Banks poised to escape tax rises in Rachel Reeves’s budget
The chancellor has decided against increasing taxes on banks in this month’s budget, according to reports, which sent UK bank shares higher on Thursday.Shares in the high street banks NatWest and Lloyds rose by about 2%, putting them among the top risers on London’s FTSE 100.Despite speculation in the run-up to the 26 November budget, Rachel Reeves has reportedly told colleagues that she does not intend to impose further taxes on the UK banking sector, as she wants it to remain competitive to help support economic growth, according to the Financial Times.Banks currently pay a corporation tax rate of 28%, which includes a 3% surcharge on top of the standard corporation tax rate of 25%.Fresh calls for a new tax raid on lenders were raised in August in a paper by the Institute for Public Policy Research thinktank, which calculated such a move could raise as much as £8bn.
The report called on Reeves to levy a new tax on the big banks to help to recover the “windfalls” they received as a result of the emergency economic policy known as quantitative easing, which was implemented by the Bank of England after the 2008 financial crisis.A bank levy has been one of a number of potential tax increases – including on property and landlords’ rental income – discussed in recent weeks, as Reeves seeks to plug a shortfall in the public finances.Ministers had previously asked Treasury officials to look into the profitability of the UK’s largest banks as a consequence of quantitative easing, the Guardian understands.Speculation about a windfall tax on large banks spooked investors, triggering a sharp sell-off of banking shares and prompting the industry to lobby against higher taxes for the sector.The banking industry body UK Finance claimed in a report in October that the total tax rate paid by UK banks was higher than that of other financial centres, including New York, Dublin, Frankfurt and Amsterdam, driven by changes to employers’ national insurance contributions from this April.
The total tax contribution of the UK banking sector for the most recent financial year was £43,3bn, representing 4,3% of total UK government tax receipts, according to an estimate by PwC,It found the overall tax contribution had risen by a third since PwC’s study began in 2014, when it was £33,4bn.
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 promotionThe chief executive of NatWest Group warned the government in recent weeks against increasing taxes on banks, as the high street lender reported a 30% rise in profits.Paul Thwaite said he understood the “difficult choices” the chancellor had to make in the budget but argued that she needed to “balance fiscal discipline” with “policies that create stability, consistency and support growth”, and should consider how higher taxes appear to international investors.Gary Greenwood, an equity analyst at the broker Shore Capital, said in order to be spared higher taxes, the “quid pro quo” for banks would be demonstrating “a willingness to grow even faster than they are doing in order to support the economy rather than just harvesting the benefits of higher interest rates and so profitability for their shareholders in the form of juicy dividends and share buybacks”.
Lammy says he was not ‘equipped with the details’ when facing questions on mistaken prisoner release at PMQs – as it happened
David Lammy has recorded a pooled interview about the prisoner release mistakes reveaved after yesterday’s PMQs. There were three main lines in the excerpt available so far.Lammy, the deputy PM and justice secretary, defended his decision to dodge questions at PMQs yesterday about whether there had been another prisoner let out by mistake. The Conservatives have strongly criticised him for this, with Chris Philp, the shadow home secretary, saying that Lammy’s non-answer was “dishonest”, and Robert Jenrick, the shadow justice secretary, saying Lammy’s PMQs performance was “a disgrace” and “a dereliction of duty”. (See 9
Badenoch accused of ‘interfering’ in lobbying scandal linked to Cameron
Lex Greensill has accused Kemi Badenoch of “interfering” in an insolvency case “for political ends” as the last Conservative government sought to protect David Cameron from scrutiny for his involvement in a lobbying scandal.The financier, whose companies paid Cameron millions of pounds, claimed that the current Tory leader used her former ministerial position as business secretary to restructure an inquiry into his activities.Greensill alleged that the move was made to protect Cameron as he was elevated to the House of Lords in November 2023 and brought back into government as the foreign secretary.The allegations were made in a letter sent to the current business secretary, Peter Kyle, as Greensill contests the possibility of being disqualified from company directorships for up to 15 years.Greensill claimed the decision to omit Cameron’s involvement from the Insolvency Services’s inquiries meant the case against him should be dropped because it was “based on allegations that have no merit and little or no evidence”
Labour MPs revive ‘desperately needed’ soft left group to take on Reform
Senior MPs who were the architects of the Labour welfare rebellion are to revive a powerful caucus on the party’s soft left to influence the budget and beyond, in a move likely to further unnerve No 10.The former cabinet minister Louise Haigh and Vicky Foxcroft, a former whip who resigned to vote against welfare cuts, are to take the reins of the Tribune group with the aim of giving an organising voice to their wing of the party.Key figures in the group, which hopes it will attract more than 100 MPs to revitalise the caucus, were major players in Lucy Powell’s successful deputy leadership campaign.They also include the former minister Justin Madders, Sarah Owen, the chair of the women and equalities committee and Debbie Abrahams, the chair of the work and pensions select committee. Two other new MPs will also steward the group – Yuan Yang and Beccy Cooper
Lancashire’s Reform-run council plans to close care homes and day centres
Lancashire’s Reform-run council has been accused of “selling off the family silver” through its plans to save £4m a year by closing five council-run care homes and five day centres and moving residents into the private sector.One of the care home residents, a 92-year-old woman, said she would leave only by “being forcibly removed or in a box”.Another resident’s son, a Reform party member, said any move would “kill” his mother, and he vowed to quit the party if the closures went ahead.Questions are also being asked about a potential conflict of interest involving Reform’s cabinet member for social care in Lancashire, who owns a private care company with his wife.Reform UK took control of Lancashire county council (LCC) from the Conservatives in May, winning 53 of the 84 available seats
Reform’s public-sector pensions plan could cost billions extra, union warns
Reform UK’s plans to make public-sector pensions less generous could cost billions extra a year and cause a ticking timebomb in the public finances, a leading trade union has warned.Prospect said the plans unveiled by the party’s deputy leader, Richard Tice, would damage the public finances rather than save money “and end up costing taxpayers tens of billions of pounds in the years to come”.The union challenged Tice after he said he would want to change public-sector pensions from a defined benefit system to a defined contribution scheme for new entrants, a move that would mirror what has happened in the private sector and would result in less generous payouts in retirement.A defined benefit scheme gives a guaranteed annual income for life after retirement, while a defined contribution pension provides a pot that can be drawn on until it runs out.Tice said he believed Prospect had misunderstood the changes he proposed and that the move would help the country avoid a slide into bankruptcy on the back of huge unfunded pension liabilities, which he said ran into trillions
London mayor sees parallels in Zohran Mamdani’s victory: ‘Hope won’
Sadiq Khan, the city’s first Muslim mayor, says: ‘We are united by something far more fundamental, our belief in the power of politics to change people’s lives for the better’While the soon-to-be first Muslim mayor of New York, Zohran Mamdani, was in the final throes of his mayoral campaign on a brisk day in New York, Sadiq Khan, the first Muslim of mayor of London, was wrapping up a two-day climate summit in a steamy if overcast Rio de Janeiro.“Hope is not gone,” Khan told the 300 city mayors gathered in the Brazilian city’s museum of modern art.The London mayor was referring to the challenges faced by regional politicians in dealing with the climate emergency in the face of the scepticism or outright denial of the science by national governments – including that led by Donald Trump.But on hearing of Mamdani’s win, Khan suggested that this too had given him hope. London and its mayor have been repeatedly raised by figures such as Trump’s former chief of staff Steve Bannon as the disastrous outcome that New Yorkers had to avoid
De Niro to JLaw: should celebrities be expected to speak out against Trump?
Jon Stewart on Trump’s Gatsby party: ‘The theme was apparently gross income inequality’
Three decades later, The Truman Show feels freshly disturbing – and astoundingly prescient
Big trouble in ‘Little Berlin’: the tiny hamlet split in two by the cold war
Josh O’Connor: the shape-shifting star who became cinema’s most wanted
From Bugonia to All’s Fair: your complete entertainment guide to the week ahead