REEVES SAYS HASTY RESPONSE TO TRUMP TARIFFS COULD PUT ‘PRIZE’ OF
ECONOMIC DEAL AT RISK – AS IT HAPPENED

REEVES says the government will respond to the Trump tariffs in a calm
way. She says he met big exporters this morning, and they support this
approach too.

She says “the prize on offer is an economic agreement” and
businesses do not want the government to do anything that would put
this at risk.

 	*
RACHEL REEVES, THE CHANCELLOR, HAS TOLD MPS THAT THE GOVERNMENT DOES
NOT WANT TO GIVE A HASTY RESPONSE TO THE TRUMP TARIFFS BECAUSE IT DOES
NOT WANT TO PUT THE “PRIZE” OF AN ECONOMIC DEAL WITH THE US AT
RISK. (See 3.36pm.) But, in evidence to the Commons Treasury
committee, she said even with a deal with the US, the UK could still
face difficulties. As Bloomberg reports, she said:

> If we are able to secure an economic agreement with the United
> States, which we very much want to secure, and are working hard to
> secure, even if that is possible, it doesn’t mean that somehow we
> are therefore out of the woods and not impacted by tariffs.
> 
> The specific tariffs on the UK are less relevant to the growth and
> inflation impacts than the global picture because we are an open
> trading economy and depressed demand from overseas because of
> tariffs, higher inflation overseas because of tariffs has a direct
> impact on the UK.

The NATIONAL INSTITUTE OF ECONOMIC AND SOCIAL RESEARCH thinktank has
said much the same. In an assessment, it says:

> Our estimates also show that the UK economy is vulnerable to the
> negative effects of US tariffs through both direct and indirect
> channels. We find that tariffs raise prices and weaken economic
> activity in the United Kingdom, with the size of the effects
> depending on the scope of the tariffs. Even if the United Kingdom
> were exempt from these tariffs, economic activity could still suffer
> due to broader global disruptions. In a worst-case scenario where
> high tariffs are applied, UK GDP growth could fall to zero next
> year.

 	*
KEIR STARMER HAS ACCUSED THE CONSERVATIVES OF USING A “FANTASY
FIGURE” TO CLAIM THAT FAMILIES WILL BE £3,500 POORER DUE TO THE
RISE IN EMPLOYER NATIONAL INSURANCE CONTRIBUTIONS.

Greater Manchester offers a model for Britain as to how public
services should be delivered and improved, ANDY BURNHAM has said.

In a speech today at the Institute for Government, Burnham said that
his city showed why combined authority mayoralties were the best way
of delivering services locally. At the heart of this was “a
place-first approach”.

The push for elected mayors started when Tony Blair was prime
minister, but the concept was extended under the coalition and
Conservative governments, with mayors being elected to run combined
authorities – not just a single town or city, but a wider area,
incorporating several local authorities.

In 2017 Burnham was the first person to be elected Greater Manchester
mayor and his combined authority, which covers 10 boroughs, is the
most powerful outside London.

In his speech, Burnham paid tribute to George Osborne, the former Tory
chancellor, and Sir Howard Bernstein, the former Manchester city chief
executive, for their work on the devolution deal that gave his
authority its powers.

It had been a great success, he argued.

> Since Greater Manchester and the UK government signed the first
> devolution deal a decade ago, our city-region has been the
> fastest-growing in the UK, with average annual growth of 3.1% over
> the last 10 years and the highest productivity growth.
> 
> The jury is in: the combined authority model of English devolution,
> pioneered by Greater Manchester, works. The scale of the achievement
> is all the more significant when you consider this was a decade of
> Brexit, Covid and all the shocks since …
> 
> The signature achievement is the successful introduction of a new,
> integrated public transport system, the Bee Network.
> 
> But just as significant, although less visible to the public, is the
> unique, highly-integrated model of public services built in close
> partnership with the private sector, our universities and the
> community and voluntary sector. I think we have the most integrated
> system of public services anywhere in the country.

The Labour government wants to extend the combined authority mayoral
model and Burnham said this this approach was right.

> In the mayoral combined authority model, the country has stumbled
> upon the game-changer that the British state has long needed.
> 
> It allows a coherent, whole-place approach and, if used properly,
> could provide the roadmap to a more streamlined and financially
> sustainable state, breaking down silos, joining the dots around
> people and places and, in the process, securing more value for
> public money. Particularly in an era when it is scarce.

And he said a “place-first approach” was at the crucial to making
this work.

> Combined authorities work best when they operate on the principle of
> place-first rather than party-first.
> 
> Unlike the divisions of party, place is a unifying force. However
> people vote, they are united by a desire to see the place where they
> live move forward.
> 
> These days, we are lacking things which unite us in common cause. If
> places have more agency, and a sense of forward direction, and those
> places are likely to be more cohesive and less divided.
> 
> A place-first approach also creates the right conditions for
> businesses to invest. It creates a long-term stability in direction
> that Westminster is simply not set up to provide.

_Eleni Courea is a Guardian political correspondent._

LORD HERMER, the attorney general, has criticised MPs who make
personal attacks on judges.

Giving evidence to the joint committee on human rights, Hermer said
that it was “dangerous” to have a culture where judges are singled
out for personal attack, not just on social media but in the House of
Commons too.

Hermer seemed to be referring particularly to Robert Jenrick, the
shadow justice secretary, who yesterday in effect called for Lord
Justice William Davis, an appeal court judge, to be sacked as chair of
the Sentencing Council.

But Keir Starmer has also been criticised recently for condemning a
judicial decision in the Commons.

Hermer told the committee:

> We are entering a dangerous moment in which not simply on social
> media but indeed on the floor of the House of Commons, people are
> attacking judges on a personal basis. That is entirely unacceptable
> and creates a huge threat to the rule of law and the independence of
> the judiciary.

JENRICK, who led attacks on the Sentencing Council over guidelines
that he described as amounting to “two-tier justice”, told MPs
yesterday that he did not see how Davis could continue in office
“given that he has brought [the council] into total disrepute”.
Jenrick asked Shabana Mahmood, the justice secretary, if she would
sack him.

During the exchanges yesterday, another Conservative, JOHN HAYES, said
that all members of the Sentencing Council should resign, and a third
Tory, DESMOND SWAYNE, said that Lady Sue Carr, the lady chief justice,
should be “rebuked” for her “impertinence”.

He was referring to CARR writing a letter to the PM saying that Keir
Starmer, and Kemi Badenoch, were wrong to criticise a decision in an
immigration case (without naming the judge involved). Carr said that
the government should respect the rule of law and, if it disagreed
with a judicial decision, it should appeal it in the courts.

Under the last government ministers were given official legal advice
encouraging them to approve policies that might have been unlawful,
LORD HERMER, the attorney general, has said.

Hermer made the point in evidence to the joint committee on human
rights this afternoon as he explained why he had revised the advice.

He said he had not changed the substance of what the advice said. But
he had changed the tone, to prevent ministers being misled, he said.
As PA Media reports, he explained:

> There is nothing substantively new in the revised guidance that I
> put out.
> 
> The reason I brought it in as a revised guidance, without changing
> the substance but changing to some degree the tone, is because I had
> a very real concern on entering government as attorney that a
> practice had developed in which lawyers were being asked to advise
> ministers as to whether there was a ‘respectable legal argument’
> to support the policy or piece of legislation they wanted to
> introduce.

Hermer said “respectable legal argument” means something is highly
likely to be unlawful but not “so bad you’d be struck off”. He
went on:

> My fear is that it was the default position and ministers were
> thinking it was respectable without realising it was highly likely
> to be unlawful.

Hermer said he changed the rules to give ministers an “unvarnished
assessment” of the legal risk. He said the threshold “remains
exactly the same” but he replaced the word “respectable” with
“tenable” to reflect a “change in tone”.

There have been reports claiming some ministers blame Hermer for
stopping them introducing bold policies by issuing over-cautious legal
advice. But Hermer told the committee he did not accept this.

> I don’t think in any sense that is blocking or slowing up a
> government that wants to abide by the rule of law and ministers who
> want to abide by the ministerial code.

When Suella Braverman was attorney general, she reportedly changed the
guidance to government lawyers to make it easier for ministers to put
forward policies which were at risk of being found unlawful by the
courts.

In his evidence Hermer also defended the government’s decision to
review the way the courts apply article 8 of ECHR when deciding
whether migrants should have the right to remain in the UK. I have
beefed up the post on this at 3.15pm to include quotes from him about
how he thinks article 8 cases are frequently misreported.

The Labour MP JOHN GRADY asks Reeves what she thinks of calls for a
wealth tax.

REEVES says he has already increased various taxes that impact
particularly on the wealthy. As examples, she cites the non-dom tax,
VAT on private school fees, the windfall tax on energy companies, the
additional dwelling higher rate for stamp duty, the capital gains tax
increase, and the inheritance tax increase.

Asked why the spring statement left the headroom almost exactly the
same as it was in the budget last year (£9.9bn), REEVES said that she
wanted roughly the same amount of headroom. But she said it was “it
was accident, rather than design that it was exactly the same amount
of headroom”.

REEVES says the government will respond to the Trump tariffs in a calm
way. She says he met big exporters this morning, and they support this
approach too.

She says “the prize on offer is an economic agreement” and
businesses do not want the government to do anything that would put
this at risk.

JOHN GLEN (Con) goes next.

_Q: At our last hearing you said you would make strong representations
to the US government about the importance of free trade. How
successful have those been?_

REEVES says she has spoken to her opposite number, Scott Bessent, and
Jonathan Reynolds has had meeting with his counterparts.

Talks on a trade deal are underway, she says.

_Q: But it’s fair to say the consequences of what has already been
announced are signficiant. The OBR forecast does not take into account
any of the tariffs already imposed. Your headroom is very modest. And
yesterday the OBR told us that further tariffs, in line with the car
ones, will knock out your headroom. Are you still ruling out further
taxes?_

REEVES says she said the last budget was a once-in-a-generation tax
increase.

_Q: So you are ruling out further tax rises?_

REEVES says she will not write future budgets in advance. She goes on:

> I can assure the committee I will not need to repeat a budget on
> that scale because we have now wiped the slate clean and put our
> public finances on a firm footing.

The 2024 budget raised taxes by about £25bn.

MEG HILLIER, the chair of the Treasury committee, asks Rachel Reeves
if she has any message for businesses worried about the impact of the
rise in employer national insurance.

REEVES says there are always consequences from a tax change.

_Q: Do you worry that it means firms might cut investment?_

REEVES says she speaks to businesses regularly.

If she had not taken the decisions in the budget, she would not have
retained control of the public finances. And when you lose control,
interest rates go up and bond yields go up.

She says the Bank of England has now had the confidence to cut
interest rates three times.

Back at the Treasury committee, there is not much news being
committed, and Rachel Reeves is having quite an easy time. It is bad
news for JOHN CRACE, the Guardian’s sketchwriter. He says:

> Time was when chancellors feared an appearance before Treasury
> Select Cttee. This one is hopeless. Rachel Reeves is living the
> dream so far

At the weekend YVETTE COOPER, the home secretary, said she was
reviewing how the courts apply article 8 of the European convention on
human rights (ECHR), the right to private and family life, when
deciding whether migrants should have the right to remain in the UK.

In evidence to the joint committee on human rights this afternoon,
LORD HERMER, the attorney general, said it was “entirely right” to
conduct a review like this.

Hermer said there has been a number of decisions at immigration
tribunals on the basis of article 8 that are “capable of suggesting
that it is not being applied properly or appropriately”. He went on

> I want to make clear in all my comments about decisions of any court
> that I am categorically not criticising judges.
> 
> I think there is real merit in checking that article 8 is being
> properly understood and applied, because, as I’ve said, you can
> have a very, very robust but fair process in asylum and immigration
> context that is entirely compatible with article 8.
> 
> We need to just check that there’s a right calibration on casework
> decisions.
> 
> We may also need to check … that government is being robust in
> appealing decisions that we don’t like, that there’s a
> litigation strategy that meets that aim.

_UPDATE:_ HERMER said that some of the reporting about article 8 was
inaccurate. He said:

> There is clearly a lot of information, misinformation, that is being
> whipped up in the context of asylum and immigration in particular,
> article 8.
> 
> Many of you will have heard banded around the idea that the courts
> have allowed a foreign national offender to stay here because his
> child will miss chicken McNuggets.
> 
> That is doing the rounds. What is not doing the rounds is that that
> case went to the upper tribunal, who categorically rejected that as
> an article 8 argument. They rejected the claim.
> 
> Courts are always going to make mistakes. That’s why we have
> appeal courts, and that’s what’s happened here.

REEVES says it is important to have just one major fiscal event a
year. In the last parliament there were many, and that created
uncertaintly.

_Q: Is it is important to you to have two forecasts every year?
Because obviously that constrains you._

REEVES says she does not feel that. She says she chose to update her
plans in the light of the OBR forecast. But she goes on:

> We could have chosen to say we would address issues of the headroom
> the budget, but I did think it was important to show how important
> we take fiscal sustainability, fiscal stability, and so that’s why
> we made the decisions we did.

This is interesting. In his column in the Observer on Sunday ANDREW
RAWNSLEY said Keir Starmer now agrees with the many commentators who
think having the OBR revise its forecasts every six months is
distorting policy making. Rawnsley wrote:

> [The OBR] also made life difficult for the chancellor in the
> short-term by telling her that she’d bust her rules unless she
> made additional spending reductions. The complaint is that
> policymaking has become too subservient to satisfying OBR
> guesstimates about what growth and debt might be in five years. I
> have it on exceedingly good authority that the prime minister
> himself has come to the view that it is unhelpful, to the point of
> being barmy, that the government has to live in dread of an OBR
> report card every six months, rather than face an annual verdict at
> budget time.

(I have no idea who Rawnsely’s source was, but “on exceedingly
good authority” is the sort of thing columnists write when they have
recently had a private chat with the PM.)

The Rawnsley column suggests Starmer would like to change the rules so
that the OBR only updates its forecasts once a year. Reeves’ reply
just now implies she is happy with the status quo.