#public-finances

#public-finances

Meg Hillier, the chair of the all-party House of Commons Treasury committee, said the chancellor should make clear her long-term plans for the 6bn-a-year Send bill as uncertainty grows over how it will be accounted for at the end of the decade. Reeves, who is due to appear before the committee next month, said in a letterto MPs that she plans to delay a decision until next year.

The warning comes from the National Institute of Economic and Social Research (NIESR), which said a zero net migration policy would shrink the economy by 3.6 per cent by 2040 and reduce the workforce by around 2.5 million people compared with current forecasts. The result, it argues, would be a £37bn deterioration in the public finances unless offset by higher taxes or cuts to public spending.

'We want money from hard work going to families, not to the taxman,' says Tánaiste

Prime Minister Keir Starmer has denied accusations that Chancellor Rachel Reeves misled the cabinet or the public over the state of the public finances ahead of last week's Budget, after a fresh row erupted between the Treasury and the Office for Budget Responsibility (OBR). Speaking at a nursery in London, Starmer defended Reeves' tax rises and her decision to scrap the two-child benefit cap, despite weeks of speculation over possible income tax hikes. He insisted that revenue-raising measures were unavoidable and dismissed allegations that the government exaggerated the scale of its fiscal challenges. "There was no misleading," he said. "It was inevitable we would always have to raise revenue. I was clear we needed more headroom."

The Office for Budget Responsibility (OBR) said the potential for damaging events such as a global stock market crash or future pandemic to knock the government's finances off course remained high, even while the chancellor increased her headroom from 9.9bn to 22bn. After a wide-ranging review of the UK's economic health stretching back to the 2008 financial crash, the OBR also said the economy would grow at a slower rate over the next five years than previously estimated.

The budget will include action to cut NHS waiting lists, cut debt and borrowing, and cut the cost of living to secure a strong future for the country, built on fairness and fuelled by growth. Action to keep prescription costs under 10, freeze rail fares for the first time in 30 years and increase the national minimum wage and national living wage by 1,500 and 900 respectively has already been confirmed to put more money in people's pockets at this budget.

Tánaiste has replaced Paschal Donohoe as Finance Minister

The taxpayer put a total of €64.1bn into the Irish banks during the financial crisis. After exorbitant boom-time lending, Anglo Irish Bank and Irish Nationwide were in deepest trouble and the State had to put in €34.5bn into the crippled institutions. It was money down the drain as only €1.1bn has been recovered to date and the remaining €33.4bn is lost. No wonder it's known in the industry as a "sunk cost".

Our independent forecaster is likely to downgrade the forecast for productivity in the UK based not on anything this government has done, but on our past productivity numbers, which, to be honest, since the financial crisis and Brexit have been very poor, and that just shows how essential growth is. So I'm not going to do anything in the budget that reduces our opportunities to grow the economy. That's very important.

Britain's leading tax and spending experts have urged Rachel Reeves to consider announcing billions of pounds in welfare cuts in next month's budget to help placate jittery financial markets. After the chancellor gave her strongest hint yet that spending cuts were under consideration, the Institute for Fiscal Studies (IFS) called on Reeves to take bold action to plug a potential 22bn shortfall in the government finances.

At the moment the chancellor gives away more than 50bn in tax relief for pension saving, most of which goes to wealthier boomers and better-paid gen Xers who do not need the money and would save anyway if state support was more limited. A remodelling of pension subsidies cutting the 40p higher rate to a flat rate of 25p for all savers could claw back 10bn to 20bn in extra income tax and national insurance payments, depending on how the new regime is constructed.

A huge proportion of the tax gap is attributable to small businesses (60% or approx. £. Sole traders do not have to register with Companies House and it is likely that plenty fly under HMRC's radar. Even small businesses which are companies, although they need to be registered at Companies House, have significant exemptions in the level of detail that they are required to submit in terms of their accounts.

Rachel Reeves could consider cutting the amount savers are allowed to withdraw in a lump sum from their pension pots as she seeks to plug a multi-billion-pound hole in the public finances. The chancellor will look at proposals from civil servants that could raise around 2bn by lowering the limit on how much people are allowed to take out of their pension without paying tax. Currently, pensioners can take out a quarter of their pension pot tax-free, with a cap of 268,000.

Chancellor Rachel Reeves stated that the fifth interest rate cut since last year's election is welcome news, assisting in lowering costs for mortgages and loans.

Starmer emphasized that some figures concerning the public finances, particularly the projected shortfall, are not recognized by him and indicated a need to prioritize living standards.

Niesr recommends a moderate but sustained increase in taxes, including reforming the council tax system, to address a 41.2bn shortfall in government finances.