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Badenoch refuses to commit to reversing employers’ national insurance rise in budget

During the Q&A after her speech Kemi Badenoch would not commit to reversing the rise in employers’ national insurance in the budget.

Asked if she would give such a commitment, Badenoch said that, if a tax increase is not raising money, the Tories would reverse it. “One of the things that we’re going to have to do is rewire everything,” she said. But she said she would not “comment on every bit of micro-policy” now.

However, she did say the fact so many firms are complaining about the tax, and saying that it will make employing people on low wages unaffordable, meant that the government should “look again” at the plan. And that would be something the Tories would look at when they started work on their policy platform, she said.

UPDATE: Badenoch said:

Where we can see that a change that has been brought in in the budget … will not raise any money, we will change that. What I’m not going to do is comment on every bit of micro-policy. There will be different budgets, there will be new things that occur, the system may change.

What I am starting with is principles, we believe that employer’s national insurance, while necessary to help us fund public services, is a tax on jobs.

The fact that so many organisations – especially those that have people who are on the lowest wages – are saying that this is becoming unaffordable means that we should look again, and that’s one of the first things that we’re going to be doing when we start our policy platform.

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Starmer praises John Prescott during tributes in Commons

Keir Starmer is paying tribute to Prescott now.

He says Prescott was the longest-serving deputy PM ever and “a politician for working people through and through”.

In many respects, Prescott was ahead of his time, Starmer says. He championed causes like tackling climate change, fighting regional inequality, supporting the minimum wage, improving public transport, and building council houses.

Prescott was “a skilled negotiator, sometimes with immense and perhaps surprising sensitivity”, Starmer says. He says Prescott had a talent for bringing people together who had different points of view. He was someone who was not in politics for himself, Starmer says. And he was someone who was a team player who would support a position in public, even if he had opposed it in private before the collective decision was taken.

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In the Commons MPs are now paying tribute to John Prescott.

Lindsay Hoyle, the Speaker, recalls Prescott visting Hoyle’s constituency soon after Hoyle became an MP. He says there was so much pushing from reporters that a woman in the crowd broke her arm. Prescott insisted on going to visit her in hospital, Hoyle says. He says that is the sort of person he was.

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Institute for Fiscal Studies proposes changes to inheritance tax extension to farms to make it fairer

The Institute for Fiscal Studies thinktank has published a paper suggesting two changes to the government’s plans to extend inheritance tax to farms that it says would make them fairer. The IFS is broadly supportive of what the government is doing, but it accepts that the change in inheritance tax rules has disadvantaged elderly farmers who, if they knew this was coming, would have already given away their farms to their children. Summing up the IFS arguments, David Sturrock, one of the authors of the paper, said:

Inheritance tax [IHT] relief for agricultural and business assets favours those whose wealth is held in these forms rather than others. It also provides a tax incentive for agricultural land to be used by the wealthy as a way to avoid inheritance tax. That is unfair, inefficient and creates economic costs.

Those objecting to the change claim that paying IHT will have detrimental effects on food production or the environment. But if government wishes to promote food production or certain uses of land, there are much better ways of doing so than through an inheritance tax break. It is also objected, as a matter of principle, that this could result in families having to sell up and move on from farms that have been in the same family for generations. That is an argument against inheritance tax in general – it can have the same effect on family homes, for example – rather than a strong case for protecting certain forms of assets specifically.

The exact design of the tax change is important, and there are two mitigations which the government could consider. There is a good case for making unused portions of the new £1m allowance inheritable by a spouse or civil partner, as happens for the main inheritance tax allowances. In addition, current farm owners passing away in the next seven years (but after the new regime comes into force in April 2026) will not have had the opportunity to avoid inheritance tax by making lifetime gifts. If the government wished to give current farm owners the same opportunity to avoid inheritance tax as owners of other assets, it could, for example, make lifetime gifts of agricultural property made before a certain future date inheritance tax free, regardless of the timing of the death.

Responding to the report, Tim Farron, the Lib Dem environment spokesperson, said

The government hid behind the IFS to try and justify this disastrous policy. That very same organisation is now telling them that their own proposals need an overhaul.

It would be beggars belief for the government to continue to push forward with these stupid plans.

They need to swallow their pride, realise the damage this family farm tax will do and axe the tax.

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Labour claims Badenoch’s refusal to commit to reversing employers’ NICs rise shows Tories accept budget tax increases

Labour claims the Conservative party is now implicitly accepting the need for the tax increases in the budget. Referring to the Kemi Badenoch’s speech to the CBI, and her refusal to commit her party to reversing the rise in employers’ national insurance in the budget (see 2.13pm), a Labour spokesperson said:

After weeks of campaigning against it, Kemi Badenoch is now refusing to say whether she would actually reverse the employer national insurance rise. The opposition seem to finally accept that the damage they did to the economy made tax rises necessary – but the least the public deserve is an answer on what their actual position is.

It’s no wonder there was nothing to trail from the leader of the opposition’s speech: she has nothing to say.

While the Tories try and work out what they think, Labour is getting on with fixing the foundations and rebuilding the country.

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Badenoch says Tory policy review must go back to first principles, and not just involve minor tweaks

Simon Jack, business editor of the BBC, asked Kemi Badenoch about her claim that there was an alternative to the budget plans. (See 2.03pm.) If she did not agree with the taxes, what taxes would she raise instead? Or what services would she cut?

Badenoch said she did not accept the premise of the question. She went on:

We need to stop looking at everything as if it’s just a ledger where there’s taxes raised and services delivered. Not everything that government does is public services. We can do things better. We can redesign things.

Badenoch suggested there was no need for government to set up a football regulator. Although this was just a “tiny thing”, it was an example of unnecessary, “burdensome” regulation.

That is why I’m not talking about which tax will tweak here or which service we’re going to cut there. We need to completely change the way we talk about how our economy works.

She said she wanted “deep, real [policy] reviews, asking the right questions, not just a policy tweak here or there”. She went on:

If we’re going to rewire the state, we need to start from there and not just adjust little nods and levers on tax or insurance. Let’s think about everything from first principles.

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Badenoch refuses to commit to reversing employers’ national insurance rise in budget

During the Q&A after her speech Kemi Badenoch would not commit to reversing the rise in employers’ national insurance in the budget.

Asked if she would give such a commitment, Badenoch said that, if a tax increase is not raising money, the Tories would reverse it. “One of the things that we’re going to have to do is rewire everything,” she said. But she said she would not “comment on every bit of micro-policy” now.

However, she did say the fact so many firms are complaining about the tax, and saying that it will make employing people on low wages unaffordable, meant that the government should “look again” at the plan. And that would be something the Tories would look at when they started work on their policy platform, she said.

UPDATE: Badenoch said:

Where we can see that a change that has been brought in in the budget … will not raise any money, we will change that. What I’m not going to do is comment on every bit of micro-policy. There will be different budgets, there will be new things that occur, the system may change.

What I am starting with is principles, we believe that employer’s national insurance, while necessary to help us fund public services, is a tax on jobs.

The fact that so many organisations – especially those that have people who are on the lowest wages – are saying that this is becoming unaffordable means that we should look again, and that’s one of the first things that we’re going to be doing when we start our policy platform.

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Badenoch rejects Reeves’ claim there was no alternative to her budget

Badenoch ended her speech by referring to reports that, when Rachel Reeves, the chancellor, speaks to the CBI later, she will say no one has offered a good alternative to the proposal in her budget.

Badenoch said:

They will tell you there is no alternative, there is. We need an alternative strategy so we can finally unleash the power of business to make our country better.

I believe in the immense power of business to do good. You may not be the public sector. But many of you deliver critical services for the public.

So I will stand up for the values of business.

It’s time to defend free enterprise and capitalism, to defend lower taxes, less borrowing and healthy, real competition.

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Badenoch said government could learn from business in adapting to change.

Government itself must change, it must change what it does if growth is ever properly to return.

We didn’t address this when we were in government and if Labour does not they will fail.

Government is going to have to learn from business about how to work better quicker and be more responsive.

We can no longer tolerate a situation where building roads takes decades.

Where Treasury decision making means railways don’t get built.

Where the planning system stops investments being made by you and your colleagues.

Over the last two decades, you have all had to transform your business models to account for massive societal and technological change.

It’s time that government does the same because what we have now isn’t working.

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Badenoch calls for rethink in role of state

Badenoch called for a rethink in the role of the state.

We are trying to fix problems with the wrong tools. We are using a mindset and a paradigm that worked well in the late 20th century, but does not work well when we have aggressive competitor economies like China.

And when there is rapid technological innovation, when our society is getting older and the birth rate is still too low, more quangos, more interference, more regulations, more laws will not fix that.

We need to ask ourselves, ‘What is the role of the state? What can we do to create a level playing field and allow you to go out and fix those problems?’

Kemi Badenoch speaking at the CBI conference. Photograph: Stefan Rousseau/PA
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Badenoch says politicians need to ‘accept boundaries’ and regulate less

Badenoch said she wanted politicians to cut back on regulation.

Politics needs to accept boundaries. Every day in the legislature, someone has a great new idea that sounds nice in principle, but in practice, creates more red tape, more bureaucracy, more burden. The incentive for us as politicians is to keep announcing new nice things.

But the way to fix things is not just about creating new laws. We must not be a bureaucratic state. We need to get a proper diagnosis of what is going wrong. Why is capital investment so low? Why is productivity still so stubbornly stalled?

I have read endless reports and many reviews with all sorts of potential solutions improving skills or getting our pensions working harder for us, and we have brought in regulations and policies to address this. And yet, still, things are not getting better. I think we need to look again.

So I’m not standing here telling you that I have all the answers. I am letting you know that I have seen the system from the inside and it is broken.

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Badenoch says she wants to focus on ‘growth people can feel’, not just GDP, or GDP per head

Badenoch also said she wanted to take a new approach to growth.

We have got to be more precise when we talk about growth. It is not just about increased GDP. It is not even just about increased GDP per capita. You can increase GDP by increasing immigration, but no one feels richer. In fact, some gets poorer. You can increase GDP per capita by getting more millionaires and billionaires to move to your country, but that won’t necessarily make everyone else better off. In fact, there are many studies that show even when nothing has changed, we are more likely to feel worse when we compare ourselves with those who are a lot wealthier than us.

I am talking about real growth, growth that people can see, growth that people can feel, seeing an improved environment around them, as well as having more money in their pockets to spend, knowing that we have enough money to provide security, to protect our families, but also to protect our country in increasingly dangerous times …

The bottom line is that economic growth is not the end in itself. It is a means to an end. The end is to make people’s lives better.

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