The government’s mini-budget has left it facing such a large black hole in the public finances that the most credible way of filling it is severe spending cuts similar to the kinds imposed during the austerity years a decade ago, according to an authoritative new report.
The “Green Budget”, from the Institute for Fiscal Studies (IFS), together with investment bank Citi, warns that the chancellor would have to cut spending or raise taxes by £62bn if he is to stabilise or reduce the national debt, as he has repeatedly promised in recent weeks.
That shortfall is a direct consequence of measures announced since the Truss government took office, including its reversal of various tax increases such as corporation tax and National Insurance, and its Energy Price Guarantee.
There is a chance that hole is filled by economic growth, but the IFS said such an outcome would depend on luck more than judgement.
It said the Office for Budget Responsibility (OBR), the government’s in-house forecaster, was unlikely to assume at the end of the month that the measures in Kwasi Kwarteng’s mini-budget would boost the country’s long-term growth prospects.
The IFS said that even raising working age benefits in line with earnings rather than inflation – one of the big and controversial money-saving measures it is considering – would only save a fraction of the money necessary – about £13bn a year.
It added that Mr Kwarteng would instead have to carry out more dramatic cuts, potentially reducing government investment and slashing public spending on departments already squeezed to the bone during the austerity years.
The IFS Green Budget found that the amount the government is set to pay on debt interest is set to rise in the next couple of years to the highest level, as a percentage of national income, since at least the late 1940s.
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How might the government balance the books?
This increase in debt interest is one element of a “premium” the government is having to pay at the moment because of fears among investors that it has surrendered some of its credibility.
This “credibility premium” means the cost of borrowing is currently higher in the UK than might have been expected, given the increase in borrowing accounted for by the mini-budget.
Moreover, Citi said that the higher interest rates faced by consumers in their mortgages would also dampen economic growth in the coming years.
The IFS said the “credibility premium” for the public finances was around £10bn; Citi said the premium for economic growth was 0.1 or 0.2 percentage points.
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Labour: ‘Reverse mini-budget’
IFS director, Paul Johnson, said that with so much geopolitical instability there were large uncertainties about the outlook in the coming year, but that Mr Kwarteng was left facing large fiscal challenges.
“The specifics of the UK government’s fiscal strategy are under more scrutiny by financial markets than at any point in the recent past. The chancellor should not rely on over-optimistic growth forecasts or promises of unspecified spending cuts. To do so would risk his plans lacking the credibility which recent events have shown to be so important.
“All that said, we would have sympathy with the chancellor if he decided that the uncertainties of the present moment are too great to be promising specific future action around public spending.
But the same would apply to his recent package of tax cuts. He should not apply that argument asymmetrically.”
Benjamin Nabarro, chief UK economist at Citigroup, added: “With monetary and fiscal policy now working in opposite directions, we think the broader risks around UK monetary-financial stability are growing.
“In the years ahead, ‘supply shocks’ such as those seen in recent months seem likely to grow more frequent. That may require profound changes in the manner macroeconomic policy is conducted if we are to avoid another decade of stagnation.
“The UK can ill afford further policy mistakes,” he concluded.
A “British man” has died after being beaten and set on fire by a mob in Ecuador, according to reports by media in the South American country.
According to reports, the man – who has not been officially identified – had been detained by police after being accused of being involved in a fatal shooting.
Ecuadorian news outlet Ecuavisa reported that the man had been taken to a police station Playas del Cuyabeno, a remote village in the Amazon rainforest.
While there, a group broke into the station and took the man away. He was then set on fire in the street, it is reported, and died from his burns.
The incident reportedly happened in the Playas del Cuyabeno area of Sucumbios province
Another local report, from EXTRA.ec, said that specialist police units had been slow to arrive due to the geographical conditions of the area – which is accessible by river.
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According to reports, police officers at the station apparently decided they could not intervene when the mob arrived out of concerns for their own safety.
The UK Foreign, Commonwealth and Development Office has been approached for comment.
Premier League match tickets at Chelsea have been selling for more than twice the price of a season ticket on an American exchange website with a familiar director and investor to supporters – club chairman Todd Boehly.
Amid growing fan fury, Sky News was able to access the Vivid Seats platform on different devices last week from London – and saw tickets for the visit of Liverpool on 4 May, priced by Chelsea at a maximum of £80, being sold for between £537 and £2,666.
Some tickets were listed as being sold by traders.
Chairman of Chelsea Todd Boehly. Pic: Reuters
Chelsea’s official website appeared to show no availability for this premium fixture, with the Blues battling for Champions League qualification and Liverpool potentially celebrating being crowned Premier League winners.
The most expensive Stamford Bridge season ticket for this campaign was £1,015.
Vivid is listed by the Premier League among “unauthorised ticket websites” with a message: “We would urge fans to exercise extreme caution when dealing with these websites.”
Vivid insisted it adheres to laws and regulations in Britain
The Chelsea Supporters’ Trust has written to the Premier League to ask that Vivid – given its ties with a club’s shareholder – “ceases facilitating the sale of tickets for significantly above face value”.
Mr Boehly – part of the consortium that replaced Roman Abramovich as owner in 2022 – has not addressed accusations of a “conflict of interest” or claims he is undermining efforts to combat ticket touting.
There are anti-touting warnings on signs in the streets approaching the stadium.
Sky News found some tickets for more than £2,000 on Vivid Seats
An official Chelsea Ticket Exchange allows season ticket holders to sell their tickets “at the pro-rata price of season tickets” to a club member “in a safe, secure environment”.
While Chelsea’s website says to only buy tickets in the UK from official sellers, it adds: “Many of the websites that advertise and sell tickets online are not within the jurisdiction of UK law.
“This means, while we report these sites when we see Chelsea tickets on them, there is little we can do to shut down the sites.”
Sign at Stamford Bridge warning against ticket touting
On Vivid, we did see warnings telling visiting users not to buy seats in the home sections and a pop-up eventually appeared after browsing the availability, saying: “Tickets for the EPL matches are not currently available for purchase in your location.”
No attempt was made by us to buy tickets. But should we have been able to see the listings at all?
Sky News first asked for comment from Vivid last Monday and continued to see ticket listings with variable prices in pounds during the week. It took until Friday night for any form of response.
“Vivid Seats respectfully adheres to the laws that are in place in the United Kingdom and is not in violation of any regulations around EPL tickets,” the email read in part. “As such, Vivid Seats’ policy restricts the sale and marketing of EPL tickets in the United Kingdom.”
Pic: Reuters
When Sky News checked the website again on Saturday the listings for Premier League matches were no longer visible as they are from outside of Britain.
Asked if they were no longer visible after our inquiries, Vivid’s official replied: “The conclusions that you are drawing are factually incorrect.
“We understand that people will try to find ways to circumvent technology and as such, we have validation protocols in place in order to restrict the sale and marketing of EPL tickets in the United Kingdom.”
Again, Vivid insisted it adheres to laws and regulations in Britain.
But the same official did not respond to an email detailing how we were able to view the tickets listings from London on separate days, without using VPN software that can make your browser seem as if it’s accessing the internet from another country.
Chelsea’s match against Ipswich at Stamford Bridge. Pic: Reuters
‘It’s the only way I was going to get here’
Ticket exchange websites can be the only way for some fans overseas to come to matches.
When Ipswich played at Stamford Bridge on 13 April, Baz Gillespie was able to watch after 20 years living in Cyprus by paying a vastly-inflated £300 for two tickets on a website other than Vivid.
“The only way I was going to get here was that way,” he said, remembering the days he could just queue up and pay a fiver for a ticket.
The same match was Martin van Dijk’s first-ever game at the Bridge, having come from the Netherlands after paying €150 (£128) on another exchange website after initially trying through Vivid.
“If there’s no other option, and you want to visit, it’s the only way, but I’d rather get it through like the normal way,” he said.
Chelsea fan Martin van Dijk paid €150 for a ticket on a resale website
‘An absolute disgrace’
It is the “normal way” that so many supporters want to protect and are aghast at Mr Boehly’s links to Vivid, predating his purchase of a stake in Chelsea.
“It’s an absolute disgrace,” supporter Ben Grey said. “He shouldn’t be involved in Chelsea and a reselling website. It’s unethical from a basic perspective.
“The club are coming out with communication saying that they’re against ticket reselling and our semi-majority shareholder [has a website] reselling tickets to our games.”
Asked what the Premier League should do, he replied: “I’m a massive Chelsea fan, I don’t want Chelsea to be hit hard by anything.
“But the fact of the matter is they need to sort that out and if they’re allowing there to be an owner of a club who’s reselling tickets, it’s a disgrace.”
Fan Ben Grey said Mr Boehy shouldn’t be involved in Chelsea and a reselling website
‘Not a very good look’
Another fan, Rich Still, called it “21st century greed”.
The issue is resonating with young children.
Rhys Edwards, watching with his father, said: “It doesn’t look too good on Chelsea and their owners to be fair.
“Saying that [the website] is not authorised by the league they’re playing in isn’t a very good look.”
Officials with Chelsea, the Premier League and Mr Boehly declined to comment.
The Vivid statement to Sky News stressed: “It is important to note that Vivid Seats does not set the base price for tickets sold on its marketplace or receive any revenue from that base price; only the seller sets and receives the base ticket price.”
Labour MP Rupa Huq has proposed a law change to improve pricing transparency
‘It’s like the Wild West’
Vivid highlighted to Sky News its “long-standing partnership”, including being a backer of a 2023 summer tour of the United States.
Chelsea’s website featured a quote saying: “We are pleased to join with a company committed to becoming the ultimate partner for connecting fans to the live events, teams and artists they love.”
The government has launched a consultation to prevent people from being ripped off in Britain by the resale of tickets.
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The limit could range from the cost of the original ticket to a 30% uplift to stop the public being “fleeced” by professional touts.
Labour MP for Ealing Central and Acton, Rupa Huq, has separately proposed a change to the law to improve pricing transparency on secondary ticketing sites.
“It’s an unregulated market,” she told Sky News. “It’s like the Wild West. It needs getting back into control.”
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