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Politics

The Budget cannot mask big changes

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In normal times (remember them?) there would be a frenzy this weekend about what’s coming up in next week’s Budget.

If it feels a bit muted so far, that isn’t just because of a bit of a media frenzy over something else (what could that be?) but because Jeremy Hunt was employed as a “calm down” chancellor – called in like a soothing manager of many years’ experience in a sensible bank to sort things out after some crazy young guns spent all the loot.

Given how he got his job and his political character he’s not going to wake up on Wednesday morning and spring a red box full of massive shocks on an unsuspecting public.

One senior Conservative MP is hopeful of a few “pleasant surprises” but notes the Downing Street neighbours’ priority is to “hold on to their reputation for caution and prudence”.

Expect headlines about the country being less in the red than expected, a possible giveaway on pension savings and some goodies to help working families with the soaraway costs of childcare – you can read Faisal’s primer here.

But when we sit down on our programme this Sunday with Jeremy Hunt and Labour’s Rachel Reeves – who hopes to fill his job – there’s so much more than the specifics of what’s coming on Wednesday to talk about.

No one Budget can mask some big shifts in how the economy works – or perhaps doesn’t work for many voters. Long-term changes to wealth and wages feed into how we all vote.

Statistics in the last few days suggest the economy is not in such dire straits as predicted a few months ago, but what’s happened over the past few years and is possibly coming next isn’t pretty.

Bluntly, the economy has failed to grow persuasively for a long time, and no strong surge is coming soon. In fact, the Bank of England reckons growth will be measly in the coming years too, only getting back to the levels it was at before Covid in 2026.

Politicians aren’t short of explanations for what’s gone wrong – some self-inflicted, some out of their control.

Chart showing the UK economy slowing down after the pandemic while other G& countries grow

There has been the Ukraine war, the pandemic and the disruption of Brexit. We’ve also seen years of political strife, the markets’ disastrous reaction to Liz Truss’ decisions, the effects of a spending squeeze during the 2010s and even the long-lasting hangover from the 2008 financial crisis. Remember experts brandishing “L-shaped” graphs during that time – warning that it would take years for the economy to climb back to anything with vigour?

Those political and economic dramas have had real-life consequences, presenting huge challenges to what, years ago, politicians presented to voters as normal, achievable aspirations – the hope and expectation that each generation would do better than the last. Perhaps that’s shaky now.

Take for example this statistic from the Institute for Fiscal Studies: in 1997 more than 60% of people on middle incomes between the ages of 25 and 35 owned their own homes. Twenty years later, that figure had slumped to just over 20%.

Think about that for a moment – it is a profound change. There is a blizzard of statistics of course, and each year, every Budget, there are moves up and down. Think how much impact Kwasi Kwarteng’s short time with the No 11 Downing Street red box had.

But let’s look at the big changes that have been in the works over a longer period.

For years, wages have been sluggish and growing more slowly than wealth. Paul Johnson, economist and director of the IFS, says a “significant fraction” of people in their 20s and 30s are earning less than their parents at the same stage of life.

It’s harder to buy a house. It’s more expensive to rent one if you can’t afford to buy. For decades, what your parents passed on was becoming less important to your chances of prosperity. That seems to have gone into reverse and could have huge consequences for our political choices.

It’s given Labour leader Sir Keir Starmer ammunition to suggest that under the Conservatives that pact – that “social contract” with the public that you get back what you put in – has frayed.

“Hard-working families” – the nebulous group so beloved by successive generations of politicians whose votes might swing if only the right solutions could be dangled in front of them – are likely to be working harder and feel life’s harder too.

You can add to this the pressures of an ageing population: fewer people in the workforce paying tax, happily living longer but requiring more cash for health and care.

The two main political parties share a desire to get the economy growing strongly. It’s not abstract – if the economy doesn’t grow and the government needs more money for health or defence for example, ministers have either to borrow, increase taxes or cut spending. Those aren’t ideas parties like to put on the front of leaflets, lecterns or Facebook ads.

Labour's Rachel Reeves and Sir Keir Starmer
Rachel Reeves and Sir Keir Starmer have been at pains not to push businesses away

The trouble for the Conservatives is that even inside the party they disagree over how to do it. Former Prime Minister Liz Truss’s verdict was to slash taxes, borrowing to do so, which ended in disaster.

Even though Jeremy Hunt and Rishi Sunak promised radical tax cuts when they were vying to be Tory leader, neither of them says now is the right time. There will probably be hints on Wednesday and promises of tax cuts to come, but they’re unlikely to cave to backbench pressure to cut now.

We’ll hear more from Rachel Reeves on Sunday’s programme about how Labour would spend billions to try to create thousands of jobs and get growth going through supporting green industries. But there’s perhaps a tension too for Labour, promising massive state intervention in industry while vowing to watch every single penny.

Rishi Sunak has soothed nervous Tory brows in the last few weeks with a frenzy of activity, fewer leaks from cabinet, and pointers the economy might not be in such dire straits as previously thought. His calm down chancellor, Jeremy Hunt, did reassure the manic financial markets when he took over. But Labour’s been solidly ahead in the polls for months and shadow chancellor Rachel Reeves has carefully been building its reputation for credibility and making nice with business.

What happens to our wallets makes a huge difference to what happens at the ballot box. There is huge pressure on both main parties to address the big shifts in how we make our livings as individuals and as a country.

That’s not just about what happens this Wednesday but about who wins much bigger arguments that affect us all in the months and years ahead.

We’ll be asking Mr Hunt and Ms Reeves about those big questions in the morning, and perhaps, talking a little about what’s going on at the BBC too.

Remember, we love to get your questions – you can email me kuenssberg@bbc.co.uk.

Reports /TrainViral/

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Politics

Gething downfall delivers Starmer 1st headache

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Just when you’d have been forgiven for thinking politics might quieten down a bit…

The Welsh Labour government was for so long a case study in how the party could operate in power during its long years of opposition at Westminster.

And yet here we are less than a fortnight into a UK Labour government, and the Welsh Labour government is imploding.

So much for all that talk about bringing stability back to politics.

Last week Vaughan Gething was sharing smiles here not just with the new prime minister but the King too.

Now, he’s a goner, delivering Sir Keir Starmer a headache rather than a handshake.

When I was here in March covering Mr Gething’s victory, the seeds of his political demise were germinating before our eyes.

The donations row had already sprouted and his defeated opponent, Jeremy Miles, legged it from the venue without so much as any warm words about the victor on camera.

It was another sign of the cultivating anger, the political knotweed that would soon flourish and ensnare Vaughan Gething.

Along came the row about alleged leaking, a sacking, a confidence vote — and a first minister whose tenure up until today at least amounts to 2.4 times that of Liz Truss. Ouch.

Westminster has generated its fair share of turbulence in the last decade.

But it is far from unique as a source of turbulence in UK politics.

In February, Michelle O’Neill became first minister of Northern Ireland with Emma Little-Pengelly her deputy, after a long period without devolved government at Stormont.

In March, we had a new first minister of Wales, when Mark Drakeford stood down and Vaughan Gething took the job.

In April we had the resignation of the first minister of Scotland Humza Yousaf.

He was replaced the following month by John Swinney. June was the quiet month then. Just the small matter of a general election campaign.

And here we are in July, and Mr Gething is resigning.

So will begin another leadership race, a new government in Wales, a new first minister and a new team of senior Welsh ministers.

There will also be more arguments about Welsh Labour – its direction, its priorities, its capacity to govern effectively and its relationship with the UK party.

If you’re watching this in Downing Street, it’s the last thing you need.

Reports /Trainviral/

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Politics

Shoplifting crackdown expected to be unveiled

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A crackdown on shoplifting is expected to be announced in the King’s Speech on Wednesday.

The government is due to unveil a new crime bill to target people who steal goods worth less than £200.

The policy would be a reversal of 2014 legislation that meant “low-value” thefts worth under £200 were subject to less serious punishment.

The government is also expected to introduce a specific offence of assaulting a shop worker to its legislative agenda.

It will not be clear until legislation passes through Parliament what the punishments for any new or strengthened offences would be.

Data from the Office for National Statistics shows that last year was the worst on record for shoplifting in England and Wales.

Police recorded over 430,000 offences in those nations in 2023 – though retailers say underreporting means these figures are likely to represent only a fraction of the true number of incidents.

Michelle Whitehead, who works at a convenience store in Wolverhampton, said her shop had been “hit every day” by thieves.

People were stealing “absolutely anything” including “tins of spam, tins of corned beef, all the fresh meat”, Ms Whitehead told BBC Radio 4’s World at One programme.

“They’re just coming in, getting their whole arm and sweeping the lot off the shelves,” she said. “The shelves were always empty.”

She said she believed “organised” criminal gangs, rather than individuals struggling with the cost of living, were behind the thefts in her shop.

The crackdown on “low-value” shoplifting “will help a lot of little shops,” Ms Whitehead said.

While retailers and shop workers have welcomed the anticipated proposals, a civil liberties group has raised concerns about criminalising people struggling to make ends meet and overburdening the prison system.

The new legal measures are expected to be announced as part of the King’s Speech on Wednesday, a key piece of the State Opening of Parliament that allows the government to outline its priorities over the coming months.

Before the general election, the Labour Party pledged to reverse what it described as the “shoplifter’s charter” – a piece of 2014 legislation that reduced the criminal punishment for “low-value shoplifting”.

Tom Holder, spokesperson for the British Retail Consortium (BRC), told BBC News the impact of the 2014 legislation has been to “deprioritise it in the eyes of police”.

“I think police would be less likely to turn up to what they see as low-level theft,” he said.

Shoplifting cost retailers £1.8 billion in the last year, which could impact prices, according to the BRC.

“Shoplifting harms everyone in that sense – those costs eventually get made up somewhere, whether it’s prices going up or other prices that can’t come down,” Mr Holder said.

Co-op campaigns and public affairs director Paul Gerrard said the supermarket chain had also recorded rising theft and violence against shop workers.

“There’s always been people who will steal to make ends meet. That’s not what is behind the rise we’ve seen,” he told BBC Radio 4’s Today programme on Tuesday. “What’s behind that rise is individuals and gangs targeting large volumes of stock in stores for resale in illicit venues like pubs, clubs, markets, and out the back of cars.”

But Jodie Beck, policy and campaigns officer at civil liberties organisation Liberty, had concerns about the expected proposals, saying there is “already a wide range of powers” the police can use to tackle shoplifting and anti-social behaviour levelled at retail staff.

Ms Beck said the “£200 threshold” would not just target criminal gangs but also “people who are pushed into the desperate situation of not paying for things” because they cannot afford to make ends meet.

She urged the government to avoid focusing on “criminal justice and policing solutions instead of doing the thoughtful work of looking at the root causes of crime, which we believe are related to poverty and inequality”.

Ms Beck also argued the additional legislation could serve to worsen the UK’s “enormous court backlog” and its “bursting prison system”.

Last week, Justice Secretary Shabana Mahmood announced plans to release thousands of prisoners early to ease overcrowding in the country’s prisons.

A spokesperson for Downing Street said the government would not comment on the King’s Speech until it has been delivered by the monarch.

The National Police Chiefs’ Council has been approached for comment.

Reports /Trainviral/

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Politics

Government launches ‘root and branch’ review

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Defence Secretary John Healey hailed the government’s defence review as the “first of its kind” and said it will “take a fresh look at the challenges we face”.

Mr Healey noted the “increasing instability and uncertainty” around the world, including the conflict in the Middle East and war in Ukraine, and said “threats are growing”.

The strategic defence review will consider the current state of the armed forces, the threats the UK faces and the capabilities needed to address them.

Sir Keir Starmer has previously said the review will set out a “roadmap” to the goal of spending 2.5% of national income on defence – a target he has made a “cast iron” commitment to but is yet to put a timeline on.

On Monday, the prime minister said the “root and branch review” of the armed forces would help prepare the UK for “a more dangerous and volatile world”.

The review will invite submissions from the military, veterans, MPs, the defence industry, the public, academics and the UK’s allies until the end of September and aims to deliver its findings in the first half of 2025.

“I promised the British people I would deliver the change needed to take our country forward, and I promised action not words,” Sir Keir said.

“That’s why one of my first acts since taking office is to launch our strategic defence review.

“We will make sure our hollowed out armed forces are bolstered and respected, that defence spending is responsibly increased, and that our country has the capabilities needed to ensure the UK’s resilience for the long term.”

The review will be overseen by Defence Secretary John Healey and headed by former Nato Secretary General Lord Robertson along with former US presidential advisor Fiona Hill and former Joint Force Commander Gen Sir Richard Barrons.

The group will have their work cut out.

The global security threats facing the UK and its Western allies are more serious and more complex than at any time since the end of the Cold War in 1990.

They also coincide with what many commentators have said is a catastrophic running down of the UK’s armed forces to the point where the country is arguably no longer considered to be a Tier One military force.

In terms of the number of troops in its regular forces, the British Army is now at its smallest size since the time of the Napoleonic Wars two centuries ago.

Recruitment is failing to match retention, with many soldiers and officers complaining about neglected and substandard accommodation.

The Royal Navy, which has spent vast sums on its two centrepiece aircraft carriers, is in need of many more surface ships to fulfil its tasks around the globe.

Its ageing fleet of nuclear-armed Vanguard submarines, the cornerstone of the UK’s strategic defence and known as the Continuous At Sea Deterrent (CASD), is overdue for replacement by four Dreadnought class submarines and costs are mounting.

Commenting on the review, Mr Healey said: “Hollowed-out armed forces, procurement waste and neglected morale cannot continue.”

Too many UK commitments?

The defence and security threats facing the UK, Nato and its allies further afield are multiple.

They include a war raging on Europe’s eastern flank in Ukraine against Russia’s full-scale invasion. The UK, along with the EU and Nato, has opted to help defend Ukraine with multi-billion pound packages of weapons and aid, stopping short of committing combat troops.

The policy behind this is not entirely altruistic. European governments, especially those closest to Russia like Poland and the Baltic states, fear that if President Putin wins the war in Ukraine it will not be long before he rebuilds his army and invades them next.

Some of those countries are already busy beefing up their own defence spending closer to 3% or even 4% of GDP.

The challenge for Nato has been how to provide Ukraine with as much weaponry as it can, without provoking Russia into retaliating against a Nato state and risk triggering a third world war.

The Royal Navy has been in action recently in the Red Sea, where it has been operating alongside the US Navy in fending off attacks on shipping by the Iranian-backed Houthi rebels in Yemen.

But the UK has also made naval commitments further afield in the South China Sea with the Aukus pact, comprising of Australia, UK and the US, aimed at containing Chinese expansion in the region.

Critics have questioned whether a financially-constrained UK can afford to make commitments like this on the other side of the world.

Closer to home in Europe, there is a growing threat from so-called “hybrid warfare” attacks, suspected of coming from Russia.

These are anonymous, unattributable attacks on undersea pipelines and telecoms cables on which Western nations depend.

As tensions increase with Moscow there are fears such actions will only increase and the UK cannot possibly hope to guard all of its coastline all of the time.

But while those nervous Nato partners living close to Russia’s borders are busy beefing up their defence spending closer to 3 or even 4% of GDP, the UK has so far declined to put a timetable on when it will raise its own defence spending to just 2.5%.

Opposition figures have criticised the government for refusing to say when defence spending will be increased.

Before his election defeat, former prime minister Rishi Sunak committed to reaching 2.5% by 2030.

Shadow defence secretary James Cartlidge previously said: “In a world that is more volatile and dangerous than at any time since the Cold War, Keir Starmer’s Labour government had a clear choice to match the Conservatives’ fully funded pledge to spend 2.5% of GDP on defence by 2030.

“By failing to do so, they’ve created huge uncertainty for our armed forces, at the worst possible time.”

Reports /Trainviral/

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