Reeves plans to give England’s regional leaders a share of national tax revenues
Rachel Reeves has announced that the Treasury will draw up proposals to hand England’s mayors a share of national tax revenues as part of a radical plan to rebalance the economy.The chancellor promised “a genuine break with the past” that would shift spending power away from Westminster, as she promised to create investment-led growth across the UK.Reeves was delivering the Mais lecture – the second time she has given the high-profile annual address at Bayes Business School in London.It is no coincidence that the UK is “the most politically centralised of advanced democracies, and one of the most geographically unequal”, Reeves said.Treasury officials will bring forward a plan at the autumn budget to allow regional leaders to receive a share of national taxes, starting with income tax, she added.
Reeves also announced new city investment funds worth £2,3bn for England’s regional “metro” mayors to spend on long-term investment projects, adding that they would be able to retain future business rates revenue,Reeves’s chief economic adviser, Neil Amin-Smith, wrote a research paper while at the Institute for Fiscal Studies that examined the case for the devolution of taxes and suggested income tax was the right place to start,The chancellor called her approach “a permanent transfer of power and resources, not another exercise in local ambition frustrated by central government control”,Local authorities across the UK have faced a severe funding squeeze in recent years, and several big councils have been forced into bankruptcy.
Aditi Sriram, an economist at the Institute for Public Policy Research, said: “Giving regions a share of tax revenues, including income tax, is the missing piece of the UK’s devolution settlement.Extending devolution to include funding, alongside powers, is essential to unlock the long-term investment needed to drive regional growth.”Reeves acknowledged that she was giving the hour-long lecture at an “anxious moment”, as the impact of the Iran conflict threatened to harm the global economy, but she vowed to press ahead with Labour’s growth plans.She said recent events, including the Middle East conflict, had confirmed that, as she had stated in her first Mais lecture two years ago: “Globalisation as we once knew it is dead.”She conceded that the Iran war was “likely to put upward pressure on inflation” in the coming months but said the UK was in a stronger position than in the run-up to the Ukraine war in 2022, with inflation lower and the public finances improving.
Without mentioning Donald Trump by name, Reeves stressed that “the single best way to protect families and businesses from rising energy prices is a swift end to the conflict in the Middle East”,She underlined three strategic choices the government was making in its efforts to boost growth: a closer trading relationship with the EU; more support for the “growth corridors” between Oxford and Cambridge and Liverpool and York; and a bet on the benefits of AI,She said the government would pursue a closer relationship with Brussels, pointing to recent research suggesting that Brexit may have depressed GDP growth by as much as 8%,“No trade deal with any individual nation can outweigh the importance of our relationship to a bloc with which we share a large border, and with which all supply chains are closely intertwined, and which accounts for almost half of our trade,” she said,Reeves struck an optimistic note about the economic outlook for the UK despite the looming energy crisis, highlighting the country’s record as the world’s second-largest exporter of services with strong creative, energy and pharmaceuticals sectors.
After two controversial tax-raising budgets since Labour came to power, the chancellor acknowledged the frictions, including within her own party, saying the argument for fiscal responsibility “must be fought and won, over and over again, to persuade people”.In what appeared to be a sideswipe at potential rivals to Keir Starmer tempted to advocate a looser approach, she said: “For anybody who thinks this is the moment to change course, I just say to them: ‘Be very careful about what you are doing and what you are advocating.’”Reeves also batted aside calls for the Treasury to offer immediate relief to graduates struggling with the burden of student loans.“Yes, the student loan system is broken.But if you try to fix everything straight away, everything will fall over,” she said, citing “precarious public finances”.
“What is more broken is the fact that we have got one in six kids not in education, employment or training.So yes, we want to fix it, yes, we want to make improvements.But is it front of the queue? No, it’s not.”
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Nige and Honest Bob. Honest Bob and Nige. Reform’s answer to the Chuckle Brothers. Robert Jenrick is just about the only other member of Reform UK that Nige will be seen dead with now. Apart from Richard Tice, everyone’s favourite fake-tanned beta male
Was Adam Smith’s ‘invisible hand’ on right or left? | Letters
Your editorial (11 March) is correct in insisting that the economist and philosopher Adam Smith used “invisible hand” only once in The Wealth of Nations: to discuss investing at home or abroad, not as a general description of economic structure.If the capital is invested at home, the decision to do that being purely a selfish and personal one, then, as if led by an invisible hand, this benefits the domestic economy.Which is true, so we’d better be careful about deterring investment at home through the confiscatory taxation of either the wealth or the profits from having benefited the society by investing at home. Tim WorstallSenior fellow, Adam Smith Institute, London You address one popular legend with evidence from another; the idea that Marx was an advocate of the “iron law of wages”. In reality, Marx, like Smith, believed that growth could lift wages and living standards in a society defined by wage labour and capital; but he also believed that the transcendence of the wages system was desirable, or else workers would be temporarily “encrusting their chains with gold”
UK has flown 100,000 nationals out of Middle East since Iran conflict began
The number of UK nationals flown back from the Middle East since the start of the conflict with Iran reached 100,000 on Tuesday, Britain’s foreign secretary has said.Yvette Cooper told parliament this is a third of the 300,000 who were in the region at the outset of hostilities, many of whom were stuck when airspace was closed. The figure included tourists and Gulf residents who have temporarily left.Fellow MPs urged Cooper to help many British citizens who were still stuck in the region and those who were said to be struggling to get extensions for visas in the countries where they had gone on holiday before the US and Israeli strikes on Iran.Cooper also provided an update on Britain’s part in discussions that could see an international coalition involved in opening the strait of Hormuz, adding that this was “separate from the conflict”
Being in Sinn Féin not the same as being in the IRA, Gerry Adams tells high court
Gerry Adams has told the high court that opponents of Sinn Féin have repeatedly sought to conflate the political party he led with the IRA, as he denied ever being a member of the Irish Republican Army.Giving evidence in London watched by victims of IRA bombings, the 77-year-old, credited with helping to bring about the peace process that ended the Troubles, also rejected accusations that he had ever led the paramilitary organisation or sat on its army council.Adams is being sued for symbolic “vindicatory” damages of £1 each by John Clark, Jonathan Ganesh and Barry Laycock. They claim he was an IRA member, sat on its army council and was culpable for the 1973 Old Bailey bombing, and the London Docklands and Manchester bombings in 1996 in which they were respectively injured.Adams, who entered the witness box wearing a shamrock and a badge of the Palestinian flag, said in his witness statement: “To be clear, membership of the political party, Sinn Féin, does not equate to membership of the IRA
Iran war cannot be ’windfall’ for Putin, says Starmer, as Zelenskyy arrives in UK
Keir Starmer will host Ukraine’s president, Volodymyr Zelenskyy, on Tuesday as the prime minister warns US-Israeli strikes on Iran cannot be allowed to become a “windfall for Putin”.Zelenskyy’s visit will come on the day of the government deadline for the Russian oligarch Roman Abramovich to pay proceeds from his sale of Chelsea FC to victims of the Ukraine war.The former Chelsea owner is now expected to face legal action, having insisted that the £2.5bn raised by the sale is his to allocate, including to Russian victims of the war.The British government warned Abramovich last year he must release the cash, or he could be taken to court
One day Keir Starmer might say what he really thinks of Trump. But not today | John Crace
It was a message that could just as easily have been given via a ministerial statement in the Commons. But Keir Starmer needs every break he can get at the moment and he wasn’t going to pass up the chance to look like a world leader at a press conference in Downing Street. The advantages were obvious. No need to have to listen to Kemi Badenoch drone on for five minutes with her revisionist fantasies in reply. Avoid the danger of loads of backbench MPs observing that President Trump is a deranged halfwit who doesn’t know what he’s doing
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