Rishi Sunak has claimed his budget will deliver a stronger economy “fit for a new age of optimism”.
In comments released by the Treasury ahead of the chancellor’s address to MPs in the Commons on Wednesday, Mr Sunak said the budget will commence the “work of preparing for a new economy post-COVID”.
“An economy of higher wages, higher skills, and rising productivity. Of strong public services, vibrant communities and safer streets,” he said.
Image: Critics have said the wage increases announced by the chancellor will not be enough amid a cost of living crisis
“An economy fit for a new age of optimism. That is the stronger economy of the future.”
Much of the contents of the chancellor’s economic set piece are already known, following a raft of announcements in recent days.
• £1.4bn to encourage foreign investment into UK businesses and attract overseas talent • £700m to be spent mainly on the new post-Brexit borders and immigration system, as well as a new maritime patrol fleet • £435m for victims services, crime prevention and the Crown Prosecution Service • £560m for adult maths coaching to help increase numeracy • A six-month extension to the COVID recovery loan scheme to June 2022
The announcements on pay, which will take effect in April, are the most high-profile so far.
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Sky’s Ed Conway previews the budget
However, critics have pointed out that the end of the Universal Credit uplift, an upcoming 1.25% rise in National Insurance and continuing cost of living pressures, including rising petrol prices and soaring energy bills, will mean that many of those who see their salaries bumped up will not be much better off in real terms, if at all.
Labour’s shadow chancellor Rachel Reeves said the chancellor has to “create a more resilient economy and take the pressure off working people” amid continuing cost of living pressures.
Setting out the party’s approach, she continued: “Labour would grow our economy, with our plan to buy, make and sell more in Britain, and a Climate Investment Pledge to create the jobs of the future.
“With costs growing and inflation rising, Labour would ease the burden on households, cutting VAT on domestic energy bills immediately for six months.
“And we would not raise taxes on working people and British businesses, while online giants get away without paying their fair share.”
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Minister: Chancellor is ‘keen to give a pay rise’
Meanwhile, the Liberal Democrats said Mr Sunak was treating education as an “afterthought”.
“Rishi Sunak is setting up our children to fail, while hammering families with tax hikes and a cost of living crisis,” party leader Sir Ed Davey said.
“We need an emergency children’s budget, with £15bn for schools catch-up funding as recommended by the government’s own adviser.
“Parents and children who have sacrificed so much during the pandemic deserve a fair deal.
“Instead this budget looks set to treat education and our children’s future as an afterthought.
“You can’t build a strong economy without investing in younger generations and allowing them to fulfil their potential.”
Ian Blackford, Westminster leader of the SNP, warned the chancellor he must not “short-change” Scotland, calling for a “multi-billion-pound Brexit Recovery Fund – to provide Scotland with compensation and to ensure proper financial support for struggling businesses and industries.”
“With Brexit playing a major role in the ongoing severe staffing shortages, rotting food in the fields, empty supermarket shelves, plunge in UK exports, and rising cost of goods and services, the chancellor must wake up and smell the coffee before that also ends up running out in our stores,” he said.
The series of pre-announcements ahead of the budget has angered Commons Speaker Sir Lindsay Hoyle, who allowed a second urgent question in as many days on Tuesday to compel ministers to appear before MPs to answer questions on the budget.
“I was disappointed to see more stories in the media today with apparently very well-briefed information about what will be in tomorrow’s budget,” the speaker told the Commons.
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Speaker angry at government ignoring Commons
Accusing ministers of treating parliament in a “discourteous manner”, Sir Lindsay added: “This house will not be taken for granted, it’s not right for everybody to be briefed, it’s not more important to go on the news in the morning, it’s more important to come here.
“Let us get the message across that these elected members represent this United Kingdom. It is not done through Sky TV.”
Follow budget coverage live on Sky News on Wednesday with the chancellor’s announcement from 12.30pm
Octopus Energy Group, Britain’s largest residential gas and electricity supplier, is plotting a £10bn demerger of its technology arm that would reinforce its status as one of the country’s most valuable private companies.
Sky News can exclusively reveal that Octopus Energy is close to hiring investment bankers to help formally separate Kraken Technologies from the rest of the group.
The demerger, which would be expected to take place in the next 12 months, would see Octopus Energy’s existing investors given shares in the newly independent Kraken business.
A minority stake in Kraken of up to 20% is expected to be sold to external shareholders in order to help validate the technology platform’s valuation, according to insiders.
One banking source said that Kraken could be valued at as much as $14bn (£10.25bn) in a forthcoming demerger.
Citi, Goldman Sachs, JP Morgan and Morgan Stanley are among the investment banks invited to pitch for the demerger mandate in recent weeks.
A deal will augment Octopus Energy chief executive Greg Jackson’s paper fortune, and underline his success at building a globally significant British-based company over the last decade.
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Octopus Energy now has 7.5m retail customers in Britain, following its 2022 rescue of the collapsed energy supplier Bulb, and the subsequent acquisition of Shell’s home energy business.
In January, it announced that it had become the country’s biggest supplier – surpassing Centrica-owned British Gas – with a 24% market share.
It also has a further 2.5m customers outside the UK.
Image: Kraken is an operating system licensed to other energy providers, water companies and telecoms suppliers. Pic: Octopus
Sources said a £10bn valuation of Kraken would now imply that the whole group, including the retail supply business, was worth in the region of £15bn or more.
That would be double its valuation of just over a year ago, when the company announced that it had secured new backing from funds Galvanize Climate Solutions and Lightrock.
Shortly before that, former US vice president Al Gore’s firm, Generation Investment Management, and the Canada Pension Plan Investment Board increased their stakes in Octopus Energy in a transaction valuing the company at $9bn (£7.2bn).
Kraken is an operating system which is licensed to other energy providers, water companies and telecoms suppliers.
It connects all parts of the energy system, including customer billing and the flexible management of renewable generation and energy devices such as heat pumps and electric vehicle batteries.
The business also unlocks smart grids which enable people to use more renewable energy when there is an abundant supply of it.
In the UK, its platform is licensed to Octopus Energy’s rivals EON and EDF Energy, as well as the water company Severn Trent and broadband provider Cuckoo.
Overseas, Kraken serves Origin Energy in Australia, Japan’s Tokyo Gas and Plentitude in countries including France and Greece.
Its biggest coup came recently, when it struck a deal with National Grid in the US to serve 6.5m customers in New York and Massachusetts.
Sources said other major licensing agreements in the US were expected to be struck in the coming months.
Kraken, which is chaired by Gavin Patterson, the former BT Group chief executive, is now contracted to more than 70m customer accounts globally – putting it easily on track to hit a target of 100m by 2027.
Earlier this year, Mr Jackson said that target now risked being seen as “embarrassingly unambitious”.
Last July, Kraken recruited Amir Orad, a former boss of NICE Actimize, a US-listed provider of enterprise software to global banks and Fortune 500 companies, as its first chief executive.
A demerger of Kraken will trigger speculation about an eventual public market listing of the business.
Its growth in the US, and the relative public market valuations of technology companies in New York and London, may put the UK at a disadvantage when Kraken eventually considers where to list.
One key advantage of demerging Kraken from the rest of Octopus Energy Group would be to remove the perception of a conflict of interest among potential customers of the technology platform.
A source said the unified corporate ownership of both businesses had acted as a deterrent to some energy suppliers.
Kraken has also diversified beyond the energy sector, and earlier this year joined a consortium which was exploring a takeover bid for stricken Thames Water.
The boss of Ryanair has told Sky News the president of the European Commission should “quit” if she can’t stop disruption caused by repeated French air traffic control strikes.
Michael O’Leary, the group chief executive of Europe’s largest airline by passenger numbers, said in an interview with Business Live that Ursula von der Leyen had failed to get to grips, at an EU level, with interruption to overflights following several recent disputes in France.
The latest action began on Thursday and is due to conclude later today, forcing thousands of flights to be delayed and cancelled through French airspace closures.
Mr O’Leary told presenter Darren McCaffrey that French domestic flights were given priority during ATC strikes and other nations, including Italy and Greece, had solved the problem through minimum service legislation.
He claimed that the vast majority of flights, cancelled over two days of action that began on Thursday, would have been able to operate under similar rules.
Mr O’Leary said of the EU’s role: “We continue to call on Ursula von der Leyen – why are you not protecting these overflights, why is the single market for air travel being disrupted by a tiny number of French air traffic controllers?
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Image: Ryanair has cancelled more than 400 flights over two days due to the action in France. File pic: PA
“All we get is a shrug of their shoulders and ‘there’s nothing we can do’. We point out, there is.”
He added: “We are calling on Ursula von der Leyen, who preaches about competitiveness and reforming Europe, if you’re not willing to protect or fix overflights then quit and let somebody more effective do the job.”
The strike is estimated, by the Airlines for Europe lobby group to have led to at least 1,500 cancelled flights, leaving 300,000 travellers unable to make their journeys.
Image: Michael O’Leary believes the EU can take action on competition grounds. Pic: PA
Ryanair itself had axed more than 400 flights so far, Mr O’Leary said. Rival easyJet said on Thursday that it had cancelled 274 services over the two days.
The beginning of July marks the start of the European summer holiday season.
The French civil aviation agency DGAC had already told airlines to cancel 40% of flights covering the three main Paris airports on Friday ahead of the walkout – a dispute over staffing levels and equipment quality.
Mr O’Leary described those safety issues as “nonsense” and said twhile the controllers had a right to strike, they did not have the right to close the sky.
DGAC has warned of delays and further severe disruption heading into the weekend.
Many planes and crews will be out of position.
Mr O’Leary is not alone in expressing his frustration.
The French transport minister Philippe Tabarot has denounced the action and the reasons for it.
“The idea is to disturb as many people as possible,” he said in an interview with CNews.
Passengers are being advised that if your flight is cancelled, the airline must either give you a refund or book you on an alternative flight.
If you have booked a return flight and the outbound leg is cancelled, you can claim the full cost of the return ticket back from your airline.
The CBI has begun a search for a successor to Rupert Soames, its chairman, as it continues its recovery from the crisis which brought it to the brink of collapse in 2023.
Sky News has learnt that the business lobbying group’s nominations committee has engaged headhunters to assist with a hunt for its next corporate figurehead.
Mr Soames, the grandson of Sir Winston Churchill, was recruited by the CBI in late 2023 with the organisation lurching towards insolvency after an exodus of members.
The group’s handling of a sexual misconduct scandal saw it forced to secure emergency funding from a group of banks, even as it was frozen out of meetings with government ministers.
One prominent CBI member described Mr Soames on Thursday as the group’s “saviour”.
“Without his ability to bring members back, the organisation wouldn’t exist today,” they claimed.
Mr Soames and Rain Newton-Smith, the CBI chief executive, have partly restored its influence in Whitehall, although many doubt that it will ever be able to credibly reclaim its former status as ‘the voice of British business’.
Its next chair, who is also likely to be drawn from a leading listed company boardroom, will take over from Mr Soames early next year.
Egon Zehnder International is handling the search for the CBI.
“The CBI chair’s term typically runs for two years and Rupert Soames will end his term in early 2026,” a CBI spokesperson said.
“In line with good governance, we have begun the search for a successor to ensure continuity and a smooth transition.”