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The government has ruled out a U-turn on the costly tax-cutting mini-budget and the chancellor will not resign despite mounting pressure.

It comes after a day in which the Bank of England was forced to launch a temporary bond-buying programme as it took emergency action to prevent “material risk” to UK financial stability.

Bank’s ‘nearly unthinkable’ intervention – economy latest

Sky’s political editor Beth Rigby was told that the chancellor, Kwasi Kwarteng, would not be resigning and that there would be “no reversal of policy”.

A minister told deputy political editor Sam Coates it was “bulls***t” to say that today’s market movement was related to the mini-budget announcement.

And on The Take with Sophy Ridge, chief secretary to the Treasury Chris Philp denied that the government had any responsibility and said there would be no change of course.

Politics Hub: No mini-budget reversal and chancellor will not resign

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‘We’re not going to change course’

The Bank will buy as many long-dated government bonds as needed between now and 14 October in a bid to stabilise financial markets in the wake of the mayhem that followed the government’s mini-budget last Friday.

In addition to the plunge in the value of the pound, it has also seen investors demand a greater rate of return for UK government bonds – essentially IOUs.

That is because the level of borrowing required to fund the government giveaway, including tax cuts and energy aid for households and businesses, shocked the market which immediately questioned the sustainability of the public finances.

City minister Andrew Griffith told Sky’s economics editor Ed Conway: “Every major economy is dealing with exactly the same issues.”

“They [the bank] have made a targeted and timely intervention in the market. That’s their decision, but they’ve done so working very closely with the chancellor.”

The Bank’s action comes after the International Monetary Fund added its voice to criticism of the growth plan.

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Govt sticking to ‘mini budget’ despite turmoil

What the Bank’s action is aimed at doing is tackling the consequences of rising bond yields, in this instance a liquidity crunch facing pension funds.

The pound fell back in response but bond yields did ease back from multi-year highs.

WHY THE BANK OF ENGLAND HAS ACTED


 Ian King

Ian King

Business presenter

@iankingsky

There are some very, very specific reasons why the Bank of England is intervening in this particular asset class in long-dated gilts – that’s gilts of a 20 to 30 year duration.

It affects traditional pension funds where a retiree is guaranteed a certain payout at their retirement based on their final salary when they retire.

Now, a lot of these funds use long-dated gilts as part of their investments and what has been happening over recent days is a lot of the investment funds have been asking pension funds to post more collateral – to put up cash.

It has been reported in The Times that actually these cash calls have been running into tens of billions of pounds since the beginning of the week because of this spike in long-dated gilt yields.

That is why the Bank of England is specifically targeting that with this gilt intervention.

It is aimed at seeing off a crisis that’s potentially starting to emerge in pension funds.

The Bank said in a statement: “Were dysfunction in this (long-dated bond) market to continue or worsen, there would be a material risk to UK financial stability.

“This would lead to an unwarranted tightening of financing conditions and a reduction of the flow of credit to the real economy.”

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Senior Tory blames mini-budget for turmoil

‘Significant’ interest rate rise likely ahead

The programme marked the Bank’s first policy intervention as it battles to bring down inflation and ease the cost of living crisis. Its chief economist signalled on Tuesday that a “significant” rise in Bank rate was also likely ahead.

The government’s growth plan is only seen as adding inflationary pressure to the economy, leaving it at loggerheads with the Bank’s mandate.

The Bank said the bond purchases, which would be fully covered by the Treasury in the event of any losses, would be sold back once market conditions had stabilised.

The announcement certainly had an immediate effect on the market.

Data showed that 30-year bond yields fell back to 4.3%, having risen to levels above 5% not seen since 2002 earlier in the day. There were similar falls for 20-year yields.

Those for 10-year bonds also fell back below 4% from 4.6%.

Stock markets, which had endured widespread falls Europe-wide amid recession fears, erased some of their losses.

The FTSE 100 had been almost 2% down but was just 0.8% lower on the day just before 1pm.

The pound, however, was a cent and a half down versus the dollar shortly after the announcement, to stand at $1.0578, and a cent lower against the euro. It later moved back towards $1.07 as market surprise at the intervention eased.

The single European currency was also suffering against a resurgent US currency.

Bank going ‘toe-to-toe’ with the market

The Bank said it would also postpone its efforts to unwind the sale of bonds it acquired through quantitative easing during the financial and COVID crises.

The Bank had planned to reduce its £838bn of gilt holdings by £80bn over the next year.

Neil Wilson, chief markets analyst at Markets.com, said the move followed evidence of “severe liquidity stress”.

This would have been particularly evident for pension funds who have faced demands for additional cash to cover off rising yields.

“We’re now seeing the Bank go toe-to-toe with the market and this might not lead to any decrease in volatility.”

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Drones are sending ‘overwhelming amounts’ of drugs into prisons – and could help inmates escape, report warns

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Drones are sending 'overwhelming amounts' of drugs into prisons - and could help inmates escape, report warns

Sophisticated drones sending “overwhelming amounts” of drugs and weapons into prisons represent a threat to national security, according to an annual inspection report by the prisons watchdog.

HMP chief inspector of prisons Charlie Taylor has warned criminal gangs are targeting jails and making huge profits selling contraband to a “vulnerable and bored” prison population.

The watchdog boss reiterated his concerns about drones making regular deliveries to two Category A jails, HMP Long Lartin and HMP Manchester, which hold “the most dangerous men in the country”, including terrorists.

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Ex-convict: Prison is ‘birthing bigger criminals’

Mr Taylor said “the police and prison service have in effect ceded the airspace” above these two high-security prisons, which he said was compromising the “safety of staff, prisoners, and ultimately that of the public”.

“The possibility now whereby we’re seeing packages of up to 10kg brought in by serious organised crime means that in some prisons there is now a menu of drugs available,” he said. “Anything from steroids to cannabis, to things like spice and cocaine.”

“Drone technology is moving fast… there is a level of risk that’s posed by drones that I think is different from what we’ve seen in the past,” warned the chief inspector – who also said there’s a “theoretical risk” that a prisoner could escape by being carried out of a jail by a drone.

He urged the prison service to “get a grip” of the issue, stating: “We’d like to see the government, security services, coming together, using technology, using intelligence, so that this risk doesn’t materialise.”

The report highlights disrepair at prisons around the country
Image:
The report highlights disrepair at prisons around the country

The report makes clear that physical security – such as netting, windows and CCTV – is “inadequate” in some jails, including Manchester, with “inexperienced staff” being “manipulated”.

Mr Taylor said there are “basic” measures which could help prevent the use of drones, such as mowing the lawn, “so we don’t get packages disguised as things like astro turf”.

Responding to the report, the Prison Advice and Care Trust (PACT) said: “The ready access to drugs is deeply worrying and is undermining efforts to create places of rehabilitation.”

Mr Taylor’s report found that overcrowding continues to be what he described as a “major issue”, with increasing levels of violence against staff and between prisoners, combined with a lack of purposeful activity.

Some 20% of adult men responding to prisoner surveys said they felt unsafe at the time of the inspection, increasing to 30% in the high security estate.

Andrea Coomber, chief executive of the Howard League for Penal Reform, said: “This report is a checklist for all the reasons the government must prioritise reducing prison numbers, urgently.

“Sentencing reform is essential, and sensible steps to reduce the prison population would save lives.”

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May: Male prison capacity running at 99%

The report comes after the government pledged to accept most of the recommendations proposed in the independent review of sentencing policy, with the aim of freeing up around 9,500 spaces.

Those measures won’t come into effect until spring 2026.

Prisons Minister Lord Timpson said Mr Taylor’s findings show “the scale of the crisis” the government “inherited”, with “prisons dangerously full, rife with drugs and violence”.

He said: “After just 500 prison places added in 14 years, we’re building 14,000 extra – with 2,400 already delivered – and reforming sentencing to ensure we never run out of space again.

“We’re also investing £40m to bolster security, alongside stepping up cooperation with police to combat drones and stop the contraband which fuels violence behind bars.”

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Post Office scandal: Daughter has had ‘panic attacks’ since mum was accused of stealing

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Post Office scandal: Daughter has had 'panic attacks' since mum was accused of stealing

The daughter of a Post Office victim has told Sky News she suffered “dark thoughts of suicide” in the years after her mother was accused of stealing.

Kate Burrows was 14 years old when her mother, Elaine Hood, was prosecuted and subsequently convicted in 2003.

The first public inquiry report on the Post Office – examining redress and the “human impact” of the scandal – is due to be published today.

“I’ve suffered with panic attacks from about 14, 15 years old, and I still have them to this day,” Kate said.

“I’ve been in and out of therapy for what feels like most of my adult life and it absolutely categorically goes back to [what happened].”

Kate and Rebecca with their mother, Elaine
Image:
Kate and Rebecca with their mother, Elaine

Kate, along with others, helped set up the charity Lost Chances, supporting the children of Post Office victims. She hopes the inquiry will recognise their suffering.

“It’s important that our voices are heard,” she said. “Not only within the report, but in law actually.

More on Post Office Scandal

“And then maybe that would be a deterrent for any future cover-ups, that it’s not just the one person it’s the whole family [affected].”

Her sister, Rebecca Richards, who was 18 when their mother was accused, described how an eating disorder “escalated” after what happened.

“When my mum was going through everything, my only control of that situation was what food I put in my body,” she said.

Elaine Hood with her husband
Image:
Elaine with her husband

She also said that seeing her mother at court when she was convicted, would “stay with me forever”.

“The two investigators were sat in front of my dad and I, sniggering and saying ‘we’ve got this one’.

“To watch my mum in the docks handcuffed to a guard… not knowing if she was going to be coming home… that is the most standout memory for me.”

The sisters are hoping the inquiry findings will push Fujitsu into fulfilling a promise they made nearly a year ago – to try and help the children of victims.

Rebecca Richards and Kate Burrows
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The siblings were teenagers when their mum was unfairly prosecuted

Last summer, Kate met with the European boss of the company, Paul Patterson, who said he would look at ways they could support Lost Chances.

Despite appearing at the inquiry in November last year and saying he would not “stay silent” on the issue, Kate said there has been little movement in terms of support.

“It’s very much a line of ‘we’re going to wait until the end of the inquiry report to decide’,” she said.

“But Mr Patterson met us in person, looked us in the eye, and we shared the most deeply personal stories and he said we will do something… they need to make a difference.”

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2024: Paula Vennells breaks down in tears

Fujitsu, who developed the faulty Horizon software, has said it is in discussions with the government regarding a contribution to compensation.

The inquiry will delve in detail into redress schemes, of which four exist, three controlled by the government and one by the Post Office.

Victims of the scandal say they are hoping Sir Wyn Williams, chair of the inquiry, will recommend that the government and the Post Office are removed from the redress schemes as thousands still wait for full and fair redress.

A Department for Business and Trade spokesperson said they were “grateful” for the inquiry’s work, describing “the immeasurable suffering” victims endured and saying the government has “quadrupled the total amount paid to affected postmasters”, with more than £1bn having now been paid to thousands of claimants.

Anyone feeling emotionally distressed or suicidal can call Samaritans for help on 116 123 or email jo@samaritans.org in the UK. In the US, call the Samaritans branch in your area or 1 (800) 273-TALK

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Jury shown CCTV and bodycam footage of brothers allegedly assaulting police at Manchester Airport

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Jury shown CCTV and bodycam footage of brothers allegedly assaulting police at Manchester Airport

CCTV and police bodycam footage allegedly showing three police officers being assaulted at Manchester Airport has been played to jurors.

Mohammed Fahir Amaaz, 20, and his brother, Muhammad Amaad, 26, are said to have struck out after police were called to the airport on 23 July last year, following Amaaz allegedly headbutting a customer at a Starbucks in Terminal 2.

Minutes later, three police officers approached the defendants at the paystation in the terminal’s car park.

A jury at Liverpool Crown Court today watched CCTV footage from opposite angles, which captured what the prosecution says was a “high level of violence” being used by the siblings.

The prosecution says Amaaz resisted as officers tried to move him to arrest him, and Amaad then intervened.

Junior counsel Adam Birkby suggested Amaaz threw 10 punches, including one to the face of PC Lydia Ward, which knocked her to the floor.

His brother Amaad is then said to have aimed six punches at firearms officer PC Zachary Marsden.

Amaaz also allegedly kicked PC Marsden and struck firearms officer PC Ellie Cook twice with his elbow.

He is said to have punched PC Marsden from behind and had a hold of him, before PC Cook discharged her Taser.

Human Rights lawyer Aamer Anwar (centre) arrives with Mohammed Fahir Amaaz (left) and Muhammed Amaad (right) at Liverpool Crown Court, where
Image:
Mohammed Fahir Amaaz (left) and Muhammed Amaad (right) arrive at the court with their lawyer. Pic: PA

The bodycam and CCTV footage, submitted as evidence by the prosecution, allegedly shows the officers’ arrival in the Terminal 2 car park and their attempts to arrest the siblings, as well as their exchanges with them.

PC Ward can be heard saying “Oi, you b*****d” in footage from her bodycam, the prosecution evidence appears to show.

She then appears to fall to the floor and screams.

PC Cook, who is pointing her Taser at one of the defendants, then allegedly says: “Stay on the floor, stay on the floor whatever you do.”

“Get back, get back,” PC Ward appears to say.

The bodycam footage, shown to the jury by the prosecution, shows PC Marsden, who is also pointing his Taser, appear to approach the defendant who is lying on the ground and kick out at him.

Mr Birkby said: “Mr Amaaz, while prone, lifts his head towards the officers. PC Marsden kicks Mr Amaaz around the head area.

“PC Marsden stamps his foot towards the crown of Mr Amaaz’s head area but doesn’t appear to connect with Mr Amaaz.”

Amaaz denies three counts of assault occasioning actual bodily harm to the three police officers and one count of assault to Abdulkareem Ismaeil, the customer at Starbucks.

Amaad denies one count of assault occasioning actual bodily harm to PC Marsden.

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