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.
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”.
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.
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.
Zack Polanski and Nigel Farage might be polar opposites when it comes to politics – but they do have one thing in common.
The pair are both cutting through in a changing media landscape when attention is scarce and trust in mainstream politics is scarcer still.
For Farage, the Reform UK leader, momentum has been building since he won a seat at the general election last year and he continues to top the polls.
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Badenoch doesn’t want to talk about Farage
But in the six weeks since Polanski became leader of the Greens, membership has doubled, they’ve polled higher than ever before while three Labour councillors have defected. Has the insurgent firebrand finally met his match?
“I’m sure I don’t need to say this, but I despise Nigel Farage’s politics and disagree with him on almost everything,” Polanski tells Sky News.
“But I think his storytelling has undoubtedly cut through and so yes there has been a huge part of us saying ‘If Farage can do that with a politics of hate and division, then it’s time for the Green Party to do that with a politics of hope and community’ and that’s absolutely what I intend to keep doing.”
Polanski was speaking after a news conference to announce the defections of the councillors in Swindon – a bellwether area that is currently led by a Labour council and has two Labour MPs, but was previously controlled by the Tories.
It is the sort of story the party would previously have announced in a press release, but the self-described “eco populist” is determined to do things differently to grab attention.
He has done media interviews daily over the past few weeks, launched his own podcast and turbocharged the Greens social media content – producing slick viral videos such as his visit to Handsworth (the Birmingham neighbourhood where Robert Jenrick claimed he saw no white people).
Image: Zack Polanski announces the defection of Labour councillors
Polanski insists that it is not increased exposure in and of itself that is attracting people to his party but his messaging – he wants to “make hope normal again”.
“I’m not going to be in a wetsuit or be parachuting from a helicopter”, he says in a swipe at Lib Dem leader Ed Davey.
“I think you only need to do stunts if you don’t have something really clear to say and then you need to grab attention.
“I think when you look at the challenges facing this country right now if you talk about taxing wealth and not work, if you talk about the mass inequality in our society and you talk about your solidarity with people living in poverty, with working-class communities, I think these are the things that people both want to hear, but also they want to know our solutions. The good news is I’ve got loads of solutions and the party has loads of solutions. “
Some of those solutions have come under criticism – Reform UK have attacked his policy to legalise drugs and abolish private landlords.
Image: Discontent is fuelling the rise of challenger parties. Pic: PA
Polanski is confident he can win the fight. He says it helps that he talks “quite quickly because it means that I’m able to be bold but also have nuance”. And he is a London Assembly member not an MP, so he has time to be the party’s cheerleader rather than being bogged down with case work.
As for what’s next, the 42-year-old has alluded to conversations with Labour MPs about defections. He has not revealed who they are but today gave an idea of who he would welcome – naming Starmer critic Richard Burgon.
Like Burgon, Polanski believes Starmer “will be gone by May” and that the local elections for Labour “will be disastrous”.
He wants to replace Labour “right across England and Wales” when voters go to the polls, something Reform UK has also vowed to do.
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2:26
Is Zack Polanski squeezing the Labour vote?
Could the Greens be kingmakers?
Luke Tryl, director of More in Common, says this reflects a “new axis of competition” as frontline British politics shifts from a battle of left vs right to a battle of process vs anti-establishment.
Farage has been the beneficiary of this battle so far but Tryl says Polanski is “coming up in focus groups” in a way his predecessors didn’t. “He is cutting through”, the pollster says.
However, one big challenge Polanski faces is whether his rise will cause the left vote to fragment and make it easier for Farage to win – something he has said he wants to avoid at all costs.
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And yet, asked if he would form a coalition with Labour to keep Farage out of power in the event of a hung parliament, he suggested he would only do so if Sir Keir Starmer is no longer prime minister.
“I have issues with Keir Starmer as prime minister,” he says. “I think he had the trust of the public, but I would say that’s been broken over and over again. If we had a different Labour prime minister that would be a different conversation about where their values are.”
He adds: “I do think stopping Nigel Farage has to be a huge mission for any progressive in this country, but the biggest way we can stop Nigel Farage is by people joining the Green Party right now; creating a real alternative to this Labour government, where we say we don’t have to compromise on our values.
“If people wanted to vote for Nigel Farage, they’d vote for Nigel Farage. What does Keir Starmer think he’s doing by offering politics that are similar but watered down? That’s not going to appeal to anyone, and I think that’s why they’re sinking in the polls.”
A former paratrooper accused of murdering two civilians in the Bloody Sunday shootings in Northern Ireland 53 years ago has been found not guilty.
Soldier F – who cannot be identified for legal reasons – was accused of killing James Wray and William McKinney during disorder after a civil rights parade on 30 January 1972 in Londonderry, also known as Derry.
The veteran was also found not guilty of five attempted murders at Belfast Crown Court on Thursday.
He had denied all seven charges.
Thirteen people were shot dead by the Parachute Regiment on the day in question.
Soldier F did not give evidence, but the court heard about previous statements from two paratroopers – known as G and H – who were in Glenfada Park North along with F.
The prosecution said their testimony was direct evidence that the defendant had opened fire in the area.
Image: Bloody Sunday Trust undated handout photos of (top row, left to right) Patrick Doherty, Bernard McGuigan, John “Jackie” Duddy and Gerald Donaghey, (bottom row, left to right) Gerard McKinney, Jim Wray, William McKinney and John
However, the defence argued that they were unreliable witnesses as their statements were inconsistent with each other and with other witnesses who gave evidence.
The trial was held in Belfast in front of a judge, not a jury.
Delivering his judgment, Judge Patrick Lynch said the evidence presented against the veteran fell well short of what was needed for conviction.
This breaking news story is being updated and more details will be published shortly.