Good morning. Today the Institute for Fiscal Studies has launched its interactive ‘Be the Chancellor’ tool. In a press release announcing it, Tim Leunig, the chief economist at Nesta, which has developed it with the IFS, says:
To govern is to choose. This tool will help policymakers, would-be policymakers, and those who seek to influence them make better choices. As it makes clear, there are no easy choices facing our country today.
The tool allows anyone to explore the consequences of different choices on spending and tax.
One person who may be logging on is Angela Rayner, the deputy Labour leader and housing secretary. According to the Telegraph splash, she is taking a keen interest in the government’s tax policy, and wants taxes to go higher.
In his story, Ben Riley-Smith reports:
In the document, seen by our reporters, the deputy prime minister proposed eight tax increases including reinstating the pensions lifetime allowance and changing dividend taxes.
She also suggested new raids on the million people who pay the additional rate of income tax and a higher corporation tax level for the banks.
The measures would raise taxes by £3bn to £4bn a year, according to estimates cited in the document. The real figure would be much higher, as no specific estimates were given for some policies.
The memo amounts to a direct challenge to the chancellor’s approach this year of using spending cuts rather than tax rises to fill the black hole in the nation’s finances.
Here is a Telegraph graphic showing how much some of the Rayner proposals might raise.
Secret government memos are always interesting. But proposals in Whitehall documents don’t always become official policy, and the Telegraph points out that Rayner’s department sent this to the chancellor, Rachel Reeves, before the spring statement. Despite speculation that Reeves might use the spring statement to raise taxes, in the end she didn’t, and the Rayner document is still just a wishlist.
Amazingly, though, it seems to have found its way into the public domain. In his report, Riley-Smith implies that Rayner won’t be totally devastated to hear it on the news.
Allies of the deputy prime minister have said she has become increasingly exasperated by having to publicly defend Treasury spending cuts, and is pushing back in private.
Treasury insiders are understood to be making it clear that while Ms Reeves welcomes contributions from all cabinet colleagues, as chancellor she decides taxation and spending policy.
Simon Finkelstein, a former Tory special adviser, describes this as: “An absolute classic of the genre: letters to the chancellor ahead of a spending review/fiscal event that are designed to be leaked…”
The Conservative party has tried to capitalise on the leak but (as usual these days) it has fluffed its response by going over the top. In a statement, Mel Stride, the shadow chancellor, said:
This confirms that we are still living with the Labour party of Jeremy Corbyn. At the very highest level, Labour ministers are debating which taxes to increase next.
Stride seems to have missed the point that these proposals haven’t actually been implemented, and that the Labour leadership isn’t turning to “Corbynism” (not that these proposals amount to that anyway), which is why Rayner may be feeling “exasperated”. (Stride would have sounded more sensible if he had just issued a press statement challenging Keir Starmer to rule these ideas out.)
The Tories might be critical but, as the Telegraph reports, Labour leftwingers approve of Labour’s proposals. Andy McDonald told the paper:
My sense is that a lot of Labour MPs are concerned that the Chancellor’s fiscal rules and spending cut proposals hit those on lower incomes. Proposals to increase tax revenue from the wealthy would make tax fairer and support public services.
And on the Today programme, asked if the Rayner proposals were “the sorts of things the government should be considering, another backbencher, Neil Duncan-Jordan, replied: “Absolutely.”
He went on:
There’s a very healthy debate inside the Labour party at the moment about how we should be raising additional funds rather than cutting benefits. And there’s a menu, I think, of options that we should be using, and these are just some of those.
Doubtless we will hear more about this at PMQs.
Here is the agenda for the day.
10am: Liz Kendall, the work and pensions secretary, gives a speech at the IPPR thinktank defending the proposed welfare cuts.
Noon: Keir Starmer faces Kemi Badenoch at PMQs.
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