What was in the mini-budget and what has been scrapped?

Published

2 years ago

October 17, 2022

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Just over three weeks ago, then-chancellor Kwasi Kwarteng unveiled his tax-cutting mini-budget to MPs which caused economic turmoil in the UK.

Following a dramatic U-turn on a promise to abolish the 45% higher rate of income tax after backlash from the government’s own Conservative MPs earlier this month, Mr Kwarteng has now been sacked – and many of the other pledges in the mini-budget have been torn up.

On Friday, the government scrapped its decision to axe the rise in corporation tax to 25% next year.

Addressing the nation in a statement on Monday morning, newly appointed chancellor Jeremy Hunt confirmed that most of the other mini-budget proposals have also now been thrown in the bin as Prime Minister Liz Truss seeks to hold on to her premiership.

Hunt goes further than expected – as Tory MPs say it’s ‘when not if’ Truss goes – follow latest on politics

Here is a breakdown of what was in the government’s mini-budget at the end of September and what has changed:

Income tax:

What was pledged?

• The government pledged that the 45% higher rate of income tax would be abolished.

• There was a promise to reduce the basic rate of income tax to 19p in the pound by April 2023, meaning 31 million people would be better off by an average of £170 a year.

What has changed?

• The government rowed back on its decision to scrap the highest rate of income tax earlier this month.

• Mr Hunt said the basic rate of income tax would now “indefinitely” stay at 20p until economic conditions allowed a reduction.

“It is a deeply held Conservative value – a value that I share – that people should keep more of the money that they earn,” the new chancellor said.

“But at a time when markets are rightly demanding commitments to sustainable public finances, it is not right to borrow to fund this tax cut.”

Corporation tax

What was pledged?

• The government said it would cancel a UK-wide rise in corporation tax which was due to increase from 19% to 25% in April.

What has changed?

• Ms Truss confirmed in a brief press conference on Friday that she was dropping this flagship policy of her leadership campaign and that corporation tax will go up from 19% to 25% in April after all.

Energy package

What was pledged?

• The government said household bills would be cut by an expected £1,000 this year with aid from the energy price guarantee and £400 grant. The energy price guarantee had been due to cap prices for two years.

What has changed?

• Mr Hunt confirmed the energy price guarantee will now end in April after which time the government will look to target help on those most in need.

IR35 rules

What was pledged?

• The government promised to “simplify” IR35 rules – the rules which govern off-payroll working. It promised to change the regulations so pensions funds can increase UK investments.

What has changed?

• Mr Hunt confirmed the government will now abandon these proposed IR35 changes.

Alcohol duty

What was pledged?

• The government said in the mini-budget that planned increases in the duties on beer, for cider, for wine, and for spirits would be cancelled.

What has changed?

• Mr Hunt confirmed this will now no longer be the case, with the price of beer, cider, wine and sprits soon rising.

Dividend tax change

What was pledged?

• The government announced in the mini-budget that from 6 April 2023, the additional rate applying to dividend income would be abolished and the 1.25% rise in the dividend rates, initially brought into force in April this year, would be reversed.

What has changed?

• Mr Hunt said the government will no longer reverse the 1.25% rise in the dividend rates.

VAT-free shopping

What was pledged?

• The government pledged VAT-free shopping for overseas visitors.

What has changed?

• Mr Hunt said this policy has now been scrapped.

Stamp duty

What was pledged?

• The government promised to cut stamp duty which is paid when people buy a property in England and Northern Ireland. It said no stamp duty would be paid on the first £250,000 of any property and no stamp duty on the first £425,000 for first-time buyers.

What has changed?

• Mr Hunt confirmed this is one of very few policies in the controversial mini-budget which will remain.

National Insurance

What was pledged?

• The government said it would reverse the recent rise in National Insurance from 6 November. Workers and employers have paid an extra 1.25% since April 2022.

What has changed?

• Mr Hunt confirmed that, like stamp duty, this policy has survived the mini-budget cull.

Bankers’ bonuses

What was pledged?

• The government announced it was scrapping rules which limit bankers’ bonuses.

What has changed?

• Mr Hunt did not mention bankers’ bonuses in his statement. But a Treasury source has told Sky News there is “no change in policy there.” They said the cap “was bad policy” adding that it “didn’t cap bankers pay and was bad for financial stability”.

World

Climate-vulnerable islands storm out of COP29 negotiation room in row over funding

Published

5 hours ago

November 23, 2024

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Climate-vulnerable islands storm out of COP29 negotiation room in row over funding

Representatives of dozens of climate vulnerable islands and African nations have stormed out of high-stakes negotiations over a climate funding goal.

Patience is wearing thin and negotiations have boiled over at the COP29 climate talks in Azerbaijan, which were due to finish yesterday but are now well into overtime.

After two weeks of talks, the more than 190 countries gathered in the capital Baku are still trying to agree a new financial settlement to channel money to poorer countries to both curb and adapt to climate change.

Talks have now run well into overtime at COP29, but a deal now feels much more precarious.

The least developed countries like Mozambique and low-lying island nations like Samoa say their calls for a portion of the fund to be allocated to them have been ignored.

Samoa’s minister of natural resources and environment Toeolesulusulu Cedric Schuster is one of the representatives who walked out.

“We are here to negotiate but we have walked out… at the moment we don’t feel we are being heard in there,” he said on behalf of more than 40 small island and developing states, whose shorelines are being lost to rising sea levels.

Shortly after he made a veiled threat of leaving COP29 altogether, saying: “We want nothing more than to continue to engage, but the process must be INCLUSIVE.

“If this cannot be the case, it becomes very difficult for us to continue our involvement here at COP29.”

Evans Njewa, who chairs a group of more than 40 least developed countries, said the current deal is “unacceptable for us. We need to speak to other developing countries and decide what to do.”

The last official draft on Friday pledged $250bn a year annually by 2035.

This is more than double the previous goal of $100bn set 15 years ago, but nowhere near the annual $1.3trn that experts say is needed.

Sky News understands some developed countries like the UK were this morning willing to bump up the goal to $300bn.

Developing countries are angry not just about the finance negotiations, but also on how to make progress on a pledge from last year to “transition away from fossil fuels”.

A group of oil and producing countries, spearheaded by Saudi Arabia, have tried to dilute that language, while the UK and island state are among those that have fought to keep it in.

Mr Schuster said all things being negotiated contain a “deplorable lack of substance”.

He added: “We need to see progress and follow up on the transition away from fossil fuels that we agreed last year. We have been asked to forget all about that at this COP, as though we are not in a critical decade and as though the 1.5C limit is not in peril.”

“We need to be shown the regard which our dire circumstances necessitate.”

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World

At least 11 killed in Israeli strikes on central Beirut, Lebanese authorities say

Published

6 hours ago

November 23, 2024

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At least 11 killed in Israeli strikes on central Beirut, Lebanese authorities say

At least 11 people have been killed and 63 injured in an Israeli strike on central Beirut, Lebanese authorities have said.

Lebanon‘s health ministry said the death toll could rise as emergency workers dug through the rubble looking for survivors. DNA tests are being used to identify the victims, the ministry added.

State-run National News Agency (NNA) said the attack “completely destroyed” an eight-storey residential building in the Basta neighbourhood early on Saturday.

Footage broadcast by Lebanon’s Al Jadeed station also showed at least one destroyed building and several others badly damaged around it.

The Israeli military did not warn residents to evacuate before the attack – the fourth targeting the centre this week.

At least four bombs were dropped in the attack, security sources told Reuters news agency.

The blasts happened at about 4am (2am UK time).

A seperate drone strike in the southern port cuty of Tyre this morning killed one person and injured another, according to the NNA.

The blasts came after a day of bombardment of Beirut’s southern suburbs and Tyre. The Israeli military had issued evacuation notices prior to those strikes.

Israel has killed several Hezbollah leaders in air strikes on the capital’s southern suburbs.

Heavy fighting between Israel and Hezbollah is ongoing in southern Lebanon, as Israeli forces push deeper into the country since launching a major offensive in September.

US envoy Amos Hochstein was in the region this week to try to end more than 13 months of fighting between Israel and Hezbollah, ignited last October by the war in Gaza.

Mr Hochstein indicated progress had been made after meetings in Beirut on Tuesday and Wednesday, before going to meet Israeli Prime Minister Benjamin Netanyahu and defence minister Israel Katz.

According to the Lebanese health ministry, Israel has killed more than 3,500 people in Lebanon and wounded more than 15,000.

It has displaced about 1.2 million people – a quarter of Lebanon’s population – while Israel says about 90 soldiers and nearly 50 civilians have been killed in northern Israel.

World

Vladimir Putin vows to increase production of Russia’s ‘unstoppable’ missile – as NATO and Ukraine to hold talks

Published

6 hours ago

November 23, 2024

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Vladimir Putin vows to increase production of Russia's 'unstoppable' missile - as NATO and Ukraine to hold talks

President Vladimir Putin has said Russia will ramp up the production of a new, hypersonic ballistic missile.

In a nationally-televised speech, Mr Putin said the intermediate-range Oreshnik missile was used in an attack on Ukrainian city Dnipro in retaliation for Ukraine’s use of US and British missiles capable of striking deeper into Russian territory.

Referring to the Oreshnik, the Russian president said: “No one in the world has such weapons.

“Sooner or later other leading countries will also get them. We are aware that they are under development.”

Russia war latest: Long-awaited US air defences arrive in Ukraine

He added: “We have this system now. And this is important.”

Detailing the missile’s alleged capabilities, Mr Putin claimed it is so powerful that using several fitted with conventional warheads in one attack could be as devastating as a strike with nuclear weapons.

General Sergei Karakayev, head of Russia’s strategic missile forces, said the Oreshnik could reach targets across Europe and be fitted with either nuclear or conventional warheads – while Mr Putin alleged Western air defence systems will not be able to stop the missiles.

Mr Putin said of the Oreshnik: “There is no countermeasure to such a missile, no means of intercepting it, in the world today. And I will emphasise once again that we will continue testing this newest system. It is necessary to establish serial production.”

Testing the Oreshnik will happen “in combat, depending on the situation and the character of security threats created for Russia“, the president added, stating there is “a stockpile of such systems ready for use”.

NATO and Ukraine are expected to hold emergency talks on Tuesday.

Meanwhile Ukraine’s parliament cancelled a session as security was tightened following the strike on Dnipro, a central city with a population of around one million. No fatalities were reported.

EU leaders condemn Russia’s ‘heinous attacks’

Numerous EU leaders have addressed Russia’s escalation of the conflict with Poland’s Prime Minister Donald Tusk saying the war is “entering a decisive phase [and] taking on very dramatic dimensions”.

Speaking in Kyiv, Czech foreign minister Jan Lipavsky called Moscow’s strike an “escalatory step and an attempt of the Russian dictator to scare the population of Ukraine and to scare the population of Europe”.

At a news conference, Mr Lipavsky gave his full support for delivering the additional air defence systems needed to protect Ukrainian civilians from the “heinous attacks”.