Afternoon summary
Rachel Reeves will pledge to reverse huge cuts in public investment in her budget next week after she confirmed that rules limiting her spending power will be overhauled to enable the government to free up as much as £50bn for infrastructure spending. The Conservatives are claiming that, by using a new definition of debt for her fiscal rules, Reeves will “punish families with mortgages” because interest rates will be higher for longer. (See 4.28pm.)
In interviews today, Rachel Reeves, the chancellor, has said that although she is changing the fiscal rules to allow more investment, she will put “guardrails” in place to stop money being wasted. She told Sky News:
We will measure debt differently but of course we’ll put guardrails in place to ensure that every pound of taxpayers’ money spent is spent wisely, and we’ll involve the National Audit Office and the Office for Budget Responsibility in that.
According to YouGov, Keir Starmer’s appoval ratings are worse than any other recent prime minister’s at this stage during their premiership.
Keir Starmer has a worse PM job rating than all of his recent predecessors by this point in their tenure (*except for Liz Truss, who didn't last this long)
— YouGov (@YouGov) October 24, 2024
Starmer: 26% well vs 58% badly
Sunak: 29% vs 53%
Truss*: 11% vs 71%
Johnson: 40% vs 49%
May: 46% vs 22%
Cameron: 59% vs 32%… pic.twitter.com/Owjj9O8EyE
Angela Rayner says government will scrap 'punitive' premium on councils needing bailouts
Struggling councils will no longer be required to pay a “punitive” premium on financial bailouts, Angela Rayner has announced in a speech vowing to get local government “back on its feet”. As PA Media reports, the deputy PM likened the fee, which was a condition for local authorities seeking emergency support under the previous Tory government, to a “payday loan” charge. PA says:
A total of 18 councils were given an injection of money from the government in February to ensure they could meet their legal duty to balance their books in 2024-25.
Bailouts through this exceptional financial support (EFS) framework are usually provided in the form of a “capitalisation direction”, which permits authorities to use capital funds raised through borrowing, or the sale of assets such as buildings, to fund day-to-day services.
Previously, they have been charged an additional one percentage point premium on the interest rate, above the rate to which the loan would otherwise be subject, if they draw down on the borrowing.
Addressing the Local Government Association on Thursday, Rayner, criticised the previous Conservative administration for leaving councils “stuck in a doom loop” with “money pouring out of a system with too many cracks”.
The cabinet minister, who also serves as local government secretary, said: “It’s going to be a long, hard slog to get local government back on its feet. And in the short term we’re doing all that we can to protect severely struggling councils, which is why I’ve announced we are scrapping the punitive, payday loan premium on borrowing for councils in need of exceptional financial support.”
One of the problems with Rachel Reeves choosing PSNFL as the new definition of debt for the fiscal rules is that people can’t agree how to pronounce it.
Robert Peston, the ITV political editor, is adamant that you pronounce it SNFL, or snuffle, as if the p were silent. He says:
There is an important battle taking place about whether the “p” in “PSNFL” is silent or spoken. I say “snuffle”. If you say “persnuffle” you are wrong and you have lost my respect
But Cara Pacitti, an economist at the Resolution Foundation, says you do pronounce the p.
Fiscal nerds pronounce PSNFL as ‘P-snuffle’, which would make this one of the oddest sounding fiscal rules we’ve had for a while!
Jeremy Hunt claims by changing debt definition in fiscal rules Labour will 'punish families with mortgages'
Jeremy Hunt, who is now shadow chancellor and who did Rachel Reeves’s job until the general election, says her decision to change the definition of debt used in the fiscal rules will “punish families with mortgages”. He posed this on social media.
The consistent advice I received from Treasury officials was always that increasing borrowing meant interest rates would be higher for longer – and punish families with mortgages. What’s even more remarkable is that the Chancellor hasn’t seen fit to announce this major change to the fiscal rules to parliament. The markets are watching.
Updated
Here is Phillip Inman’s story about Rachel Reeves confirming that she is changing the definition of debt she is using in her fiscal rules.
Reeves confirms she is changing debt definition in fiscal rules
Rachel Reeves, the chancellor, has now confirmed that she is changing the debt definition in her fiscal rules. She has made this explicit in interviews with broadcasters that have just been released.
Speaking to Sky News, Reeves said:
The second [fiscal] rule will be the investment rule, which means to get debt down as a share of GDP. But I can confirm today that which will be measuring debt differently. I will set the details to the House of Commons at the budget next week.
The reason we’re doing that is because there are massive opportunities to invest in return, to get the growth and the jobs of the future here for the UK. And I’m determined to do that. But it’s not possible under current rules.
So I’m listening to what the IMF has been saying, but also UK economists like Gus O’Donnell [the former cabinet secretary] and Andy Haldane [the former Bank of England chief economist] and Jim O’Neill [the former Goldman Sachs chief economist, and a former Treasury minister in David Cameron’s government] who are all saying you need to free up money for investment. So I can confirm that we will be measuring debt differently.
Reeves did not say what the new debt definition would be. But the Guardian has revealed she will target public sector net financial liabilities (PSNFL). See 9.01am.
Earlier Reeves published an article in the Financial Times in which she explained her fiscal rules in detail and said her debt rules, which she calls her “investment rule”, would “make space for increased investment”. But in that article she did not formally confirm the definition of debt used in the rule would change. (See 2.38pm.)
Tories claim interest rates could stay 'higher and for longer' as result of Reeves changing debt definition in fiscal rules
The Conservative party says Rachel Reeves’s decision to change the definition of debt in her fiscal rules will put up the cost of borrowing. In a statement issued by CCHQ, Gareth Davies, a shadow Treasury minister, said:
Before the election Rachel Reeves promised that she would not ‘fiddle’ the fiscal rules, and now it seems she is going to do exactly that. Remarkably she is announcing this not to parliament, but to the IMF in advance of the budget.
This is already having real world effects, with borrowing costs rising. This uncertainty over additional borrowing risks interest rates staying higher and for longer. It’s families up and down the country who would pay the price.
The Liberal Democrats are saying that any extra investment available because of Rachel Reeves’s decision to change the definition of debt in her fiscal rules should go to the NHS. In a statement Daisy Cooper, the Lib Dem Treasury spokesperson, said:
The chancellor must invest any extra borrowing wisely and that should start by fixing the previous Conservative government’s legacy of crumbling hospitals and GP practices that plague our communities.
Crumbling hospital roofs, creaking ventilation systems, and lift-shafts on life support pose a danger to patient safety and are demoralising for frontline NHS staff.
George Osborne says he can't back Jenrick for Tory leader because leaving ECHR unacceptable 'red line'
And George Osborne, the former Tory chancellor, has told the Political Currency podcast he co-hosts with Ed Balls that he is voting for Kemi Badenoch, not Robert Jenrick, in the Conservative leadership contest because Jenrick’s proposal to leave the European convention on human rights is a red line for him. He says:
I started the campaign thinking that Robert Jenrick was going to win. But he underperformed at the conference, and I can’t get round this promise to leave the European convention on human rights.
For me, that is a red line; this is just a really impossible thing for Britain to do. A Conservative party that said it was going to withdraw from the European Convention Human Rights, I could not vote for. It’s breaking the rule of law that we’ve helped establish around the world, it’s something that Conservative governments did so much to establish.
I’m just fed up with the Conservative party wanting to leave things and break up international alliances. I want to hear about the Conservatives building things and forming international alliances.
I just can’t get around the Jenrick promise, and therefore, I’ve come around to saying I will vote for Kemi Badenoch. I’ve ticked the box and I’m about to post it after this podcast.
Ed Balls says Starmer and Reeves have not done enough yet to persuade people they have a growth plan
Ed Balls, the Labour former shadow chancellor, has said Keir Starmer and Rachel Reeves have not done enough yet to persuade people they have a plan to stimulate growth.
Before the election Keir Starmer said that securing the highest sustained growth in the G7 would be one of his five missions for government.
But, in his Political Currency podcast, which he co-hosts with George Osborne, the Tory former chancellor, Balls said the new government has not properly explained how this might happen. He said:
They haven’t done enough to explain to us why growth has been so weak over 10,15, 20 years – so that we understand why what they’re going to do is going to turn things around.
It’s not enough to say to business, or to the markets or to the population, ‘we’re not the Tories’ – because nobody thinks it was simply the Conservatives, by being Conservatives, which led to low growth.
[The question is] do they really have a plan on transport infrastructure investment? What is the plan for driving regional growth? How is innovation going to work?
We’ve seen some things around the green agenda, which is good, but they’ve been cutting back – not just public investment, but the national wealth fund investments into those areas. How strategic is it actually going to be? Are they going to choose the areas where they can really have a big impact?
They haven’t done enough yet to persuade us there really is a growth plan.
Balls also said that, although British activists have been going to the US to campaign in elections for years, it was “naive and gauche” to a Labour figure to seem to be organising an effort like this for the 2024 presidential election. He explained:
These kinds of visits have been happening for decades but this is a different election. You would think people would have known from 2020 how delicate this is. Both Keir Starmer and David Lammy had been going out of their way to say they would work with Trump …
When you start organising a sort of a posse of campaigners as a foreign party, now a foreign government, an alarm bell should have rung, and there will be people kicking themselves, thinking ‘I saw that and I didn’t do anything.’
If you’re in opposition for years, you get used to the idea that nobody cares that much what you do, and when you’re in government, suddenly it changes overnight.
They won’t make this mistake again, but it’s definitely a mistake, and somebody should have spotted it earlier.
Balls was a lead figure in Labour politics for two decades, but now he works as a TV presenter and podcaster. He is married to Yvette Cooper, the home secretary.
Reeves says new debt definition will 'make space for increased investment in fabric of economy'
Rachel Reeves, the chancellor, has published an article for the Financial Times about the new version of the fiscal rules she will unveil in the budget. While she is not confirming that she will move to the PSNFL measure of debt (see 9.01am), she hints at this by saying that her investment rule “will make space for increased investment in the fabric of our economy”.
This is what she says in the article about her rules.
My fiscal rules will do two things. The first and most important: my stability rule will mean that day-to-day spending will be matched by revenues.
Given the state of the public finances and the need to invest in our public services, this rule will bite hardest. Alongside tough decisions on spending and welfare, that means taxes will need to rise to ensure this rule is met. I will always protect working people when I make these choices, while taking a balanced approach.
Crucially, my stability rule will also cover the interest on our national debt and unlike the previous government I won’t cut capital budgets to make up for shortfalls in the day-to-day running costs of departments.
My second fiscal rule, the investment rule, will get debt falling as a proportion of our economy. That will make space for increased investment in the fabric of our economy, and ensure we don’t see the falls in public sector investment that were planned under the last government.
We will invest alongside business, through expert bodies like the National Wealth Fund, multiplying the impact of public money. And I will invest wisely — we won’t just increase investment, we will also invest differently. We won’t repeat the costly mistakes of the past.
My colleague Graeme Wearden has more on this on his business live blog.
In a post on Bluesky, Jo Michell, an economics professor and chair of the Post-Keynesian Economics Society, says he approves of the new debt definition chosen by Rachel Reeves.
So it looks like PSNFL. Of the options on the table I think this is the best:
1. Status quo PSND ex BoE. Obvs not good.
2. Revert to straight PSND. Banter option but little more.
3. PSNW. A potential mess of accounting and politics.
4. PSNFL. Substantial room for investment, avoids downsides of 3.
Harman accuses Starmer of not appreciating why reparations live issue for Commonwealth, not just problem from past
Harriet Harman, the former Labour deputy leader, has accused Keir Starmer of failing to understand why other Commonwealth leaders are so keen on having a full debate about having a reparatory justice for slavery.
While No 10 has indicated that it is open to some discussion on this issue (see 12.32pm), Downing Street said before the Chogm summit that Starmer would not be offering reparations or an apology when he met his fellow Commonwealth leaders. Speaking to reports on his flight to Samoa, Starmer said he was more interested in “looking forward rather than looking backwards”.
Speaking on Sky News’ Electoral Dysfunction podcast, Harman said Starmer did not appreciate why this was a live issue for so many country, and she said the PM should “lean in to a sense of cultural respect and equality”.
She explained:
I think that reparative justice is not about the past.
Of course it’s about what happened in the past, but it’s about relationships in the future and what those relationships are based on.
And therefore, I think to say ‘that’s all in the past, let’s look to the future’ feels like a misunderstanding of what they’re actually saying.
Harman said trying to argue that this was just a historic matter would not work. “[Starmer] needs to be in this conversation rather than be ruling it out,” she said.
Updated
UK’s borrowing costs rise on news that Reeves is changing fiscal rules
The UK government’s borrowing costs have risen on global financial markets amid expectations that Rachel Reeves will change Britain’s debt rules to unlock up to £50bn of additional headroom for investment in infrastructure, Richard Partington reports. He says:
The yield – in effect the interest rate – on UK government bonds rose by about six points to trade above 4.2% in early trading on Thursday morning before easing, contrasting with a fall in borrowing costs for other comparable countries, including the US. The spread between gilts and German debt rose to the highest in more than a year, according to Bloomberg.
“It seems to be related to Reeves last night suggesting that the fiscal rules would be rewritten to increase spending on infrastructure,” Lyn Graham-Taylor, a senior rates strategist at Rabobank, told Reuters.
Here is the full story.
Diana Johnson, the policing minister, has said the crime figures out today (see 1.41pm) show why the government is prioritising neighbourhood policing. In a statement she said:
Too many town centres have been decimated by record levels of shoplifting, and communities have been left shaken by rising levels of knife crime, snatch theft and robbery. This cannot continue.
This government will restore neighbourhood policing across the country, put thousands more dedicated officers out on our streets and scrap the £200 shoplifting threshold, bringing an end to the effective impunity for thieves who steal low value goods.
Robin Butler, the former cabinet secretary who is now a peer, has described being in a Brighton hotel room with Margaret Thatcher when an IRA bomb exploded – and how she rushed in to check on her husband, Dennis, after he hesitated.
Butler, who was the head civil servant under Thatcher, John Major and (briefly) Tony Blair, told a podcast led by the Lord Speaker, John McFall, that he was with the then-prime minister in the sitting room of her suite at the Grand hotel at around 3am in October 1984, going over some government business, when there was “this mighty explosion”. He went on:
And I’d heard bombs before, so I knew it was a bomb. I suddenly came to, and I thought, ‘You’re alone with the prime minister. Somebody’s trying to blow her up. You better do something sensible.’ So I said to her, ‘I think you should come away from the windows in case there’s another bomb.’ She didn’t hesitate for a moment. She said, ‘I must see if Dennis is all right.’
So she goes to the bedroom, opens the door, bedroom in darkness. And you could hear the sounds of falling masonry through, because it was the bathroom that was collapsing. And I should have said, ‘Stand back, prime minister. This is a job for somebody more dispensable than you,’ but I had my inhibitions, so she went in. And a moment or two later, she came out with Dennis pulling his grey flannel trousers over his pyjamas. We went out into the corridor and we looked up the corridor, and amazingly the lights had stayed on despite this huge explosion in the hotel.
And when we looked up, the next suite along, we saw what looked like smoke coming out from under the door. And that was the suite that Geoffrey Howe had. So I thought the bomb must have been in there. And again, I’ll never forget it, his security man was running at the door trying to kick it in so that ... And luckily he failed because there had been a void the other side of the door. Geoffrey came out from the next room along, which was their bedroom, and came down.
Butler also recounts having to tell Thatcher later in the morning that five people were confirmed dead and two of her ministers, Norman Tebbit and John Wakeham were either trapped or badly hurt:
She didn’t hesitate for a moment. She said, ‘Well, the conference is due to begin at 9.30, and we must make sure it begins on time.’ And I was appalled. I said to her, ‘This terrible thing’s happened. Some of your closest colleagues have been killed and badly injured. You can’t be going on with a party conference.’ And she said, ‘This is our opportunity to show that terrorism can’t defeat democracy.’ Of course, she was right and I was wrong, and that’s what she did demonstrate.
Violent crime and fraud up significantly over past year, ONS crime figures show
Crime figures out today show robbery, violence with injury and fraud up significantly over the past year.
As the Office for National Statistics says in a report, the Crime Survey for England and Wales (CSEW) shows a 10% increase in overall crime in the year ending June 2024, compared to the previous year.
The ONS says that overall crime, on this measure, has been falling over the past decade, and that the 10% increase might be partly explained by the fact that the previous survey period covered a time when some Covid restrictions were in force.
But it says with some crimes there has been a “notable” rise. It says:
While most crime types did not show a statistically significant change, there were notable increases in robbery, violence with injury and consumer and retail fraud. In the year ending June 2024:
-robbery returned to levels last seen before the coronavirus (Covid-19) pandemic, rising to an estimated 139,000 incidents, compared with 60,000 incidents in YE [year ending] June 2023; although police recorded crime is our preferred source for robbery
-violence with injury also returned to pre-pandemic levels and increased to an estimated 562,000 incidents from around 376,000 incidents in YE June 2023
-consumer and retail fraud increased by 19%, reaching approximately 963,000 incidents
The crime survey measures crime by asking people what crime they have experienced. It is seen as a good way of measuring some crimes, like violence and fraud, while statistics about the crimes recorded by police are seen as a more accurate measure of other crimes, like robbery.
Here is a chart from the report with the headline crime figures, as recorded by the crime survey. There is a gap where comparable data is not available.
And here are figures for specific crimes, using a mix of crime survey data (CSEW) and police recorded crime data (PRC).
The Global Justice Now campaign group has said the UK should agree to pay reparations for slavery. It issued a statement saying:
The idea that formerly colonised countries in the Commonwealth should ‘look forward’ is a wilful misunderstanding of demands for reparations. The consequences of the UK’s abhorrent history of slavery and colonialism still reverberate globally today – the unequal impact of the global climate crisis is a potent example of how. Paying reparations is a non-negotiable if the UK hopes to meaningfully address the continued consequences of these legacies, and forge relationships rooted in trust and equity with the global south moving forwards.
Robert Peston, ITV’s political editor, has given a cautious welcome to the news (see 9.01am) that Rachel Reeves plans to change the definition of debt used in the debt target so that it targets “snuffle”. (Snuffle is public sector net financial liabilities, or PSNFL, snuffle with a silent p, he explains.) Peston explains why in a post on social media. Here is an extract.
The question is whether seeing the liabilities as a snuffle is more rational than the current picture.
I would say yes, to an extent.
On the positive side, adoption of PSNFL will allow Reeves to invest billions of pounds every year - in transport, and power generation and electricity networks - through her National Wealth Fund and GB Energy, and in partnership with the private sector, relatively unconstrained by her debt target.
The reason is that under the PSNFL definitions, the value of equity investments in private companies is deducted from debt.
However if the government were to own 100% of an investment project, in the way it typically does, then the value of that investment would not be netted off PSNFL. Or to put it another way, adopting PSNFL does not allow for an unlimited investment bonanza.
The Cabinet Office has been in touch to point out that reports of what Nick Thomas-Symonds said in the Commons earlier imply that the government is more open to an EU youth mobility scheme than it really is. (See 10.58am.) When Thomas-Symonds talked about being willing to look at what the EU proposes, he was just talking in general terms, not specifically referring to this, a source said. They pointed out that Keir Starmer has said the government has “no plans” to agree to an EU youth mobility scheme.
Starmer 'open to discussing non-cash forms of reparatory justice for slavery'
Keir Starmer is open to discussing non-cash forms of reparatory justice for Britain’s former colonies, the Guardian understands.
The prime minister is under pressure to open the door to reparations at the Commonwealth heads of government meeting (Chogm) in Samoa this week.
Caribbean countries have been pushing for the issue to be discussed at the summit, despite resistance from the UK government.
No 10 has ruled out paying reparations or apologising for the UK’s role in the transatlantic slave trade, and this uncompromising tone has irritated some Commonwealth countries.
But a Downing Street source indicated that the UK could support some forms of reparatory justice, such restructuring financial institutions and providing debt relief. The source said:
There is a general sense that these multilateral institutions give out loans to developing countries then charge large interest rates for repayments.
They added that reforming financial situations was something the UK often took a lead on and was a form of reparatory justice that would not come at a cost to UK taxpayers.
Other proposed forms of restorative justice include making a formal apology, running educational programmes, establishing cultural institutions and providing economic and public health support.
A draft of the CHOGM communique leaked to the BBC said that governments, “noting calls for discussions on reparatory justice with regard to the transatlantic trade in enslaved Africans and chattel enslavement … agreed that the time has come for a meaningful, truthful and respectful conversation towards forging a common future based on equity.”
According to the broadcaster the communique sought to broaden the issue to include the slave trade not just across the Atlantic but in the Pacific, by saying that a majority of Commonwealth countries “share common historical experiences”.
It mentioned the practice of “blackbirding”, where Pacific islanders were kidnapped and brought to Australia where they were sold as slaves or cheap labour to work on plantations in Queensland.
In 2021 Jack Dempsey, then mayor of Bundaberg in Queensland, issued a formal apology for blackbirding.
Asked about reparations ahead of the Chogm summit Pat Conroy, Australia’s minister for the Indo-Pacific, told the Guardian:
I don’t want to get into the UK particular focus but what I can say is from an Australian point of view, on things like blackbirding, it’s really important to be conscious of the past, learn from it and not be afraid of discussing it.
No 10 has ruled out making a formal apology for slavery and colonialism at Chogm.
Britain has a legal and moral case to answer over its historical role in slavery, the chair of the Caribbean’s slavery reparation commission has said. Natricia Duncan has the story.
Bahamas PM says he hopes for 'frank' conversation with Starmer over slavery reparations
Philip Davis, the prime minister of the Bahamas, has said that he wants to have a “frank” conversation with Keir Starmer about slavery reparations.
In an interview with Politico, Davis also said that he was encouraged because he had worked with Starmer on death penalty cases when they were both lawyers in the past – and he knew Starmer to be a “fair-minded” person.
Davis was speaking to Politco’s Dan Bloom, who says the two prime ministers worked together on a case in the early 2000s that led to the mandatory death penalty being abolished in the Bahamas.
On the subject of reparations, referring to Starmer’s comment about wanting to look to the future not the past, Davis said:
I don’t want to comment on his views about looking forward or on the past, but I think knowing what the past is should inform your decision-making towards the future.
Let’s have a conversation about this … We all appreciate this, the horrendous impact that the transatlantic slave business had on the African diaspora and it requires justice.
It’s not just about an apology. It’s not about money. It’s about an appreciation and embracing and understanding of what our ancestors went through, that has left a scourge on our race, culturally, mentally and physically.
Davis also said that, because they knew each other, he hoped to have a “frank” conversation with Starmer on this.
He’s not unknown to me, we have come out of the same profession, and we will have met each other during the course of our profession over the years, and I’ve always known him to be a fair-minded, just individual.
Sometimes we get hamstrung by those around us.
Green party says UK should commit to paying slavery reparations
The Green party says the UK should commit to paying slavery reparations.
Keir Starmer is refusing to talk about slavery reparations at the Commonwealth summit (during Black History Month no less).
The Green Party calls on the Government to commit to a holistic process of atonement and reparations.
Keir Starmer is refusing to talk about slavery reparations at the Commonwealth summit (during Black History Month no less).
— The Green Party (@TheGreenParty) October 24, 2024
The Green Party calls on the Government to commit to a holistic process of atonement and reparations. pic.twitter.com/rMvnTzsisI
Robert Jenrick? 'No one knows who he is,' says Farage
Nigel Farage, the Reform UK leader, has said that “no one knows” who Robert Jenrick, the Tory leadership contender, is.
Of the two candidates left in the contest, Jenrick is the one who is doing most to appeal to Tories who defected to Reform UK, because he is saying Britain should leave the European convention on human rights.
In an interview with Times Radio, Farage was dismissive of both candidates.
Asked who he would rather have a drink with, Farage said that with Kemi Badenoch, the favourite in the contest, he would need bodyguards, because she likes a verbal “punch-up”, but he said she would be “entertaining”.
Referring to Jenrick, he claimed not to remember his surname and then went on:
I know the fella. Is he the chap that one day was on the very much on the left of the Conservative party and is now on the right of the Conservative Party?... No one knows who he is.
In the same interview, when asked if it was hypocritical for him to attack Labour activists for going to the US to campaign for the Democrats when he had flown to the Republican convention to support Donald Trump, Farage said: “I paid my own airfare. That’s the point.”
That is not true. As the Guardian has reported, the £32,000 cost of his flights and accommodation was paid for by a British cryptocurrency investor, Christopher Harborne. When Farage said he paid for his own airfare, he seemed be be using the phrase to mean he got someone else to pay for it, not the Republican party.
Farage seemed to acknowledge that when the presenter asked if his flights to the US had ever been paid for by someone who was not him. He replied: “Not if I was going to actively involve myself in the Trump campaign, no.”
In the past Farage has flown to the US to speak at Trump rallies. But he was not a speaker at the Republican convention.
Farage was also wrong when he implied Labour staffers were getting their flights to the US paid for so they could support the Democrats. Labour says that is not true.
Nick Thomas-Symonds, a Cabinet Office minister, has said the government will consider EU plans for a youth mobility scheme with the UK. But he ruled out agreeing free movement with the bloc.
Thomas-Symonds, who deals with post-Brexit relations with the EU, was speaking during Cabinet Office questions in the Commons this morning, where the Lib Dem MP Sarah Olney asked about a youth mobility scheme.
She said:
I’m sure government can agree that support and providing opportunities for young people should be central to the policy of any government. We are glad to see the government working to build closer economic and cultural ties with Europe. We want to forge a new partnership with our European neighbours, built on cooperation, not confrontation and move to a new comprehensive agreement.
We must build rebuild confidence through seeking to agree partnerships or associations helping to restore prosperity and opportunities for British people.
So I ask the minister if he will consider the extension of a youth mobility scheme and acknowledge the breadth of ways in which this would strengthen our cultural, educational and economic links with Europe.
Thomas-Symonds replied:
We are not going to give a running commentary on the negotiations. We will obviously look at EU proposals on a range of issues, but we are clear that we will not return to freedom of movement.
UPDATE: The Cabinet Office has been in touch to say this report of what Nick Thomas-Symonds said in the Commons implies that the government is more open to an EU youth mobility scheme than it really is. When Thomas-Symonds talked about being willing to look at what the EU proposes, he was just talking in general terms, not specifically referring to youth mobility, a source said. They pointed out that Keir Starmer has said the government has “no plans” to agree to an EU youth mobility scheme.
Updated
Rachel Reeves, the chancellor, has posted a video about next week’s budget on social media. There is nothing original in what she says in it, but the tone is interesting. Even though ministers have spent the last few months talking about the dire state of the public finances and public services, and even though the budget may include a record increase in taxation (at least in cash terms), in this video Reeves is notably upbeat about what it could lead to in the future.
A Budget to fix the foundations and deliver change. pic.twitter.com/idCi79qil9
— Rachel Reeves (@RachelReevesMP) October 24, 2024
Gita Gopinath, deputy managing director at the IMF, has implied the IMF would support the UK changing the debt definition to allow more public investment, the BBC’s economics editor, Faisal Islam, reports. He posted this on social media.
IMF top official Gita Gopinath tells BBC when asked about UK fiscal rule change allowing more investment, that “public investment is needed in the UK. If you compare the UK to G7 countries, investment has fallen short”
Also stresses “stabilising debt” over 5 years
Starmer under pressure to accept case for slavery reparations, as Commonwealth minister claims UK will eventually agree
Keir Starmer has been told by Commonwealth leaders he must come to the table to discuss reparations for the “ill effects” of slavery, PA Media reports.
Commonwealth nations are looking at an agreement that could begin conversations on the issue through a communique, according to the BBC.
Frederick Mitchell, foreign minister for the Bahamas, told the Today programme that Starmer should take part in a discussion which “needs to be had about the history” around reparations. Mitchell said:
There appears to be even a reluctance to have the conversation start.
Many of the institutions in the UK have already conceded the point of apology, the British government isn’t quite there.
But at this time, the discussion needs to be had about the history of this and the ill effects of what happened after slavery was abolished, which continue to affect our societies today.
Mitchell said that he expected discussions on the wording of the communique to continue overnight and that leaders might have to get involved in settling the details. He indicated there was some opposition to having a declaration on reparatory justice in the communique – even though countries like his, he said, thought this wording was “innocuous” and that there really should be “an apology and a commitment to reparations”.
He also predicted that eventually Starmer would shift on this. “It’s only a matter of time before his position changes, I am confident of it,” Mitchell said.
According to a BBC report, the draft communique says:
Heads [of government], noting calls for discussions on reparatory justice with regard to the transatlantic trade in enslaved Africans and chattel enslavement … agreed that the time has come for a meaningful, truthful and respectful conversation towards forging a common future based on equity.
But Downing Street insists that it’s relaxed about the draft communique mentioning reparations. A source said:
It’s written by consensus and some language along these lines on reparations is what were expecting. Our position hasn’t changed.
No 10 has ruled out paying reparations or apologising for slavery. But the source said the government was open to some kinds of reparatory justice, such as reform of multilateral financial institutions.
They added that reparations were not a priority for the whole of the Commonwealth and that issues such as climate change and the oceans remained top of the agenda.
In an interview on the Today progamme this morning, asked if it was now time for the UK to consider reparations, Lisa Nandy, the culture secretary, replied:
The prime minister has been clear, and I believe that he’s right, that we have to focus on the future. There are serious, serious challenges facing countries like the Bahamas. They’re dealing with a triple crisis of climate change, they’re some of the worst affected countries in the world for climate change, historic debt on very poor terms, and growing problems of poverty. We’ve got to help them break out of that.
As a country that’s home to the City of London, that is the legal jurisdiction where many of those debts are settled, and one of the biggest insurance markets in the world, we are almost uniquely placed to help them do that.
Asked if reparations were wrong in principle, Nandy said she would not criticise people who supported the idea, or people who have paid reparations already. She went on:
But I think the idea that at this moment in the UK’s history, with the challenges facing other countries in the world and the world collectively, that we would be focused on anything other than dealing with the challenges that we have now and how future-proof the world against climate change would be the wrong approach. And I fully support the prime minister.
Speaking to reports on his flight to Samoa, when asked about reparations, Starmer said he was focused on the future, not the past.
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Keir Starmer sat with the Australian prime minister Anthony Albanese during a welcome reception banquet at the Commonwealth heads of government meeting in Samoa, PA reports. PA says:
The prime minister wore a suit but no tie, while Mr Albanese wore a tropical shirt and shorts.
A Samoan church minister offered a blessing at the start of the gathering, and joked the king and queen had “brought the British weather to us”, adding: “We can blame them for this.”
Samoa has been lashed by heavy rains in recent days as the Commonwealth summit takes place.
Starmer drank from a glass of wine as he took part in a toast to the Commonwealth alongside politics leaders.
Samoa is 12 hours ahead of UK time, and so for much of today (our time) Starmer may be trying to get some sleep.
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What IFS says about changing definition of debt used in government's fiscal rules to PSNFL
This is what the Institute for Fiscal Studies said in a briefing published last month about changing the defintion of debt used in the government’s debt rule from underlying PSND to PSNFL. (See 9.01am.) The IFS is quite sceptical, and warns that more borrowing could push up interest rates (which is also what the Conservative party says).
It is hard to avoid the suspicion that the government is attracted not by any theoretical advantages of a change in the debt rule, but by the fact that it would allow for significantly more borrowing for investment. Here, it is worth pausing to comment on scale. On existing plans, public sector net investment is currently forecast to be £53 billion in 2028–29. Net gilt issuance in 2028–29 is forecast to be £87 billion. Against that, any change that allowed for an extra £50 billion of borrowing for investment would be an enormous shift, even if not all of this extra space were used at once. If even half that figure were spent on additional investment, debt (on the previous target’s measure) could be more than 3% of national income higher by the end of the parliament and would almost certainly still be rising at the end of the forecast period, even accounting for typical feedback effects via a larger economy.
Such a large change would also raise questions about the government’s capacity to spend this money well, and about the possible impact on government borrowing costs and interest rates more generally. Previous Treasury modelling suggested that an increase in borrowing of 1% of GDP might increase interest rates by between 50 and 125 basis points, depending on economic conditions. An extra £50 billion of borrowing in 2028–29 (roughly the amount of extra ‘headroom’ provided by a switch to PSNFL) would amount to around 1.6% of GDP. To the extent that the additional investment produced material benefits for the productive potential of the economy, we would expect the impact on interest rates to be smaller. But the point is, additional borrowing on this scale could have a material impact on interest rates.
The IFS also argues that changing the definition could be seen as a breach of Labour’s manifesto promise to stick to its “strong fiscal rules”. But the manifesto did not commit the party to a specific debt definition, and the IFS acknowledges that what measure of debt is used for these purposes is probably “not a mainstream political issue”.
Starmer defends plan to change definition of debt used in fiscal rules, rejecting claim this might spook investors
Good morning. Officially Rachel Reeves, the chancellor, will unveil Labour’s first budget (and probably the most important of the whole parliament) on Wednesday next week. But in practice budget announcements are now two-week news events, because the Treasury knows that it is bad idea to spook the markets with lots of surprises on the day and so this government, like past governments, has been engaged in elaborate pitch-rolling, ensuring that there are plenty of reports in advance giving a broad idea of what is coming. Not all the stories you might read this week about what will be in the budget will be accurate, or Treasury-sanctioned, but quite a lot of them are.
One of the measures subject to a lot of pitch-rolling is the proposal to change the official definition of debt used in the government’s fiscal rules. Reeves has been hinting for a while that she will change this and today, at a meeting of the IMF in Washington, she will confirm this.
The government is committed to having debt falling as a share of national income in the fifth year of the economic forecast (ie, in five years’ time). The last government used to define debt as headline public sector net debt (PSND) but when Rishi Sunak was chancellor he changed this to underlying PSND – which is PSND excluding the Bank of England’s liabilities. This is the definition currently in use.
The Institute for Fiscal Studies recently published a good paper explaining what alternative definitions Reeves could choose, and today Larry Elliott, Pippa Crerar and Richard Partington say she will opt for public sector net financial liabilities (PSNFL). They says in their story:
This yardstick – which will replace public sector net debt – will take into account all the government’s financial assets and liabilities, including student loans and equity stakes in private companies, as well as funded pension schemes.
This would give the chancellor room to increase borrowing for investment in long-term infrastructure …
Had [Conservative chancellor Jeremy] Hunt adopted a PSNFL target in March, it would have added about £53bn to his borrowing headroom.
Keir Starmer is at the Commonwealth heads of government meeting (Chogm) in Samoa and, as Eleni Courea reports, he was asked if he was worried that changing the definition of debt would scare investors. Starmer replied:
The chancellor has made clear, both in her conference speech and consequently, about her desire to see more investment in the economy.
It’s a matter of record that investors in the UK have previously said that UK investment levels are too low both in terms of public infrastructure and in terms of business investment more generally.
Starmer said the budget as a whole would be “unashamedly pro-business”. He said:
Investors shouldn’t be worried about this budget. This government is prioritising growth. It’s unashamedly pro-business.
You’ll have seen from the significant vote of confidence in the UK economy at the international investment summit that it is already the case that investors are responding positively to the government’s plans.
He also said his government’s first budget would be a “significant” one that would “give a sense of how we intend to do business”.
Here is the agenda for the day.
9.30am: Pat McFadden, the Cabinet Office minister, takes questions in the Commons.
11.30am: Downing Street holds a lobby briefing.
Noon: Angela Rayner, the deputy PM and housing secretary, gives a speech to the Local Government Association.
Afternoon (UK time): Rachel Reeves, the chancellor, is in New York for the annual IMF meeting, and is due to give broadcast interviews.
Also, the football governance bill is being introduced today in the House of Lords.
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