Economy and Tax

The most powerful department in Whitehall. Ministers come and go, policies rise and fall, but sooner or later almost every major decision ends up on a Treasury desk with a price tag attached.

Applications have opened for the British Industrial Competitiveness Scheme, expected to cost around £600 million a year and cut electricity bills for more than 10,000 manufacturers by up to 25 per cent. A comparable scheme, the British Industry Supercharger, has been running since April 2024. No published evaluation shows how much additional investment, production or employment resulted from that support.

British Steel is costing around £1.3 million a day in public money, more than a year after emergency intervention prevented the closure of its Scunthorpe blast furnaces. The Public Accounts Committee says the intervention bought time but not a solution. The Department for Business and Trade still cannot provide Parliament with indicative estimates of future expenditure, a preferred decarbonisation route or a timetable for returning the company to financial sustainability.

The government says its steel trade measure applies to products that can be made in Britain. The Public Accounts Committee found that the commodity codes used to enforce it can also catch specifications that British producers do not make, leaving UK manufacturers facing a 50 per cent tariff on steel they cannot source domestically. The department acknowledged that smaller companies could be put out of business. A formal review is not planned for 12 months.

English mayors and strategic authority leaders will be able to impose an uncapped percentage tax on overnight accommodation stays. In the consultation, 58 per cent of respondents supported a national rate cap. Sixty per cent opposed the model based on a percentage. The government rejected both majority positions.

Five weeks ago, John Healey resigned as defence secretary because he said the Treasury would not provide enough money for Britain's armed forces. On 20 July, Andy Burnham made him Chancellor of the Exchequer. Healey now controls the department whose spending restraint helped prompt his resignation.

British Steel passed into public ownership on 16 July. In the same statement announcing the nationalisation, the government said its view was that the company's current commercial value was nil. By 18 June, the government had provided British Steel with about £555 million of working capital. The government has now committed itself to further spending without publishing an estimate of the eventual bill.

The government has invested £1.6 billion in Britain's "sovereign AI capabilities": £500 million for the Sovereign AI fund and £1.1 billion for an AI hardware plan. Three weeks later, the House of Commons Science, Innovation and Technology Committee said ministers had still not set out which technological capabilities Britain needs to control, which it can share with allies and which it is prepared to obtain from overseas.

The House of Commons passed a bill appropriating more than £1.15 trillion of departmental resources for 2026/27. Its second and third readings on 1 July were completed without substantive debate. That is not an accidental shortcut. It is how Supply legislation works. But most departmental Estimates never received their own Commons debate before Parliament approved them.

Andy Burnham says higher business rates on warehouses will fund cuts for pubs and high street businesses. An outside estimate puts his proposed Small Business Rates Relief changes alone at around £880 million a year. The existing warehouse surcharge raises roughly £90 million a year. Burnham has not published the rate he would charge, the properties he would target or the revenue he expects.

On 30 June, Keir Starmer announced another £15 billion for defence over the next four years. The remaining £4.7 billion has not yet been allocated. The Defence Investment Plan arrives in a country already carrying the cost of decisions that were priced too late, postponed for years or repeatedly redesigned.

Donald Trump threatened on 26 June to impose a 100 per cent tariff on goods from countries that tax American digital companies. Britain already does. Its Digital Services Tax raised £808 million in 2024/25 and UK businesses exported £59.7 billion of goods to the United States in 2025. But as of 30 June, Trump had not imposed either tariff on British goods.

Labour's 2024 manifesto said it would not increase National Insurance. Four months after the election, Rachel Reeves increased employer National Insurance. The OBR estimates that by 2026/27, 76 per cent of the cost in the long run will ultimately be reflected in lower real wages. Labour's defence, that the promise referred to taxes paid directly by working people, was not what the manifesto said.