Friday, February 09, 2024
UK Business leaders warn against large-scale tax cuts
People want stability and public services properly funded, not tax cuts 'driven by short-termisn'
February 8, 2024
The boss of the Confederation of British Industry said “large-scale” tax cuts should be kept off the table this year with the focus instead on funding public services.
Rain Newton-Smith said companies do not want tax reductions “driven by short-termism” as she also called for green investment to hit about £50bn a year by the end of the decade.
The CBI director-general said companies are crying out for sustainable growth in the British economy.
Her advice comes after the International Monetary Fund issued a strong warning to Chancellor Jeremy Hunt against cutting taxes in his Budget in March, stressing the need to boost key areas of public spending instead.
“Business investment is set to fall 5 per cent this year, in part because of higher interest rates needed to bring inflation down,” Ms Newton-Smith said.
“As one business leader told me, they don’t want to see tax cuts driven by short-termism which leads to higher interest rates. They want stability so they can invest for the future.
“To fund our public services with an ageing population, we must keep large-scale tax cuts off the table. The need for growth that is sustainable, not fuelled by pre-election giveaways, is predicated on a bedrock of stability.
“That focuses on the UK’s amazing capabilities and sets out a clear, long-term plan to make the most of them. Which we stick to. We can even call it an industrial strategy.”
In recent interviews with business leaders, the CBI found that a third of firms felt like they had lost investments “because of UK-specific factors”. Nine in 10 UK-owned firms spoken to by the CBI “expressed a negative view about the UK as a place to invest…that without bold action, the UK’s competitiveness is drifting away”, she said.
Sustainable growth can only come if it also stops stoking persistently high inflation, said Ms Newton Smith.
“We must build resilience in our economy and society, while enabling us to play our part in mitigating climate change. And that takes investment – both public and private.”
Speaking as Labour dropped its £28bn green investment pledge, she said reaching the net-zero target by the middle of the century would require green investment to rise from £10bn a year today to £50bn by 2030.
“The majority will need to come from the private sector. But public sector investment in green technologies is essential as a catalyst. In the UK, overall public sector investment is too low and too volatile. The average OECD [Organisation for Economic Co-operation and Development] country invests nearly 50 per cent more.”
Surge in no-fault evictions by bailiffs in England
By Harry Farley
The number of no-fault evictions by bailiffs in England surged by almost 50% last year, compared with 2022.
Under Section 21 notices, people who rent their homes can be removed without landlords having to provide a reason.
The government has promised its new Renters (Reform) Bill will ban Section 21 evictions in England and Wales.
But campaigners have warned the bill is "on life support" and have accused ministers of "deprioritising" the reforms.
The number of households repossessed by bailiffs after receiving a Section 21, or no-fault, notice rose by 49% last year from 6,339 to 9,457.
Housing charity Shelter says only the most desperate tenants are evicted by a bailiff. Most leave before the end of their notice period when they receive a Section 21 order.
In addition to the sharp rise in bailiff evictions, the total number of no-fault notices has risen to a seven-year high
What are your rights when you're renting?
Latest figures from the Ministry of Justice show 30,230 were served last year, up from 23,622 in 2022, a 28% increase.
The Conservatives promised to ban no-fault evictions in their 2019 general election manifesto.
MPs began debating the Renters (Reform) Bill in October, but it has yet to complete its passage through the Commons.
Landlords have warned that banning no-fault evictions will force many of them to sell and therefore reduce the availability of homes to rent.
Shelter pointed to figures showing that since the government first promised to end no-fault evictions, a total of 26,311 bailiff repossessions had been granted.
Chief executive Polly Neate accused the government of "bowing to vested interests while renters are marched out of their homes in their thousands".
As the figures were released, Commons leader Penny Mordaunt outlined the upcoming business in Parliament, but made no mention of the bill.
Tom Darling, campaign manager of the Renters' Reform Coalition, said: "What a shocking juxtaposition - on the day figures confirm our fears that Section 21 'no-fault' evictions have seen a huge increase, with all the misery that entails, we hear that the long-awaited Renters (Reform) Bill is now on life-support after being deprioritised by the government."
The government insisted the bill would return to the Commons soon.
A spokesperson for the Department for Levelling Up, Housing and Communities said: "Our landmark Renters (Reform) Bill will deliver a fairer private rented sector for both tenants and landlords.
"It will abolish Section 21 evictions - giving people more security in their homes and empowering them to challenge poor practices."
Campaigners have called for greater protection of renters
By Harry Farley
Political correspondent
The number of no-fault evictions by bailiffs in England surged by almost 50% last year, compared with 2022.
Under Section 21 notices, people who rent their homes can be removed without landlords having to provide a reason.
The government has promised its new Renters (Reform) Bill will ban Section 21 evictions in England and Wales.
But campaigners have warned the bill is "on life support" and have accused ministers of "deprioritising" the reforms.
The number of households repossessed by bailiffs after receiving a Section 21, or no-fault, notice rose by 49% last year from 6,339 to 9,457.
Housing charity Shelter says only the most desperate tenants are evicted by a bailiff. Most leave before the end of their notice period when they receive a Section 21 order.
In addition to the sharp rise in bailiff evictions, the total number of no-fault notices has risen to a seven-year high
What are your rights when you're renting?
Latest figures from the Ministry of Justice show 30,230 were served last year, up from 23,622 in 2022, a 28% increase.
The Conservatives promised to ban no-fault evictions in their 2019 general election manifesto.
MPs began debating the Renters (Reform) Bill in October, but it has yet to complete its passage through the Commons.
Landlords have warned that banning no-fault evictions will force many of them to sell and therefore reduce the availability of homes to rent.
Shelter pointed to figures showing that since the government first promised to end no-fault evictions, a total of 26,311 bailiff repossessions had been granted.
Chief executive Polly Neate accused the government of "bowing to vested interests while renters are marched out of their homes in their thousands".
As the figures were released, Commons leader Penny Mordaunt outlined the upcoming business in Parliament, but made no mention of the bill.
Tom Darling, campaign manager of the Renters' Reform Coalition, said: "What a shocking juxtaposition - on the day figures confirm our fears that Section 21 'no-fault' evictions have seen a huge increase, with all the misery that entails, we hear that the long-awaited Renters (Reform) Bill is now on life-support after being deprioritised by the government."
The government insisted the bill would return to the Commons soon.
A spokesperson for the Department for Levelling Up, Housing and Communities said: "Our landmark Renters (Reform) Bill will deliver a fairer private rented sector for both tenants and landlords.
"It will abolish Section 21 evictions - giving people more security in their homes and empowering them to challenge poor practices."
Skilled Worker Shortage Stalls U.S. Construction Boom in 2024
- The U.S. construction industry is grappling with a critical shortage of skilled workers, affecting project costs and completion times.
- The industry's labor deficit is exacerbated by the Great Resignation, a diminishing pool of young workers, and unfavorable working conditions.
- China's property sector problems could have significant implications for the U.S. construction market, influencing global metal demand and prices
The Construction MMI (Monthly Metals Index) moved in a relatively sideways trend. Steel prices continuing to flatten out, along with bar fuel surcharges dipping in price, kept the index from breaking out of the sideways movement we’ve witnessed since December. As the index enters 2024, U.S. construction news continues to focus on high interest rates and when the hawkish Fed might consider dropping them. Along with this, the U.S. construction market still faces labor shortages, particularly for specialized skills. While predictions indicate that U.S. construction projects will continue to increase in the future, these current trends remain extremely taxing for the sector.
Construction News Indicates Lack of Skilled Workers Problematic
According to construction news sources, the construction industry in the United States continues to face a severe shortage of skilled workers, making it difficult for the sector to satisfy the growing demand for building projects. According to the Associated Builders and Contractors (ABC), the business needs over half a million people. Meanwhile, construction news outlets report that contractors continue to see significant demand from an increasing number of mega-projects, sustainable energy facilities, and infrastructure.
Among the numerous crafting positions that need filling are positions for heavy equipment operators, carpenters, masons, electricians, and plumbers. Most industry players anticipate that there will be a continued high demand for these positions, requiring between 300,000 and 546,000 additional hires per year on top of regular employment figures. In particular, the sector continues to struggle to find younger people to fill these roles. The Great Resignation, a declining pool of potential new hires, and unfavorable working conditions are just some of the reasons for these difficulties.
Ramifications
Of course, this lack of skilled construction workers affects the industry in a number of ways. For instance, projects may cost more to complete and take longer to finish. There could also be problems with productivity and quality control, raising questions about the general caliber of building projects. Construction companies are already investigating several strategies to alleviate this problem, including putting training and apprenticeship programs in place, collaborating with hiring agencies, and using technology and automation to lessen the impact of worker scarcity on project costs and construction deadlines.
China’s Property Sector More Closely Tied to U.S. Construction Than Assumed
China’s robust demand for imports at the start of 2024 left many questioning (and concerned) if the news signaled a thriving Chinese economy or the opposite. However, even if China’s economy or property sector isn’t performing at its peak, this doesn’t impact U.S. construction, right? Think again.
China remains one of the top global consumers of metals. This means that where China goes, global metal demand goes as well. If China’s metal demand proves lackluster in the immediate future, it will snowball into other global construction sectors. Moreover, with an estimated 20 million unbuilt and delayed pre-sold homes, China has a huge backlog of unfinished real estate endeavors that will cost significant amounts of money to finish. Developers continue to experience financial difficulties as a result of this fact. Now it seems that these difficulties may spread to the global construction market, including the U.S.
There are several ways in which China’s property sector difficulties might affect American building projects, according to construction news sources. For instance, if Chinese developers continue to encounter finishing projects, it could result in a decline in the market for building supplies and machinery. This, in turn, could impact American manufacturers and suppliers. In addition, if Chinese metal demand drops significantly due to domestic property construction issues, global demand for several major metals, particularly steel and aluminum, could drop. This would result in higher prices for the U.S. and any other country sourcing these metals from China.
These facts continue to ensure that any construction news out of China should get top priority.
By Jennifer Kary
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Irresponsible not to ditch £28bn green pledge, Starmer says
Starmer confirms end of Labour's £28bn green policy
BBC
8 February 20248 February 2024
Play video Starmer confirms end of Labour's £28bn green policy plan from BBC
Summary
Labour says it will no longer spend £28bn a year on environmental projects if it wins the upcoming general election, blaming the Conservatives for "crashing the economy"
Party leader Sir Keir Starmer says all of Labour's green policies remain on the table, but the Warm Homes insulation plan will be "scaled back"
The pledge to spend £28bn a year on clean energy, green jobs and home insulation was first pledged in 2021
Ditching the idea has come under fire - Labour's former shadow environment secretary Barry Gardiner called it "economically illiterate"
The Green Party, the SNP, and the Unite union have also criticised dropping the scheme - while Rishi Sunak says Labour "doesn't have a plan"
Summing up: Labour backtracks on green pledges
So what just happened?
As our live coverage draws to a close, here is a summary of Labour's U-turn on its green pledges and the reaction to today's announcement.
'Responsible' for Starmer to ditch pledge, says Scottish Labour leader
It is "completely responsible" for Labour to avoid attaching a figure to its green investment plan, given the "economic carnage" created by the Conservatives, says Scottish Labour leader Anas Sarwar.
He says the party is still committed to the "economic opportunities" of the green transition, highlighting plans for GB Energy - a publicly-owned national energy company - which would be headquartered in Scotland.
Sarwar stresses that "the ambition, the plan, and the pledges" have not changed - they are "firm", he says.
He says: "They [the green plans] are big parts of an incoming UK Labour government's agenda.
"But we have to be fiscally responsible."
Starmer sees U-turns as pragmatic - opponents eye a vulnerability
Chris Mason
Political editor
This is a U-turn where every degree of the twist has played out in plain sight.
A policy number - £28bn - in 2021, diluted in its intended delivery in 2023, and binned in 2024.
Why? Because, in the end, the party felt shackled to a number they believed could only be a political negative: they were never likely to achieve that level of spending anyway, given their self imposed economic rules.
And the party's critics said it was a number that would lead to vast borrowing or tax rises.
But attempting to articulate that nothing will change in practical outcomes - as Sir Keir does - while junking the headline figure, isn’t an easy argument to make.
And while the Labour leader tries to claim U-turns are pragmatic shifts to acknowledge changing circumstances, the breadth of his changes of mind - his political opponents hope - is a vulnerability they want to expose – and they see this as the latest case study.
Labour's dropped pledge is a massive backward step, say Green Party
Labour's announcement to "stand down" the £28bn green investment pledge is a "massive backward step for the climate, economy and jobs", the Green Party have said.
Speaking on the BBC News Channel, co-leader of the Green Party Carla Denyer criticised Labour's timing of the announcement "on the very day we learn global warming has exceeded 1.5 degrees across the entire year".
She said that the "UK's future prosperity is dependent on greening our economy and that requires green investment" and warned that there is "a risk that this U-turn will push businesses to take their investments elsewhere".
Ms Denyer described the decision as a “question of political will and priorities” and argued that "Labour can choose whether to have that fiscal inheritance as a millstone round their neck or to do something differently".
Asked what the Green Party's policy on green investment was, she said that they would at least double the £28bn figure and fund green transition through tax reforms.
Starmer does not have plan for Britain, says Sunak
The prime minister has accused Sir Keir Starmer of having "no plan" for Britain, after Labour dropped its pledge to invest £28bn a year on green policies.
Rishi Sunak said, "the uncertainty about what a Labour government would do is a real risk to our country’s future".
Sir Keir has "confirmed he doesn’t have a plan for Britain" by dropping his party's flagship investment plan, Sunak added.
The prime minister said Labour have also set out "no plan" to pay for the remaining watered-down green investments - "this will mean higher taxes for working people to fill Labour’s black hole".
“That’s why the choice this year is to stick with our plan that’s working, or go back to square one with Labour which would put our country’s future at risk," he added.
Greenpeace: Starmer's caved like a house of cards
Greenpeace says Keir Starmer has "caved like a house of cards in the wind".
Areeba Hamid, Greenpeace UK’s co-executive director, says that climate action remains hugely popular among voters.
"It would be ironic indeed if Labour’s attempt to make their manifesto ‘bombproof’ from Tory attack ended up just bombing on the doorstep instead," she says.
Hamid criticises Labour for scaling back planned investment, particularly int two areas: home insulation and public transport.
She adds:
What has changed in Labour's green investment plans?
Oscar Bentley
BBC Political Research Unit
Keir Starmer insists most of the party's green plans "remain on the table".
So what has changed?
It would be 'irresponsible' not to drop £28bn pledge - Starmer
Sam Francis
Political reporter
Sir Keir Starmer has argued it would be "irresponsible" not to drop the £28bn pledge due to the state of the economy.
Under questioning by BBC Political Editor Chris Mason, Starmer said the pledge was made when “interest rates were very low”.
But now interest rate payments on government debt “is measured in tens of billions of pounds”, he said.
“Everywhere in the real world people have to adjust their decision when the circumstances change”, this is just “common sense and everyone understands,” he said.
“What would be really irresponsible is to know the damage done to the economy by his failed government and ignore that and pretend it didn’t happen,” he added.
Labour attempt to argue there is still an ambitious plan to green economy
Peter Saull
BBC Political Reporter
So many will now ask, what exactly does Labour stand for?
The party have put out a press release entitled: “Labour announces plans to invest in Britain’s future.”
The abandoning of the £28bn isn’t mentioned until you get to the fourth paragraph.
The document says the party’s green pledges will be paid for by an extended windfall tax on gas and oil giants, some borrowing and investment from the private sector.
It’s also notable that the release includes quotes from Keir Starmer, Rachel Reeves and Ed Miliband – who behind the scenes have not always seen eye to eye on the £28bn investment.
This is an attempt to put on a united front, and argue that Labour still has an ambitious plan to green Britain’s economy.
First major U-turn since Starmer took the job
Peter Saull
BBC Political Reporter
Sir Keir Starmer regularly comes under attack for abandoning pledges he made while running to be Labour leader.
But this is the first major U-turn on a policy announced since he took the job.
The context of the initial announcement, at the party conference in 2021, is important.
At the time, Labour was trailing in the polls, the cost of borrowing was lower, and they needed a splash.
The £28 billion a year pledge became a central plank of the party’s agenda for government.
Starmer blames 'reckless' Tory plans for dropping green investment
Sam Francis
Political reporter
Sir Keir Starmer has told the BBC that Labour was forced to drop the £28bn by the government “recklessly” planning to “max out the credit card” before the next election.
According to briefings from “Treasury insiders” there will be less money for investment due to the government's tax cuts and spending plans.
“We have to anticipate the economy as it is” and “not the one we want to inherit”, Starmer said.
Starmer told the BBC Political Editor Chris Mason that he was not interested "in the exact sums” but rather “interested in the outcomes”.
Starmer says green investment 'remains on table' despite dropping £28bn pledge
Sam Francis
Political reporter
Sir Keir Starmer has said all of Labour’s green policies “remain on the table” despite the announcement he is dropping the flagship pledge to spend £28bn a year on its green investment plan.
Speaking to BBC Political Editor Chris Mason, Starmer said there would be “no further investment commitments” made before the election “so we won’t reach the £28bn”.
Labour’s Warm Homes Plan, to upgrade Britain’s home insulation, will “be scaled back” from reaching 19 million homes over a decade to 5 million homes over five years.
“The only thing not going into the manifesto is unannounced plans that I haven’t made,” he said.
BREAKINGLabour confirms it will drop £28bn green pledge
Labour confirms what we've been talking about all day - that it will drop its pledge to spend £28bn a year on its green investment plan, in a major U-turn.
Labour leader Sir Keir Starmer says that due to the Conservatives "crashing the economy" and the chancellor's decision to "max out" the country's credit card, it "would not be possible" to reach its previous commitment.
Why does 1.5C matter?
Labour's expected U-turn comes on the same day as the world temperature breached 1.5C across an entire year for the first time.
But why does this stark milestone matter?
In 2015, world leaders pledged to try and prevent global temperatures rising by more than 1.5C.
Scientists say incremental rises by 0.1C bring with it greater risks for the planet - including longer heatwaves, more intense storms and wildfires.
The 1.5C target was agreed because there is strong evidence that the impacts of global warming would become much more extreme as the world gets closer to 2C. Some changes could become irreversible.
The projected consequences of 2C global warming versus 1.5C are significant and could include extreme hot days, sea-level rise, the accelerated loss of coral reefs as well as risks to human health, food security and water supply around the world.
Labour's polices in brief
We've been talking about Labour's expected U-turn on it's £28bn green pledge, but what are the party's other policies?
Sir Keir Starmer previously set out five "missions" for a potential first term in government.
They are:
Key reaction to Labour row-back on green promise
There's been a lot of reaction today to Labour's decision to scrap its pledge to invest £28bn in green ventures, set to be announced later today. Here are the top lines:
Labour peer backs Starmer U-turn
Labour peer and former cabinet minister Lord Peter Hain says he agrees with Sir Keir Starmer's decision to scrap his pledge to spend £28bn a year on green projects.
Speaking to BBC Radio 4's World at One programme Hain says Labour will still increase public investment and private investment in green energy, but, he adds, the £28bn "is not going to be possible immediately".
BBC Verify
What happened to Labour's £28bn green pledge?
Labour's green pledge was first announced in September 2021, when shadow chancellor Rachel Reeves said her party would put £28bn every year of this decade towards the transition to a green economy.
But how did it change?
In June 2023, Reeves said the £28bn would not be spent on day one of a Labour government because of the poor economic picture and the soaring cost of borrowing.
Then in January 2024, Labour leader Sir Keir Starmer said his party would spend less if the amount of borrowing needed would break its self-imposed fiscal rules. These include a pledge that government debt should be on course to fall as a share of the size of the economy in five years.
And the party said that every pound invested by the government in clean energy production would have to be matched by three pounds of private investment.
Also, the additional amount to be invested was reduced by several government announcements, such as the £8bn of emissions-reducing spending announced in the October 2021 Spending review that would count towards the £28bn total, and the £2bn pledged to the hydrogen industry.
That implies Labour would not have to spend as much as an extra £28bn a year.
But as recently as 6 February, Starmer was still using the £28bn figure, telling Times Radio: "We're going to need investment - that's where the 28 billion comes in."