Jeremy Hunt to defend autumn statement amid warning of record fall in living standards
Jeremy Hunt will continue to defend his autumn statement today as experts warn of a record fall in living standards across the country.
The chancellor presented his economic plan to parliament on Thursday, littered with stealth taxes and curbs on government spending amounting to £55bn in an attempt to plug the black hole in public finances.
But the independent Office for Budget Responsibility warned the disposable incomes of UK households would fall by 7.1% over the next two years – the lowest level since records began in 1956/7, and taking incomes down to 2013 levels.
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As a result of the Mr Hunt’s announcements, the tax burden in the UK will also now be at its highest since the Second World War, and there are stark warnings about increased bills and higher unemployment as the recession takes hold – as well as predictions the economy will still shrink 1.4% in 2023.
But most of the difficult decisions on spending have been postponed until after the next general, due in 2024.
Both the Resolution Foundation and the Institute for Fiscal Studies will lay out their own analysis of the plans later this morning, but Treasury analysis already suggests around 55% of households will be worse off as a result of the measures.
Meanwhile, Labour has blamed “12 weeks of Conservative chaos” and “12 years of Conservative economic failure” for the bleak outlook.
Shadow chancellor Rachel Reeves accused the government of forcing the UK economy into a “doom loop where low growth leads to higher taxes, lower investments and squeezed wages, with the running down of public services”.
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During his statement, Mr Hunt distanced himself from the philosophy of Liz Truss’s short-lived government – which promised billions of unfunded tax cuts and sent the markets into turmoil.
Yet, while the chancellor froze tax thresholds, lowered the point the higher rate of income tax kicks in and extended the windfall tax on energy firms (the latter, a Labour policy) amid other measures, he also promised more spending on the NHS, social care and education, as well as re-committing to uprating pensions and benefits in line with inflation.
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Hunt questioned over autumn statement
Mr Hunt also pledged to continue support for energy bills from April next year – though raising the cap to £3,000 for the average household.
Speaking to reporters after the announcement, he said the government was “helping every bit as much as we can” to reduce the impact of the recession on households and businesses, as well as protecting public services.
But he pointed to those spending decisions, adding: “As soon as the recession is behind us, then, yes, we will consolidate to make sure that we’re balancing our books – and I think that’s what people would want.”
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While many in his party were supportive of the “difficult decisions”, the chancellor made in light of the energy crisis, the war in Ukraine and the fallout from the pandemic – as well as Ms Truss’s tenure in office – other Tories warned against hiking taxes while the country is in a recession.
Former party leader Sir Iain Duncan Smith told Sky News: “My worry is they’ve estimated that they will get certain revenues from their tax rises [but] those tax rises could end up damaging the economy and they won’t get the revenues thereafter, which means they’ll be back again looking for more.
“[There] is every chance that tax increases don’t yield what you think they will, so this could lead to a deeper recession. We need to watch that very carefully and see where it goes.”
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And former Wales Secretary David Jones told the Telegraph that the if high taxes continue, “the prospects of Tories winning the next election… are going to become more remote”.
Opposition parties were also quick to condemn the plan, with Liberal Democrat MP Sarah Olney saying it will “cause untold pain for everyone”, and the SNP’s Kirsty Blackman saying it “ushered in a new era of damaging austerity cuts”.
MPs will debate the measures in the Commons on Monday and Tuesday next week.
Chancellor Jeremy Hunt will be talking to Sky News at around 7am this morning about his autumn statement announcement
Four people have been arrested by police investigating cyber attacks targeting M&S, Co-op and Harrods.
A 20-year-old woman and two males, both aged 19, and a male aged 17, were detained in London and the West Midlands this morning as part of a National Crime Agency (NCA) operation.
They were arrested at their homes on suspicion of Computer Misuse Act offences, blackmail, money laundering and participating in the activities of an organised crime group.
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Electronic devices were seized from the suspects and are currently being analysed by forensic experts.
M&S halted online orders, and shelves were empty in shops after the cyber attack on the retailer earlier this year.
The initial hack into the retailer’s systems took place in April through “sophisticated impersonation” involving a third party.
Disruption is expected to continue at the retailer until the end of this month.
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Mickey Carroll in May answered why M&S cyber attack was so bad.
The Co-op and Harrods were also subsequently targeted by hackers.
Paul Foster, head of the NCA’s National cybercrime unit described the arrests as a “significant step” in their investigation, which remains “one of the Agency’s highest priorities”.
He added: “…our work continues, alongside partners in the UK and overseas, to ensure those responsible are identified and brought to justice.”
The National Crime Agency is keen to “signal” to “future victims” the “importance of seeking support and engaging with law enforcement”, stating that “the NCA and policing are here to help”.
The NCA has also thanked M&S, Co-op and Harrods for their support in their investigations.
The arrests, which took place early on Thursday morning, were supported by officers from the West Midlands Regional Organised Crime Unit and the East Midlands Special Operations Unit.
Earlier this week, the chairman of M&S told MPs that the hack had been “traumatic” and like an “out-of-body experience”.
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Archie Norman, however, refused to be drawn on whether the retailer had paid any ransom.
“We are not discussing any of the details of our interaction with the threat actor, including this subject, but that subject is fully shared with the NCA,” he said.
It is estimated that the cyber attack will cost M&S up to £300m this year.
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Days after M&S was attacked, the Co-op was targeted and forced to shut down some internal systems.
Harrods was then hacked, and also had to shut some systems despite its website and shops continuing to operate.
Of those arrested, a 17-year-old British male and a 19-year-old Latvian male were from the West Midlands.
A 19-year-old man was from London and a 20-year-old woman from Staffordshire.
Royal Mail is to be allowed to scrap Saturday second-class stamp deliveries, under a series of reforms proposed by the communications regulator.
From 28 July, Royal Mail will also be allowed to deliver second-class letters on alternate weekdays, Ofcom said.
The post will still be delivered within three working days of collection from Monday to Friday.
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The proposals had already been raised by Ofcom after a consultation was announced in 2024, and the scale back was proposed early this year.
Royal Mail had repeatedly failed to meet the so-called universal service obligation to deliver post within set periods of time.
Those delivery targets are now being revised downwards.
Rather than having to have 93% of first-class mail delivered the next day, 90% will be legally allowed.
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The sale of Royal Mail was approved in December
The target for second-class mail deliveries will be lowered from 98.5% to arrive within three working days to 95%.
A review of stamp prices has also been announced by Ofcom amid concerns over affordability, with a consultation set to be launched next year.
It’s good news for Royal Mail and its new owner, the Czech billionaire Daniel Kretinsky. Ofcom estimates the changes will bring savings of between £250m and £425m.
A welcome change?
Unsurprisingly, the company welcomed the announcement.
“It is good news for customers across the UK as it supports the delivery of a reliable, efficient and financially sustainable universal service,” said Martin Seidenberg, the group chief executive of Royal Mail’s parent company, International Distribution Services.
“It follows extensive consultation with thousands of people and businesses to ensure that the postal service better reflects their needs and the realities of how customers send and receive mail today.”
Citizens Advice, however, doubted whether services would improve as a result of the changes.
“Today, Ofcom missed a major opportunity to bring about meaningful change,” said Tom MacInnes, the director of policy at Citizens Advice.
“Pushing ahead with plans to slash services and relax delivery targets in the name of savings won’t automatically make letter deliveries more reliable or improve standards.”
Acknowledging long delays “where letters have taken weeks to arrive”, Ofcom said it set Royal Mail new enforceable targets so 99% of mail has to be delivered no more than two days late.
Changing habits
Less than a third of letters are sent now than 20 years ago, and it is forecast to fall to about a fifth of the letters previously sent.
According to Ofcom research, people want reliability and affordability more than speedy delivery.
Royal Mail has been loss-making in recent years as revenues fell.
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In response to Ofcom’s changes, a government spokesperson said: “The public expects a well-run postal service, with letters arriving on time across the country without it costing the earth. With the way people use postal services having changed, it’s right the regulator has looked at this.
“We now need Royal Mail to work with unions and posties to deliver a service that people expect, and this includes maintaining the principle of one price to send a letter anywhere in the UK”.
Ofcom said it has told Royal Mail to hold regular meetings with consumer bodies and industry groups to hear their experiences implementing the changes.
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