Rishi Sunak and Jeremy Hunt eyeing ‘rough’ tax rises across the board to help plug fiscal ‘black hole’
The autumn statement this month will likely encompass “rough” tax rises as the Treasury seeks to fill a multi-billion “black hole” in the nation’s finances, Sky News has been told.
The warning from a source in the Treasury comes after Chancellor Jeremy Hunt and Prime Minister Rishi Sunak met yesterday morning.
They discussed what is being characterised as an eye-watering black hole, and agreed that tough decisions will be needed on tax rises as well as spending.
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The tax rises are likely to be across the board, although the pair agreed those with the “broadest shoulders” should bear the greatest burden, it is understood.
The source said: “It is going to be rough. The truth is that everybody will need to contribute more in tax if we are to maintain public services.
“After borrowing hundreds of billions of pounds through COVID-19 and implementing massive energy bills support, we won’t be able to fill the fiscal black hole through spending cuts alone.”
The source did not put a figure on the “black hole”, but the Resolution Foundation thinktank have estimated at least £40bn will need to be found as part of the fall-out from Liz Truss’s disastrous mini-budget and warned tax rises are “likely” to come soon.
Mr Hunt will set out his plans in the Autumn Statement on 17 November and is reportedly considering splitting the burden equally between tax rises and spending cuts.
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Ed Conway looks at PM Rishi Sunak’s warning that the country faces a ‘profound’ economic crisis.
Few concrete details have emerged but, according to The Times, public sector workers could face deep real-terms cuts to wages, with The Treasury reportedly looking at an increase of 2% across the board for 2023-24, at a time when inflation is expected to be well above that threshold.
A Treasury source told the PA news agency that “no decisions have been taken” and the “independent pay review body process takes place next year”.
With BP unveiling profits that doubled to more than £7.1bn in the three months to September, pressure is continuing to mount for an enhanced windfall tax on oil and gas giants to help fill the Treasury coffers.
COP26 president Alok Sharma, who was demoted from the cabinet by Mr Sunak, has backed this move, saying: “We need to raise more money from a windfall tax on oil and gas companies and actively encourage them to invest in renewables.”
Rishi Sunak told his Cabinet on Tuesday that the NHS would be “prioritised” as difficult decisions are taken on spending, No 10 said.
A recession next year could be predicted by the government’s independent forecaster the Office for Budget Responsibility, the Resolution Foundation said, and GDP forecasts could be cut by up to 4% by the end of 2024.
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Among the “menu” of options open to the chancellor are cuts to investment spending, a move the Resolution Foundation said could save £10bn but would also have a detrimental impact on growth.
The thinktank also suggests the government could try to choose the so-called “austerity option” – but this would require cuts to already-squeezed department budgets.
Meanwhile, £9bn could be saved by choosing not to raise benefits and pensions in line with rising prices next year, but any such move would have a “huge” impact on those already struggling to make ends meet.
Another option would be to re-instate the health and social care levy to raise £15bn by 2026-2027, while around £2bn could be raised by extending the “stealth” freezes in income tax threshold by a further year to 2026-2027.
New pictures show the moment of impact as an Israeli missile hit a Beirut apartment block and exploded.
The block was one of five buildings destroyed by airstrikes on Friday alone.
Israel launched airstrikes in the southern suburbs of Beirut in a fourth consecutive day of intense attacks.
There were no immediate reports of casualties.
An Associated Press photographer captured a sequence of images showing an Israeli bomb approaching and hitting a multi-storey apartment building in Beirut’s Tayouneh area.
Richard Weir, a senior crisis, conflict and arms researcher at Human Rights Watch, reviewed the close-up photos to determine what type of weapon was used.
“The bomb and components visible in the photographs, including the strake, wire harness cover, and tail fin section, are consistent with a Mk-84 series 2,000-pound class general purpose bomb equipped with Boeing’s joint directed attack munition tail kit,” he told AP.
Pics: AP
Smoke covers a building that collapses following the strike. Pic: AP
Deadly strikes as bombardment stepped up
Israel stepped up its bombardment this week – an escalation that has coincided with signs of movement in US-led diplomacy towards a ceasefire.
The Israeli military said its fighter jets attacked munitions warehouses, a headquarters and other Hezbollah infrastructure. It issued a warning on social media identifying buildings ahead of the strikes.
Meanwhile, an Israeli airstrike killed five members of the same family in a home in Ain Qana in the southern province of Nabatiyeh, Lebanon’s state media said.
The report said a mother, father and their three children were killed but didn’t provide their ages.
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Three other Israeli strikes killed six people and wounded 32 in different parts of Tyre province on Friday, also in south Lebanon, the report said.
Video footage also showed a building being struck and turning into a cloud of rubble and debris that billowed into Horsh Beirut, the city’s main park.
Residents check the site of the airstrike in Tayouneh, Beirut. Pic: AP
More than 3,200 people have been killed in Lebanon during 13 months of fighting between Israel and Hezbollah – most of them since mid-September.
About 27% of those killed were women and children, according to Lebanon’s health ministry.
Israel dramatically escalated its bombardment of Lebanon from September, vowing to cripple Hezbollah and end its barrages in Israel.
Friday’s strikes come as Lebanon’s caretaker prime minister has asked Iran to help secure a ceasefire in the war between Israel and Hezbollah.
The prime minister appeared to urge Ali Larijani, a top adviser to Iran’s supreme leader, Ali Khamenei, to convince the militant group to agree to a deal that could require it to pull back from the Israel-Lebanon border.
Iran is a main backer of Hezbollah and for decades has been funding and arming the Lebanese militant group.
On Thursday, Eli Cohen, Israel’s energy minister and a member of its security cabinet, said that prospects for a ceasefire with Lebanon were the most promising since the conflict began.
The Washington Post reported Israel’s Prime Minister Benjamin Netanyahu was rushing to advance a Lebanon ceasefire to deliver an early foreign policy win to his ally, US President-elect Donald Trump.
“Super high-IQ revolutionaries” who are willing to work 80+ hours a week are being urged to join Elon Musk’s new cost-cutting department in Donald Trump’s incoming US government.
The X and Tesla owner will co-lead the Department Of Government Efficiency (DOGE) with former Republican presidential candidate Vivek Ramaswamy.
And in a post on X, the official DOGE account put out a call to arms for people to sign up and help “dismantle government bureaucracy”.
The post said: “We are very grateful to the thousands of Americans who have expressed interest in helping us at DOGE.
“We don’t need more part-time idea generators.
“We need super high-IQ small-government revolutionaries willing to work 80+ hours per week on unglamorous cost-cutting.
“If that’s you, DM this account with your CV. Elon & Vivek will review the top 1% of applicants.”
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Elon Musk speaking at an event held at Donald Trump’s Mar-a-Lago estate. Pic: AP Photo/Alex Brandon
In a reply to an interested party, Mr Musk suggested the lucky applicants would be working for free.
“Indeed, this will be tedious work, make lost of enemies & compensation is zero,” the world’s richest man wrote.
“What a great deal!”
When announcing the new department, President-elect Donald Trump said Mr Musk and Mr Ramaswamy “will pave the way for my administration to dismantle government bureaucracy, slash excess regulations, cut wasteful expenditures, and restructure federal agencies”.
Mr Musk has previously made clear his desire to see cuts to “government waste” and in a post on his X platform suggested he could axe as many as three-quarters of the more than 400 federal departments in the US, writing: “99 is enough.”
At least 10 people have been killed after a fire broke out at a retirement home in northern Spain in the early hours of this morning, officials have said.
A further two people were seriously injured in the blaze at the residence in the town of Villafranca de Ebro in Zaragoza, according to the Spanish news website Diario Sur.
Two people remain in a critical condition following the blaze. Pic: AP
They remain in a critical condition, while several others received treatment for smoke inhalation.
Firefighters were alerted to the blaze at the residence – the Jardines de Villafranca – at 5am (4am UK time) on Friday.
Several residents were treated for smoke inhalation. Pic: AP
Those who were killed in the fire died from smoke inhalation, Spanish newspaper Heraldo reported.
The residence is home to 82 elderly residents.
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The blaze started in one of the rooms, Fernando Beltran, the national government’s top official in the region, told reporters.
All of the victims were elderly residents, he added.
Relatives wait for news outside the care home. Pic: AP
Fire crews, paramedics and police officers remain on site, said a spokesperson for the regional government of Aragon who confirmed the fatalities.
It took firefighters several hours to extinguish the blaze, they said.
The cause of the fire is unknown and is being investigated.
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