Margaret Hodge, anti-tax avoidance campaigner and Kendall backer. Photo: Getty Images
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Liz Kendall appoints Margaret Hodge to investigate Britain's £100bn tax relief bill

The Labour leadership has appointed the former head of the Public Affairs Committee and anti-tax avoidance campaigner Margaret Hodge to review the £100bn that Britain gives away in tax relief each year. 

Liz Kendall has announced a review into Britain's tax relief bill, potentially paving the way to massive reductions in the amount that the Treasury gives away in tax breaks.

The Labour leadership hopeful, who has described regaining the party's reputation for economic credibility as "the gateway to government", has appointed Margaret Hodge, the former chair of the Public Accounts Committee and a renowned tax avoidance campaigner, to look into the United Kingdom's £100bn annual tax relief. 

Although Kendall regards many of the tax breaks as vital to attracting investment to important sectors of the economy, including manufacturing and IT, she also believes that other reliefs are impossible to defend.

The Late Night Taxi Relief is a particularly egregious example: a tax break for people who work late hours and are given taxis home, paid for by their employers. Bankers and hedge fund traders regularly claim this tax break. But shift workers, night bus drivers, care workers and security guards are not entitled to claim the relief, as they are contracted to work unsocial hours. Between 80 to 90 per cent of the relief is claimed by city firms. 

The Kendall campaign also hope to highlight the rise in tax relief under the Conservative-led government, in contrast to the cuts to tax credits and the ongoing public sector pay freeze. Over the last five years, tax reliefs rose from 5.5 per cent of GDP to six per cent of GDP, while the cost of working age welfare fell from 5.7  per cent of GDP to 5.2 per cent. Even a reduction to 2010 levels would generation £10 billion for the Treasury, while the combined £100bn cost is greater than that paid to the NHS.)

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.

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Our new relationship with the EU may be a lot like the old one

For all the tough mood music, Theresa May has left room for concessions.

I'm sad and dismayed, but that's democracy for you.

The Mail is in a cheerier mood. "Freedom!" is their splash. "Dear EU, We're Leaving You" cheers the Express' while "Dear EU, it's time to go" is the Mirror's splash. "Dover & Out!" roars the Sun, who have projected those same words on the white cliffs of, you guessed it, Dover. "May Signs Us Out!" is the Metro's take.

"Brexit begins" is the i's more equivocal splash, "The eyes of history are watching" is the Times' take, while the Guardian opts for "Today Britain steps into the unknown".

The bigger story isn't the letter but its content, which leads the FT: "May signs historic Brexit letter and opens way for compromise". The government is finessing its red line on the competence of the European Court of Justice. (The word in Whitehall is that Theresa May hadn't grasped the importance of the ECJ as an arbitration mechanism after Brexit and for cross-border matters such as flights when she made her conference speech.)  And the PM has done a good job of not ruling out continuing payments to the European Union, her best path to the deal Britain needs.

A lot depends on what happens to the British economy between now and March 2019. The pound is down still further today but whether that's a minor eruption or the start of sustained losses will have significant consequences on how painful Britain's best path to the access we need to the single market - paying over the odds for the parts of membership that the British government wants to keep and swallowing that £50bn divorce bill - is doable or not.

For all the mood music emanating from May, she's quietly done a good job of clearing the obstacles to a deal where Britain controls its own immigration policy, continues to staff Europol and to participate in European-wide research, the bulk of our regulation is set by Brussels de facto if not de jure and we pay, say £250m a week into Brussels.

Our new relationship with the EU may be rather closer to our old one than we currently expect.

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.