Jump in UK borrowing shows Rachel Reeves needs to relax her strict budget rules

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There is mounting pressure on Rachel Reeves to relax her budget rules and to prepare the ground by telling voters in the next few weeks.The latest public borrowing figures for April, which show a rise above most City forecasts, indicate that the chancellor will struggle to stay within the constraints she imposed on herself at last year’s budget.Reeves gambled that the Treasury could brazen out a difficult year with nearly £10bn of headroom – a cushion that would protect the government against all eventualities.Donald Trump’s tariffs war and the subsequent global slowdown have been enough to derail that tactic.Economic growth is expected to slow over the next year despite a spate of trade deals.

Inflation is rising, hitting household incomes and pushing up the costs of public services.A £10bn cushion over a five-year time horizon was always optimistic.Now it looks like being in jeopardy even after the Office for National Statistics said revisions of past estimates means it overestimated last year’s debt by £4bn.No 10 is adding to Reeves’s problems now Keir Starmer has made clear he views the winter fuel allowance cut as a mistake.It’s possible he has many other unpopular measures in his sights.

There was better news from a rise in tax receipts linked to the increase in employer national insurance contributions and the freeze on income tax thresholds, which has brought more people into higher rates of tax.They gave the Treasury a lift, according to April’s figures, but not enough to override the extra spending needed to compensate public bodies for higher wage bills and the costs of inflation on department running costs.Next month’s departmental spending review will set aside funds for lots of long-term projects designed to raise the UK’s skill levels, bring more people back into the workforce and boost productivity.As a potential reboot, it holds the prospect of lifting the nation’s spirits.The impact, though, will be circumscribed by the need to keep the overall plan within tight spending limits.

Another problem for Reeves can be found in the reaction from businesses.They are making their own assessment of the public finances and the tension between the people-pleasing Starmer and the iron chancellor.They know more concessions from No 10 will make the likelihood of higher taxes on business more likely in the autumn.If there is a budget gap to fill, company bosses sense they are being viewed as a cash cow that can be endlessly milked.Their reaction is already clear; apart from a few industries such as construction, where the government has shown a sense of direction, most businesses are hunkering down, cutting staff and cancelling job adverts.

Sign up to Business TodayGet set for the working day – we'll point you to all the business news and analysis you need every morningafter newsletter promotionYet the Treasury knows that another round of tax rises, whether on businesses or households, will be a growth killer, delaying a move through the economic gears promised when Labour took office.The National Institute of Economic and Social Research has long argued that constraining budget rules have forced successive chancellors to make bad, short-term decisions in an effort to squeeze through each annual budget.That is the prospect Reeves faces now.The thinktank favours bringing down debt, but after a period of public investment has sparked a rise in tax receipts.It also argues, like many do, that cuts to welfare at this moment will prove to be counter-productive.

To maintain investment and keep public services from falling backwards, there will need to be more cash on the table from the Treasury.That’s the growing view in the business community as well.The public wants the economy to recover more than it wants fiscal rectitude, and while the financial markets are anxious about rising public debts, the scale of the modest easing needed in the UK will be dwarfed by what is going on in the US, where Trump is pushing for tax cuts that will raise US debt levels by more than $5tn (£3.7tn) by the end of the decade.As messages go, there could not be a clearer one for the chancellor.

A relaxation of the fiscal rules should not be delayed.Without it, the whole Labour project could be undermined.
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Extra cancer scans for women with dense breasts could save 700 lives a year – UK study

Hundreds of lives could be saved every year with extra cancer checks for women with very dense breasts, a study suggests.Millions of women undergo breast screening, but regular mammograms can be less effective at spotting cancer in the 10% with very dense breasts, as the tissue can hide tumours on X-rays. This is because very dense breasts look whiter on scans, making it harder to detect early-stage disease, which also appears white.Offering this group of women enhanced scans could find 3,500 more cases of cancer and save 700 lives a year in the UK, researchers from the University of Cambridge said. Their findings were published in the Lancet

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‘It’s all people wanted to talk about’: How Labour U-turned on winter fuel payment cut

Rarely are British voters united by one issue, but Labour MPs returning to Westminster after the local election campaign this month all reported a single policy dominating all others: cuts to the winter fuel allowance.“It is all people wanted to talk about on the doorstep,” said one. “Some were upset about the coming cuts to disability benefits, some were exercised by immigration. But everyone was angry about winter fuel payments.”And so when Keir Starmer confirmed on Wednesday his government would change the threshold at which the cuts bite, it should not have come as a surprise

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More community sentences in England and Wales could be ‘catastrophic’, warns watchdog

Plans to allow thousands more criminals in England and Wales to serve their sentence in the community risk “catastrophic consequences” unless the Probation Service is overhauled, a watchdog has told the Guardian.Martin Jones, HM chief inspector of probation, said government plans to hand responsibility for overseeing offenders from prisons to probation officers meant the risk “is carried directly into the community”.He called for extra funds, greater staff numbers, a slashing of red tape and better retention of experienced staff, saying that “any response to simply shift demand from prison to probation will be ineffective at best, and dangerous at worst”.His comments come as Shabana Mahmood prepares to announce an overhaul of criminal justice on Thursday after the publication of an independent review carried out by David Gauke, a former Conservative justice secretary.Judges and magistrates in England and Wales will be told to move away from handing out short custodial sentences in favour of community based alternatives, increasing pressure on the probation service

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It’s not ‘grit’ that children lack, but proper support | Letters

Comments by the education secretary, Bridget Phillipson, about children’s “grit” are a distraction from the huge missed opportunity in the government’s expansion of access to mental health support teams in schools (‘Grit’ no substitute for better mental health funding for pupils in England, say experts, 16 May).Children are resilient – but they are living in an increasingly complicated world of challenges and conflict. They’re having to cope with the consequences of the Covid pandemic, the cost of living crisis, social media, and school, family and relationship pressures.We at the British Association for Counselling and Psychotherapy are pleased that the government recognises the importance of supporting children in all schools, but this announcement falls short of what’s needed. The plan will do little to meet the needs of children who need more than pastoral care and the low-level interventions provided through mental health support teams (MHSTs), but don’t require a referral to psychiatrists or child and adolescent mental health services

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Texas model cuts costs and prison numbers | Letters

We welcome Gaby Hinsliff’s call for “a more enlightened approach to cutting crime” (Republican Texas is a surprising model for solving the UK’s prison crisis – but it just might work, 16 May). To achieve this and deal with the problem of prison overcrowding, we do not need to build more prisons. Community sentences require more resources so they can constructively challenge offending behaviour while keeping convicted individuals in touch with their responsibilities to families and communities.For those in prison, this would also allow for the application of the Texas model – a promising form of prison reform that is not only cost-saving but has also reduced crime and recidivism rates in that state. Its success lies significantly in prioritising incarceration for violent offences

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Britain should adopt the Passivhaus standard to cut energy costs in new homes | Letters

Regarding your article (Poor building standards add £1,000 to energy bills of new homes, analysis finds, 16 May), the solution is very simple: the government should adopt the Passivhaus standard that has been established in Germany for over 25 years.Its use there results in buildings with little or no heating requirements as the buildings are super-insulated and extremely airtight, and have mechanical ventilation and heat reclaim systems to distribute filtered air throughout the property.This can obviate the need for solar panels and heat pumps, which have a lifespan of around 25 years. However, housebuilders in the UK do not yet have the desire to build houses this way as it requires site staff be motivated to build in a way that prevents air leakage and to care about build quality, something that is sorely lacking here.The higher build cost for the fabric would be offset by the absence or reduction in the cost of heating installation