Autumn statement: Jaw-dropping change of tack as Jeremy Hunt announces more spending – and sets trap for next election
There is so much about today’s autumn statement that hurts the head.
The job of today’s statement – the reason it was urgent and necessary and painful – is because there was a huge black hole in the public finances that was unsettling the markets and pushing up government debt.
Yet – amazingly – for the next two years Jeremy Hunt announced the Sunak government will overall spend more money, not less.
A jaw-dropping change of tack
Yes, there are big immediate tax rises that many including Tory backbenchers will hate (£7.4bn worth in the next financial year, for example). But this is offset by an incredible £9.4bn of additional spending on energy help, school budgets, social care and the NHS. A jaw-dropping change of tack.
The argument by the chancellor is that a near-term boost to spending is needed to dampen the recession we are now in and keep more people in their jobs. It’s just a very different message from the one we’ve been hearing for the last month.
Incredibly, as Sky News revealed last night, Mr Hunt is even keeping the Liz Truss Energy Price Guarantee and extending it for another year – the very scheme due to be junked in March because it was too risky. That’s quite something, one month after he binned it dramatically on TV.
There is, however, much more theoretical pain, though not yet. In order to calm the markets, the Sunak government is promising an incredible squeeze will begin after an election.
Yes there will be a small 1% real terms increase in budgets after 2025, but that’s much less than then chancellor Rishi Sunak promised in March, and after a decade of pain.
This creates an accountancy bonanza: it means Mr Hunt is able to say he’s saved a theoretical £27bn in 2027, reducing theoretical future borrowing costs. But is this fantasy, because nobody can make promises about public spending that far ahead, given not a word of either the Labour or Tory manifesto has been written.
Read more on the autumn statement:
Key announcements from autumn statement
How can chancellor reduce ‘financial black hole’?
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All the key data and analysis
A trap for Labour
So in some regards, today’s autumn statement is a trick, a magician’s prestige, aimed not so much at the public but at the markets.
Will they buy it? Will investment houses upon which the UK depends simply trust the sombre seriously seeming spectacle of Mr Hunt and Mr Sunak more than the Truss-Kwasi double act, even if the actual numbers don’t pass muster? Actually there’s a chance they do, and in that sense it works. But it might not. It’s a gamble.
All of this feels very reminiscent of the way George Osborne would approach his budgets – no wonder he’s been seen going into Downing Street in recent weeks and his old lieutenants are advising Mr Hunt behind the scenes.
The trademark Osborne move embedded in today’s decisions is to set a trap for Labour. By doing a Labour-friendly set of tax rises which focus on the richest, then squeezing spending in the next parliament, Mr Sunak and Mr Hunt want to challenge Labour. If they want to go into the next election promising to spend more on public services, where will they get the cash, they will ask. It’s a dilemma, and it’s unclear how Labour will answer.
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’12 weeks of Conservative chaos’
But again this is a gamble. The short-term tax rises are real – taking us to the highest tax burden since the Second World War – while the increase in the amount people will pay on energy will go up and mortgages are still rising, and public sector pay still squeezed. The Office for Budget Responsibility suggests a 7% real terms drop in living standards next year. This will all feel very real.
Perhaps by the next election, Labour will be put on the spot and have to justify where tax rises will come from. But maybe people will be feeling the squeeze to such a degree they want change without needing to interrogate too much the alternatives.
That’s the battle to be fought out at the next election.
Benjamin Netanyahu’s plan for Israel to take full military control of the Gaza Strip has been condemned, amid fears a reoccupation could put the lives of Palestinians and the remaining Israeli hostages at risk.
Asked in a Fox News interview on Thursday if Israel would “take control of all of Gaza”, the prime minister replied: “We intend to, in order to assure our security, remove Hamas there, enable the population to be free of Gaza.”
Latest updates from war in Gaza
“We don’t want to keep it. We want to have a security perimeter,” he continued. “We want to hand it over to Arab forces that will govern it properly without threatening us and giving Gazans a good life.”
Israel already controls around 75% of Gaza and has largely sealed its borders.
To take full control, it would need to launch ground operations in the remaining areas that have not been destroyed, where most of Gaza’s two million population have sought refuge.
Israel’s security cabinet, which would need to approve the military operations, began a meeting on Thursday evening, but for now no official announcement has been made.
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Netanyahu on Israel’s plans for Gaza
Plan will ‘put hostages and soldiers in danger’
The plan has been criticised by many, including families of hostages being held by Hamas and a top Israeli Defence Force (IDF) official.
Einav Zangauker, the mother of hostage Matan Zangauker, said Mr Netanyahu promised her that he would pursue a deal to free the hostages.
She said in a post on X: “Someone who talks about a comprehensive deal doesn’t go and conquer the Strip and put hostages and soldiers in danger.
“Netanyahu and his partners are about to condemn [Matan] to death.”
Israel’s military chief of staff, Eyal Zamir, has warned against occupying Gaza, saying it would endanger the hostages and put further strain on the IDF, according to Israeli media reports.
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In an illustration of the kind of opposition Israel could face internationally if it purses the plan, a Jordanian official aid Arabs would “only support what Palestinians agree and decide on”.
“Security in Gaza must be done through legitimate Palestinian institutions,” the source said.
“Arabs will not be agreeing to Netanyahu’s policies nor clean his mess.”
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Israeli hostage families sail near Gaza
At least 42 more Palestinians killed by Israeli fire, say hospitals
It comes after at least 42 Palestinians were killed in Israeli airstrikes and shootings across southern Gaza on Thursday, according to local hospitals.
At least 13 of those people were seeking aid in an Israeli military zone where UN aid convoys are regularly overwhelmed by desperate crowds and looters.
An Israeli soldier, standing next to an Israeli flag, looks out across Gaza. Pic: Reuters
Another two were killed on roads leading to sites run by the Israel- and US-backed Gaza Humanitarian Foundation (GHF), according to Nasser Hospital, which received the bodies.
The GHF said there were no violent incidents at or near its sites on Thursday.
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The war in Gaza began when Hamas killed about 1,200 people – mostly civilians – in its attack on 7 October 2023 and abducted 251 others. They still hold approximately 50 of those hostages – with 20 believed to be alive – after most of the others were released in ceasefires or other deals.
Israel’s retaliatory offensive has killed more than 61,000 Palestinians, according to Gaza’s Hamas-run health ministry, which does not differentiate between militants and civilians in its count.
Vladimir Putin has played down the possibility of a meeting with Volodymyr Zelenskyy, saying that while it is possible, certain conditions must be met.
The Russian president was responding to an American proposal of a trilateral meeting between him, the Ukrainian president and Donald Trump.
The idea was floated by Steve Witkoff, the US president’s envoy during talks with Mr Putin on Wednesday, Kremlin aide Yuri Ushakov said.
War in Ukraine: Latest updates
Mr Ushakov said the three-way option was “simply mentioned by the American representative during the meeting in the Kremlin”.
He added, however: “This option was not specifically discussed.”
On the prospect of meeting Mr Zelenskyy, Vladimir Putin said: “I have already said many times that I have nothing against it in general – it is possible.”
However, he distanced himself from any such meeting happening soon, adding: “But certain conditions must be created for this. Unfortunately, we are still far from creating such conditions.”
Pic: AP
Mr Zelenskyy offered to speak to Vladimir Putin in May, challenging him to meet in Istanbul for talks on ending the war in Ukraine – an invitation the Russian leader declined.
While a trilateral meeting appears to be off the agenda, Mr Ushakov said an agreement had been reached for Donald Trump and Vladimir Putin to meet “in the coming days”.
After the US president touted a “very good prospect” of the leaders meeting for Ukraine ceasefire talks, Mr Ushakov said on Thursday that Russian and American officials had started working on the details.
“At the suggestion of the American side, an agreement was essentially reached to hold a bilateral meeting at the highest level in the coming days,” he said.
“We are now beginning concrete preparations together with our American colleagues.”
Regarding a trilateral meeting, Mr Ushakov said: “We propose, first of all, to focus on preparing a bilateral meeting with Trump, and we consider it most important that this meeting be successful and productive.”
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Will Putin agree to Trump’s condition to meet Zelenskyy?
It would be the first time the two leaders have met since Mr Trump returned to office, and follows a three-hour meeting between Mr Putin and Steve Witkoff in Moscow on Wednesday.
Following the meeting, Volodymyr Zelenskyy said it appeared that Russia was “more inclined to a ceasefire”.
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The Ukrainian president said he planned to speak on Thursday to German Chancellor Friedrich Merz, as well as contacts from France and Italy.
He said he planned to discuss a ceasefire, a leaders’ summit and long-term security, adding: “Ukraine has never wanted war and will work toward peace as productively as possible.”
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A poll from Gallup suggests 69% of Ukrainians support a negotiated end to the war with Russia – an almost complete reversal from 2022, when 73% favoured fighting until victory.
Most said they were sceptical the war would end soon, with 68% saying they believed it was unlikely that active fighting would stop within the next 12 months.
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Trump vowed to end Ukraine war in first 24 hours of his presidency – nearly 200 days in, could he be close?
Seven hours is a long time in US politics.
At 10am, Donald Trump accused Russia of posing a threat to America’s national security.
By 5pm, Mr Trump said there was a “good prospect” of him meeting Vladimir Putin “soon”.
There had, he claimed, been “great progress” in talks between his special envoy Steve Witkoff and the Russian president.
It’s difficult to gauge the chances of a meeting between the two leaders without knowing what “great progress” means.
Is Russia “inclined” towards agreeing a ceasefire, as Ukraine’s president now claims?
Is Mr Putin prepared to meet with his Ukrainian foe, Volodymyr Zelenskyy, too?
The very fact that we’re asking those questions suggests something shifted on a day when there was no expectation of a breakthrough.
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Mr Trump repeatedly vowed to end the war within 24 hours of becoming president.
On day 198 of his presidency, he might, just might, be one step closer to achieving that.
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