Stay Ahead of the Political Curve

Cash-strapped Lib Dem council to pay new boss more than Prime Minister

30th January 2025

"A Liberal Democrat-run council will pay its new chief executive more than the Prime Minister, despite cutting 300 jobs" reports The Telegraph.

The next head of cash-strapped Dorset Council will be paid up to £200,000 – £34,000 more than the £166,000 earned by Sir Keir Starmer.

The successful candidate will also receive a £10,500 “golden hello” despite the local authority being set to lay off 6 per cent of its employees to reduce its wage bill by £12.5 million.

From April, locals will also face a 5 per cent increase in their council tax.

Benjamin Elks, of the TaxPayers’ Alliance, said: “Local taxpayers footing the bill for telephone number salaries will be demanding immediate results.

“Council top brass have been receiving big money while paring back essential services like bin collections, but don’t seem to be shy in coming back to taxpayers for ever more council tax.

Rachel Reeves says third runway at Heathrow could be built and in use by 2035

30th January 2025

"Heathrow's third runway could be built and in use by 2035, Rachel Reeves has signalled" reports the Evening Standard .

Asked for a timeline on the plans, which she backed on Wednesday, the Chancellor told BBC Breakfast: "We want to see spades in the ground in this Parliament.

"We have asked Heathrow to come forward with plans by this summer, and then we want to grant that development consent order by the end of this Parliament, so we can get the diggers in the ground to get this project up and running."

Ms Reeves said reforming the planning system would meanwhile "make it easier to build big infrastructure projects, like a third runway at Heathrow".

Pressed when flights would take off from the airport, the Chancellor added: "I think we can get that done in a decade."

Liz Kendall Confirms £8.6bn Welfare Cap Breach, Blames Conservative Government

30th January 2025

Work and Pensions Secretary Liz Kendall has confirmed that the welfare cap was exceeded by £8.6bn in the 2024/25 financial year, attributing the breach to the policies of the previous Conservative government.

In a written ministerial statement, Kendall explained that the cap, set at £137.4bn, was exceeded primarily due to increased spending on Universal Credit and disability benefits. She emphasized that this outcome had been anticipated since March 2023, yet no preventive measures were taken by the previous administration.

"The forecast breach, due in particular to expected higher expenditure on Universal Credit and disability benefits, is unavoidable given the inheritance from the last government," Kendall stated.

"The likely scale of the eventual breach has been known since March 2023. No action was taken by the previous administration to avoid it."

Kendall noted that while the Labour government is committed to making difficult financial decisions, addressing the breach through immediate and severe welfare cuts was not the right approach.

Future Welfare Spending Reforms Planned

Kendall also confirmed that the government will introduce new measures later this year to manage welfare spending. These will include reforms to health and disability benefits as well as initiatives to combat welfare fraud.

The welfare cap, originally introduced in 2014 by then-Chancellor George Osborne, was intended to set a spending limit on certain types of benefits (approximately half of total welfare spending). If the cap is exceeded, the government is required to formally explain the breach, serving as an incentive to control costs.

However, economists have questioned the effectiveness of the cap, noting that this is the fourth time it has been breached. Previous governments have responded to breaches by adjusting the cap's level rather than significantly reducing spending.

In the 2024 budget, Chancellor Rachel Reeves updated the cap for 2029-30, with MPs scheduled to vote on the revised level.

Two Tory donors pay £25,000 to attend Reform fundraising dinner

30th January 2025

"Two major Conservative donors, Bassim Haidar and Mohamed Amersi, paid £25,000 each to attend a Reform fundraising dinner on Tuesday night, and sources say the party brought in pledges of more than £1m beforehand from business people" reports the Guardian.

Reform sources said ticket prices ranged from £10,000 for the dinner to £25,000 for a seat at the top table with Nigel Farage at Oswald’s in Mayfair, central London.

Haidar, an IT billionaire and Lebanese-Irish national, gave the Conservatives more than £700,000 in the run-up to the last election and is one of a string of Tory backers who have flirted with Reform as it grows in the polls.

Amersi told the Guardian: “The energy in the room was just really electric. It does feel like momentum is behind Reform and the question is what happens to the strands of conservatism, Reform and the Conservative party. People like me, who straddle both, will certainly be pushing for a unified stance …

“Mr Farage was impressive as ever and I was particularly impressed by the young chairman, Zia Yusuf, who was dynamic and articulate. Nick Candy, of course, is also an amazing figure to have there. He is a doer.”

Topics discussed included Reform’s chances in the local elections and in Wales and Scotland. Donors who attended say they were told that 190,000 people had signed up to be Reform UK members.

Reeves’s speech was more a pitch to keep her job than a real plan for growth

29th January 2025

"The slogan on the podium read “kickstart economic growth”, but over the course of 45 minutes, Rachel Reeves delivered what felt more like a televised plea to keep her job" reported The Telegraph.

For anyone lucky enough to still be in work after the Chancellor’s jobs-killing Budget, and therefore too busy to watch her speech live, the gist of it was this: I might have made things worse, but I can make them better if you let me carry on for another 10 years.

The key to prosperity, she said, is stability. At a time when Sir Keir Starmer is having to contemplate whether to sack her, this felt like a less-than-subtle hint about her own position.

“We stand at a moment of global change,” she said, grandly. “I want to see the sights and the sounds of the future arriving.”

Ms Reeves, of course, would far rather talk about a future that might never arrive than a present that, thanks to her, is looking bleak.

By shifting the focus onto projects that will take at least a decade to realise, she avoided having to talk about the anti-growth measures she has championed, such as increasing employers’ National Insurance contributions, which has stifled growth and could cost 150,000 jobs according to some estimates.

To her credit, the Chancellor did acknowledge that the tax rise “has consequences for business and beyond” but instead of fixing that problem in the here and now, she talked only about grand schemes that, conveniently enough, the Government will not have to deliver before the next election.

As expected, she backed a third runway for Heathrow, which is unlikely to be ready before 2035 at the earliest, with years of planning and legal rows to come. She resurrected the idea of an Oxford-Cambridge arc – an idea to connect the two university cities by developing thousands of new homes and better transport between them – to create Europe’s version of Silicon Valley, which has been on, then off, then on again for decades.

Britain, she said, should be the best place in the world to be an entrepreneur, which makes her decision to make it more expensive for wealth creators to employ people all the more incoherent.

Taken at face value, there were plenty of positives in the Chancellor’s speech. Heathrow expansion and the Oxford-Cambridge arc have been big asks for British business for longer than most people can remember. Speeding up the planning system, and spending less time worrying about protecting bats and newts, is something most voters can get behind. Building an extra Thames crossing to unblock a bottleneck to Channel exports will help trade. Never mind the now, just think about tomorrow.

However, journalists who had made the trip to a Siemens medical technology site in Eynsham, near Oxford, quickly pricked her bubble.

If she is so committed to growth, the man from Channel 5 News asked, would she rule out any further tax increases on businesses, which have been the biggest barrier to growth since Labour came to power?

Ms Reeves, looking like the Wizard of Oz after the curtain was pulled back, could not rule that out.

What about Angela Rayner’s workers’ rights package, forecast to cost businesses £5 billion per year? Scrapping that could boost growth now, one reporter pointed out, rather than having to wait 10 years.

Ms Reeves’s rather odd response was that the workers’ rights package “gives people the confidence to go out and spend”, perhaps unaware that people don’t go out and spend if they have lost their job because Labour has made it too expensive for firms to employ them.

Brexit and the US Election:

1. How might Donald Trump's re-election impact the UK's post-Brexit relationship with the EU?

Trump's re-election presents both challenges and opportunities for the UK's relationship with the EU. On one hand, Trump's potential trade war with the EU, fuelled by threatened tariffs, could put the UK in a difficult position. A preferential trade agreement between the US and UK, while beneficial economically, might signal to the EU that the UK is prioritizing its relationship with the US over a closer relationship with the EU. This could hinder attempts at a "reset" in UK-EU relations.

On the other hand, some commentators believe that Trump's re-election could strengthen EU-UK ties. The EU might see the UK as a key ally in navigating the challenges posed by a Trump presidency. This could lead to new security agreements and a greater willingness to collaborate on issues of mutual interest.

2. Could a US-UK trade deal undermine the UK's attempts to improve relations with the EU?

Yes, a US-UK trade deal could potentially complicate the UK's efforts to rebuild its relationship with the EU. The EU might perceive such a deal as evidence that the UK is prioritizing its transatlantic ties over its European ones. This could create tension and make it more difficult to negotiate agreements on issues like security, trade, and data sharing.

3. What are the potential benefits of a US-UK trade deal for the UK?

A US-UK trade deal could offer significant economic benefits for the UK. The US is the UK's largest trading partner, and a deal could reduce tariffs and other barriers to trade, boosting exports and creating new opportunities for businesses. It could also offer the UK some protection from a potential global trade war initiated by Trump.

4. What are the potential downsides of a US-UK trade deal for the UK?

A US-UK trade deal could have several downsides. It could lead to increased competition for UK businesses from American companies and might necessitate compromises on regulatory standards and labour protections to align with US practices. It could also strain relations with the EU and complicate the UK's efforts to establish a new post-Brexit identity.

5. How does Keir Starmer's approach to Brexit differ from his predecessors?

Starmer has pledged to pursue a "reset" in relations with the EU, seeking closer collaboration on areas like security and defence. He has also emphasized the importance of maintaining a strong relationship with the US, despite Labour's traditional alignment with the Democratic party. However, he has maintained the "red lines" established by his predecessors, ruling out a return to the single market and customs union and rejecting freedom of movement.

6. What are the EU's priorities in negotiating a future relationship with the UK?

The EU is prioritizing a stable and predictable relationship with the UK, focusing on areas like security cooperation and trade. They are also keen to see the UK uphold its commitments under the Withdrawal Agreement, particularly with regards to the Northern Ireland Protocol. The EU views a youth mobility scheme as "indispensable" for a strong future relationship, a policy Starmer has so far rejected.

7. Is the UK likely to face pressure to choose between a close relationship with the US or the EU?

Yes, the UK could face pressure to choose sides in the event of a global trade war initiated by the US. If the EU retaliates against US tariffs, the UK might have to decide whether to align with its European neighbours or prioritize its relationship with the US. This decision could have significant economic and political consequences.

8. What are the key challenges facing the UK in navigating its post-Brexit relationships?

The UK faces several key challenges in navigating its post-Brexit relationships. Balancing the desire for closer ties with the EU while maintaining a strong relationship with the US will require careful diplomacy. Negotiating trade deals that benefit the UK economy without compromising standards or alienating partners will also be crucial. Ultimately, the UK will need to define its new role in the world and establish its priorities in a rapidly changing geopolitical landscape.