Former Labour minister Liz Kendall has warned Chancellor John Healey that increasing taxes and borrowing could trap the United Kingdom in a "doom loop." Speaking to Sky News, Kendall urged the government to prioritize economic growth over further tax hikes for families and businesses.
Liz Kendall’s warning of a "tax and borrow" doom loop
Liz Kendall, a former Labour Cabinet minister , expressed cocnern that the UK is entering a cycle of escalating taxes and borrowing. According to the report, Kendall believes the government cannot simply tax its way out of current economic challenges and must instead focus on stimulating growth to avoid long-term stagnation.
Kendall's perspective is shaped by her previous efforts to reduce the welfare bill,an initiative that was reportedly blocked by other Labour MPs. she suggests that the rising cost of welfare spending needs a clear downward trajectory to avoid further straining the national budget . This internal critique highlights a growing tension within the Labour party regarding how to balance social safety nets with strict fiscal responsibility.
The £2,000 energy price cap and the end of universal support
Chancellor John Healey has acknowledged that many UK households and businesses are facing significant economic pressure in the coming months. As reported by the source, experts anticipate that the energy price cap could rise by approximately 20 per cent in January, potentially exceeding £2 ,000.
Unlike the universal energy freezes implemented by the previous Conservative government following the 2022 invasion of Ukraine, Healey indicated that future support will be strictly targeted. The Chancellor stated that the state of public finances means government assistance must be limited to families on benefits and those with very low incomes, rather than providing broad relief to the middle class.
The battle over Rachel Reeves's £25 billion NI raid
The government is currently defending a £25 billion increase in employer National Insurance contributions, a move attributed to Rachel Reeves aimed at restoring public finances and funding public services. This decision has drawn sharp criticism from Shadow Chancellor Andrew Griffith, who argues that such "Jobs Taxes" are pricing young people out of the labour market.
While the government is looking for ways to tackle youth unemployment, it has explicitly ruled out the Conservative proposal to cut National Insurance for workers under the age of 25. This refusal leaves the government in a difficult position as they attempt to address employment concerns without the specific tax incentives suggested by the opposition.
A 5-year miinmum wage freeze to unlock 600,000 jobs?
A new proposal from the Prosperity Institute think tank suggests that a five-year freeze on the minimum wage could create up to 600,000 jobs by reducing the burden on employers. The study argues that steep rises in the minimum wage in recent years have been corrosive to the employment prospects of young people.
This proposal raises several critical questions for the upccoming Budget: Can the government successfully stimulate youth employment without adopting the National Insurance cuts they have already rejected? Furthermore,how will Chancellor Healey manage public sector pay demands when he has already signaled there will be no new money for government departments to fund such deals?
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