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UK PM Starmer warns of ‘painful' October budget to tackle shortfall in public finances
- U.K. Prime Minister Keir Starmer on Tuesday told the nation that the upcoming October budget would be “painful,” as he paves the way for government spending cuts to address a £22 billion ($29 billion) financing shortfall.
- Starmer said the U.K.’s public finances were “worse than we ever imagined” and that “difficult” decisions lay ahead, after he announced plans to test winter fuel payments made to pensioners.
LONDON — U.K. Prime Minister Keir Starmer on Tuesday told the nation that the upcoming October budget would be “painful,” as he paves the way for spending cuts to address what the government says is a £22 billion ($29 billion) financing shortfall.
“We have no other choice given the situation that we’re in,” Starmer said in a speech in the gardens of 10 Downing Street, the prime minister’s residence.
“Those with the broadest shoulders should bear the heavier burden, that’s why we’re cracking down on non-doms,” he added, referring to U.K. residents whose domicile is outside of the country for tax purposes.
“Those who made the mess should have to do their bit to clean it up, that’s why we’re strengthening the powers of the water regulator and backing tough fines on the water companies who have let sewage flood our rivers, lakes and seas,” Starmer said. “But just as when I responded to the riots, I’ll have to turn to the country and make big asks of you as well, to accept short-term pain for long-term good, the difficult trade-off for the genuine solution.”
Starmer’s Labour party took power in early July following a landslide election victory. The U.K. parliament is on a summer break between July 30 and Sept. 2, although the new government has been navigating challenges including a series of riots around the nation involving far-right groups and a capacity crisis in the prison system.
The Labour administration has meanwhile benefitted from the ongoing fall in inflation, which is hovering around 2%, from the start of interest rate cuts by the politically-independent Bank of England and from the economic return to growth for the past two successive quarters.
In its electoral manifesto, Labour said it would raise £7.35 billion ($9.71 billion) by 2028-29 to fund public services through measures including closing tax loopholes on nondomiciled individuals, removing tax breaks for independent schools, closing what has been described as a “tax loophole” for private equity investors, and introducing a “time-limited windfall tax” on oil and gas firms.
Starmer and Finance Minister Rachel Reeves have repeatedly stated they will prioritize economic growth and fiscal responsibility in their policymaking.
In his Tuesday speech, Starmer said the U.K.’s public finances were “worse than we ever imagined” and accused the previous government of masking a £22 billion “black hole.”
Labour announced the shortfall figure at the end of July and blamed it on overspending and poor budgeting by the previous Conservative government.
Former Finance Minister Jeremy Hunt in July wrote to Simon Case, the head of the British civil service, labeling Labour’s claims about the public finances “deeply troubling.”
Hunt said the alleged £22 billion gap differed from the “main estimates” for spending presented for approval before Members of Parliament on July 17. He added that the disparity in figures risked bringing the politically-neutral civil service into disrepute, since estimates are signed off by its senior officials.
The Institute for Fiscal Studies, an independent research group, has previously argued Labour was aware of the “broad outline” of the size of the deficit and was not upfront during the election campaign about the cuts and tax rises that would be needed to maintain public services.
“Growth — and frankly, by that I do mean wealth creation — is the number one priority of this Labour government,” Starmer said on Tuesday.
Starmer said he had not wanted to take the path to means test the Winter Fuel Payment, a payout for pensions, in a move that has been controversial even within his own party — but added that more “difficult” decisions would come.
Starmer said taxes would not rise for “working people” in the October budget, although he did not supply additional details. Labour has previously pledged not to increase value added tax, national insurance — a general taxation — or income tax.
The speech was criticized by politicians from other parties.
“Keir Starmer says cutting the winter fuel payment is a choice he had to make. But when asked about a wealth tax – Rachel Reeves said their spending commitments didn’t require extra investment. So his tough choices are to not tax wealth of billionaires,” Zack Polanski, deputy leader of the Green Party, said on social media network X.
Conservative politician Kemi Badenoch, a frontrunner to replace Rishi Sunak as party leader, said the speech showed that Starmer “campaigned on promises he couldn’t deliver and now he is being found out,” according to BBC News.
Liberal Democrats leader Ed Davey meanwhile stated that the Conservatives left a “toxic legacy” that needed “bold and ambitious action from the government to fix.”
CNBC has contacted the Conservatives for comment.
Financial markets and investors are still waiting for concrete announcements from the government, David Denton, technical consultant at investment management firm Quilter Cheviot, said in a note.
“During Labour’s election campaign, the party emphasised the various taxes it would not seek to raise, such as National Insurance, VAT, and income tax. Therefore, an increase in Capital Gains Tax (CGT) seems plausible,” Denton said. “An alignment with income tax rates or even a minimal increase might impact investor behaviour.”
He added, “Another potential problem is that unless anti-forestalling measures are announced with any plans, we could see a surge in property on the market as homeowners rush to sell investment properties before new legislation comes into place.”
San Diego, CA
Former City Manager, Jack McGrory: Straight Talk About San Diego, Part 2
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Feds Will Finally Help Oceanside 73 Years After Admitting Fault for Its Disappearing Beaches
When the U.S. military built the Camp Pendleton Harbor complex just north of Oceanside in 1942, it didn’t set out to steal Oceanside’s beaches for decades to come.
But that’s exactly what’s been happening for the past 73 years.
In 1953, the federal government admitted that construction of harbor jetties at Camp Pendleton was directly contributing to the erosion of Oceanside’s beaches. The jetties block the ocean’s currents that carry sand along the coast, which causes Oceanside’s beaches south of the military base to lose out on sand that would have naturally flowed to them.
Rising sea levels caused by climate change also play a part, but in Oceanside, naturally occurring erosion has been exacerbated by the military base.
But the military is only just now stepping in to help. While the government’s admission of guilt seemed like a win, it somewhat backfired; because the federal government was on the hook for the entire cost, the project got swallowed by a bureaucratic black hole. Tired of waiting, Oceanside launched its own plan to save its beaches, one the military now refuses to help fund.
What Took so Long
In 2000, Congress passed a law mandating the Army Corps to study how it could restore Oceanside’s beaches to pre-harbor conditions.
The government was supposed to pay for the study and complete it in 44 months. The U.S. Army Corps of Engineers finally released the draft report of the study earlier this month – 26 years later.“Studies require both authorization and funding,” said Shawn Davis, public affairs specialist for the Army Corps, via email. “While the study was initially authorized in 2000, there have been gaps in funding that have impacted the timeline to complete the study.”
Those funding gaps happened until 2022 when Rep. Mike Levin, D-San Juan Capistrano, whose district includes much of North County’s coastal cities, helped secure $1.8 million in federal funding and another $2.27 million in 2025 to complete the study.
So, why did the funding dry up for so long at the federal level? According to Davis, “federal projects can only proceed and continue with appropriations from Congress.”
In other words, the project was stuck in bureaucratic limbo; it had the legal authorization to exist, but it couldn’t secure funds in a highly competitive budget that favored bigger projects.
Jayme Timberlake, Oceanside’s coastal zone administrator, told Voice of San Diego that the city and its representatives tried lobbying Congress for years, but there are often a lot of unknowns when it comes to Army Corps projects.
“It’s very political. It’s very much dependent on what the rest of the nation is going through and where the funds are going and how they’re getting allocated,” Timberlake said. “It’s very tough to navigate and there’s a lot of risk associated with it, meaning we can’t really rely on it.”
Other coastal cities received a plan before Oceanside did: The Corps completed similar studies for two sand replenishment efforts. One is a joint effort in Encinitas and Solana Beach, the other in San Clemente. Congress has already approved both of these projects for sand deliveries every seven to 10 years for the next 50 years.
“The difference is that the … projects that are happening in Encinitas, Solana Beach and San Clemente were initiated by a request to the Army Corps from these cites, and they were cost shared,” Timberlake said.
That means these cities are paying 35 percent of the costs, and the federal government is paying 65 percent. That also applies to sand deliveries every seven to 10 years. These types of projects can cost upwards of $100 million.
“In Oceanside, our mitigation project, at least the study was not cost shared. It was the full responsibility of the federal government because they admitted fault,” Timberlake said. “So, it’s really unfortunate that the mitigation for Oceanside beaches didn’t happen before those requested projects.”
Meanwhile, Oceanside’s Sand Was Disappearing

While Oceanside officials and residents waited for the government’s help, the city’s beaches were rapidly disappearing before their eyes.
Previous Army Corps studies estimate the Harbor has caused a loss of 1.4 to 1.6 million cubic yards of sand volume from Oceanside’s beaches since 1942, with some areas retreating at a rate of 6.6 feet per year. That’s 84 years of consistent and severe sand loss.
El Niño conditions over the years have also exacerbated the problem.
“There was such a dramatic loss of sand that the community really started asking for solutions,” Timberlake said. “There’s a whole generation that has been able to use the beach and then have it be gone, so it has triggered a lot of community interest.”
After 20 years of waiting, Oceanside decided to take matters into its own hands.
“Once there was momentum to fix the problem itself and not rely on the Army Corps any further, the city did a feasibility study in 2020, and that study really unearthed all the possible things that Oceanside could do in the short and long term to fix its beaches,” Timberlake said.
A few years later, city officials held a competition that brought together three design teams from around the world to develop sand retention pilot projects. They chose a concept that includes the construction of two headlands that will aim to stabilize sand on the back beach, with an offshore artificial reef aimed at slowing down nearshore erosive forces.
The project is called RE:Beach and it’s already funded up to the construction phase, Timberlake said. The city has applied for a few different grants to cover construction, which will cost upwards of $60 million.
Timberlake said the city asked the Army Corps to help fund the rest of the RE:Beach project, and the Army Corps denied the request.
The Government’s Plan

Oceanside’s RE:Beach project and the federal government’s recent recommendations won’t conflict with each other, Timberlake said. In fact, the two projects will complement one another.
The Army Corps’ draft feasibility report identified beach nourishment (a lot of sand) as the tentatively selected plan to restore Oceanside’s beaches.
It calls for dredging 4 million cubic yards of sand from an offshore borrow site and then placing it along Oceanside’s beaches, with the goal of sustaining a minimum 85-foot wide beach from Oceanside Harbor south to Buena Vista Lagoon. Sand replenishment would be 1 million cubic yards the first cycle, then repeated every 10 years.
Realistically, though, it could be another couple decades before Oceanside’s beaches start receiving sand, Timberlake said.
That’s because there are other competing projects the Army Corps is working on. Plus,, Congress still has to appropriate funding for the rest of the project to move forward once the feasibility study is completed. Initial costs of construction are currently estimated to be $243,540,000, Davis, spokesperson for the Army Corps, said via email.
It’s still unclear if the government will cover the full costs of construction and the subsequent sand renourishments for Oceanside, but Levin told Voice he thinks it’s unlikely.
“I will advocate for every penny to come from the federal government, given that the government did acknowledge responsibility,” Levin said. “But I do also know how the Army Corps works, and it’s very likely they’ll want some sort of cost share.”
Meanwhile, the Trump administration is proposing major funding cuts to the Army Corps’ budget for fiscal year 2027. If those cuts are approved by Congress, it could have an impact on projects like this one.
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