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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.

Politics live: COVID campaigners call for Matt Hancock to be kicked off reality TV show

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.”

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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.

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Inside a secret, underground military base in eastern Ukraine

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Inside a secret, underground military base in eastern Ukraine

A hidden, underground military base in eastern Ukraine is so secret, soldiers change into civilian clothes whenever they step outside to avoid drawing attention.

Journalists are not usually allowed access.

But the unit that has been using this vast, subterranean warren of war rooms, a dormitory, kitchen, canteen and makeshift gym as its headquarters since the summer is imminently relocating, so Sky News was invited inside.

Lieutenant Colonel Arsen Dimitric – call sign Lemko – is the chief of staff of 1st Corps Azov of the National Guard of Ukraine, one of the country’s most effective combat forces.

Lemko
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Lemko

He sat with us in the base, next to a large square table, covered by a map of the Donbas region.

His soldiers have been fighting in this area since the summer, countering a surge in Russian attacks in and around the frontline city of Pokrovsk.

“We aim to destroy as much of the enemy as possible,” he said.

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“Will we take losses? Yes. Will it hurt? Absolutely.”

But he said if Russia is allowed to advance, even more Ukrainians will suffer.

“Their [the Russians’] only advantage is numbers,” he said.

“They don’t care how many people they lose.”

Lemko said almost 17,000 Russian soldiers had been killed or wounded fighting in this section of the warzone alone between August to November.

Read more:
Russia hits Ukraine with massive missile and drone attack

Ukrainian video footage of the battlefield showed Russian armoured vehicles being taken out by drones and artillery fire.

At one point, Russian soldiers mounted on motorbikes try to advance, only to be stopped by Ukrainian fire.

“Our task is to hit them as hard as possible in various areas,” Lemko said. “We focus on our operations, others on theirs, and leadership will negotiate the best possible terms.”

The Azov Corps soldiers are fighting over land that should be handed over to Russia, according to an initial draft of a peace deal proposal between Kyiv and Moscow put forward by the United States. This is despite swathes of the Donbas remaining under Ukrainian control.

But General Oleksandr Syrskyi, the head of the Ukrainian armed forces, has since told Sky News that simply surrendering territory would be “unacceptable”.

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Giving up territory ‘unacceptable’, Ukraine’s military chief says

For Lemko, he says the job of his troops is to inflict as much damage as possible on the Russian side to help strengthen Ukraine’s hand in negotiations.

“Simply giving it [land] away isn’t the way,” he said.

“Diplomats do their work, we do ours. Our job as soldiers is to give as many advantages as possible to our negotiating team. And we’re doing exactly that.”

Lemko, who has been battling against Russia since the Crimean annexation in 2014, also had a warning for the rest of Europe about a rise in hybrid attacks, such as mysterious drone sightings, acts of sabotage and cyber hacks suspected of being linked to Moscow.

He said Ukraine’s experience showed that if attacks by Russia that fall under the threshold of conventional war are not successfully countered, full-scale conflict could follow.

“Ukraine once lost a hybrid war that had been waged since the very start of our independence,” he said.

“Because of that defeat, there was a physical operation against us in Crimea and then a physical operation in 2022.

“Now the hybrid war has reached its climax, and it is moving into the Baltic States and Europe.

“That is why, in my opinion – and in the opinion of most of our officers – now is the moment for all countries to unite and counter this hybrid war. Because the consequence may be a physical one.”

Production: Katy Scholes, security and defence producer, and Azad Safarov, Ukraine producer.

Camera operator: Mostyn Pryce

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At least 25 people dead after major fire at nightclub in Goa, India

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At least 25 people dead after major fire at nightclub in Goa, India

At least 25 people have been killed after a fire at a nightclub in Goa, the state’s police service has said.

The fire reportedly started around midnight on Saturday local time.

The majority of victims were kitchen staff at the club – although around three to four tourists are thought to be among those killed.

Videos on social media showed emergency services lining up to help the injured – some of whom were taken to nearby hospitals.

Dr Pramod Sawant, Goa’s chief minister, said: “I am deeply grieved and offer my heartfelt condolences to all the bereaved families in this hour of unimaginable loss.”

He later said he was “closely reviewing the situation arising from the tragic fire” – adding six additional people had been injured.

“All six injured persons are in a stable condition and are receiving the best medical care,” he said.

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Pic: NDTV
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Pic: NDTV

Fire at nightclub in Goa. Pic: NDTV
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Fire at nightclub in Goa. Pic: NDTV

Authorities worked through the night to bring the situation under control and all bodies have been recovered, the state’s police chief told reporters, according to Reuters news agency.

India’s Prime Minister Narendra Modi said the deadly fire was “deeply saddening”.

He said he had spoken with Goa’s chief minister and that “the state government is providing all possible assistance to those affected”.

Dr Sawant said he has “ordered an inquiry” to discover what happened after visiting the site.

Pic: AP
Image:
Pic: AP

“The inquiry will examine the exact cause of the fire and whether fire safety norms and building rules were followed,” he said.

“Those found responsible will face most stringent action under the law – any negligence will be dealt with firmly.”

Goa, a small state on India’s western coast, is a popular tourist destination, attracting millions of tourists every year.

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Russia hits Ukraine with massive missile and drone attack amid peace talks

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Russia hits Ukraine with massive missile and drone attack amid peace talks

Russia launched a massive missile and drone attack on Ukraine overnight, after US and Ukrainian officials said they would meet for a third day of talks aimed at bringing the war to an end.

The two sides said they had made progress on a security framework for post-war Ukraine, but that any “real progress toward any agreement” will depend “on Russia’s readiness to show serious commitment to long-term peace.”

Russia launched 653 drones and 51 missiles in its attack on Ukraine, triggering air raid alerts across the country, Ukraine’s air force said.

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Giving up territory ‘unacceptable’ – Ukraine’s military chief

Ukrainian forces shot down and neutralised 585 drones and 30 missiles, the air force said, adding that 29 locations were struck.

At least eight people were wounded in the attacks, Ukraine’s minister of internal affairs Ihor Klymenko said.

Russia conducted a “massive missile-drone attack” on power stations and other energy infrastructure in several regions, Ukraine’s national energy operator Ukrenergo said on Instagram.

Ukraine’s Zaporizhzhia nuclear power plant temporarily lost all off-site power overnight, the International Atomic Energy Agency said.

The plant is in an area that has been under Russian control since early in Moscow’s invasion of Ukraine. It is not in service, but needs reliable power to cool its six shutdown reactors and spent fuel in order to avoid any catastrophic nuclear incidents.

Read more from Sky News:
Young Germans fear return to conscription
Giving up territory would be ‘unjust’, says Kyiv armed forces chief

Russia struke a train station in the city of Fastiv. Pics: Reuters
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Russia struke a train station in the city of Fastiv. Pics: Reuters

Zelenskyy condemns ‘meaningless’ strikes

Ukrainian President Volodymyr Zelenskyy condemned the strikes as “meaningless” from a military point of view.

He said energy facilities were the main targets, but a drone strike had “burned down” a train station in the city of Fastiv, in the Kyiv region.

“The Russians’ goal is to hurt millions of Ukrainians, and they have sunk so low that they are launching missiles at peaceful cities on St. Nicholas Day,” he said.

“That is why additional pressure is needed. Sanctions must work, and so must our air defence, which means we must continue to support those who defend our lives.”

Ukraine strikes oil refinery

Meanwhile, Russia’s defence ministry said its air defences had shot down 116 Ukrainian drones over Russian territory overnight.

The General Staff of the Ukrainian Armed Forces said Ukrainian forces had struck Russia’s Ryazan Oil Refinery, while Russian Telegram news channel Astra shared footage appearing to show a fire breaking out and plumes of smoke rising above the refinery.

Over the last few months, Ukraine has used long-range drones to target Russian refineries in an attempt to deprive Moscow of the oil export revenue it needs to continue the war.

Meanwhile, Kyiv and its Western allies say Russia is trying to cripple Ukraine’s power grid and deny civilians access to heat, light and running water in winter, which Ukrainian officials call “weaponising” the cold.

On Monday, Mr Zelenskyy will meet Sir Keir Starmer in London to discuss the ongoing negotiations mediated by the US, along with French President Emmanuel Macron and German Chancellor Friedrich Merz.

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