Labour at war over spending plans as Number 10 tries to stem threat from Farage
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Sir Keir Starmer is fighting to quell mounting Labour tensions over how to deal with the threat from Nigel Farage, as bitter Whitehall negotiations over the Government’s Spending Review go down to the wire.
Sources describe ‘very unpleasant’ exchanges between Rachel Reeves and senior Cabinet ministers, including Home Secretary Yvette Cooper and Local Government Secretary Angela Rayner, as the Chancellor prepares to give the NHS a £30billion boost at the expense of the police and local councils.
Preparations for Wednesday’s announcement have been held against the backdrop of slamming doors and raised voices, as No 10 and the Treasury work out how to divide a limited pot of public money in a way most likely to arrest the surge in support for Mr Farage’s Reform UK.
Ms Reeves is expected to set out plans for an extra £113billion in spending on infrastructure projects such as Sizewell C nuclear power plant, and an extra 2.8 per cent real-terms increase in the NHS’s £200billion-a-year budget, amounting to an extra £30billion by 2028.
But with the economy barely growing, other departments have had to take a hit as a result.
A source said: ‘It turned nasty between Yvette and Rachel. It was just as bad as that between Rachel and Angela, who walked out during her negotiations.
‘Yvette was just passing on the concerns of the police, who said that without more money they would be forced to make stark choices about which crimes they prioritise.
‘The anger of the police shows they’ve been briefed by Cooper on how the negotiations are going, and they’re not happy.’
By CALUM MUIRHEAD
Rachel Reeves is planning a £3billion tax raid on millions of pensions.
The new Pension Schemes Bill lays out a blueprint for companies to take out ‘surplus’ cash from certain schemes.
The theory behind the plan is that companies can use the money to invest in their business and that would fuel growth.
But experts fear this could lead to a repeat of the Robert Maxwell scandal of the early 1990s, when the late tycoon stole £400 million from his staff pension fund to prop up his companies.
The Chancellor, who is desperate to raise tax revenues, would benefit because any ‘surpluses’ released are taxed at 25 per cent, which could raise almost £3billion over a decade.
The bill, tabled in Parliament last week, will affect old-style pension schemes where retirement incomes are linked to people’s pay packets, which have around nine million members.
British chancellor Rachel Reeves
A minister said: ‘The negotiations over the final settlements are still not sorted for some departments.
'They’re going to carry on fighting it out over the weekend.’
Another source added: ‘Rachel will stand up and promise things she can’t deliver.
'There will be a lot of guff about how she will deliver security for the country.
‘But how can you promise to deliver security when Trump’s doing what he’s doing on tariffs and Putin is so active?’
At the heart of the schism is an ideological divide between the party’s Blairites, represented in No 10 by Liz Lloyd, Sir Keir’s head of policy delivery, and Morgan McSweeney, the Downing Street chief of staff.
Mr McSweeney is desperate to tackle small boats migration while Ms Lloyd is encouraging spending more on the NHS.
Rachel Reeves is planning a £3billion tax raid on millions of pensions.
The new Pension Schemes Bill lays out a blueprint for companies to take out ‘surplus’ cash from certain schemes.
The theory behind the plan is that companies can use the money to invest in their business and that would fuel growth.
But experts fear this could lead to a repeat of the Robert Maxwell scandal of the early 1990s, when the late tycoon stole £400 million from his staff pension fund to prop up his companies.
The Chancellor, who is desperate to raise tax revenues, would benefit because any ‘surpluses’ released are taxed at 25 per cent, which could raise almost £3billion over a decade.
The bill, tabled in Parliament last week, will affect old-style pension schemes where retirement incomes are linked to people’s pay packets, which have around nine million members.
