Former Tory minister calls for delay in corporation tax cut as ‘obvious’ way to help balance books
A leading Tory former minister has suggested Prime Minister Liz Truss abandon a flagship policy to keep down corporation tax to avoid savage cuts to public services.
Stephen Hammond is the first Tory MP to effectively call for the measure to be scrapped to balance the books and reassure the markets.
Mr Hammond, a minister in successive Tory governments who has close links to the City, said the corporation tax could be lowered at a later date, but should be allowed to rise now as planned by the last administration.
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Under Boris Johnson’s government, corporation tax – the levy on the profits of UK businesses – was due to rise from 19% to 25% in April next year.
But Chancellor Kwasi Kwarteng ruled out the hike during his mini-budget last month, saying keeping the tax lower would help growth in the country.
Speaking exclusively to Sky News, Mr Hammond said: “It is clear that if you look at international tax rates for corporates, keeping it at a level below the 24p level but keeping it above the 19p level would raise money and that would be a sensible way at this stage.”
He said the government needed to prioritise “making sure that the poorest in our society are looked after”, and said the government should limit cuts to education, health and defence rather than spending money preventing corporation tax from rising.
Keeping the 19% figure was one of a number of tax-cutting measures in Mr Kwarteng’s mini-budget, with the Treasury ordering an additional £72bn of borrowing on the financial markets to pay for them all.
The move sent the markets into turmoil, with the pound dropping, mortgage products being withdrawn and the Bank of England having to step in to save some pension funds.
Mr Kwarteng and Liz Truss were forced into a U-turn over the plan to scrap the 45p tax rate for the wealthiest earners, and to bring forward the chancellor’s medium-term economic plan from late November to Halloween.
But now, the Institute for Fiscal Studies (IFS) has warned the chancellor will need to cut spending or raise taxes by £62bn if he is to stabilise or reduce the national debt, as he has promised to do.
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Mr Hammond praised the support the government was providing to households and businesses to tackle rising energy bills.
But he also appealed to the prime minister, saying he hoped she would “recognise the need to increase benefits with inflation because that is key I think – making sure that the poorest in our society are looked after”.
Instead, he said the “obvious” area where savings could be made was on whether to keep the reduction of corporation tax the chancellor has planned.
He added: “What is clear is that the government has an ambitious growth plan and it is clear at the moment that a lot of it is coming through very quickly and some of that probably can’t be… this is a matter of timing and it is clear that some of that needs to wait.”
A new aid system has opened its first distribution centres in Gaza, according to a US-backed organisation dealing with supplies.
The Gaza Humanitarian Foundation (GHF) began its operations in the territory on Monday, following the resignation of its director, Jake Wood, over its independence.
Gaza’s 2.3m population has been pushed towards famine by Israel’s almost three-month blockade.
Boxes of aid to be distributed across Rafah. Pic: Reuters.
The GHF said lorryloads of food – it did not say how many – had been delivered to its hubs, and distribution to Palestinians had begun.
“More trucks with aid will be delivered tomorrow, with the flow of aid increasing each day,” it said in a statement.
The controversial group, backed by Israel and the United States, has been rejected by the United Nations and other aid groups.
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People line up for food in Gaza
UN agencies and major aid groups have refused to cooperate with the GHF.
They claim Israel is weaponising food, and the new distribution system will be ineffective and lead to further displacement of Palestinians.
They also argue the GHF will fail to meet local needs, and violates humanitarian principles that prohibit a warring party from controlling humanitarian assistance.
In the meantime, scores of Palestinians in Gaza, like Islam Abu Taima, have resorted to searching through rubbish to find food.
Palestinians are having to search through rubbish to find food
She found a small pile of cooked rice, scraps of bread, and a box with a few pieces of cheese inside it – which she said she will serve to her five children.
“We’re dying of hunger,” she told the Associated Press news agency.
“If we don’t eat, we’ll die.”
Islam Abu Taeima finds a piece of bread in a pile of rubbish in Gaza City. Pic: AP.
It is unclear how many of the GHF’s aid trucks will enter Gaza.
It claims it will reach one million Palestinians by the end of the week.
There are questions, however, over who is funding it and how it will work.
Trucks transporting aid for Palestinians in Rafah. Pic: Reuters.
It has been set up as part of an Israeli plan – rather than a UN distribution effort.
Israel, which suggested a similar plan earlier this year, has said it will not be involved in distributing the aid but supported the plan and would provide security.
It says aid deliveries into Gaza are taken by Hamas instead of going to civilians.
Aid groups, however, say there is no evidence of this happening on a systemic basis.
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Israel began to allow a limited amount of food into Gaza last week – after a blockade that prevented food, medicine, fuel and other goods from entering the Palestinian enclave.
A letter has been signed by hundreds of judges and lawyers calling on the UK government to impose trade sanctions on Israel.
It also calls for Israeli ministers to be sanctioned and the suspension of Israel from the UN over “serious breaches of international law”.
“Genocide is being perpetrated in Gaza or that, at a minimum, there is a serious risk of genocide,” the letter says.
The Israeli government has repeatedly dismissed allegations of genocide in Gaza.
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At least 31 dead after school attack
More than 52,000 Palestinians have been killed since Israel launched its ground invasion of Gaza, according to the Hamas-run health ministry, following the deadly attacks by the militant group on Israel, which killed 1,200 people and saw around 250 people taken hostage.
The health ministry’s figures do not differentiate between civilians and fighters in Gaza.
King Charles and Queen Camilla are being urged to use their visit to Canada to seek an apology for the abuse of British children.
Campaigners have called on them to pursue an apology for the “dire circumstances” suffered by so-called “Home Children” over decades.
More than 100,000 were shipped from orphan homes in the UK to Canada between 1869 and 1948 with many used as cheap labour, typically as farm workers and domestic servants. Many were subject to mistreatment and abuse.
Canada has resisted calls to follow the UK and Australia in apologising for its involvement in child migrant schemes.
King Charles and Mark Carney on Monday. Pic: PA
Campaigners for the Home Children say the royal visit presents a “great opportunity” for a change of heart.
“I would ask that King Charles uses his trip to request an apology,” John Jefkins told Sky News.
John’s father Bert was one of 115,000 British Home Children transported to Canada, arriving in 1914 with his brother Reggie.
“It’s really important for the Home Children themselves and for their descendants,” John said.
“It’s something we deserve and it’s really important for the healing process, as well as building awareness of the experience of the Home Children.
“They were treated very, very badly by the Canadian government at the time. A lot of them were abused, they were treated horribly. They were second-class citizens, lepers in a way.”
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John Jefkins
John added: “I think the King’s visit provides a great opportunity to reinforce our campaign and to pursue an apology because we’re part of the Commonwealth and King Charles is a new Head of the Commonwealth meeting a new Canadian prime minister. It’s a chance, for both, to look at the situation with a fresh eye.
“There’s much about this visit that looks on our sovereignty and who we are as Canadians, rightly so.
“I think it’s also right that in contemplating the country we built, we focus on the people who built it, many in the most trying of circumstances.”
The issue was addressed by the then Prince of Wales during a tour of Canada in May 2022. He said at the time: “We must find new ways to come to terms with the darker and more difficult aspects of the past.”
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King Charles and Queen Camilla are on a two-day visit to Canada.
On Tuesday, the King will deliver the Speech from the Throne to open the 45th session of Canada’s parliament.
Camilla was made Patron of Barnardo’s in 2016. The organisation sent tens of thousands of Home Children to Canada. She took on the role, having served as president since 2007.
Buckingham Palace has been contacted for comment.
A spokesperson for the Canadian government said: “The government of Canada is committed to keeping the memory of the British Home Children alive.
“Immigration, Refugees and Citizenship Canada deeply regrets this unjust and discriminatory policy, which was in place from 1869 to 1948. Such an approach would have no place in modern Canada, and we must learn from past mistakes.”
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