Rachel Reeves has hit back at critics as she insisted she will not raise major taxes to cover spending plans and vowed to reverse winter fuel cuts this winter.
The chancellor unveiled a £15.6 billion package to upgrade public transport networks in the North and Midlands on Wednesday, and was pressed a number of times on the manifesto pledge not to increase income tax, VAT or national insurance.
Despite warnings that manifesto spending plans are now at risk, the chancellor said: “We made those commitments in our manifesto and we stick to them. All of the manifesto commitments that we made were fully costed and fully funded.”
She also said the government’s U-turn on cuts to winter fuel payments would be reversed “this coming winter,” as the economy “is in a better shape”.
Ms Reeves announced the package including funding to extend the metros in Tyne and Wear, Greater Manchester and the West Midlands, along with a renewed tram network in South Yorkshire and a new mass transit systems in West Yorkshire.
Sir Keir Starmer will face questions on the announcement as well as the future of his tariff deal with Donald Trump during PMQs later today.
Key Points
- Reeves: ‘Winter fuel U-turn will kick in this winter’
- Reeves vows no new taxes as she insists spending plans “are fully funded”
- Rachel Reeves unveils £15bn for transport outside London
- Trump temporarily spares UK from 50% metal tariffs
- Britain given 5 weeks to finalise exemption for steel tariffs
Badenoch asks how many will get winter fuel payments back
12:07
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Athena Stavrou
In her first question during this week’s PMQs, Kemi Badenoch asked Sir Keir Starmer about his winter fuel payment U-turn.
“Three weeks ago the winter fuel policy was set in stone, two weeks ago the prime minister U-turned,” she said.
“Today the Chancellor is rushing her plans because she just realised when winter is.”
She added: “Can the PM be clear with us here and now. How many of the 10 million people who lost their winter fuel payments will get them back?”
Starmer began by saying: “I’m glad to see she’s catching up with what happened two weeks ago.”
PMQs begins
12:03
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Athena Stavrou
Sir Keir Starmer has stood up in the Commons to begin PMQs.
He began by commenting on Labour’s announcement of £15 billion into public transport networks in the North and Midlands.
Watch live: Starmer faces Badenoch at PMQs after Reeves vows winter fuel U-turn
11:56
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Athena Stavrou
Starmer is about to face his weekly midday questions in the Commons.
We’ll be bringing you the latest updates and you can watch live here:
Pictured: Starmer leaving Downing Street ahead of PMQs
11:48
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Athena Stavrou
Starmer to face PMQs
11:40
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Athena Stavrou
Sir Keir Starmer will face his weekly PMQs shortly in the Commons.
The prime minister will face tough questions from the Tory leader and other MPs amid concern Trump’s tariff exemption could be a temporary measure.
He will also face questions on the announcement hat billions of pounds will be invested in public transport in the North and Midlands.
Reeves: British exemption from Trump tariff hike welcome
11:31
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Athena Stavrou
The Independent’s Political Correspondent Archie Mitchell reports:
Rachel Reeves has said it was “welcomed by UK Steel” that Britain avoided Donald Trump’s doubling of steel and aluminium tariffs - and vowed negotiators will work to ensure the levies are brought down to zero.
The chancellor said the UK-US trade deal struck by Sir Keir Starmer and business secretary Jonathan Reynolds was “good for British Steel”, as it will see tariffs on the sector dropped.
With the US president setting a five-week deadline for the terms of the agreement to be fully implemented - or leave Britain facing the higher tariffs - she said Britain will work to “bring those tariffs down to zero”.
Nato boss calls on allies to ‘go further and faster’ on defence spending
11:10
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Athena Stavrou
The Independent’s Whitehall Editor Kate Devlin reports:
Nato secretary general Mark Rutte has told member countries to “we have to go further and faster” on defence spending, amid an expectation the alliance will force Keir Starmer to agree to allocate 3.5 per cent of GDP.
Defence spending “keeps us safe” Mr Rutte told a press conference ahead of a meeting of defence ministers.
On Monday the prime minister's bold plans to transform the UK’s defences were overshadowed by a row over money after the prime minister failed to commit to a firm date to raise spending to 3 per cent of GDP.
The Labour leader was warned Britain may not be moving quickly enough to counter the rapidly growing threats from countries such as Russia.
Sir Keir and other Nato leaders are under pressure from US president Donald Trump to rapidly increase spending, to wean Europe off a dependence on Washington for military support.
Reeves: ‘Winter fuel U-turn will kick in this winter’
11:06
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Athena Stavrou
The Independent’s Political Correspondent Archie Mitchell reports:
Rachel Reeves has promised that those made eligible for payments under Labour’s winter fuel U-turn will receive them this winter.
The chancellor said she will set out details of who will be eligible under a more generous means testing system than it put in place last July “as soon as possible”.
And she admitted that, as well as her justification that the U-turn is based on an economic turnaround under Labour, it is also due to “the concerns people had about the level” of eligibility.
She said: “I had to make decisions last year to restore sound public finances, and that involved a number of difficult decisions around welfare, taxation and also public spending - including the decision to means test winter fuel payments so only the poorest pensioners, those on pension credit, got it.
“But we have now put our public finances on a firmer footing. The economy is in a better shape, but we have also listened to the concerns that people had about the level of the means test
.“So we will be making changes to that.
“They will be in place so that pensioners are paid this coming winter, and we'll announce the detail of that and the level of that as soon as we possibly can.”
Pictured:Rachel Reeves during visit to Mellor Bus in Rochdale, Manchester
11:04
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Athena Stavrou
Conservatives describe Rachel Reeves' speech as 'a copy and paste announcement'
11:00
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Athena Stavrou
The Independent’s Political Editor David Maddox reports:
Gareth Davies MP, shadow Treasury minister, said: "Rachel Reeves is scrambling to salvage her failing economic plan after the Prime Minister has made U-turn after U-turn, punching holes in her credibility."S
he needed to do better than copying and pasting announcements made by the previous Conservative government. The country is not falling for their lies anymore. Britain deserves better.
"Only the Conservatives believe in sound money, low tax and the ingenuity of our entrepreneurs."
Reeves vows no new taxes as she insists spending plans “are fully funded”
10:46
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Athena Stavrou
The Independent’s Political Editor David Maddox reports:
Rachel Reeves has hit back against her critics within and outside the government who warn she needs to raise taxes to pay for Labour’s manifesto commitments.
Despite rows with ministers like deputy prime minister Angela Rayner and warnings from leading economists such as Paul Johnson from the Institute of Fiscal Studies (IFS), Ms Reeves has insisted she will not raise the major taxes.
She was pressed a number of times on the manifesto pledge not to increase income tax, VAT or national insurance but insisted she will stick to her promises.
And despite warnings from cabinet colleagues that manifesto spending plans are now at risk, the chancellor also insisted they are “fully funded and fully costed”.
She was asked: “Are manifesto commitments on policing, housing and energy at risk?”
But Ms Reeves responded: “We made those commitments in our manifesto and we stick to them. All of the manifesto commitments that we made were fully costed and fully funded.”
She highlighted the small taxes which Labour said it would raise in the manifesto to pay for extra investment - VAT on private school fees, cracking down on non-doms and introducing the energy levy
She went on: “Those promises were fully funded. We have raised those taxes to put that money into our public services which is why we can deliver on our manifesto commitments including not increasing the key taxes working people pay - income tax, national insurance and VAT.”
Rachel Reeves unveils the latest plan for change and renewal - but will it happen?
10:32
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Athena Stavrou
The Independent’s Political Editor David Maddox reports:
Most politicians want to get the bad news out of the way early and have a big positive announcement on the day of a major statement.
But Rachel Reeves has gone the opposite direction. About 20 minutes into her speech she has started listing a string of eye-catching investment in transport across the midlands and the north.
Train stations, tram lines, buses, light rail.
If it comes to fruition then there will be a true renewal of the UK’s less economically productive regions.
The biggest of all is Northern Powerhouse Rail.But cynics will note that similar announcements were made by the Tories in the last 14 years.
The question now will be whether Labour really delivers.
Reeves fights to win back Reform voters with transport package
10:22
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Athena Stavrou
Chancellor Rachel Reeves has defended her stewardship of the economy and the public finances as Labour battles the electoral threat from Nigel Farage’s Reform UK.
Unveiling a £15 billion investment package for the North and Midlands, she said: “The choice is already clear: Where Reform and the Conservatives would gamble with Britain’s future, Labour will invest in that future.
“Where they offer chaos, Labour offers stability.
“Where they offer decline, Labour offers investment.
“And where they offer more of the same, we offer change; change that we can now deliver because of the choices we have made.”
Watch: Reeves says she will 'never take risks' on 'fantasy economics' like Reform and Tories
10:07
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Athena Stavrou
British cities must mimic European infrastructure if UK is to succeed, says Reeves
10:02
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Athena Stavrou
The Independent’s Political Correspondent Millie Cooke reports:
British cities must improve their infrastructure to become more like other European cities if the UK is to succeed, Rachel Reeves has said.
Giving a speech in Manchester, the chancellor warned that the lack of infrastructure in cities like Birmingham, Liverpool and Newcastle put them at a disadvantage compared to the rest of Europe.
“Labour's strong investment in the past in strongly integrated transport systems, including in London, helps explain London's global success and also its advantages over other UK cities”, she said.
“And we want London to succeed, but it is the lack of that infrastructure which puts England's other great cities, Birmingham, Liverpool, Newcastle, at a disadvantage compared to their European counterparts that have this infrastructure, and it helps to explain our under performance relative to other European economies.”
She added: “If we were to increase the productivity of those second cities in the UK, it's a much the national average. Our economy today would be £86bn pounds larger.”
Analysis: Reeves loves her buzz words
10:00
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Athena Stavrou
The Independent’s Political Editor David Maddox reports:
As the chancellor continues to plough on with her speech she desperately tries to repeat as many of Labour’s buzz words even if they have little meaning for those listening.
So far we have had six “working people” references and nine “fiscal rules”.Of course there has been “plan for change” as well, another important line for this Labour government.
There have been a few “fiscal framework” moments too.
It has to be said from the shuffling feet, the people standing behind her appear to be struggling to remain interested in the speech as Ms Reeves carries on.
Reeves re-hashing Boris Johnson’s levelling up language
09:56
The Independent’s Political Correspondent Archie Mitchell reports:
Rachel Reeves is re-hashing the language Boris Johnson used to sell his levelling up agenda as prime minister.
Four years ago Mr Johnson warned of too many people born in a country in which “geography turns out to be destiny”.
“Everyone knows that talent and energy and enthusiasm and flair are evenly spread across the UK, evenly spread,” he said.
Ms Reeves is today talking about young people being forced to move hundreds of miles across the UK to secure high-paying jobs, attacking the “uneven distribution of opportunity”.
Voters were let down by Mr Johnson’s failings on levelling up, with inequality across the UK largely unmoved. Rishi Sunak then symbolically scrapped the northern leg of HS2, a project Labour has not moved to revive.
Ms Reeves risks overpromising and under delivering, letting voters down in the same way as so many of her predecessors.
Analysis: Rachel Reeves has rediscovered the levelling up agenda
09:51
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Athena Stavrou
The Independent’s Political Editor David Maddox reports:
Red wall Labour MPs in the north and midlands were complaining recently that the chancellor has ignored their parts of the country in her announcements and speeches.
This is somewhat surprising given that Ms Reeves is a Leeds MP, even if she is a south London woman at heart.
But with Reform and Nigel Farage now breathing down the necks of Labour MPs in those regions and the threats of rebellions, Ms Reeves has suddenly rediscovered “the forgotten parts of the country”.
In her last infrastructure speech the investment was all about the south - Heathrow expansion and silicon valley between Oxford and Cambridge.
Burn now it is regional summits for the north and midlands, and Northern Powerhouse Rail.
The words “levelling up” were taken away from the communities department by Labour but now it is back on the agenda.
Reeves: ‘Britain cannot rely on a handful of places forging ahead of the rest’
09:48
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Athena Stavrou
The Independent’s Political Correspondent Archie Mitchell reports:
Rachel Reeves has said the country cannot rely on London and the south east forging ahead, while the north and midlands lag behind.
The chancellor is unveiling billions of pounds of investment in transport infrastructure outside the capital.
She said: “The resource of such thinking has been growth created in too few places and too few people feeling the benefits wide gaps between regions and between our cities and our towns.”
She warned of young people being forced to choose between staying close to home or moving across the country to find better paying jobs.And she added: “I and my colleagues are determined to change things, because I know that there is brilliant talent to be found right across our country.”
Trust in the government is low, Reeves admits
09:46
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Athena Stavrou
The Independent’s Political Correspondent Millie Cooke reports:
Trust in the government is low, and “prosperity is too narrowly shared”, the chancellor has admitted.Giving a speech in Manchester, where she is expected to announce billions of pounds of investment in public transport in the North and Midlands, the chancellor said the government “must do more” for people.
“While it is just one quarter, the most recent numbers show Britain to be the fastest growing economy in the G7. And real wages rose more in less than 10 months under Labour than they did over the first 10 years of the previous Conservative government.
“But we know that not enough people are feeling that. The trust remains low and prosperity is too narrowly shared. I know that we must do more”, she said.
Rachel Reeves unveiling £15bn for transport outside London
09:42
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Athena Stavrou
Rachel Reeves has begun her speech in Manchester, where she is unveiling billions of pounds of investment in public transport in the North and Midlands.
She said: “I know that we must do more. In a weeks time I will set out a spending review targeted squarely on the renewal of Britain. Focused on the priorities of working people.
Analysis: Rachel Reeves attempts to win over the north ahead of difficult spending review
09:33
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Athena Stavrou
The Independent’s Political Correspondent Millie Cooke reports:
Rachel Reeves is in Manchester today, where she is expected to announce billions of pounds of investment in public transport in the North and Midlands as part of an attempt to win some goodwill ahead of next week’s spending review.
Announcing the £15.6bn package, the chancellor will argue that Britain “cannot rely on a handful of places forging ahead of the rest of the country”.
It comes amid a backdrop of dire poll ratings and concern over the direction of the party from a large number of Sir Keir Starmer’s own MPs.
Meanwhile, voters are braced for difficult cuts at next week’s spending review, where the chancellor will set detailed departmental budgets for most of this parliament.
Today’s speech is an attempt to prove to voters – and the party – that its not always bad news with Labour, and generate some positive press ahead of the stark trade offs we’re likely to see next Wednesday.
Watch live: Live: Rachel Reeves announces £15bn transport projects across UK
09:30
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Athena Stavrou
Rachel Reeves is about to announce billions of pounds of investment in public transport in the North and Midlands.
She is expected to confirm the measures during a speech in Manchester in the next few minutes.
You can watch live here:
Analysis: How the stock markets are reacting to tariff changes
09:14
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Athena Stavrou
The Independent’s Business and Money Editor Karl Matchett reports:
The UK and European markets have taken the latest tariff changes in their stride - it's fairly calm waters across the board with most indices either flat or slightly up in morning trading.
The FTSE 250 is up 0.2 per cent, with the FTSE 100 fully flat. The biggest early winners within it are defence firm Babcock (+4pc) and miners Antofagasta, Fresnillo, Endeavour, Anglo American and Glencore (all 1.7-2.7pc up).
Over in France, the CAC 40 is up 0.4pc, Germany's Dax is almost 0.7pc higher and the Euro Stoxx 50 is between them both at 0.6pc in the green. So far, so calm.
Minister cannot guarantee Britain will meet Trump’s tariff deadline
09:05
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Athena Stavrou
The Independent’s political correspondent Archie Mitchell reports:
Heidi Alexander refused to guarantee officials would meet Mr Trump’s deadline to fully implement the UK-US deal before the 50 per cent tariffs are imposed.
The transport secretary told BBC Radio 4’s Today programme: “I know that business owners will want to know that we're doing absolutely everything that we can to protect them from these very challenging global economic headwinds.
“It was fantastic news that we got that trade deal with the US.”
Ms Alexander added that she is “really confident” in the government’s ability to fully implement the deal.
Reeves to announce £15bn for transport outside London ahead of spending review
08:56
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Athena Stavrou
Away from news around Trump’s tariffs, Rachel Reeves is set to tear up Treasury rules as she announces billions of pounds of investment in public transport in the North and Midlands.
The £15.6 billion package for mayoral authorities is expected to include funding to extend the metros in Tyne and Wear, Greater Manchester and the West Midlands, along with a renewed tram network in South Yorkshire and a new mass transit systems in West Yorkshire.
She is also expected to confirm that next week’s spending review will include changes to the rules in the Treasury’s Green Book that determine whether projects receive funding.
The chancellor is expected to announce the investment in a speech in Manchester in the next few minutes.
We’ll keep you updated here.
Minister: ‘No row over spending review’
08:40
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Athena Stavrou
The Independent’s political correspondent Archie Mitchel reports:
The transport secretary has denied a row over the chancellor’s spending review, due to be unveiled next Wednesday.
Heidi Alexander said there is a “collegiate atmosphere" in the cabinet, with colleagues “determined to get the economy firing on all cylinders”.
It came after The Independent reported on a revolt against Rachel Reeves and Sir Keir Starmer, with minister warning key manifesto spending promises risk being ditched as a result of the review.
But Ms Alexander told Times Radio: “I know the Chancellor is focused on next week making sure that across the board, we have the money in the right places so that we can deliver on the people's priorities."
Starmer to face PMQs today
08:34
Sir Keir Starmer will face his weekly PMQs today in the Commons.
The prime minister will face tough questions from Tory leader and other MPs amid concern Trump’s tariff exemption could be a temporary measure.
He will also likely face questions on the expected announcement from the Chancellor of billions of pounds of investment in public transport in the North and Midlands.
Steel industry welcomes 25% tariffs but warns ‘uncertainty remains’
08:20
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Athena Stavrou
The UK steel Industry has welcomed Donald Trump’s decision to keep tariffs at 25 per cent on British goods, but warned that “uncertainty remains” over the final tax rate.
Gareth Stace, the director general of UK Steel, said that Mr Trump’s decision is a “welcome pause”.
He added: “Continued 25 per cent tariffs will benefit shipments already on the water that we were concerned would fall under a tax hike.
“However, uncertainty remains over timings and final tariff rates, and now US customers will be dubious over whether they should even risk making UK orders.
“The US and UK must urgently turn the May deal into reality to remove the tariffs completely.”
Full story: UK’s steel industry spared Trump’s new 50 per cent tariffs – White House warns the exemption is conditional
08:10
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Athena Stavrou
Donald Trump will spare Britain’s steel and aluminium industry from his 50 per cent tariffs on Wednesday, but has given the UK just five weeks to finalise a full exemption.
The US president has given Britain a reprieve as he doubles the levies on imports to he US as he vows to “further secure” American industry.
Sir Keir Starmer’s much-hyped UK-US trade deal unveiled last month should have exempted Britain from steel tariffs completely, but is still yet to be implemented. And Mr Trump has now set a deadline of next month for the deal to be finalised.
Read the full story here:
Government urged to 'apply rocket boosters' to US negotiations
08:01
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Athena Stavrou
Gareth Stace, director general of UK Steel, urged the Government to “apply rocket boosters” to negotiations to get US tariffs removed from steel imports as soon as possible.
Mr Stace told the BBC’s Radio 4 Today programme: “We need the UK Government to apply rocket boosters to those negotiations with the US administration to get that deal over the line and remove tariffs altogether on our imports and exports to the US market, which is our second biggest export market.”
He said the last months and weeks had been a “rollercoaster ride of uncertainty”, adding: “We woke up on Saturday morning to the president saying he’s going to increase tariffs to 50%.
“All of the UK steel exporters were in touch with their customers, almost all of them were cancelling those orders or pausing indefinitely.
“Now they will have to get back in touch with those customers and say: ‘Are those deals back on or not?'”
Britain given 5 weeks to finalise exemption
08:01
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Athena Stavrou
Britain escaped a hike to steel tariffs - but has just five weeks to finalise a full exemption.
Sir Keir Starmer’s much-hyped UK-US trade deal unveiled last month should have exempted Britain from steel tariffs completely, but is still yet to be implemented. And Mr Trump has now set a deadline of next month for the deal to be finalised.
Levies will remain at 25 per cent for imports from the UK, according to a version of the US executive order that confirmed the worldwide tariff increase on Tuesday, which also added that Britain could still be subject to the higher 50 per cent rate from 9 July.
Trump temporarily spares UK from new 50% tariffs in last-minute exemption
07:54
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Athena Stavrou
Donald Trump will spare Britain’s steel and aluminium industry from his 50 per cent tariffs on Wednesday.
The US president has given Britain a reprieve as he doubles the levies on imports to he US as he vows to “further secure” American industry.
It means levies will remain at 25 per cent for imports from the UK, according to a version of the US executive order that confirmed the worldwide tariff increase on Tuesday, which also added that Britain could still be subject to the higher 50 per cent rate from 9 July.
