Although Labour has only just got its feet under the table, it has been keen to shower the nation with a series of announcements – a strategy designed to impress us and demonstrate it means business from the word go.
It is a deluge on a par with the insistent rain that I endured exploring the UK’s eastern coastline over the past two weeks.
Which of the two have depressed me the most, I will leave you to fathom out – but, for the record, I do love walking in all weathers.
So, Conservative initiatives designed to tackle illegal immigration (flights to Rwanda and the stark Bibby Stockholm barge, parked up in Dorset) have been swiftly knocked on the head.
Instead, Labour will help fund projects in both Africa and the Middle East (to the tune of some £84 million) aimed at discouraging people from migrating in the first place. Good luck with that.
Chancellor of the Exchequer Rachel Reeves has indicated that inflation-busting pay rises could soon be on the way for millions of public sector workers
Meanwhile, thousands of inmates will be released after serving only 40 per cent of their sentences to relieve pressure on an overstretched prison system.
Labour has also promised to get millions of the long-term ‘sick’ back to work, while Chancellor of the Exchequer Rachel Reeves has indicated that inflation-busting pay rises could soon be on the way for millions of public sector workers.
How much these workers will get should be confirmed before the month is out, but it’s going to cost the public purse a pretty penny – at least £3 billion according to think-tank the Institute for Fiscal Studies, maybe up to £8 billion.
While some of you may agree with Labour’s direction of travel, what is increasingly obvious is that tax rises are around the corner. Government ministers have already begun to lay the groundwork for them by repeatedly sniping at the Conservatives for leaving the country’s finances in a parlous state.
How threadbare the public purse is we will learn tomorrow when the Chancellor confirms a £20billion hole in the Government’s finances. Tax rises in an autumn budget are a certainty, as sure as night follows day. The rumour mill has already begun, with one report suggesting Reeves is set to overhaul the tax-relief people enjoy on contributions into pension plans.
It could result in a 30 per cent flat rate being introduced – good news for basic rate taxpayers who currently enjoy 20 per cent relief, but bad news for some 6 million 40 and 45 per cent taxpayers. In effect, it will result in higher rate taxpayers paying a ten per cent tax charge on their pension contributions.
Yet, as I said (repeatedly) ahead of the election, this could be just the tip of the iceberg. Other tax rises, aimed primarily at the middle-classes, are coming our way.
This could result in a more draconian regime for those taking capital gains made from property (buy-to-let, holiday homes) or share sales. It could also make it more difficult to shield wealth from inheritance tax – and increase tax on share dividends income.
Labour has always despised personal wealth creation. The 2024 version is no different.
A sorry tale of two city banks
I know it’s rather sad, but my two-week road trip earlier this month along the east coast was not just about visiting castles (the likes of Alnwick, Dunstanburgh and Scarborough), hopping over to Holy Island for the day, strolling along glorious Northumberland beaches and watching trains cross the Royal Border Bridge at Berwick.
A key component of the tour was to look at the banking health of the locations I stayed at (Norwich, Whitby, Berwick, Alnwick, Scarborough and Cambridge). Not one of them has escaped the curse of closures, but Alnwick, above, home of second-hand bookshop Barter Books, in the former railway station angered me the most. Although there are still two banks – Halifax and Lloyds – in the town, they are both closing in January.
Given these two brands are owned by Lloyds Bank, surely one of the branches could have been saved. The bank says otherwise: they are victims of low usage. Really? Not when I was there.
The only good thing is that a banking hub is coming once Lloyds and Halifax take their suitcases and cash machines and get out of town. Let’s hope the Financial Conduct Authority is true to its promise (see my story on the right) and ensures Cash Access UK moves heaven and earth to get one up and running as soon as Lloyds runs for the Cleveland Hills.
Visitors relax outside a cafe in the Northumberland market town of Alnwick
Five-year fixed mortgage rates for new borrowers are slowly edging down – with Nationwide Building Society becoming the first to offer a loan at below four per cent.
Great news for borrowers, but will the Bank of England (BOE) be as bold and trim the base rate when its monetary committee opines on Thursday? A cut would be most welcome, and provide a boost for many borrowers, businesses and the UK stock market. But my money is on the base rate staying at 5.25 per cent for another month.
The Conservatives may be in rebuild mode, but conservatism continues to reign supreme at the BOE. If I am wrong, I will give £50 to charity.
Hubs with too many ‘get out’ clauses
September will bring in new rules designed to ensure nationwide access to cash.
The details were confirmed a few days ago by the Financial Conduct Authority (FCA) which will oversee the new regime and ensure that banks act responsibly when closing branches.
The regulator’s involvement will bring about some positives. For example, it will stop banks from shutting the last branch in town before an alternative service, such as a banking hub, is up and running. Hubs are community branches which customers of all the big banks can use to access basic banking services – and on occasion visit to see an adviser from their own bank.
It will also reduce the time it takes hubs to be set up.
Some take more than a year to come to fruition, but the FCA will require them to be operational within three months, even if the initial hub is temporary while a permanent home is sought.
Yet the FCA’s new rules are not without flaws. There is nothing that requires banks to stand four-square behind the hubs which they fund though payments to Cash Access UK, an organisation set up to build the hub network.
This means banks could at some stage in the future turn round and say the hubs are not busy enough to continue in existence.
Also, there is nothing that requires the banks (through Cash Access UK) to put a hub in a town where Nationwide Building Society is the last ‘bank’ standing.
Community bank campaigners such as Derek French have long argued for this anomaly to be addressed on the grounds that Nationwide does not offer banking services for small businesses. As a result, local traders in towns where Nationwide rules the roost struggle to access – or deposit – cash and banking services.
French argues that if this anomaly is not addressed, banking hubs will remain a minority sport. Furthermore, it will mean there is not a cat in hell’s chance of Labour honouring its manifesto commitment to have 350 rejuvenating banking hubs installed on our high streets.
The number of fully operational hubs currently stands at 68, and for all of Cash Access UK’s hard work the network grows at a snail’s pace.
Maybe Labour needs to have a word in the FCA’s ear.