Jeremy Hunt to unveil package of tax hikes and spending cuts in autumn statement to plug £54bn black hole

Published

3 years ago

November 17, 2022

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Jeremy Hunt will promise to weather an economic “storm” by raising taxes, cutting public spending and scaling back energy support to fill a £54bn black hole in the nation’s finances.

The chancellor will insist to MPs on Thursday that his autumn statement puts the UK on a “balanced path to stability” as he tackles the “enemy” of inflation, which has soared to a 41-year high.

But the measures could put him on a collision course with Tory MPs on the right of his party who are already voicing anger about the prospect of some of the plans.

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An 11th hour petition from two dozen Tory MPs, led by Jonathan Gullis, has been sent to the chancellor asking him not to hike fuel duty in the statement.

The package will be in the form of £30bn of spending cuts and £24bn in tax rises over the next five years – a stark contrast to Kwasi Kwarteng’s unfunded tax-slashing spending splurge two months ago.

Among the measures, annual energy bills for a typical household will stay capped at £2,500, but this will rise to £3,000 in April 2023, when support will become more targeted with additional payments for low-income households and pensioners, Sky’s political editor Beth Rigby understands.

On tax rises, those with the broadest shoulders will bear most of the burden, but there will be pain all around.

The chancellor is expected to lower the threshold for paying the highest rate of tax to £125,000 – down from the existing £150,000.

This is a marked difference to Liz Truss’s plans to scrap the 45p rate altogether, giving the highest earners an average tax cut of £10,000.

Analysis says lowering the threshold will bring an extra 246,000 people into the highest 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 is also expected to announce a freeze on personal income tax and national insurance tax thresholds lasting until 2028.

Sometimes referred to as a “stealth tax”, freezing tax thresholds drags more earners into paying higher rates of tax.

Mr Hunt has already hinted he will make it easier for local authorities to increase council tax, with reports suggesting the threshold for raising bills without a referendum could increase from 2.99% to 5%.

There is also expected to be a big increase in the windfall tax on energy companies, and a new tax on electricity generators.

Labour has previously said a windfall tax extension could raise an additional £50bn, and criticised what it calls the “loophole” that allows gas and oil firms to offset their tax liability if they invest back into the UK.

On spending cuts, departments are expected to be told to live within an envelope of the March Spending Review, when inflation at was 3%.

With inflation now at 11.1%, that amounts to a real-terms cut across the board, meaning tough choices will be necessary.

However, there will be some exceptions, with the NHS expected to get more money.

There is also likely to be some protection for the schools budget, Sky’s deputy political editor Sam Coates understands.

“There will inevitably be some good news after the weeks of doom-laden warnings,” he said.

Mr Sunak and Mr Hunt have spent weeks warning that tough choices lay ahead.

However, the prime minister told Sky News on Tuesday that “fairness and compassion” will be at the heart of his decisions.

It is understood the chancellor will keep the triple lock for pensioners in his autumn statement – honouring a manifesto commitment.

He is also expected to uprate benefits in line with inflation, rather than earnings (a controversial move that would have saved £5bn).

The government has not confirmed what measures will be in the statement, but there has been a constant stream of measures reportedly being considered.

This “pitch rolling” helps markets get an idea of what is coming down the road and avoids spooking traders.

When Ms Truss and Mr Kwarteng made several surprise announcements in their mini-budget in September, it contributed to the financial chaos which saw the pound crash and the Bank of England forced to intervene to prevent pension funds from collapsing.

Analysis released on Monday by the independent Resolution Foundation think tank found the mistakes they made cost the UK £30bn, doubling the sum the Treasury says will have to be raised.

Mr Hunt will say that his “difficult decisions” are necessary to keep mortgage rates low and tackle the rocketing energy and food prices intensifying the cost of living crisis.

“Families across Britain make sacrifices every day to live within their means, and so too must governments because the United Kingdom will always pay its way,” he is expected to say.

But Tories on the right of the Conservative Party are already voicing anger about the prospect of raising taxes.

Among the Tory critics, former cabinet minister Esther McVey has warned she will not support tax rises without the scrapping of the “unnecessary vanity project” of HS2.

Former business secretary Jacob Rees-Mogg told ITV’s Peston he would vote for the budget so as to not bring the government down, but warned he opposes tax increases, which he believes “risks making a recession worse”.

Labour has also warned that Britain is “falling behind on the global stage”.

Shadow chancellor Rachel Reeves said: “The country is being held back by 12 years of Tory economic failure and wasted opportunities and working people are paying the price.

“What Britain needs in the autumn statement are fairer choices for working people, and a proper plan for growth.”

And Sharon Graham, the general secretary of the Unite union, warned Mr Hunt “workers are ready to take a stand”.

“He can choose to inject investment into the NHS and deliver a fair pay deal – or he can leave it as it is today, in danger of fatal collapse,” she said.

Business

Steel tycoon Gupta’s troubles deepen amid Australian probe

Published

5 hours ago

August 28, 2025

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Steel tycoon Gupta's troubles deepen amid Australian probe

Sanjeev Gupta, the metals tycoon whose main British business was forced into compulsory liquidation last week, is facing a deepening probe by Australian regulators into his operations in the country.

Sky News has learnt that officials from the Australian Securities & Investment Commission (ASIC) last week served Mr Gupta’s Liberty Steel group with a new demand for information about its activities.

Sources said the regulator had also taken possession of a mobile phone belonging to Mr Gupta as part of the probe.

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One insider said that other senior executives at the company may also have had electronic devices confiscated, although the accuracy of this claim could not be verified on Thursday morning.

Both ASIC and a spokesman for Mr Gupta’s GFG conglomerate refused to comment on the suggestion that a search warrant had been produced by the watchdog.

ASIC’s deepening investigation comes a month after it said that three of GFG Alliance’s companies had been ordered by the Supreme Court of New South Wales to lodge outstanding annual reports with it.

It is the latest headache to hit Mr Gupta, whose companies remain under investigation by the Serious Fraud Office in the UK.

Last week, the Official Receiver took control of Speciality Steels UK following a winding-up petition from creditors led by Greensill Capital, the collapsed finance firm.

Mr Gupta remains intent on buying SSUK back, and has assembled financing from BlackRock, the world’s largest asset manager, Sky News revealed last week.

SSUK employs nearly 1,500 people at steel plants in South Yorkshire, and makes highly engineered steel products for use in sectors such as aerospace, automotive and oil and gas.

“[Gupta Family Group] will now continue to advance its bid for the business in collaboration with prospective debt and equity partners and will present its plan to the official receiver,” Jeffrey Kabel, chief transformation officer, at Liberty Steel, said after SSUK’s collapse.

“GFG continues to believe it has the ideas, management expertise and commitment to lead SSUK into the future and attract major investment.”

“The plan that GFG presented to the court would have secured new investment in the UK steel industry, protecting jobs and establishing a sustainable operational platform under a new governance structure with independent oversight,” Mr Kabel added.

“Instead, liquidation will now impose prolonged uncertainty and significant costs on UK taxpayers for settlements and related expenses, despite the availability of a commercial solution.”

Mr Gupta wants to hand control of SSUK to his family in a bid to alleviate concerns about his influence.

One source close to the situation claimed that the ownership structure devised by Mr Gupta would be independent, ring-fenced from him and have “robust standards of governance”.

Behind Tata Steel and British Steel, SSUK is the third-largest steel producer in the country.

Other parts of Mr Gupta’s empire have been showing signs of financial stress for years.

Mr Gupta is said to have explored whether he could persuade the government to step in and support SSUK using the legislation enacted to take control of British Steel’s operations.

His overtures were dismissed by Whitehall officials.

He had previously sought government aid during the pandemic but that plea was also rejected by ministers.

Business

Nvidia beats revenue expectations in boost to AI investment and US stock markets

Published

13 hours ago

August 28, 2025

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Nvidia beats revenue expectations in boost to AI investment and US stock markets

The world’s most valuable company, and first to be valued at $4trn (£2.9trn), beat market expectations in keenly anticipated financial results.

Microchip maker Nvidia recorded revenues of $46.7bn (£34.6bn) in just three months up to July, latest financial data from the company showed, slightly better than Wall Street observers had expected.

The company’s performance is seen as a bellwether for artificial intelligence (AI) demand, with investors paying close attention to see whether the hype is overblown or if significant investment will pay off.

Originally a creator of gaming graphics hardware, Nvidia’s chips help power AI capability – and the UK’s most powerful supercomputer.

Nvidia’s graphics processors underpin products such as ChatGPT from OpenAI and Gemini from Google.

Other tech giants – Microsoft, Meta and Amazon – make up Nvidia’s biggest customers and are paying large sums to embed AI into their products.

Why does it matter?

Nvidia has been central to the boom in AI development and the surge in tech stock valuations, which has seen stock markets reach record highs.

It represents about 8% of the value of the US S&P 500 stock market index of companies relied on to be stable and profitable.

Strong results will continue to fuel record highs in the market. Conversely, results that fail to live up to the hype could trigger a market tumble.

Nvidia itself saw its share price rise more than 40% over the past year. Its value impacts anyone with cash in the US stock market, such as pension funds.

The S&P 500 rose 14% over the past year, and the tech-company-heavy NASDAQ gained 21%, largely thanks to Nvidia.

As such, its earnings can move markets as much as major economic or monetary policy announcements, like an interest rate decision.

What next?

Revenue rises are forecast to continue to rise as Nvidia said it expected a rise to roughly $54bn (£40bn) in the next three months, more than the $53.14bn (£39.3bn) anticipated by analysts.

This excludes any potential shipments to China as export of Nvidia’s H20 chip, designed with the Biden administration’s export crackdown on advanced AI powering chips in mind, had been banned under US national security grounds.

But in recent weeks, Nvidia and another chipmaker, AMD, reached an unprecedented agreement to pay the Trump administration a 15% portion of China sales in return for export licences to send chips to China.

There were no H20 sales at all to China in the second quarter of the year, the period for which results were released on Wednesday evening.

Previously, 13% of Nvidia’s revenue came from China, with nearly 50% coming from the US.

Market reaction

Despite the expectation-beating results, Nvidia shares were down in after-hours trading, as the massive revenue rises previously booked by the company were not repeated in the latest quarter.

Compared to a year ago, revenues rose 56% and 6% compared to the three months up to April.

The absence of Chinese sales in forecasts appeared to disappoint.

Business

Bonuses to rise for Ryanair staff spotting oversized baggage

Published

16 hours ago

August 27, 2025

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Bonuses to rise for Ryanair staff spotting oversized baggage

Ryanair staff are to get more money for spotting and charging for oversized baggage, the company’s chief executive has said.

Michael O’Leary said he made “absolutely no apology” for catching people who are “scamming the system”.

The reward for intercepting passengers travelling with bags larger than permitted will increase from €1.50 (£1.29) to €2.50 (£2.15) per bag in November, and the monthly €80 (£68.95) payment cap will be scrapped, Mr O’Leary said.

At present, the budget airline allows travellers a free 40cm x 30cm x 20cm bag, which can fit under the seat in front, and charges for further luggage up to 55cm x 40cm x 20cm in size.

Customers face fines of up to £75 for an oversized item if it is brought to the boarding gate.

“I make absolutely no apology for it whatsoever”, Mr O’Leary said.

“I am still mystified by the number of people with rucksacks who still think they’re going to get through the gate and we won’t notice the rucksack”, he added.

Around 200,000 passengers per year are charged bag fees at airport gates.

“We have more work to do to get rid of them”, Mr O’Leary said.

“We are running a very efficient, very affordable, very low-cost airline, and we’re not letting anybody get in the way.”

The airline does not support a European Union proposal to ensure customers get a free cabin bag, he said.

Air fares

After a 7% fall in air fares for the year to 31 March, Mr O’Leary said he expected ticket prices to go back up this financial year.

“We expect to get most of last year’s 7% decline, but not all,” he told reporters in a news conference.

“We have sold about 70% of our September seats, but we have another 30% to sell, and it’s those last fares, what people pay for all those last-minute bookings through the remainder of September, that will ultimately determine what average airfares are.”