Connect with us

Published

on

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.

Politics live: Top Tory warns ‘jury is out’ on chancellor’s plans

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.

More on Autumn Statement 2022

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”.

Click to subscribe to the Sky News Daily wherever you get your podcasts

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.

Please use Chrome browser for a more accessible video player

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.”

Please use Chrome browser for a more accessible video player

’12 weeks of Conservative chaos’ – Rachel Reeves

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.”

Read more:
Key announcements from the autumn statement
Electric car owners to pay road tax from 2025

Jaw-dropping change of tack by Jeremy Hunt – analysis

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

Continue Reading

Business

Greater risk to UK economy following Trump’s tariffs, says Bank of England

Published

on

By

Greater risk to UK economy following Trump's tariffs, says Bank of England

The future of the UK economy is weaker and more uncertain due to President Trump’s tariffs and conflict in the Middle East, the Bank of England has said.

“The outlook for UK growth over the coming year is a little weaker and more uncertain,” the central bank said in its biannual health check of the UK’s financial system.

Economic and financial risks have increased since the last report was published in November, as global unpredictability continued after the announcement of country-specific tariffs on 2 April, the Bank’s Financial Stability Report said.

Money blog: €1 home goes on sale – but there are T&Cs

These risks and uncertainty, as well as geopolitical tensions, like the wars in Ukraine and the Middle East, are “particularly relevant” to UK financial stability as an open economy with a large financial sector, it said.

Pressures on government borrowing costs are “still elevated” amid significant doubts over the global economic outlook.

Had a 90-day pause on tariffs not been announced, conditions could have worsened, the report added.

More on Bank Of England

The chance of prices rising overall has also grown as tensions between Iran and Israel and the US threaten to push up energy prices.

Possible higher inflation in turn raises the prospect of more expensive borrowing from higher interest rates to bring down those price rises. This compounds the pressure on state borrowing costs.

Please use Chrome browser for a more accessible video player

Trump’s tariffs: What you need to know

Mortgages

Borrowing costs for about 40% of mortgage holders are set to become costlier over the next three years as households refix to more expensive deals, affecting 3.6 million households, the Bank said.

Many homes have not refixed their mortgage since interest rates began to rise in 2021, meaning the full impact of higher rates has yet to filter through.

Those looking to get on the property ladder got a boost as the Bank said lenders could issue more loans deemed to be risky, meaning people could be able to borrow more.

Financial institutions can now have 15% of their new mortgages deemed risky every year, up from the current 9.7%.

Riskier mortgages are those with a loan value above 4.5 times the borrower’s income.

Be ‘prepared for shocks’

Despite the global and domestic economy concerns, the outlook for UK household and business resilience remained “strong”, the Bank said.

Investors, however, were warned that there could be “sharp falls in risky asset prices”, which include shares and currencies.

Read more:
UK to miss deadline to agree steel and aluminium tariffs
M&S boss reveals new details about cyber attack on company

If there are any vulnerabilities in non-bank lenders, it “could amplify such moves, potentially affecting the availability and cost of credit in the UK”.

“It is important that in their risk management, market participants [people involved in investing] are prepared for such shocks.”

Follow The World
Follow The World

Listen to The World with Richard Engel and Yalda Hakim every Wednesday

Tap to follow

The steep market reaction following the tariff announcements in April “highlights that the interconnectedness of global financial markets can mean stress from one market can move quickly to others,” the report said.

Overall, though, “household and corporate borrowers remain resilient”, the Bank concluded.

Continue Reading

Business

UK’s biggest housebuilders to pay record sum after CMA investigation into sensitive information-sharing

Published

on

By

UK's biggest housebuilders to pay record sum after CMA investigation into sensitive information-sharing

The UK’s biggest housebuilders are set to pay a record sum to fund affordable housing after the competition regulator investigated sensitive information sharing among the firms.

A total of £100m, paid for by seven companies, will go to affordable housing programmes across England, Scotland, Wales and Northern Ireland, following a Competition and Markets Authority (CMA) investigation.

The inquiry was launched last year due to concerns that the companies were sharing commercially sensitive information, which could influence the prices of new homes.

There was concern that the housebuilders – Barratt Redrow, Bellway, Berkeley Group, Bloor Homes, Persimmon, Taylor Wimpey and Vistry – exchanged details about property sales, including pricing, viewing numbers and buyer incentives such as upgraded kitchens or stamp duty contributions.

Money blog: Another supermarket trials self-checkout ‘VAR’

It’s resulted in an agreement to make the combined £100m payment – the largest secured via a commitment from companies under CMA investigation. Hundreds of new homes could be funded with the money, the CMA said, helping low-income households, first-time buyers and vulnerable people.

The businesses have voluntarily agreed to pay the sum and have not acknowledged wrongdoing. No finding of rule-breaking or illegality has been made.

More on Cma

What next?

They have also offered to sign up to legally binding commitments to prevent anticompetitive behaviour.

Among the proposals advanced by the companies was an agreement not to share some information, like prices houses were sold for, with other housebuilders, except in limited circumstances, and to work with the Home Builders Federation and Homes for Scotland to develop industry-wide guidance on information sharing.

Read more:
UK to miss deadline to agree steel and aluminium tariffs
M&S boss reveals new details about cyber attack on company

The CMA has said it will consult on the changes.

If accepted, the commitments will become legally binding, and the CMA will not need to decide whether the housebuilders broke competition law.

Initially, eight companies were under investigation, but following a merger of Barratt Homes and Redrow, the number became seven.

“Housing is a critical sector for the UK economy and housing costs are a substantial part of people’s monthly spend, so it’s essential that competition works well. This keeps prices as low as possible and increases choice,” the CMA chief executive, Sarah Cardell, said.

Continue Reading

Business

At least 13 people may have taken their own lives linked to Post Office scandal, public inquiry finds

Published

on

By

At least 13 people may have taken their own lives linked to Post Office scandal, public inquiry finds

At least 13 people may have taken their own lives after being accused of wrongdoing based on evidence from the Horizon IT system that the Post Office and developers Fujitsu knew could be false, the public inquiry has found.

A further 59 people told the inquiry they considered ending their lives, 10 of whom tried on at least one occasion, while other postmasters and family members recount suffering from alcoholism and mental health disorders including anorexia and depression, family breakup, divorce, bankruptcy and personal abuse.

Follow latest on public inquiry into Post Office scandal

Writing in the first volume of the Post Office Horizon IT Inquiry report, chairman Sir Wyn Williams concludes that this enormous personal toll came despite senior employees at the Post Office knowing the Horizon IT system could produce accounts “which were illusory rather than real” even before it was rolled out to branches.

Sir Wyn said: “I am satisfied from the evidence that I have heard that a number of senior, and not so senior, employees of the Post Office knew or, at the very least, should have known that Legacy Horizon was capable of error… Yet, for all practical purposes, throughout the lifetime of Legacy Horizon, the Post Office maintained the fiction that its data was always accurate.”

Referring to the updated version of Horizon, known as Horizon Online, which also had “bugs errors and defects” that could create illusory accounts, he said: “I am satisfied that a number of employees of Fujitsu and the Post Office knew that this was so.”

The first volume of the report focuses on what Sir Wyn calls the “disastrous” impact of false accusations made against at least 1,000 postmasters, and the various redress schemes the Post Office and government has established since miscarriages of justice were identified and proven.

Please use Chrome browser for a more accessible video player

‘It stole a lot from me’

Recommendations regarding the conduct of senior management of the Post Office, Fujitsu and ministers will come in a subsequent report, but Sir Wyn is clear that unjust and flawed prosecutions were knowingly pursued.

“All of these people are properly to be regarded as victims of wholly unacceptable behaviour perpetrated by a number of individuals employed by and/or associated with the Post Office and Fujitsu from time to time and by the Post Office and Fujitsu as institutions,” he says.

What are the inquiry’s recommendations?

Calling for urgent action from government and the Post Office to ensure “full and fair compensation”, he makes 19 recommendations including:

• Government and the Post Office to agree a definition of “full and fair” compensation to be used when agreeing payouts
• Ending “unnecessarily adversarial attitude” to initial offers that have depressed the value of payouts, ⁠and ensuring consistency across all four compensation schemes
• The creation of a standing body to administer financial redress to people wronged by public bodies
• Compensation to be extended to close family members of those affected who have suffered “serious negative consequences”
• The Post Office, Fujitsu and government agreeing a programme for “restorative justice”, a process that brings together those that have suffered harm with those that have caused it

Regarding the human impact of the Post Office’s pursuit of postmasters, including its use of unique powers of prosecution, Sir Wyn writes: “I do not think it is easy to exaggerate the trauma which persons are likely to suffer when they are the subject of criminal investigation, prosecution, conviction and sentence.”

He says that even the process of being interviewed under caution by Post Office investigators “will have been troubling at best and harrowing at worst”.

Read more:
Post Office inquiry lays bare heart-breaking legacy – analysis

‘Hostile and abusive behaviour’

The report finds that those wrongfully convicted were “subject to hostile and abusive behaviour” in their local communities, felt shame and embarrassment, with some feeling forced to move.

Detailing the impact on close family members of those prosecuted, Sir Wyn writes: “Wives, husbands, children and parents endured very significant suffering in the form of distress, worry and disruption to home life, in employment and education.

“In a number of cases, relationships with spouses broke down and ended in divorce or separation.

“In the most egregious cases, family members themselves suffered psychiatric illnesses or psychological problems and very significant financial losses… their suffering has been acute.”

The report includes 17 case studies of those affected by the scandal including some who have never spoken publicly before. They include Millie Castleton, daughter of Lee Castleton, one of the first postmasters prosecuted.

Please use Chrome browser for a more accessible video player

Three things you need to know about Post Office report

She told the inquiry how her family being “branded thieves and liars” affected her mental health, and contributed to a diagnosis of anorexia that forced her to drop out of university.

Her account concludes: “Even now as I go into my career, I still find it so incredibly hard to trust anyone, even subconsciously. I sabotage myself by not asking for help with anything.

“I’m trying hard to break this cycle but I’m 26 and am very conscious that I may never be able to fully commit to natural trust. But my family is still fighting. I’m still fighting, as are many hundreds involved in the Post Office trial.”

Business Secretary Jonathan Reynolds said the inquiry’s report “marks an important milestone for sub-postmasters and their families”.

He added that he was “committed to ensuring wronged sub-postmasters are given full, fair, and prompt redress”.

“The recommendations contained in Sir Wyn’s report require careful reflection, including on further action to complete the redress schemes,” Mr Reynolds said.

“Government will promptly respond to the recommendations in full in parliament.”

Continue Reading

Trending