
Autumn statement: How can Chancellor Jeremy Hunt reduce ‘financial black hole’?
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2 years agoon
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adminJeremy Hunt will unveil his autumn statement on Thursday, where he will attempt to find up to £60bn from a combination of tax hikes and spending cuts to rebalance the books.
Both the chancellor and Prime Minister Rishi Sunak have warned that “difficult decisions” will need to be made in order to restore the UK’s economic credibility.
But speculation continues about what exact measures will form the autumn statement.
A report from the Resolution Foundation economic think tank has suggested Mr Sunak and Mr Hunt face a thankless task to rebalance the nation’s finances, with at least £40bn needing to be found by the government.
Treasury sources have told Sky News the financial “black hole” could be as large as £60bn – which may require up to £35bn of spending cuts and an extra £25bn raised through taxation.
So what measures could the chancellor take?
Minimum wage
The UK has a legal minimum wage which all firms should pay and all workers should receive which goes up every April.
With the cost of living soaring, there have been calls for the government to increase the minimum wage – officially known as the National Living Wage – by more than was planned in the autumn statement.
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At present, the National Living Wage for over-23s is £9.50 an hour, for those aged 21-22 it is £9.18, for those aged 18-20 it is £6.83 and for those under-18 or apprentices it is £4.81.
The rates are the same across all parts of the UK.
Sky News understands that Mr Hunt will announce a rise in the National Living Wage for over-23s from £9.50 an hour to about £10.40 an hour.
The rise of nearly 10% would benefit around 2.5 million people, the original report in The Times said.
The newspaper also reports that eight million households will receive cost of living payments worth up to £1,100 a year.
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45:32
Who should bear brunt of budget?
Council tax
The Daily Telegraph has reported the government is also considering removing the requirement for local authorities to hold a referendum before increasing council tax by more than 2.99%, allowing them to raise significantly more money.
The new threshold could be 5%, according to the newspaper, which would see households in Band D paying up to £100 extra.
It could also mean that average council tax bills exceed £2,000 a year for the first time.
Under present rules, councils responsible for social care are allowed to increase their bills by 2.99%, including a 1% levy for social care.
If a local authority wants to raise bills any further, it must hold a local referendum.
But under new plans expected to be unveiled in the autumn statement, the maximum amount councils can increase bills without holding a referendum is expected to rise to 4.99% to help pay for social care.
Most councils are expected to take advantage of the freedom to charge residents more.
The Conservative Party manifesto in 2019 pledged to keep a veto on large council tax rises, insisting local people would “continue to have the final say”.
But a Treasury source told the Telegraph that councils need “more flexibility” to raise money.
The Telegraph has also suggested that the chancellor is considering plans to reduce the amount of funding received by councils for some of the services for refugees hosted by UK families.
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1:00
Cleverly: PM has ‘humility’
Freezing tax thresholds
In the 2021 spring budget, Mr Sunak, who was chancellor at the time, froze personal tax thresholds, which meant more low-income households had to pay the basic rate of income tax while those with earnings nearing £50,000 were made to pay the higher 40% rate.
The freezes were at the time forecast to last five years and raise billions for the Treasury by 2026, but it is thought this could be extended to 2028.
The Conservative Party’s winning 2019 manifesto promised to keep taxes low, so prolonging the freeze in the threshold at which workers start paying taxes is politically delicate ground for Mr Sunak’s government
However, it would send a signal the UK is committed to balancing its books over the long term.
Speaking on Sky’s Sophy Ridge on Sunday programme last weekend ahead of the statement, Mr Hunt said: “We’re all going to be paying a bit more tax, I’m afraid.”
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10:30
‘We don’t need another round of cuts’
Lowering 45p threshold
One of the surprise moments in Ms Truss’s mini-budget was the decision to scrap the 45p tax rate for the highest earners.
The backlash was fierce amid a cost of living crisis that is hammering the least well off, and ditching the plan became the first U-turn of her short premiership.
Now there are rumours that rather than getting rid of the top rate, more people will end up paying it.
Reports have suggested Mr Hunt would lower the threshold for paying the 45p rate to £125,000 – down from the existing £150,000.
Analysis says this would bring an extra 246,000 people into the bracket at a cost to them of around £580 each a year, which in turn would raise the Treasury £1.3bn a year.
Mr Hunt told Sophy Ridge on Sunday that everyone will be asked to make “sacrifices” in his upcoming statement, but insisted those with the deepest pockets will bear the brunt of it – perhaps this policy idea is what he was referring to.
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2:55
Chancellor Jeremy Hunt says everyone will be paying higher taxes, but there is ‘only so much we can ask’ from people on the lowest incomes.
Income tax
As chancellor, Mr Sunak also promised to cut the basic rate of income tax to 19% in April 2024 and then to gradually reduce it to 16% by 2029.
While Ms Truss’s government had said it would cut 1p of the basic rate of income tax from April 2023 – given the great need to cut the country’s debt, it is unclear whether or not this will be a pledge that is kept.
The Telegraph newspaper has suggested Mr Hunt is planning on reverting to Mr Sunak’s initial policy and planning a delay in the cut to the basic rate of income tax until 2024.
The cut could be completely off the table, however the Conservative Party’s commitment to keeping taxes low where possible suggests this is a less likely outcome.
The paper has also reported that ministers have discussed slashing the rate of income tax relief that is applied to higher rate taxpayers from 40p to 20p – which would mean millions of higher rate taxpayers could face paying more income tax.
Officials are also said to have discussed raising the top rate of income tax – which was 50p until it was abolished by former chancellor George Osborne in 2013.
But this is believed to be a less likely path for Mr Sunak and Mr Hunt to choose to go down.
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0:30
Patient confronts PM on pay for nurses
Public sector pay
It has been reported Mr Sunak and Mr Hunt are looking at pay rises of 2% across the board in the public sector for 2023/24 as the government attempts to fill the £40bn gap in the public finances.
An original report in The Times suggested the measure was spoken about in meetings this month between the prime minister and chancellor.
Such a pay rise would represent a real-term cut for those including nurses, teachers and police officers – as inflation is forecast to remain at up to 9% for much of next year.
The Resolution Foundation has warned the public sector would struggle to recruit and retain staff if this policy were to be adopted.
Earlier this month, a nursing union representing hundreds of thousands of nurses voted to hold the first nationwide strike in its 106-year history over pay levels and patient safety concerns.
The Royal College of Nursing (RCN) had called for its members to receive a pay rise of 5% above the RPI inflation rate, which currently stands at above 12%.
The Public and Commercial Services union (PCS) which represents more than 100,0000 civil servants has also recently voted to strike in a dispute over pay, pensions and jobs.
Meanwhile, the cap on bankers’ bonuses – which has limited payouts to two times executives’ salaries since 2014 – is expected to be lifted.
If so, this would be one of the few measures to survive Mr Kwarteng’s disastrous mini-budget.
However, the PM on Wednesday urged bosses to keep down their pay in order not to exacerbate inflation.
“Of course I would say to all executives to embrace pay restraint at a time like this and make sure they are also looking after all their workers,” Mr Sunak told ITV News.
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2:58
‘I have to choose which bills I pay’
Not raising benefits in line with inflation
Benefits are usually uprated along with inflation every April, but there have been reports ministers could switch to raising them in line with average earnings instead while inflation remains so high.
The Institute for Fiscal Studies has said if benefits were to increase by inflation, this would likely be a 10% rise – equating to a real-value increase of almost £500 on average per year for an out-of-work benefits claimant.
However, around £7bn would be saved if the government were to increase benefits in line with earnings instead.
The Resolution Foundation has said this move would save £5.6bn if applied to the state pension and pension credit and an additional £2.4bn if applied to working-age benefits such as Universal Credit.
It is predicted about nine million UK households would face a loss in income if benefits were to be increased in line with earnings rather than inflation.
The Resolution Foundation has estimated a single disabled adult on Universal Credit would lose £380, while a working single parent with one child would lose £478, and a working couple with three children would lose £978.
Number 10 have repeatedly refused to say whether or not they will raise benefits in line with inflation.
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1:40
Pressure on Sunak to protect pensions
Pensions triple lock
The triple lock is a government policy designed to ensure people’s pensions are not impacted by gradual rises in the cost of living over time.
In practice, it means the state pension must rise in April by whichever of the following three things is highest: average earnings, inflation in the previous September or 2.5%.
It is a long-term manifesto commitment of the Conservative Party, but questions had been raised about its future amid soaring inflation, with this hitting 10.1% in the benchmark month of September.
However, it is understood the chancellor will keep the triple lock and honour the Tory manifesto commitment when he delivers his autumn statement.
Sticking to the policy will mean the state pension rising from £185.15 to £203.85 a week from April.
Last month, during an interview with Sky News political editor Beth Rigby, the newly-appointed chancellor Mr Hunt said he could not make a commitment to keeping it in place, saying everything was on the table when it came to possible cuts to cover the fiscal black hole in Whitehall.
Getting rid of the triple lock would save the Treasury billions, with the Resolution Foundation estimating that linking state pension increases to the lower rate of average earnings, around 5.5%, rather than inflation, would save £5.6bn next year.
But charities have warned the impact on poorer pensioners, who are facing soaring food and energy bills amid the cost of living crisis, would be huge.
En route to the G20 summit in Bali earlier this week, Mr Sunak gave his strongest hint yet that the government will protect the triple lock on pensions, saying the elderly “will always be at the forefront of my mind”.
Speaking to reporters, the PM said he had demonstrated in the past he understood the particular pressures faced by pensioners unable to increase their incomes by any other means in order to cope with the cost of living.
“My track record as chancellor shows I care very much about those pensioners, particularly when it comes to things like energy and heating because they are especially vulnerable to cold weather,” he said.
“I am someone who understands the particular challenge of pensioners.”
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1:32
‘Delay best way to make right decisions’
Keeping National Insurance increase
When he was chancellor, Mr Sunak brought in a 1.25 percentage point increase in National Insurance payments in what was referred to as a “social care levy” – taking the rate up to 13.25%
The 1.25 percentage point increase in NI was supposed to raise £12bn a year.
The money was due to go to the NHS to help clear the COVID backlog before the rest was set to be used to improve the social care sector.
Ms Truss announced the increase would be reversed on 6 November as more people began to struggle with bills during the cost of living crisis, putting the rate back down to 12%.
But, in search of more savings, Mr Hunt could be tempted to reintroduce the policy or to alter it so that the cut only applies to those on the basic rate of income tax.
Last month, Downing Street suggested that the PM will not bring back a National Insurance hike in the near future.
“The former prime minister and the chancellor agreed that extra funding for the NHS to deal with the backlogs and tackling social care reform was something that was a priority,” the PM’s press secretary said.
“Obviously we’ve been through a lot since then,” she added.
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1:31
Treasury minister addresses defence spending
Cutting defence spending
Mr Sunak has repeatedly declined to commit to a promise from his predecessor Liz Truss to raise defence spending to 3% of GDP, compared to the NATO minimum of 2.5% as his government seeks to balance the books.
Speaking at the G20 summit in Bali, the PM downplayed concerns by some in the Tory party that ditching the target could be seen as a weakness by Russian President Vladimir Putin.
“We’ve got not just a current but a historic track record of being strong investors in defence and prioritising NATO. I think people can feel completely assured that we’re investing in our defences,” he said.
Mr Hunt has also refused to commit to lifting the amount of money spent on the armed forces to 3% of national income by 2030, saying the Ministry of Defence, like all other departments, would have to make additional savings.
“I’m going to ask all departments to find more efficiencies than they were planning to find,” Mr Hunt told Sky News.
Defence Secretary Ben Wallace has fought hard over the past three years to secure much-needed increases in defence spending at a time of growing security threats.
Asked whether any backtracking on defence spending goals would be a resigning issue, a defence source a few weeks ago said that Mr Wallace would hold the prime minister to the pledges made.
This includes a commitment to increase defence spending to 2.5% of gross domestic product (GDP) by 2026 from around 2% at present and then to 3% of GDP by 2030 in what would equate to around an extra £157billion over eight years.
But even Mr Wallace appeared to row back from that position last week, telling European defence ministers he was “taking it budget by budget at the moment” amid the need to fill a fiscal black hole in government finances.
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2:37
How can government fill ‘black hole’ in nation’s finances?
Prolonging temporary cut to foreign aid
Another idea being mooted is prolonging the cut to international development aid.
While chancellor, Mr Sunak reduced foreign aid spending to 0.5% of GDP saying it would return to the baseline 0.7% when the economic situation had improved following the coronavirus pandemic.
According to The Times, Mr Sunak and Mr Hunt could now argue it will not be possible to increase aid spending until 2027 or 2028 given the economic turmoil caused by Ms Truss and former chancellor Kwasi Kwarteng’s so-called mini-budget.
However, in his recent ministerial reshuffle, the prime minister appointed Conservative MP Andrew Mitchell as development minister, 10 years after his tenure as secretary of state for international development.
Mr Mitchell has been an ardent critic of reducing the foreign aid budget to 0.5% of GDP and his appointment could be a sign that Mr Sunak may be willing to compromise on this issue.
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2:01
Why do shell profits matter?
Windfall tax
Reports have suggested Mr Sunak is working on proposals to expand the windfall tax on energy companies.
The concept of a windfall tax is to target firms which are benefitting from something they are not responsible for – such as energy firms getting more money for their oil and gas compared to last year because of supply concerns following the Ukraine war and increased demand after COVID restrictions were lifted.
A number of briefings to newspapers have suggested the options could include increasing the levy, extending the deadline and expanding its remit to include renewable energy generators such as wind farms.
At present, the energy profits levy on oil and gas firms – also known as the windfall tax – is set at 25%. It is also due to expire in 2025.
With companies such as Shell recently reporting their second highest quarterly profit on record – £8bn – there is a suggestion the government should increase the levy above the 25% level.
The Financial Times has suggested the chancellor will use his autumn statement to lift the existing windfall tax on oil and gas companies from 25% to 35%, while extending it for another two years until 2028.
It is also thought the government is considering a “revenue cap” on electricity generators in line with a similar move by the European Union.
Another option being mooted is the creation of a 40% tax on the “excess returns” produced by the electricity sector above a certain price per megawatt hour.
Labour has said a windfall tax extension could raise an additional £50bn.
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3:36
How to save money on energy bills
Row back on promise to cut VAT on energy bills
Ms Truss’s government capped average annual household energy bills at £2,500 for two years in an attempt to relieve the burden for households across the UK.
Entering his new post, Mr Hunt scaled this back so that it will only continue until April 2023.
As part of his campaign to become Conservative Party leader the first time around in the summer, Mr Sunak promised he would scrap VAT on energy bills if he were to be victorious in the contest.
However, it is not known whether this pledge will be followed through with or not.
The Guardian newspaper has reported that the Treasury is considering raising the energy cap from its current level of £2,500 from next April – while The Sunday Times reported Treasury officials have discussed a scenario where average annual bills go up from £2,500 to between £2,850 and £3,100 – a rise of up to £600 on current bills.
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World
Russia wants ‘quick peace’ in Ukraine and London is ‘head of those resisting it’, ambassador to UK tells Sky News
Published
8 hours agoon
March 6, 2025By
admin
Russia wants “quick peace” in Ukraine and London is at the “head of those resisting” it, the Russian ambassador to the UK has told Sky News.
In an interview on The World With Yalda Hakim, Andrei Kelin accused the UK, France and other European nations of not wanting to end the war in Ukraine.
“We are prepared to negotiate and to talk,” he said. “We have our position. If we can strike a negotiated settlement… we need a very serious approach to that and a very serious agreement about all of that – and about security in Europe.”

Russian ambassador Andrei Kelin speaks to Yalda Hakim
US President Donald Trump held a surprise phone call with his Russian counterpart Vladimir Putin last month, shocking America’s European allies. He went on to call Ukrainian President Volodymyr Zelenskyy a “dictator” and relations between the pair were left in tatters after a meeting in the Oval Office descended into a shouting match.
Days later, the US leader suspended military aid to Ukraine, though there were signs the relationship between the two leaders appeared to be on the mend following the contentious White House meeting last week, with Mr Trump saying he “appreciated” a letter from Mr Zelenskyy saying Kyiv was ready to sign a minerals agreement with Washington “at any time”.
In his interview with Sky News’ Yalda Hakim, Mr Kelin said he was “not surprised” the US has changed its position on Russia’s full-scale invasion of Ukraine, which began in 2022, claiming Mr Trump “knows the history of the conflict”.
“He knows history and is very different from European leaders,” he added.
No doubt Russia is welcoming shift in world order

Lead world news presenter
I’ve interviewed the Russian ambassador to the UK, Andrei Kelin, on a number of occasions, at times the conversation has been tense and heated.
But today, I found a diplomat full of confidence and cautiously optimistic.
The optics of course have suddenly changed in Russia’s favour since Donald Trump was elected.
I asked him if Russia couldn’t believe its luck. “I would not exaggerate this too much,” he quipped.
Mr Kelin also “categorically” ruled out European troops on the ground and said the flurry of diplomatic activity and summits over the course of the past few weeks is not because Europeans want to talk to Moscow but because they want to present something to Mr Trump.
He appeared to relish the split the world is witnessing in transatlantic relations.
Of course the ambassador remained cagey about the conversations that have taken place between President Trump and Vladimir Putin.
There is no doubt however that Russia is welcoming what Mr Kelin says is a shift in the world order.
Peace deal ‘should recognise Russian advances’
The Russian ambassador said Moscow had told Washington it believed its territorial advances in Ukraine “should be recognised” as part of any peace deal.
“What we will need is a new Ukraine as a neutral, non-nuclear state,” he said. “The territorial situation should be recognised. These territories have been included in our constitution and we will continue to push that all forces of the Ukrainian government will leave these territories.”
Asked if he thought the Americans would agree to give occupied Ukrainian land to Russia, he said: “I don’t think we have discussed it seriously. [From] what I have read, the Americans actually understand the reality.”
Read more:
What you need to know from a monumental week in Ukraine
US ‘destroying’ world order by trying to meet Russia ‘halfway’
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31:20
In full: Russian ambassador’s interview with Sky’s Yalda Hakim
Moscow rules out NATO peacekeepers in Ukraine
He said Russia “categorically ruled out” the prospect of NATO peacekeepers on the ground in Ukraine – a proposal made by UK Prime Minister Sir Keir Starmer and French President Emmanuel Macron – saying “they have no rules of engagement” and so would just be “sitting in cities”.
“It’s senseless” and “not for reality,” Mr Kelin added.
He branded the temporary ceasefire raised by Mr Zelenskyy “a crazy idea”, and said: “We will never accept it and they perfectly are aware of that.
“We will only accept the final version, when we are going to sign it. Until then things are very shaky.”
He added: “We’re trying to find a resolution on the battlefield, until the US administration suggest something constructive.”
World
US ‘destroying’ international rules-based order by trying to meet Russia ‘halfway’, Ukraine’s UK ambassador warns
Published
14 hours agoon
March 6, 2025By
admin
The United States is “finally destroying” the international rules-based order by trying to meet Russia “halfway”, Ukraine’s ambassador to the UK has warned.
Valerii Zaluzhnyi said Washington’s recent actions in relation to Moscow could lead to the collapse of NATO – with Europe becoming Russian President Vladimir Putin‘s next target.
“The failure to qualify actions of Russia as an aggression is a huge challenge for the entire world and Europe, in particular,” he told a conference at the Chatham House think tank.
Ukraine latest: ‘Watershed moment’ as Kremlin blasts Macron
“We see that it is not just the axis of evil and Russia trying to revise the world order, but the US is finally destroying this order.”

Valerii Zaluzhnyi. Pic: Reuters
Mr Zaluzhnyi, who took over as Kyiv’s ambassador to London in 2024 following three years as commander-in-chief of the Ukrainian armed forces, also warned that the White House had “questioned the unity of the whole Western world” – suggesting NATO could cease to exist as a result.
It comes as Ukrainian President Volodymyr Zelenskyy scrambles to repair relations with US President Donald Trump following a dramatic row between the two men in the Oval Office last week.
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Mr Trump signalled on Tuesday that tensions could be easing, telling Congress he had received a letter from Mr Zelenskyy saying he was ready to sign a peace deal “at any time”.

Zelenskyy and Trump during their extraordinary Oval Office row. Pic: Reuters
Read more:
New Zealand fires UK envoy for Trump comments
US stops sharing all intelligence with Ukraine
But on the same day, the US president ordered a sudden freeze on shipments of US military aid to Ukraine, and Washington has since paused intelligence sharing with Kyiv and halted cyber operations against Russia.

Keep up with all the latest news from the UK and around the world by following Sky News
Mr Zaluzhnyi said the pause in cyber operations and an earlier decision by the US to oppose a UN resolution condemning Russian aggression in Ukraine were “a huge challenge for the entire world”.
He added that talks between the US and Russia – “headed by a war criminal” – showed the White House “makes steps towards the Kremlin, trying to meet them halfway”, warning Moscow’s next target “could be Europe”.
World
Rohingya refugees in Bangladesh being forced to fight for same military accused of genocide against their people
Published
20 hours agoon
March 6, 2025By
admin
Cox’s Bazar in Bangladesh is a sprawling mass of humanity.
It’s a sea of makeshift bamboo shelters, home to more than one million Rohingya refugees – a mainly Muslim minority from Rakhine state in Myanmar.
Some 700,000 fled their homeland back in 2017 – after the Myanmar military massacred thousands.
The army was accused of genocide by the United Nations.
The Rohingya refugees didn’t escape danger though.
Right now, violence is at its worst levels in the camps since 2017 and Rohingya people face a particularly cruel new threat – they’re being forced back to fight for the same Myanmar military accused of trying to wipe out their people.

A child at the refugee camp in Cox’s Bazar
Militant groups are recruiting Rohingya men in the camps, some at gunpoint, and taking them back to Myanmar to fight for a force that’s losing ground.
More on Rohingyas
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Jaker is just 19.
We’ve changed his name to protect his identity.
He says he was abducted at gunpoint last year by a group of nine men in Cox’s.
They tied his hands with rope he says and took him to the border where he was taken by boat with three other men to fight for the Myanmar military.
“It was heartbreaking,” he told me. “They targeted poor children. The children of wealthy families only avoided it by paying money.”
And he says the impact has been deadly.
“Many of our Rohingya boys, who were taken by force from the camps, were killed in battle.”

Jaker speaks to Sky’s Cordelia Lynch

An aerial view of the refugee camp in Cox’s Bazar
The situation in Cox’s is desperate.
People are disillusioned by poverty, violence and the plight of their own people and the civil war they ran from is getting worse.
In Rakhine, just across the border, there’s been a big shift in dynamics.
The Arakan Army (AA), an ethnic armed group has all but taken control of the state from the ruling military junta.
Both the military and the AA are accused of committing atrocities against Rohingya Muslims.
And whilst some Rohingya claim they’re being forced into the fray – dragged back to Myanmar from Bangladesh, others are willing to go.
Read more from Sky News:
Bangladesh leader reacts to ‘House of Mirrors’ prison
Inside Bangladesh’s ‘death squad’ jails
Sri Lanka rescues more than 100 people believed to be Rohingya refugees

Teknaf in Cox’s Bazar – where refugees arrive from Myanmar after crossing the Naf River
Some are so aggrieved with the AA, they’re willing to support their former persecutors.
Abu Zar is one of those willing to take up arms.
But not for the military or AA, he says.
Everyone praying in the mosque with him is prepared to go back to protect their own cause he says – not anyone else’s.
“We want to fight for our rights because we have been demanding justice for a long time. But the situation has become unbearable,” he tells me.

Abu Zar has said he is willing to take up arms for his own cause
It’s estimated between 3,000 and 5,000 Rohingya have joined armed groups from this camp.
But the fight they are joining has become increasingly bloody.
In a cramped shelter, we meet Safura.

Safura came under fire as she fled Myanmar

Safura’s son Aman had his foot blown off
Five days ago she managed to get out of Myanmar but she had to be carried part of the way.
Her legs are riddled with bullet wounds and the pain is severe.
Her son, Aman, who lies on the floor next to her, has had his foot blown off.
They were injured she said, during an attack on her family home in the middle of the night.
“They entered our house and shot all my family members. My husband and mother-in-law were killed on the spot.”
The military denies forcing Rohingya to the battlefield. But the camps tell a different story- one of surging violence and vulnerability.
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