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UK to increase military presence in Indo-Pacific to counter China | Foreign policy

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The UK will increase its military and economic presence in the Indo-Pacific to support regional stability, Keir Starmer will announce on Saturday.

In an effort to counter China’s influence, ministers will expand the Royal Navy’s presence in the region and carry out more joint patrols with Pacific island nations.

The prime minister has warned that the UK “cannot turn a blind eye” to challenges its allies face on the other side of the world.

He will announce the plans as he prepares to fly home from Samoa, where he has been attending the Commonwealth heads of government meeting (Chogm).

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The navy patrols will focus on maritime security, combatting illegal fishing and responding to the natural disasters that blight the South Pacific, one of the most disaster-prone regions in the world.

The UK has two patrol vessels persistently deployed in the Indo-Pacific, including HMS Tamar, which has been supporting Samoa with security at Chogm.

Ministers will also set up a Pacific business club alongside Australia and cooperate on renewable energy projects with New Zealand.

Geopolitical competition for influence in the South Pacific is growing rapidly, sparking concerns about the militarisation of the region.

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The Guardian has reported on the proliferation of military and security agreements between Pacific countries and Australia, the US and China, with western powers responding to China’s growing presence.

“My visit to the Pacific this week has only reinforced how important this part of the world is to the United Kingdom’s prosperity and security, and I know across business, trade and defence we play a vital role in supporting the region too,” Starmer said in a statement.

“As responsible international players, we cannot turn a blind eye to the challenges faced by our friends and partners on the other side of the world, so my message today is clear: this is just the beginning of our commitment to the Indo-Pacific.”

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After a foreign policy and security review they carried out in 2021, the Conservatives under Boris Johnson announced an “Indo-Pacific tilt” in which the UK would focus on building trade and security ties with the region. There have been questions over whether Labour will embrace the Indo-Pacific tilt in government.

Ministers said the expansion in the Indo-Pacific would also focus on growth, with a Pacific business club aiming to help businesses invest in developing countries in the region.

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The purpose of the club will be to act as a launchpad for investors and create links between businesses and regional governments.

The government will also work with New Zealand to develop renewable energy projects in the Pacific by raising private investment and making it easier for businesses to move into the market. David Lammy, the foreign secretary, is expected to announce further details with his New Zealand counterpart later this year.

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This is not a Budget I want to repeat, says Rachel Reeves

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EPA Rachel Reeves poses for the cameras with a line up of her Treasury ministers. She is smiling and holding the traditional Budget red boxEPA

Chancellor Rachel Reeves has told the BBC that she hopes Labour’s first Budget since taking power, which includes massive tax increases, would be a one-off.

“This is not the sort of Budget we would want to repeat,” she told the BBC’s political editor Chris Mason.

“But this is the Budget that is needed to wipe the slate clean and to put our public finances on a firm trajectory.”

Employers will bear the brunt of the £40bn in tax rises unveiled earlier by Reeves – the biggest increase in a generation.

She insists it is needed to plug a £22bn “black hole” in the nation’s finances she inherited from the Conservatives and to invest in the NHS and other public services.

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In a marathon 76 minute speech, she said Labour would fulfil its promise to voters in July’s election to “invest, invest, invest” to “drive economic growth”.

But the government’s promise to make the UK the fastest growing economy in the developed world have been undermined by its own financial watchdog.

The Office for Budget Responsibility said the package of economic measures unveiled by Reeves would ultimately “leave GDP largely unchanged in five years”.

Asked about the underwhelming forecasts, she said: “I absolutely accept this is not summit of my ambitions. I want the economy to grow faster than this.”

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She added that the “growth numbers this year and next year are being revised up and that’s good news”.

The OBR says the economy will grow by 2% in 2025, up 0.1% in its previous forecast, but it will drift down in subsequent years to 1.5% in 2028.

In her Budget speech, Reeves said “working people” would not see an increase in income tax, National Insurance or VAT, fulfilling a promise made by Labour at the general election.

Instead, employers will see an increase in National Insurance contributions on their workers’ earnings which will raise up to £25bn a year for the government.

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There will also be an increase to capital gains tax on share sales and a freeze on inheritance tax thresholds.

In his response to the Budget, Conservative leader Rishi Sunak accused Reeves of “hobbling” economic growth.

“They’re taxing your job, they’re taxing your business, they’re taxing your savings. You name it, they’ll tax it,” Sunak told MPs in his final Commons appearance as leader of the opposition.

But Reeves claimed any “responsible chancellor” would have been forced to do the same to “fix the foundations” of the economy.

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Her Budget – the first Labour economic statement since 2010 – sees the second biggest increase in taxes in UK history.

As measured by amount of tax raised relative to the size of the economy, it is slightly smaller than Conservative Chancellor Norman Lamont’s 1993 Budget.

In a surprise move, Reeves decided not to continue a freeze on income tax thresholds beyond 2028, which would have dragged millions of people into the tax system for the first time or pushed them into paying higher rates.

And she announced changes to Labour’s self-imposed borrowing rules to allow the government to pump billions into the UK’s infrastructure and fund improvements to crumbling schools and hospitals.

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She also froze petrol duty for next year – and retained a 5p cut introduced by the Tories that was due to expire in April.

Other measures included:

  • Capital gains tax paid on profits from selling shares to increase from up to 20% to up to 24%
  • Freeze on inheritance tax thresholds extended beyond 2028 to 2030
  • VAT on private school fees from January 2025
  • Air Passenger Duty on flights by private jet to go up by 50%
  • New tax of £2.20 per 10ml of vaping liquid introduced from October 2026
  • Tax on tobacco to increase by 2% above inflation, and 10% above inflation for hand-rolling tobacco
  • Tax on non-draught alcoholic drinks to increase by the higher RPI measure of inflation, but tax on draught drinks cut by 1.7%
  • The stamp duty land tax surcharge for second homes will increase by two percentage points to 5% from Thursday

In what was the first Budget speech by a female chancellor in the UK’s history, Reeves told MPs: “This is a moment of fundamental choice for Britain.

“I have made my choices. The responsible choices. To restore stability to our country. To protect working people.

“More teachers in our schools. More appointments in our NHS. More homes being built.

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“Fixing the foundations of our economy. Investing in our future. Delivering change. Rebuilding Britain.”

Reeves says Budget will raise taxes by £40bn

But leading business groups said the Budget was a “tough” one for business, pointing to the NI hike as a blow to the ability of firms to invest.

“At first blush, there is precious little in the government’s first Budget which offers anything other than short-term pain,” said Roger Barker, director of policy at the Institute of Directors.

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The Liberal Democrats welcomed the extra money for the NHS “to start repairing all the damage done to local health services by the Conservatives”.

But leader Sir Ed Davey said: “Raising employer’s National Insurance is a tax on jobs and high streets, and it will make the health and care crisis worse by hitting thousands of small care providers.”

Scotland will receive an additional £3.4bn in Treasury funding as a result of the Budget.

First Minister John Swinney has been calling for the UK government to “immediately and significantly” increase funding for Scotland.

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The SNP government has already cut £500m from its budget this year, with ministers warning that without extra cash they would need to make difficult choices when they set out their tax and spending plans for next year in December.

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Farmers “betrayed” by Labour’s £1m inheritance tax relief limit

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Farmers "betrayed" by Labour's £1m inheritance tax relief limit

Farmers across the UK have met the news that inheritance tax relief for farms will be limited to £1m with anger.

The National Farmers’ Union said it had been a “disastrous budget” for family farms, that would “snatch away the next generation’s ability to carry on producing British food” and see farmers forced to sell land to pay the tax.

Many have gone onto social media to express their dismay, as well as broadcasters Jeremy Clarkson and Kirstie Allsopp, who said the decision showed the government had “zero understanding of what matters to rural voters”.

The government said it was still committed to supporting farmers and “the vital role they play to feed our nation”.

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In Wednesday’s budget, the Chancellor announced that, while there would continue to be no inheritance tax due on combined business and agricultural assets worth less than £1m, above that there would be a 50% relief, at an effective rate of 20%, from April 2026.

For years, the APR tax relief has enabled small family farms – including land used for crops or rearing animals, as well as farm buildings, cottages and houses – to be handed down through the generations.

Somerset farmer Richard Payne told the BBC that he had already told his son to think of going into something other than farming, as the business would become “completely unviable” as a result of inheritance tax.

He added that the £1m limit would only cover the smallest farms and that the change could result in more land being bought up by bigger businesses, changing the future shape of UK farming.

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“Right across the land there will be a sea-change for the worse. Everyone says they don’t like mega-farms and they don’t want factory farming, but I can see that will be one answer out of all of this,” he explained.

Fellow Somerset farmer Holly Purdey, who is vice-chair of the Nature Friendly Farming Network England, said “longevity and generational thinking” were often key motivators for farmers to care for the land – and that could be lost.

But, she added, any forced sale of land from larger farms as a result of the tax relief changes could help more newcomers get into farming.

On X, many farmers said the decision would mean the end of smaller family farms.

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Jeremy Clarkson, who presents the TV programme Clarkson’s Farm, posted – telling farmers not to despair but “just look after yourselves for five short years and this shower will be gone”.

Broadcaster Kirstie Allsopp said the Chancellor had destroyed farmers’ “ability to pass farms onto their children, and broken the future of all our great estates”.

“It’s an appalling decision which shows the government has zero understanding of what matters to rural voters,” she added.

Shadow secretary of state for rural affairs, Steve Barclay, said on X that Labour had “broken a clear promise they made to our farmers” by changing the tax relief.

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Victoria Vyvyan, president of the Country Land and Business Association, said the change was “nothing short of a betrayal”, as Secretary of State Steve Reed had last year said: “We have no intention of changing APR.”

She added that it was estimated 70,000 farms could be adversely affected by the £1m cap: “This puts dynamite beneath the livelihoods of British farming, and flies in the face of growth and investment.”

Tom Bradshaw, president of the NFU, said: “It’s been a disastrous budget for family farmers.

“The shameless breaking of clear promises on agricultural property relief will snatch away the next generation’s ability to carry on producing British food, plan for the future and shepherd the environment.”

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But the government said the change was only expected to affect around 2,000 estates each year.

Following Wednesday’s budget announcement, the government said it would be maintaining the £2.4bn farming budget for England in 2025/26.

Food Security Minister Daniel Zeichner said: “Our commitment to farmers and the vital role they play to feed our nation remains steadfast.”

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Stamp duty tax on second homes to rise

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Getty Images A man looks at houses for sale at an estate agentsGetty Images

The rate of stamp duty paid by people buying a second home is to rise, Chancellor Rachel Reeves has announced in the Budget.

Stamp duty is a tax paid when buying property over a certain price in England and Northern Ireland.

People buying an additional property are already subject to a higher rate, and from Thursday this will rise from from an extra 3% to 5%.

Reeves said the move would “support over 130,000 additional transactions from people buying their first home, or moving home, over the next five years”.

However, analysts say the increase rate could affect landlords’ willingness to buy more properties.

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Paul Johnson, director of the Institute for Fiscal Studies think tank, said renters would “pay part of the cost” of the increase in stamp duty for second-home buyers and landlords “as the supply of such properties falls”.

Ben Beadle, chief executive of the National Residential Landlords Association, said: “The chancellor has failed to heed the warnings of the Institute for Fiscal Studies that higher taxes on the rental market lead only to rents going up.

“What tenants needed was a Budget to boost the supply of new, high-quality rental housing. What we got is a recipe for less choice and higher rents.”

But Ben Twomey, chief executive of campaign group Generation Rent, said: “Renters who have been able to save a deposit to buy a home will get a boost from the increased stamp duty surcharge.

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“The higher costs for investors will make it easier for first-time buyers to compete in the house sales market.”

Currently, buyers of homes worth less than £250,000 do not pay stamp duty. This was doubled from £125,000 under Liz Truss’s mini-Budget in September 2022.

The threshold is £425,000 for those buying their first property, with the level raised from £300,000 in the mini-Budget.

However, next March the thresholds are due to revert back to the lower levels set before the mini-Budget.

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The current rates of stamp duty are:

  • £0-£250,000 (£425,000 for first-time buyers) = 0%
  • £250,00-£925,000 = 5%
  • £925,001-£1.5m = 10%
  • £1.5m+ = 12%

From Thursday, people buying a second home will pay an extra 5% on top of this.

Meanwhile, the Budget included a £500m boost in funding for the Affordable Homes Programme, which the government said would deliver up to 5,000 new social and affordable homes.

Reeves also confirmed the government would reduce Right to Buy discounts in a bid to increase the supply of council housing.

The Right to Buy scheme allows tenants renting council-owned homes to buy them at a discounted rate.

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The chancellor said councils would also be able to keep 100% of the money raised from sales of housing so this could be reinvested into new supply.

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Vaping tax and tobacco duty rises set out in Rachel Reeves’ Budget

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Vaping tax and tobacco duty rises set out in Rachel Reeves' Budget

The cost of vaping and smoking will increase following tax rises announced in Chancellor Rachel Reeves’ Budget.

A new tax on vapes of £2.20 per 10ml of e-cigarette liquid will kick in from October 2026.

That will be accompanied by an equivalent increase of £2.20 per 100 cigarettes in tobacco duty to “maintain the financial incentive to switch from tobacco to vaping”.

Reeves also set out immediate above-inflation increases of 2% on tobacco and 10% for hand-rolled tobacco.

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On alcohol duties, she said that, from February 2025, there would be a 1.7% reduction in draught beer duty, to shave “a penny off a pint in the pub”.

However, rates on non-draught products, such as wine and spirits, will rise by the higher RPI measure of inflation.

Defending the rise, the chancellor said “two-thirds of alcoholic drinks sold in pubs are served on draught”.

The UK Spirits Alliance (UKSA) called the hike a “kick in the teeth”, adding: “Today’s decision won’t stop thousands more pubs and distillers closing down.”

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However, Katherine Severi of the Institute of Alcohol Studies welcomed the move saying it would “help narrow the widening gap in affordability between pub and supermarket alcohol”.

“There are both public health and economic reasons to move people back to drinking in pubs and not at home.”

In its last Budget before losing the election, the previous Conservative government said it wanted to introduce a vaping tax and set up a consultation on the changes.

The consultation said the tax aimed to make vaping “less accessible to young people and non-smokers while also raising revenue for funding vital public services like the NHS”.

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It had proposed different levels of tax based on the amount of nicotine in the vaping liquid. However, Reeves has instead opted for a flat rate.

Head of the UK Vaping Industry Association John Dunne called the vape tax a “nonsensical move” that penalised people who used vapes as a method to give up smoking.

He said: “Some three million adults are former smokers thanks to vaping, which is strongly evidenced as the most effective way to quit conventional cigarettes, saving the NHS millions of pounds in treating patients with smoking related conditions.”

The new Labour government had already said it wanted to stop vapes being branded to appeal to children, and has announced a ban on single-use vapes, due to come into effect in England in June 2025.

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Ministers have also pledged to continue plans, set out by former Prime Minister Rishi Sunak, to ban people born in or after 2009 from buying cigarettes.

In a measure aimed to encourage manufacturers to reduce sugar content in drinks, the Budget confirmed an increase to the Soft Drinks Industry Levy.

The existing exemption for milk-based drinks will be reviewed.

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Budget unveils big taxes, big borrowing and big spending plans

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Budget unveils big taxes, big borrowing and big spending plans

I said this morning this Budget would be big. And big is exactly what it is.

We got a sense of that very early on from the chancellor, when she said: “This Budget raises taxes by £40bn.”

To state the obvious, that is a massive amount of money.

The thrust of what we have heard is very much in line with what we reported in advance – with one or two tax rises suggested in some places that are not actually happening.

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So, the thresholds at which levels of income tax and National Insurance contributions are paid, which are frozen until 2028, will be unfrozen then.

That’s the opposite of what was expected.

Frozen thresholds contribute towards what is known as “fiscal drag” and amount to big tax rises – where people can be hauled into paying a tax, or a higher rate of it, courtesy of inflation.

But it is worth remembering that Rachel Reeves could have unfrozen the thresholds before 2028 and chose not to, and could later choose to maintain the freeze.

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The other tax rise many thought could happen but did not was fuel duty.

But put these two to one side – this is a massive tax raising budget.

Alongside it, where they will spend some of that money – on the NHS and schools in England, for instance.

Big taxes, big borrowing and big spending.

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But also projected pretty anaemic growth and inflation above its 2% target.

There is one big question – will all this make enough difference that people think their lives are getting better?

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Starmer slams Tory leader candidates for Southport comments

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Starmer slams Tory leader candidates for Southport comments

Starmer urges MPs to support police in Southport investigation

The prime minister has criticised both Conservative leadership candidates for casting doubt on the police and government’s response to the Southport attack that left three young girls dead.

Tory leadership hopeful Robert Jenrick has suggested information on the attack was “concealed”, while his rival Kemi Badenoch argued that the government, police and prosecutors “have questions to answer”.

This follows the revelation 18-year-old Axel Rudakubana, who is accused of murdering the three girls, was charged with two further offences – including one under the Terrorism Act.

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Sir Keir warned MPs they “can either support the police in their difficult work” on the Southport case or “undermine” it.

During his weekly Prime Minister’s Questions session, Sir Keir told a packed House of Commons: “It is important police and prosecutors are able to do their difficult job.

“All of us have a choice to make, including those running to be Conservative leader, they can either support the police in their difficult task or they can undermine the police in their difficult task, and I know what side I am on.”

Badenoch was in the Commons to hear the comments.

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Sir Keir was responding to a question from Reform UK’s deputy leader Richard Tice, who called for the police to be more open about investigations.

Reform UK leader Nigel Farage faced criticism after the Southport killings for questioning the police’s assessment of the attacks.

Following the revelations about the extra charges against Mr Rudakubana, Farage released a video claiming “perhaps I was right all along”.

On Wednesday, Mr Rudakubana appeared in court charged with production of the poison ricin and possession of a military study of the Al Qaeda training manual, an offence under terrorism legislation.

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Counter Terrorism Police are not currently treating the Southport attack itself as a terrorist incident.

The teenager had already been charged with the murders of Bebe King, six, Elsie Dot Stancombe, seven, and nine-year-old Alice Dasilva Aguiar who died at a Taylor Swift-themed dance class on 29 July.

Following reports of the new charges, Jenrick told ITV News he wanted answers on “when the prime minister knew”.

“The state should not be lying to its own citizens,” he said.

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Asked if he thought the state had lied, Jenrick said: “We don’t know the reason why this information has been concealed.

“Why has it taken months for the police to set out basic facts about this case that it is reasonable to believe were known within hours or days of this incident occurring?”

In a social media post Badenoch said there were “serious questions to be asked of the police, the [Crown Prosecution Service] and also of Keir Starmer’s response to the whole situation”.

She said: “Parliament is the right place for this to happen.

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“While we must abide by the rules of contempt of court and not prejudice this case, it is important that there is appropriate scrutiny.”

The BBC understands senior figures in government first became aware of the possibility of new charges against the suspect in the Southport murders in the past few weeks.

A spokesperson for the prime minister said it was “not correct” to say the government had been involved in withholding facts from the public.

The CPS said it has taken time to bring the charges because this was a “lengthy and complex investigation”.

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Ahead of PMQs, House of Commons Speaker Sir Lindsay Hoyle warned MPs of the risk of seriously prejudicing criminal proceedings by commenting on the investigation in the Commons.

While members might be frustrated at not being able to comment he said: “More importantly at the heart of this case are three young girls.

“We all went to see justice for them and others affected by this appalling incident.”

The day after the Southport attack, thousands attended a peaceful vigil in the town, but a separate protest later turned violent outside a mosque.

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This sparked a wave of protests across many towns and cities in the following days, leading to violence and rioting, particularly against asylum centre hotels.

More than 1,000 people have been arrested, and hundreds have been charged and sentenced to jail.

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