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On the 10 June I am taking part in the Great North Swim - this is an open water swim in Lake Windermere, I have never done an open water swim before so this will be quite a challenge!

My training is taking me from Bramley Baths to Brockwell Lido.

It would be great if you would consider sponsoring me, raising money for St Gemma's Hospice, Leeds. This is the link for the Just Giving website -  or go on to my website so you can click through to the Just Giving page.

I will be swimming with fantastic Leeds Labour Cllrs - Jools Heselwood, Jonathan Pryor, Helen Hayden, John Illingworth, Jane Dowson, Lucinda Yeadon and Adam Ogilvie.

Taking the Plunge for St Gemma’s

  On the 10 June I am taking part in the Great North Swim - this is an open water swim in Lake Windermere, I have never done an open...


It was great to join the local residents and Neighbourhood Action at Hillside Hall in Farnley, to help celebrate The Queen’s 90th birthday. 

We raised a mug and ate a slice of birthday cake followed by fun and games, music and dancing, in honour of HRH. Neighbourhood Action do a fantastic job of supporting the local elderly and they made sure that everyone had a lovely party.

Happy Birthday Your Majesty

It was great to join the local residents and Neighbourhood Action at Hillside Hall in Farnley, to help celebrate The Queen’s 90th birthday. 

New Statesman, 18 April 2016


Last summer David Cameron and George Osborne promised they would make Britain a “high wage, low tax, low welfare” economy.

But less than a year on, it is clear they are failing. The Budget documents show that the Government are set to miss their own welfare cap in every year of this Parliament, by around £4 billion each year, a staggering £20 billion gap over the next five years. And this is even as they pull vital support from low-paid workers, disabled people and children living in poverty.

While they may be making strides towards a “low tax” economy, their tax cuts are overwhelmingly targeted at the better off. According to the Resolution Foundation, the changes to income tax allowances and thresholds in the latest budget amount to a £2.6 billion annual giveaway by 2021. 80 per cent of this will go to the top half of the income distribution and nearly half (47 per cent) going to the top 20 per cent.

Where their failure is perhaps most catastrophic however, is in delivering a “high-wage” economy. In fact, the outlook for wages instead gets worse every time the Chancellor comes to Parliament.

Official documentation accompanying last month’s Budget revealed that expected earnings for workers have been revised down in every year for the rest of the parliament, and this is on top of the falls we had already seen in projected wages in last November’s Autumn Statement.

I commissioned the House of Commons Library to look at what these changes to earnings will actually mean for people. If the OBR forecasts are right, this analysis shows that compared to what the Chancellor was predicting only last summer, the average UK worker will be £79 worse off next year, £163 worse off in 2017, £343 worse off in 2018, £611 worse off in 2019, and £823 worse off in 2020. This means that the total loss in earnings over the course of this Parliament is £2,000 per working person, a huge loss to many people who are already feeling squeezed.

In fact, when accounting for “RPIJ” inflation, which takes account of housing costs, analysis from the Resolution Foundation suggests that the median hourly wage will still be lower in real terms at the end of this parliament than it was when this government took office – in today’s prices reaching just £12.34 in 2021, still less than the £12.43 the average worker earned in 2010.

And it's not just family finances that are hit. Low wage growth means extra benefit expenditure and lower tax receipts, so the public finances are hit too. The OBR figures show that the reduction in forecast wages since November will cost the government an extra £1 billion in benefit spending over the next five years, and more than £35 billion in lost tax revenues. All this is further demonstration, if any were needed, that you can’t deal with the deficit if you don’t also have a strong economy and strong wage growth – an economy that works for everyone not just a privileged few.

And the growth that the Government is forecasting over this period is dependent on “unprecedented” levels of net household borrowing. The OBR data shows that British households are running an annual deficit that is now set to hit £68.4 billion in 2020-21, with total forecast borrowing up one third since the Autumn Statement. The Chancellor is relying on this debt to continue to finance spending and hence economic growth to reach his targets. This leaves already stretched families even more exposed, and as we heard at the Treasury Select Committee this week, leaves the economy vulnerable too in the event of a shock, such as a rise in interest rates.

The Budget was a missed opportunity. If the Chancellor really believed we were “all in this together” he would want to use the Budget to target help towards ordinary working families and the low paid, encouraging stronger wage growth which would in turn help to bring down the benefit bill and build a strong economy while helping people and families who could most do with a bit of support. Instead, the Chancellor presented a set of measures that disproportionately benefit the better-off. It’s time the Chancellor realised that without action to build a more robust and inclusive recovery, he can only fail in his quest to deliver a high-wage and low-welfare economy.


Rachel Reeves is Labour MP for Leeds West and a member of the Treasury Select Committee.

The Chancellor has not delivered the high-wage economy he promised

New Statesman, 18 April 2016

Progress, 15 April 2016


The leaked Panama Papers shone a light on the murky world of tax havens and will have far-reaching implications across the world.

People are rightly angered that a super-rich elite strive to avoid or evade paying their taxes.

David Cameron’s use of an offshore trust was eventually dragged out of him when he published his tax return.

All this matters because the prime minister is responsible for clamping down on tax-avoidance, yet you cannot help feel that his heart is not in it.

In 2013, he personally intervened to prevent offshore trusts from being dragged into a European Union-wide crackdown on tax avoidance by sending a letter to the then president of the European council, Herman Van Rompuy, that called for trusts to be exempt from certain transparency requirements.

That is why Caroline Flint is right to lead calls for greater openness through her multinational enterprises (financial transparency) bill.

It is also why the prime minister must now put the issue of tax havens at the heart of his anti-corruption summit next month.

At a time of strained public finances and a time when families are struggling to make ends meet, it cannot be right that the wealthiest get away with not paying their fair share of tax.

And the last thing that the government should be doing is to cut taxes for the rich.

What British taxpayers want is a transparent system under which the wealthy contribute their fair share of tax here in the United Kingdom and are seen to do so.

The former secretary of state for work and pensions Iain Duncan Smith summed it up in his resignation speech when he condemned the government’s welfare cuts as ‘deeply unfair’ and ‘perceived to be unfair’.

No one believes Cameron and his chancellor’s tired old line that ‘we’re all in this together’ any more.

Under George Osborne’s latest budget, the tax system has become even more iniquitous, penalising the less well-off and lining the pockets of the rich.

I don’t have a problem with people doing well and making a lot of money – we should celebrate success – but at a time when the public finances are stretched and many people on modest incomes are struggling to make ends meet, prioritising tax cuts for the better-off just is not right.

The chancellor made a series of bad decisions in a budget that are patently unfair to millions of ordinary people. It is clear that more needs to be done to tackle the avoidance and evasion by having public records of beneficial membership – both in our crown dependencies and British overseas territories as well as including twists in transparency rules and resourcing HMRC to go after those who are not paying up. But other measures in the budget show the chancellor is privileging the better-off rather than those in the middle, let alone those at the bottom of the income distribution.

When it came to income tax, the chancellor could have done far more to help those on the lowest pay. Instead, he devised a package of measures that disproportionately helped the better-off with a package of badly targeted tax breaks.

For example, fewer than one in five taxpayers will gain from the £2bn cut to the higher rate of income tax. The same group also benefit most from the costly and poorly targeted increase in the personal tax allowance. Yet, the 4.6 million lowest earners get absolutely no benefit.

When it comes to capital gains tax the chancellor again showed he has his priorities wrong. The cut in CGT will cost taxpayers more than £2.7bn over the next five years, but directly benefit just a wealthy few. Government sources have admitted only 130,000 people will share the gains from this measure. Most will be higher-rate taxpayers.

It was the chancellor who argued in 2010 that it was the gap between rates of tax on income and capital gains that enabled ‘some of the richest people in this country … to pay less tax than the people who clean for them’.

The chancellor has now almost doubled this gap for all higher-rate taxpayers from 12 per cent to 20 per cent. He has delivered even bigger gains to top rate taxpayers who arrange their affairs to take advantage of the cut.

A third area where Osborne has shown his inability to come up with a fair solution is his changes to the Isa limits.

He chose to increase the amount a person can put in a tax-free savings account to £20,000 a year.

But this measure cannot be a priority when many do not even earn £20,000 in a year and struggle to make any savings at all.

Latest figures show that the average Isa subscription, for those who could afford to save, was under £4,000 a year. Fewer than one in 10 people who contributed to an Isa were able to save the maximum amount. And a disproportionate number of those who did so enjoyed an income above £100,000 a year.

We are increasingly seeing a smaller group of wealthier savers using Isas to minimise their tax liabilities in a move away from the Isa’s original purpose of helping a large number of people build a nest egg.

Another unfair and wrong-headed choice the chancellor made concerned pensions tax relief.

He could have introduced a new 33 per cent flat rate of relief that I have advocated. It would have been fiscally neutral and fairer to those on lower incomes.

It would have provided a powerful incentive to save, effectively offering people a simple two-for-one offer: for every £2 they put into their pension pot, the government would add another £1. At the moment two-thirds of pensions tax relief is enjoyed by higher-rate tax payers while only 10 per cent of the benefit is felt by those people earning £24,000 (average earning) or less.

This would have provided an incentive to save for millions of people. But he ducked the decision to reform tax relief on pensions.

A fifth key area where Osborne made the wrong call and exhibited his skewed sense of priorities was inheritance tax.

Of course, it is right that parents want to help their children get on. But the chancellor’s inheritance tax break is about helping rich families pass on homes worth up to £1m to their children entirely free of tax. Even the Treasury’s own leaked analysis confirmed this policy will ‘most likely benefit high income and wealthier households’ in London and the south-east. This money could and should be much better spent helping ordinary families who struggle to stay in work when their children are young by creating a universal childcare entitlement for children aged two.

With limited public funds I find it incredible that the government can find the money for tax breaks for people fortunate to have homes worth £1m but not to offer more help to those earning modest or low incomes.

The chancellor’s budget prioritised tax breaks for the wealthy while pulling vital support from the vulnerable and disadvantaged.

The Resolution Foundation calculated that the tax and benefit measures already taken by this chancellor since the election will cut the incomes of the poorest 30 per cent by £565 a year, while increasing those of the richest 30 per cent by £280 a year.

That is shocking and comes before any further cuts are factored in as the government battles to meet its cap on welfare spending and follows its U-turn over personal independence payments.

The chancellor had the chance to create a fairer tax system, but he careered off in the opposite direction and handed out tax breaks to the rich instead of helping ordinary families or the disabled or children in poverty – all of whom could do with more support from this government.

The chancellor could have created a more fair tax system, boosting jobs, social mobility and growth.

Instead, he blew the money looking after the few most able to look after themselves and ignoring the needs of the many and the need to rebalance our fragile economy.


Rachel Reeves MP is a member of the Treasury select committee. She tweets @RachelReevesMP

Taxing questions for the Chancellor

Progress, 15 April 2016

sheesh mahal

I’m absolutely delighted that the fantastic Sheesh Mahal Restaurant, on Kirkstall Road, has announced the start of their re-build. Many local people helped out with the clean-up operation when the Sheesh was devastated by the boxing day floods. There has been tremendous reaction on the Sheesh Mahal facebook page to the news that the re-fit has begun and we are all looking forward to the Grand re-opening.


Sheesh Mahal start rebuilding after the floods

I’m absolutely delighted that the fantastic Sheesh Mahal Restaurant, on Kirkstall Road, has announced the start of their re-build. Many local people helped out with the clean-up operation when the...

House of Commons, 11 April 2016


 9.24 pm

In 2010, the Chancellor promised us a new growth model based on higher savings, investment and exports. However, notwithstanding what we have just heard from the hon. Member for Somerton and Frome (David Warburton), ​those fundamentals, which underpin the economy and are the backdrop to the Bill, are not going as well as we might have hoped. Our national savings ratio has hit an all-time low of 3.3%. In the latest figures, investment has been revised down, with a staggering £87 billion wiped off forecast business investment since last November, and public investment is falling as well. Our export performance has deteriorated further, with the gap between the Chancellor’s 2020 target for a trillion pounds-worth of exports and the OBR’s expectations now widening to £357 billion. That is before we factor in the calamity that the Government have allowed to unfold in our steel industry or the enormous risks to our economy created by putting our membership of the European Union in question. Indeed, just a few weeks after the Budget statement, we have seen even more bad news about not only steel, but the manufacturing sector in general and the worst balance of payments figures that the country has seen since the second world war, with the deficit in the fourth quarter of 2015 reaching a staggering 7%.

All that has an impact on living standards. On top of the downward revisions that we saw in November, expected earnings have been revised down in the forecasts for every single year of this Parliament. Looking at the deterioration in expected earnings since the Budget just after the general election, the OBR forecasts that the average UK worker will be £823 a year worse off by the final year of this Parliament. Following the downward revisions, the total loss over the course of this Parliament is £2,000, the impact of which will be felt most by those on low and modest incomes. Indeed, because the national living wage is linked to average earnings, somebody on the minimum wage will be £600 a year worse off than when the Government originally announced it. In less than a year, the average worker will be £2,000 worse off over the course of this Parliament and somebody on the minimum wage will be £600 a year worse off compared with what the Government originally announced.

Against that background, one might think that a Chancellor who once proclaimed that we were “all in this together” would want to use the Budget and this Finance Bill to target help towards ordinary working families and the low-paid. Instead, we have a package of measures before us that disproportionately benefit the better-off, rather than those who most need support. Let me give three examples. First, fewer than one in five taxpayers will gain from the £2 billion cut in higher rate income tax in clause 2. Those who will gain will also receive the largest benefit from the expensive and poorly targeted increase in the personal allowance in clause 3. The 4.6 million lowest-earning workers in the country will receive no benefit at all from either change. At a time when the earnings of those on middle and low incomes are being squeezed and public finances remain extremely tight, raising the threshold at which people start paying the higher rate of income tax is the wrong priority.

Secondly, the cut in capital gains tax in clause 72 will cost taxpayers more than £2.7 billion over the next five years, but directly benefit only a tiny minority. Just 130,000 individuals will share the gains, the majority being higher rate taxpayers. Around half of capital gains tax is paid by just 5,000 individuals who will therefore receive a windfall and get the bulk of the advantage, so the benefits of this tax break will be pocketed by a relatively fortunate few. Again, that is not ​the right priority when the living standards of ordinary people are being squeezed and when our public finances are so stretched.

The Chancellor would no doubt protest that that is a price worth paying for the entrepreneurial energy that the capital gains tax cut will unleash, but the official documents reveal that the OBR has made no upward revisions to its forecasts for investment, productivity or growth as a result of the measure, which will cost £2.7 billion. Indeed, the most likely impact of the move will be to increase the incentive to avoid tax by converting income to capital gains. Perhaps the Chancellor has been taking advice from the Prime Minister, who seems to have enjoyed the benefit of some careful tax planning. But, again, I would argue that with squeezed family finances and tight public finances, this is neither fair nor fiscally responsible.

Thirdly, as part of his Budget the Chancellor has chosen to increase the amount any individual can contribute to a tax-free savings account to £20,000 a year, as the hon. Member for Kirkcaldy and Cowdenbeath (Roger Mullin) mentioned. I welcome action to make it easier for ordinary workers and families to save, but we have to ask whether this approach should be the priority when most of our constituents are lucky to earn £20,000 a year and have anything left to save at all. In my constituency, average earnings are just under £20,000 a year, and many people would struggle to put anything aside, let alone take advantage of a £20,000 individual savings account limit. In the latest year for which detailed data are available, the average ISA subscription was less than £4,000 in the year. Fewer than one in 10 people who contributed to an ISA were able to save the maximum amount of just over £15,000, with a disproportionate number of those who did so having incomes above £150,000 a year. The trends of recent years suggest that as the Government have focused on raising the annual limit for ISAs, the total amount of cash put into ISAs has increased sharply even as the total number of people contributing to an ISA has fallen. In other words, this is moving ISAs away from their original purpose as a platform to support broad-based saving and investment, and increasing their use as a way to minimise tax liabilities for those with large amounts of cash to move around. That is having the wrong effects and the wrong people are benefiting. I support ISAs and tax-free savings, but only if they are there to support those people who need to save. What we are seeing is a falling savings ratio, with the most wealthy people being incentivised to save. We need to help those people on more modest incomes to put something aside for their future.

This Finance Bill, like those before it under this Chancellor, contains a long list of clauses ostensibly aimed at reducing tax evasion and avoidance. Anything that genuinely advances that end is to be welcomed, but we will judge the Government’s achievements not on the number of clauses in their Bills, but on the real progress made towards closing the tax gap and ensuring that everyone pays their share. I urge the Government to do more, by supporting, not blocking, measures in the European Parliament that strive to meet that objective.

The truth is that HMRC’s own figures show that the tax gap fell by £4 billion over the last five years of a Labour Government but has risen by £1 billion under the current Chancellor. The consequences of this Government’s refusal to take the necessary action on ​UK Crown dependencies—[Interruption.] I am happy to take an intervention instead of having the Minister muttering from a sedentary position.

The Exchequer Secretary to the Treasury (Damian Hinds)

I wonder whether the hon. Lady would like to comment on the percentage tax gap.

Rachel Reeves

If the Minister is so concerned about the tax gap, why did his Tory MEPs block measures in the European Parliament to crack down on tax avoidance and why did the Prime Minister write to Herman Van Rompuy in 2013 asking for trusts to be excluded. As I say, instead of looking at the number of clauses in a Bill, we should judge the Government by their record, by their actions and by what is happening to the tax gap. Under Labour the tax gap narrowed but under the Tories it is widening. They need to make much more effort to ensure that people at the top and big corporations pay their fair share of tax, but that is not happening under a Conservative Administration.

I hope that I have demonstrated that this Finance Bill prioritises tax breaks for the wealthy at the same time as pulling vital support from the vulnerable and disadvantaged. The shadow Chief Secretary to the Treasury cited the Resolution Foundation. It has calculated that the tax and benefit measures already taken by this Chancellor since the election will cut the incomes of the poorest 30% by £565 a year, while increasing those of the richest 30% by £280 a year—and that is before we factor in the impact of any further cuts to social security needed to meet the Government’s welfare cap and fill the multi-billion-pound fiscal hole following their U-turn over personal independence payments.

During a sitting of the Treasury Committee I pressed the Chancellor on all of this, particularly the changes to disability benefits. All he would say was that he had “no plans” for further raids on the fragile finances of disabled people, low-paid workers or children living in poverty, but that gives very little reassurance to those who rely on social security because they are sick or disabled and cannot work, or because they are in low-paid work and struggle to make ends meet; nor does it reassure families bringing up children in poverty that the Government will not once again hit their family finances.

Perhaps even more problematic than the measures in the Bill are the measures that are missing from it. The House will remember that this was supposed to be the Finance Bill that reformed our unfair system of pensions tax relief. We spend £34 billion on pensions tax relief and 14% of that benefit goes to people earning more than £150,000 a year, even though they represent a tiny proportion of all taxpayers. Just 10% of the benefit from the relief goes to those in the bottom half of the income distribution. That is why I argued for a 33% flat rate of pensions tax relief, which would be fiscally neutral but fairer to families on ordinary incomes and those who are trying hard to put something aside for the future. It would also give a strong incentive to save by, in effect, providing a simple two-for-one offer: for every £2 people put into a pension, the Government would add another £1. At a time when wealth inequalities are widening, our savings rate is plummeting and the costs of an ageing society are increasing, that measure ​would provide a powerful incentive to save for millions more people and definitely help more people than a £20,000 ISA limit.

The Bill was also an opportunity for the Government to admit they had made a mistake and to reverse the Chancellor’s expensive and poorly targeted cuts to inheritance tax, due to be phased in from next year. The Treasury’s own leaked analysis confirms that the policy will “most likely benefit high income and wealthier households” concentrated in London and the south-east of England. It also states that “there are not strong economic arguments” for the cut, which will “push up house prices and possibly rents” and “make it more difficult for younger households to buy a house.”

Yet that is a priority of this Government. Meanwhile, the overall cost is set to rise to almost £1 billion a year as the policy is introduced. I believe that the money could be much better used helping ordinary families who struggle to stay in work when their children are young by, for example, creating a universal childcare entitlement for children aged two. That would be a more prudent use of funds when family finances are stretched and so are our public finances.

I remember being shadow Chief Secretary to the Treasury in 2012, when we had what we dubbed the “omnishambles Budget”. This Budget has unravelled even faster than the 2012 Budget, with the flagship measure—changes to disability benefits—dropped and the changes to pensions tax relief dropped before they were even announced. The flagship measure in the 2012 Budget—the cut in the top rate of tax from 50p to 45p —stayed, but the flagship measure in this year’s Budget was dropped.

I believe that the Chancellor wanted to reform pensions tax relief, but could not do so because Tory MPs protested too loudly. Instead, at the last minute he decided to raid the disability budget, but then—after that was announced—recognised that it did not really fit with his rhetoric of, “We’re all in it together.” That is why the Budget has unravelled so quickly, but most important—well, not the most important—it is why the political prospects of the Chancellor have unravelled so quickly as well. The highest price for this Budget will be paid by ordinary taxpayers, working families and future generations. That is why I and my colleagues will vote against the Bill this evening. It represents the wrong priorities for our country.

Finance Bill

House of Commons, 11 April 2016

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