manifesto, only slight economic changes and only small increases in taxes. They promised to spend much of their time in office cleaning up the mess from the last government. Reeves promised to be the iron chancellor of fiscal discipline.
But this budget is considerably less disciplined with the public finances than expected. But what will worry the chancellor is that despite this extra largesse with both investment and current spending, the UK economy is not going gangbusters as a result.
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The Office for Budget Responsibility actually cut its forecasts for long term growth. That promise made by Starmer to achieve the highest economic growth in the G7 looks highly unlikely – even after the implementation of all these policies.
And in the hours after the speech, markets reacted in a way that will cause nerves in the Treasury. It’s nothing like the lurches in government debt yields we saw after Liz Truss’s mini budget in 2022. But the pound fell and the interest rates investors charge the UK government rose. That’s not something any chancellor would like to see after their first budget.
The next few days promise to be very interesting both in politics and in markets.
Reform UK is a party that’s vying for attention and is not ashamed of how it gets it.
With political support from Elon Musk this week amplifying Reform UK talking points on his platform X, the party has been able to make a splash in the new year ahead of the government.
Already this month the party has had two conferences in two days, and with only a handful of MPs there is opportunity for all of them to speak. With one notable exception – James McMurdock MP.
Despite being the MP for South Basildon and East Thurrock, he isn’t on the schedule for the East of England conference, with Sky News initially told he wasn’t planning on attending.
When it emerged last July that he had been jailed for attacking someone, he downplayed the incident as a “teenage indiscretion”.
When spotted strolling around the conference on Saturday, Sky News asked Mr McMurdock whether he regretted that term.
The MP would not apologise for the phrase and said he hadn’t lied or ever changed his story.
“I would like to do my best to do as little harm to everyone else and at the same time accept that I was a bad person for a moment back then,” he said.
“I’m doing my best to manage the fact that something really regrettable did happen.”
The MP also wouldn’t say whether the party knew about his conviction prior to becoming a candidate, but leader Nigel Farage has previously said he “wasn’t vetted”.
Mr McMurdock still has not been suspended for the conflicting accounts of what happened and the party hasn’t commented on whether he would pass their new vetting system which they say is now in place for new council candidates.
While speaking to Sky News, Mr McMurdock said he would support that motion, though no Reform MP voted for it in an early day motion when it was laid in parliament.
MPs and peers could be forced to submit to criminal record checks under proposals submitted by a new Labour MP.
In a letter seen by Sky News, Jo White urged the leader of the Commons to examine whether a new committee set up to modernise parliament should force all new members to have checks due to their access to young and vulnerable people.
She suggests in-depth background checks by the Disclosure and Barring Service – commonly known as DBS checks – as the initial stages of introducing MPs to parliament.
Candidates are currently banned from running to be an MP if they have been jailed for more than a year in the UK.
However, there is no requirement for DBS checks, something most other jobs require when applying for positions working with vulnerable people.
Ms White previously submitted an early-day motion on this issue, with cross-party signatures including 13 other Labour MPs supporting her motion.
In her letter to the committee, the Bassetlaw MP writes: “It is a privilege that, as parliamentarians, we can work with local schools, care homes and hospitals, but we must be proactive in preserving this trust.
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“Implementing a mandatory check would protect both the people we visit and ourselves. It would be key to maintaining public trust and high workplace standards across the estate and in our constituencies.”
DBS checks are standard practices for GPs, nurses, teachers and other professions. They let potential employers know if a candidate has a criminal record or is banned from working with children or vulnerable adults.
Many local authorities already run DBS checks on elected officials but it’s not standard practice in parliament.
Prospective MPs can stand for election despite having a criminal record or appearing on the child-barred list or adult-barred list unless they have served a prison term over 12 months.
In fact, they do not need to disclose any criminal behaviour to the public prior to becoming a candidate.
The main vetting process before entering the House of Commons is done through political parties, who set their own rules for carrying out any such checks.
None of the Reform UK MPs have signed the early-day motion and leader Nigel Farage said last election there was “no vetting” of candidates.
The creation of a modernisation committee was a Labour manifesto promise and now sits as a cross-party group tasked with reforming House of Commons procedures and improving standards.
The committee said it would not be commenting on submissions until it’s had time to fully consider all options, but is due to publish an initial report early this year.
Nigel Farage has said Tommy Robinson “won’t be” joining Reform UK after Elon Musk showed support for the jailed far-right activist on social media.
The billionaire owner of X, who has spoken positively about Reform UK and is reportedly considering making a donation to the party, has been critical of the government’s handling of child sexual exploitation across a number of towns and cities more than a decade ago.
Mr Musk endorsed the far-right activist and claimed Robinson was “telling the truth” about grooming gangs, writing on X: “Free Tommy Robinson”.
Speaking to broadcasters ahead of the start of Reform UK’s East Midlands Conference tonight, party leader Mr Farage did not directly address Mr Musk’s comments, but said: “He has a whole range of opinions, some of which I agree with very strongly, and others of which I’m more reticent about.”
He went on to say that having Mr Musk’s support is “very helpful to our cause”, describing him as “an absolute hero figure, particularly to young people in this country”.
He continued: “Everyone says, well, what about his comments on Tommy Robinson? Look, my position is perfectly clear on that. I never wanted Tommy Robinson to join UKIP, I don’t want him to join Reform UK, and he won’t be.”
Later on GB News, Mr Farage added that Mr Musk “sees Robinson as one of these people that fought against the grooming gangs”.
“But of course the truth is Tommy Robinson’s in prison not for that, but for contempt of court,” he said.
Mr Farage added: “We’re a political party aiming to win the next general election. He’s not what we need.”
How did Elon Musk become involved?
The online campaign from Mr Musk began after it emerged that Home Office minister Jess Phillips had denied requests from Oldham Council to lead a public inquiry into child sexual exploitation in the borough, as the Conservatives had done in 2022.
In a letter to the authority in Greater Manchester, Ms Phillips said she believes it is “for Oldham Council alone to decide to commission an inquiry into child sexual exploitation locally, rather than for the government to intervene”.
An Oldham Council spokesman previously said: “Survivors sit at the heart of our work to end child sexual exploitation. Whatever happens in terms of future inquiries, we have promised them that their wishes will be paramount, and we will not renege on that pledge.”
Mr Musk posted on X multiple times about the scandal, and claimed Sir Keir Starmer had failed to bring “rape gangs” to justice when he led the Crown Prosecution Service (CPS). In 2013, Sir Keir introduced new guidelines for how child sexual abuse victims should be treated and how a case should be built and presented in court.
The SpaceX and Tesla boss also endorsed posts about Robinson.