Rachel Reeves is expected to announce a raft of new planning changes ahead of next month’s Budget in her desperate bid to boost sluggish economic growth.
The Chancellor is scrambling to fill an estimated £30billion black hole in the public finances before she presents her next tax and spend package on 26 November.
She is said to be hoping that, by getting new planning changes through Parliament prior to the Budget, the Office for Budget Responsibility (OBR) watchdog will judge they could add about £3billon to the economy in the long term.
This would relieve some of the huge pressure on Ms Reeves to raise taxes again next month, in order to plug her spending gap.
But, even if the OBR does give a favourable view of the Government’s growth measures, she is still expected to unveil a slew of levy hikes due to the perilous state of the public finances.
In one revenue-raising measure, the Treasury is said to be considering an increase in the tax on bank profits.
Ms Reeves has been told she could raise £2billion a year by restoring the bank surcharge, a levy on banks’ profits that comes on top of corporation tax, to 8 per cent.
The previous Tory government cut the surcharge from 8 per cent to 3 per cent in 2023 in a bid to keep the City of London competitive.
Rachel Reeves is expected to announce a raft of new planning changes ahead of next month’s Budget in her desperate bid to boost sluggish economic growth
According to The Guardian, Ms Reeves had been looking for ways to strengthen Labour’s Planning and Infrastructure Bill in the House of Lords.
This could include making it easier to build projects that are likely to have a minimal environmental impact, or making it easier to adapt project plans once they have already been approved.
Other changes could include further restrictions on who can bring a judicial review against an infrastructure project and how many times they could do so, as well as banning judges from quashing a planning approval if legal cases are still being heard, the newspaper reported.
But, by pushing for significant changes to the Bill, Ms Reeves could risk making the legislation harder to pass despite hopes it will receive Royal Assent before the Budget.
A Government spokesperson said: ‘The Chancellor and the Housing Secretary [Steve Reed] are working together to reform the outdated planning system that’s been holding this country back – so we can build the 1.5m homes hardworking people need and have given the green light to projects like the Lower Thames Crossing to drive jobs and growth.’
The i Paper reported that Ms Reeves is actively considering imposing a tax hike on bank profits next month.
Ahead of the Budget, the Trades Union Congress (TUC) has been calling for a windfall tax on bank profits by raising the bank surcharge by reversing the Tory cut to 3 per cent.
It has estimated that restoring the levy to 8 per cent would raise £8billion over four years.
But industry figures are warning the Chancellor not to risk economic growth by taxing the sector more.
In a letter sent to Ms Reeves last month, UK Finance chief executive David Postings said: ‘Efforts to boost the UK economy and foster a strong financial services sector would not be consistent with further tax rises on the sector, which already makes a substantial contribution to the public finances.
‘The emphasis should be on continuing to implement an agenda of regulatory reform that allows for an appropriate adjustment in risk appetite.’
