Sir Keir Starmer will this week launch a “build British” effort to shield the UK from the effects of the trade war sparked by Donald Trump’s tariffs.
The Prime Minister will announce on Monday that he is relaxing the ban on new petrol cars after 2030 to allow hybrids to remain on sale for another five years, in an attempt to boost the automotive industry.
Ministers are also expected to order the closure of more Government agencies this week to demonstrate that they are serious about driving up efficiency and taking more direct control of the state.
Starmer is hoping to strike a deal with the US to exempt Britain from tariffs, rather than hitting back with levies on American goods – although ministers have acknowledged that the UK will suffer from the global economic turmoil in any case.
He will argue this week that the emerging crisis requires a more interventionist state, with the Government working directly with businesses to help them expand and compensate for the damage done by tariffs.
A Downing Street source told The i Paper that the Prime Minister’s priority was to “build British”, including announcing parts of the upcoming industrial strategy this week to give firms more certainty about the support they will get from the state.
Ministers and business leaders will watch anxiously today for whether the recent rout in stock markets is over or not after Friday brought a 5 per cent slump in the value of the FTSE 100 index.
Darren Jones, Chief Secretary to the Treasury, warned that it was impossible to turn back the clock – telling the BBC’s Sunday with Laura Kuenssberg: “Globalisation, as we’ve known it for the last number of decades, has come to an end.”
He insisted that despite the economic turmoil, there was no prospect of the Chancellor breaking her self-imposed fiscal rules at the next Budget, suggesting she would cut spending or raise taxes if needed to avoid a spike in Government borrowing.
But Rachel Reeves is hoping to avoid that decision by working closely with the Office for Budget Responsibility to convince the watchdog that the economic measures she has already introduced will boost growth and strengthen the public finances.
At an event in the West Midlands, Starmer will announce that hybrid cars will be exempt from the 2030 sales ban and can continue to be sold until 2035 and petrol vans will also remain on sale for the next decade in a softening of the previous rules.
Pricey supercars made by the likes of McLaren and Aston Martin will never be banned, the Government will confirm, in a boost for the specialist industry which is particularly successful in Britain.
The original ban on sales of new petrol and diesel cars from 2030 onwards was pushed back to 2035 by Rishi Sunak, but Labour had promised to restore the previous timeline.
However, hybrids such as the Toyota Prius have been exempted in a move that will help the car industry but could anger environmentalists. Vans are also exempt until 2035 in an apparent attempt to help small businesses and sole traders.
There will also be additional flexibility in how companies must replace their manufacture of petrol cars with electric ones, and tax breaks worth hundreds of millions of pounds to encourage consumers to switch.
Starmer will say: “Global trade is being transformed so we must go further and faster in reshaping our economy and our country through our plan for change. I am determined to back British brilliance. Now more than ever UK businesses and working people need a Government that steps up, not stands aside.
“That means action, not words. So today I am announcing bold changes to the way we support our car industry. This will help ensure home-grown firms can export British cars built by British workers around the world and the industry can look forward with confidence, as well as back with pride.”
Andrew Griffith, the Conservatives’ shadow Business Secretary, said: “Although the Government have performed a U-turn, they are firing on half cylinders when nothing less than full throttle to support our car makers is required. After nearly a year, Labour’s industrial strategy remains stuck on the grid and the Business Secretary and Chancellor are busy undermining competitiveness in the form of higher taxes and new employment red tape.”
Efficiency drive
Over the weekend Pat McFadden, the minister for the Cabinet Office, wrote to Whitehall departments warning that every quango must justify its existence and explain why its work cannot be done by ministers or civil servants.
Some agencies are expected to be closed down as soon as this week as part of a push to give elected politicians more control over how their policies are delivered, and make the state more cost-effective.
McFadden said: “We are taking action to ensure decisions of national importance that affect everyone in this country are made by those who have been elected to do so.” Trade unions have warned that the move risks losing specialist workers.
Labour insiders have warned that the Prime Minister is in a politically perilous situation amid the global turmoil. A senior Labour source said: “Keir is in a tricky position. He has to toe a very difficult political line because [Trump] can be fickle and reactive.”
An MP added that the UK could double down on its position as “a services superpower”, saying: “We may have a massive competitive advantage, financial services, professional services, universities – that is non-trivial. Are tariffs a net positive? Of course not. What are the exact effects going to be? We don’t know yet.”
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