Rishi Sunak will hit the airwaves to sell his budget later, after it was warned that the chancellor’s economic set piece will leave the poorest families “far worse off”.
Having vowed to build “a stronger economy for the British people” after the coronavirus crisis in his address on Wednesday, Mr Sunak will face questions about his plans for the nation’s finances in a series of broadcast interviews.
MPs will also get the chance to give their views, with the budget debate continuing in the Commons.
The chancellor warned of “challenging” months ahead due to the continuing COVID pandemic and rising inflation as he delivered his budget.
Given the budget was delivered amid the backdrop of a continuing cost of living crisis that is putting pressure on household budgets, particular attention was paid to measures to try to ease the strain on people’s finances.
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Sunak unveils big spending budget
But delivering its snap assessment of the chancellor’s budget, the Resolution Foundation suggested the bottom fifth of households will be worse off to the tune of £280 a year because of welfare cuts and tax increases.
The think tank said a typical worker on £29,000 could also end up worse off as rising inflation – which is predicted to peak at 4.4% in March – will “all but end income growth next year” as the cost of living goes up.
Torsten Bell, chief executive of the Resolution Foundation, said the reduction in the Universal Credit taper would “soften, rather than tackle, the cost of living crisis facing millions of families across the UK today”.
He continued: “The welcome £3bn boost to Universal Credit will have offset some of the losses from the £6bn cut that took effect earlier this month.
“But while some higher-earning couples on Universal Credit are likely to be better off, the poorest families in the UK will still be far worse off over the coming months.”
The Institute for Fiscal Studies, which will deliver its full verdict on the budget later, said people will not necessarily feel better off.
“Inflation is going to head up to 4%, even 5%. We have big tax rises coming next April,” said the research institute’s director Paul Johnson in the immediate aftermath on Wednesday.
“The economy’s not really growing very fast, so it’s likely on average people’s incomes will only be crawling over the next three, four, even five years and certainly some people, particularly those whose wages don’t go up as fast, will be feeling worse off.
“So this is not a period of people feeling better I’m afraid.”
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Analysis: How this budget was different
Labour’s shadow chancellor Rachel Reeves said “never has a chancellor asked the British people to pay so much for so little”, describing the budget as a “shocking missed opportunity by a government that is completely out of touch”.
“As he hits working people with the highest sustained tax burden in peacetime, he’s giving a tax cut to bankers who like to take short-haul flights while sipping Champagne,” she said.
“After taking £6bn out of the pockets of some of the poorest people in this country, he is expecting them to cheer today at being given £2bn to compensate.”
Labour leader Sir Keir Starmer, who tested positive for COVID on Wednesday morning and therefore missed the budget, accused Mr Sunak of doing “nothing about the cost-of-living crisis”.
In the wake of the budget, the Office for Budget Responsibility said the overall tax burden was at its highest since the early 1950s, towards the end of Labour Prime Minister Clement Atlee’s time in Downing Street.
The chancellor acknowledged this in his budget speech, telling MPs: “I don’t like it, but I cannot apologise for it, it’s the result of the unprecedented crisis we faced and the extraordinary action we took in response.”
And in a bid to reassure Tory MPs, Mr Sunak added: “By the end of this parliament, I want taxes to be going down not up.”
The chancellor later addressed the 1922 Committee of Conservative backbenchers – and it is understood he tried to further reassure them on this point, telling them that he wants to use “every marginal pound” in the future to cut taxes rather than increase spending.
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“A wave of new cafes, bars, music venues and outdoor dining” could come to the UK – as the government unveils plans to overhaul planning rules and “breathe new life into the high street”.
Under the proposals, ministers also want to reform licensing rules to make it easier for disused shops to be converted into hospitality venues.
In a statement, Chancellor Rachel Reeves said she planned to scrap “clunky, outdated rules… to protect pavement pints, al fresco dining and street parties”.
The reforms also aim to prevent existing pubs, clubs, and music venues from suffering noise complaints when new properties hit the market.
Developers who decide to build near those sites will be required to soundproof their buildings.
Image: Reuters file pic
As part of dedicated “hospitality zones”, permission for al fresco dining, street parties and extended opening hours will be fast-tracked.
The government says the reforms aim to modernise outdated planning and licensing rules as part of its Plan for Change, to help small businesses and improve local communities.
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The rough plans will be subject to a “call for evidence” which could further shape policy.
Business Secretary Jonathan Reynolds said the proposals will “put the buzz back into our town centres”.
“Red tape has stood in the way of people’s business ideas for too long. Today we’re slashing those barriers to giving small business owners the freedom to flourish,” he said.
The hospitality industry has broadly welcomed the changes but argued tax reform was also essential.
Kate Nicholls, chairwoman of UKHospitality, described the proposals as “positive and encouraging”.
However, she added: “They can’t on their own offset the immediate and mounting cost pressures facing hospitality businesses which threaten to tax out of existence the businesses and jobs that today’s announcement seeks to support.”
While supporting the reforms, Emma McClarkin, chief executive of the British Beer and Pub Association (BBPA), had a similar message.
“These changes must go hand in hand with meaningful business rates reform, mitigating staggering employment costs, and a cut in beer duty so that pubs can thrive at the heart of the community,” she said.
In July, BBPA estimated that 378 pubs will shut this year across England, Wales and Scotland, compared with 350 closures in 2024, which it said would amount to more than 5,600 direct job losses.
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Pubs closing at a rate of one a day
Bar chain Brewdog announced this week that it would close 10 sites, partly blaming “rising costs, increased regulation, and economic pressures”.
Andrew Griffith MP, shadow business secretary, said: “Though any cutting of red tape for hospitality businesses is welcome, this is pure hypocrisy and inconsistency from Labour.”
He said the government was “crippling the hospitality industry by doubling business rates, imposing a jobs tax and a full-on strangulation of employment red tape”.
A campaign group for a third runway at Heathrow that gets funding from the airport has been distributing “incredibly misleading” information to households in west London, according to opponents of the expansion.
The group, called Back Heathrow, sent leaflets to people living near the airport, claiming expansion could be the route to a “greener” airport and suggesting it would mean only the “cleanest and quietest aircraft” fly there.
It comes as the airport prepares to submit its planning application for a third runway ahead of the 31 July deadline, following the government’s statement of support for the expansion.
Image: A plane lands over houses near Heathrow Airport. Pic: PA
Back Heathrow calls itself a “local campaign group of over 100,000 residents” and does not mention the funding it receives from the airport in the newsletter.
Its website also does not mention the current financial support and says it “initially launched with funding from Heathrow Airport but we have since grown”.
Back Heathrow also told Sky News it had “always been open” about the support it receives from the airport.
At the bottom of every web page, the organisation says: “Back Heathrow is a group of residents, businesses and community groups who have come together to defend the jobs that rely on Heathrow and to campaign for its secure future.”
Heathrow Airport said it had always been clear about funding Back Heathrow, but would not disclose how much it provides.
Image: Parmjit Dhanda in 2009 at the hustings to be Speaker of the House of Commons. Pic: Reuters
Who’s behind Back Heathrow?
The group’s executive director is former Labour minister Parmjit Dhanda, who was MP for Gloucester from 2001 to 2010 and sits on the National Policy Forum – the body responsible for developing Labour policy.
Latest accounts for Back Heathrow show it had five employees, including its two directors, in the financial year ending 30 June 2024. The second director is John Braggins, a former campaign adviser to Tony Blair.
The business had £243,961 in cash, the accounts show.
What are the group saying?
In the newsletter, executive director Mr Dhanda said people ask if Heathrow is sustainable. In answering the question, he appeared to suggest the airport can dictate what types of planes use Heathrow.
“We can build a cleaner, greener and smarter airport – using more sustainable aviation fuel, ensuring only the cleanest and quietest aircraft fly here, reduce stacking in our skies and modernise our airspace to cut emissions in flight,” he wrote.
When asked by Sky News what Back Heathrow meant and what the source for the claim was, the organisation pointed to the airport’s traffic light system of noise and emission measurements for the 50 largest airlines serving Heathrow.
“The scheme helps to see what areas certain airlines are excelling in and where improvements can be made,” a spokesperson said.
But those “cleaner and greener” claims were dismissed as “myths” by one campaigner.
Image: Back Heathrow’s spring 2025 newsletter
Finlay Asher is an aerospace engineer and co-founder of Safe Landing, a group of aviation workers and enthusiasts seeking climate improvements in the industry.
He said the emissions savings from sustainable aviation fuel (SAF) were “highly debatable” – but added that even if they were taken at face value, use of these fuels is “relatively low” and so only provides small emissions reductions.
“Air traffic growth at Heathrow will wipe this out,” he said.
Mr Asher also disputed the claim that only the cleanest and quietest aircraft will fly at Heathrow. “There is no policy in place which prevents older generation aircraft from being operated out of any airport,” he said.
As for reducing “stacking” – where aircraft wait over an airport to land – Mr Asher said if that’s the goal, “adding more aircraft to the sky won’t make this easier”.
Opposition to Back Heathrow’s claims also came from Rob Barnstone, founder of the No Third Runway Coalition, which is funded by five local authorities surrounding Heathrow Airport.
He said that regardless of fuel efficiencies or new quieter engines, having the additional 260,000 flights Heathrow has said will be created with an extra runway – in addition to the airport’s current cap of 480,000 – would create “an awful lot of noise”.
“For all the best will in the world, Heathrow is a very, very, very noisy neighbour… When you’re adding a quarter of a million additional flights, that’s going to create an awful lot of emissions, even if they’re using planes that are ever so slightly less environmentally damaging than previous planes,” Mr Barnstone said.
Green claims
Under the heading of “UK sustainable fuel industry for Heathrow”, Back Heathrow said “advances in electric and hydrogen powered aircraft can ensure we meet our environmental targets”.
Elaborating on this, Back Heathrow told Sky News: “Zero-emission electric and hydrogen aircraft are very much the end goal for civil aviation and countries like Norway have set 2040 as the year that all of their short-haul flights will be by electric planes.”
The statement was called “incredibly misleading” by Dr Alex Chapman, senior economist at the left-leaning think tank New Economics Foundation (NEF).
“There’s just absolutely no confidence that those aircraft are going to have any meaningful impact on emissions and commercial aviation in any reasonable time frame. And, yeah, we can all speculate as to what may not happen in 50 years’ time. But I think the people living around the airport should be given the information about what’s actually realistic.”
Even if the technology were available, the runway may not be ready for it, Dr Chapman said.
“Perhaps more importantly, there’s been no indication so far that the proposed new runway is being built to cater for those types of aircraft, because a runway that caters to electrical, hydrogen powered aircraft would be very different to one that was for conventional fuel, particularly in terms of the fuelling infrastructure around it that would be required: pipes to pipe hydrogen, massive charging power facilities.”
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Heathrow CEO on expansion plans
While work is under way to develop electric aircraft, there are currently no commercial electric flights taking place. The best-case scenario is battery-powered flights that may be suitable for short journeys.
But as a major international airport, more than 40% of Heathrow’s flights are long-haul and medium-haul.
And while airlines such as easyJet have called for government funding to develop hydrogen flying suitable for short-haul flights, there are obstacles to making regular commercial flights a reality.
Providing enough hydrogen for the plane journeys from renewable sources will be challenging, as will transporting the fuel, and reworking airport infrastructure for hydrogen refuelling.
Plans for hydrogen aircraft are at least a decade away, with Airbus saying it wants to get a 100-seat hydrogen plane in the air by 2035 – although Back Heathrow’s estimates for a third runway have flights taking off in 2034.
For now, rising emissions from flying are risking the UK’s climate targets, according to the independent government advisers of the Climate Change Committee, who found flights contribute more greenhouse gas than the entire electricity supply sector.
Image: Back Heathrow’s spring 2025 newsletter
Expanding at ‘full capacity’
On the first page of the newsletter, Back Heathrow says “Heathrow is at full capacity”, but the company told Sky News the airport has been “operating at 98% capacity since 2005”.
Despite its 98% capacity, Heathrow Airport has broken passenger number records every year for the past 14 years – excluding the pandemic years of 2020 to 2023.
Dr Chapman said Heathrow is at capacity regarding the government-imposed flight cap, not at the capacity of the current runway infrastructure.
“So if the government were, for example, to lift that cap on the number of aircraft movements, it’s pretty likely that they could actually fly 10% to 20% more flights out of the existing infrastructure,” he said.
As aeroplanes have expanded to carry more passengers, the airport has welcomed more people, he added.
The airport earlier this month announced plans to increase its capacity by 10 million passengers a year, before a third runway is built, and to raise the charge paid by passengers to fund the investment.
A Heathrow spokesperson said: “Back Heathrow represents tens of thousands of local people who want to make their views known on the importance of Heathrow to their communities and livelihoods today and into the future.
“We have always been clear that, alongside individual residents, local business groups and trade unions, we provide funding for Back Heathrow to provide a voice for local people who historically have not been heard in the debate about expanding Heathrow.”
Speaking for the campaign group, Mr Dhanda said: “At Back Heathrow we are proud of our link to Heathrow Airport (the clue is in the name).
“We have always been open about the fact that we receive support from the airport and that they helped set the organisation up to balance the debate about expansion at a time when the voices of ordinary working people from the diverse communities around Heathrow were not being heard.”
“Back Heathrow also receives support from trade unions, local businesses and residents from amongst the 100,000 registered supporters it now has,” he added.
“We want an end to the dither and delay. Back Heathrow supporters want to see economic growth and the thousands of new jobs and apprenticeships a new runway will create.”