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.
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.”
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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.
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The move sent the markets into turmoil, with the pound dropping, mortgage products being withdrawn and the Bank of England having to step in to save some pension funds.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.”
Several boats from a large aid flotilla trying to reach Gaza have been boarded by Israeli authorities – with campaigner Greta Thunberg among those removed.
The Global Sumud Flotilla is made up of more than 40 civilian boats with an estimated 500 people onboard, and is trying to break Israel’s sea blockade.
But the attempt appears to have been thwarted – at least for now – by about 20 Israeli ships.
Israel’s foreign ministry said “several vessels” had been “safely stopped” with passengers being taken to an Israeli port.
“Greta and her friends are safe and healthy,” a spokesperson added.
Image: A livestream showed some of the boats in the flotilla as the incident unfolded
A video showed Thunberg sitting on deck while being handed a water bottle and raincoat.
It’s so far unclear how many boats have been intercepted.
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The flotilla ignored requests to turn back and organisers said the interception was illegal as it happened in “international waters” around 80 miles off the coast.
Greg Stoker, a US veteran who’s involved, said water cannon had been used on some of the boats.
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Gaza-bound flotilla ‘aggressively circled’ by warship
The flotilla, which set off from Barcelona and scheduled to arrive this morning, was flanked by NATO warships for some of the journey.
The attempt has received a lot of attention, with Nelson Mandela’s grandson, a former Barcelona mayor and several European legislators taking part.
Israel said the mission was violating a lawful blockade and is only intended to provoke. It also said it had offered a way to deliver any aid peacefully through safe channels.
Organisers said the night-time interception was the second time the flotilla had been approached on Wednesday, after “warships” earlier encircled two of its boats.
Image: The flotilla set off from Barcelona on 31 August and later stopped in Sicily
Last week, drones also reportedly dropped stun grenades and itching powder on some vessels.
Israel didn’t comment, but has said it will use any means to stop the boats getting to Gaza.
Protests have broken out in Italy and Turkey over the treatment of the flotilla.
Italy’s largest union has called a general strike tomorrow, saying the “attack on civilian vessels carrying Italian citizens represents an extremely serious matter”.
Turkey’s foreign ministry called Israel’s interception an “attack” and “an act of terror” that endangered lives of those on board.
Gaza has been dealing with severe food shortages due to the ongoing war.
Image: Thunberg and activist Saif Abukeshek. Pic: Reuters/Nacho Doce
Agencies such as the UN accused Israel of deliberately slowing the delivery of supplies – something it denies.
However, the aid being carried by the flotilla is said to only be a symbolic amount of food and medicine.
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Will Trump’s Gaza plan bring peace?
Meanwhile, all eyes remain on Hamas and whether it will accept Donald Trump’s peace plan to end the two-year war, sparked by the group’s terror attack on Israel.
The 20-point proposal was unveiled alongside Israeli Prime Minister Benjamin Netanyahu in the White House this week.
Hamas said it would study the plan and consult with other factions, but didn’t give an indication of when it would deliver its verdict.
At Kabul International Airport, there are dozens of confused looking families.
Many are holding flowers, waiting and hoping their loved ones will touch down.
Others came here hoping to take-off but are now sitting bewildered in the hot sun.
After the Taliban imposed a nationwide shutdown of the internet, no one knows if any flights are still operating and no one can use their phones to find out.
Image: The Taliban caught many in the country off-guard with their shutdown. File pic: West Asia News Agency via Reuters
“I am waiting for my brother from Australia,” one man tells me, “but I don’t know if he’s coming”.
Beyond the gates, the runway is full of grounded planes.
After hours of waiting on Tuesday, no international flights took off or arrived at Kabul Airport, despite some airlines scheduling departures.
The Taliban caught many in the country off-guard with their shutdown – reportedly even some of their own ministers.
Initially, there appeared to be no official indication of how long the shutdown might last or an explanation for why it was imposed.
Image: A man tries to use Google on his smartphone in the Afghan capital. Pic: Reuters
On Wednesday, the Taliban government rejected reports of a nationwide internet ban, saying old fibre optic cables are worn out and are being replaced.
But, at the airport, people worry it could be indefinite. Others speculate about rumours it’s to do with security protocols and the movement of officials in the country.
No one knows, and the TV and radio stations they get their news from have not been providing the latest information.
Image: Men try to connect their smart TV to the internet. Pic: Reuters
The banks are open but no one can get out money. An employee at the bank in our hotel in Kabul told us they haven’t been able to open their operating systems since Tuesday morning and that Western Union isn’t accessible either.
That’s hugely significant in a country where many are reliant on money sent back by relatives abroad and banks are already struggling with sanctions.
No one can call the police, no one can call an ambulance, and hospitals and medical services are wrestling with how to adjust too.
It follows more than a week of temporary connectivity issues in some parts of the country, with the northern region of Balkh among the first to be affected by a ban on fibre optic internet.
Image: Taliban fighters ride on a pickup truck during celebrations marking the fourth anniversary of the US withdrawal. Pic: AP
In the last 10 days, we have been travelling across Afghanistan. People in Nangarhar, Kunar, Mazar-i-Sharif and Herat all expressed concern about possible impending blackouts, and we personally experienced a slowdown in connectivity in these places. But nothing as widespread or sustained as this shutdown which is nationwide.
Two weeks ago, the Taliban’s provincial government spokesman Haji Attaullah Zaid said leader Hibatullah Akhundzada had imposed a “complete ban” on cable internet access in Balkh.
“This measure was taken to prevent immorality, and an alternative will be built within the country for necessities,” Mr Zaid said.
It was said to be connected to concerns around pornography – but this was never officially stated by the Taliban.
We have tried to reach the government for comment via satellite phone but with no success.
Image: No one knows how long the shutdown will last. Pic: Reuters
The blackout has disrupted phone services. In countries with limited telecom infrastructure, phone networks are often routed through fibre-optic systems which have now been disabled.
The lack of connectivity has raised immediate concern in the aid community. Amnesty International called it “reckless” and said the shutdown would have “far-reaching consequences for the delivery of aid, access to healthcare and girls’ education”.
After the Taliban banned school for girls over the age of 12, many in the country have been secretly studying online.
During the previous temporary blackouts, the Taliban did warn more was to come. But no one appears to have anticipated this – not ordinary citizens, not foreign officials here in Kabul, not big business, not the airlines or the hospitals.
It is an indication of how quickly this country can turn and the power the Taliban has to disrupt and reshape its future.
Internationally, many are raising concerns that this is an attempt by the Taliban at widespread censorship and further restriction of girls’ education.
Whatever the intention of their move, it has created an extreme scenario: no one in this country can currently contact anyone – for an emergency, for a family member, or for guidance – creating a major information vacuum.
Princess Anne has placed a toy bear as a poignant tribute at a children’s memorial in Ukraine, during an unexpected visit to the war-ravaged country where she also met Volodymyr Zelenskyy.
The King’s sister travelled to the capital Kyiv on Tuesday, at the request of the Foreign Office, in a show of solidarity with children and families facing the horrors of the Russian invasion.
The Princess Royal met Mr Zelenskyy to discuss the UK’s support for Ukraine and its ongoing resistance.
Image: The Princess Royal and First Lady Olena Zelenska laid soft toys during a visit to a memorial for children killed in the war. Pic: PA
Anne’s secret visit, which was not publicised beforehand for security reasons, came just two days after a Russian aerial bombardment killed at least four people in Kyiv, including a 12-year-old girl, and injured at least 70 others.
The attack, which lasted more than 12 hours, was one of the heaviest in recent months.
The purpose of her trip was to highlight the traumatic experiences of children living on the frontline, Buckingham Palace said.
Joining First Lady Olena Zelenska at the children’s memorial, Anne left the teddy in tribute to youngsters killed in the conflict, saying her daughter Zara Tindall had the same bear.
As the 75-year-old princess stepped back after placing the traditional-looking teddy at the base of the memorial alongside scores of other cuddly toys, she told Mrs Zelenska: “That was one that my daughter had.”
Mrs Zelenska also left a bear in tribute.
Image: Anne is the latest British royal to make a trip to Kyiv. Pic: PA
The site commemorates more than 650 children who have died since the start of the conflict in 2022.
In Kyiv, she also met female police and armed forces representatives and heard about their key role protecting women and children.
Visiting the Child Rights Protection Centre, she spoke to families and children who have been returned and reintegrated, and met some of those working to return more Ukrainian children.
Image: Princess Anne spoke to young people who lived under occupation. Pic: PA
Image: The Princess Royal met Ukrainian war veterans relaxing in a salt therapy room at a rehabilitation centre. Pic: PA
More than 19,500 Ukrainian children have been forcibly transferred or deported by the Russian authorities to Russia and the occupied territories of Ukraine.
Princess Anne is the second working royal to visit Ukraine.
In April last year, the Duchess of Edinburgh was the first to go and bring a letter of support from the King.
Anne also visited a rehabilitation centre, where she met Ukrainian veterans returning from the frontline.
The King has met Mr Zelenskyy a number of times and marked the country’s independence day in August by sending a message of solidarity.
During Donald Trump’s recent state visit to the UK, Charles also took the opportunity to stress the importance of supporting Ukraine.
He told the US president in his banquet speech: “Today, as tyranny once again threatens Europe, we and our allies stand together in support of Ukraine, to deter aggression and secure peace.”