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The UK’s economic outlook will be “challenging” for the next two years, Jeremy Hunt says.

The chancellor presented his autumn statement 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 the public finances.

But the independent Office for Budget Responsibility (OBR) 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: Tax burden reaches highest level since WWII

Speaking to Sky News, Mr Hunt said it was “a difficult time for everyone” but tax hikes and spending cuts are needed to get the economy “on an even keel”.

“Over the next two years it is going to be challenging,” he said.

“But I think people want a government that is taking difficult decisions, has a plan that will bring down inflation, stop those big rises in the cost of energy bills and the weekly shop, and at the same time is taking measures to get through this difficult period.”

More on Autumn Statement 2022

The chancellor insisted that his autumn statement is a “very Conservative package” following criticism from some Tory MPs.

“The Office for Budgetary Responsibility said yesterday that what we’re doing is actually recession shallow, it’s saving jobs,” he said.

“But what I would say to my Conservative colleagues is there is nothing Conservative about spending money that you haven’t got, there is nothing Conservative about not tackling inflation, there is nothing Conservative about ducking difficult decisions that put the economy on track.

“And we’ve done all of those things and that is why this is a very Conservative package to make sure we sort out the economy.

“None of this is easy, but it’s the right thing to do.”

Former business secretary Jacob Rees-Mogg accused the chancellor of taking the “easy option” in Thursday’s autumn statement rather than bearing down harder on public spending.

He said the country needed lower taxes to drive up growth.

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Hunt questioned over autumn statement

Probed on how it can be fair that pensions will go up by inflation when public sector workers will not see pay increase alongside prices, Mr Hunt said the elderly do not have the ability to work more to improve their take home pay.

Well, I think the truth is, first of all, pensioners have retired. They don’t have the ability to work more or work longer hours in the way that people of working age do,” the chancellor said.

“But I think it is wrong to say that only the poorest pensioners are feeling the squeeze at the moment.

“I think this is something that’s affecting everyone and I think it’s right.

“Having made that promise to pensioners in our manifesto that we would have this triple lock, I think this is exactly the kind of tough time that people want it to kick in.

“And so that’s why I think it’s the right thing to do.”

The chancellor added: “We’re not pretending that this isn’t going to be a difficult time for everyone. But what we have is a plan.”

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’12 weeks of Conservative chaos’ – Rachel Reeves

In yesterday’s autumn statement, Mr Hunt announced economic policies which the government hopes will help to rebalance the nation’s finances after the economic turmoil which followed former chancellor Kwasi Kwarteng’s mini-budget.

These included:

• Income tax thresholds being frozen for two more years until April 2028

• Top level of income tax now being paid on earnings over £125,140 instead of £150,000

• Pensions triple lock will remain – with pensioners to see a 10.1% increase in weekly payments in line with inflation

• Benefits to also rise in line with inflation – by 10.1%

• Energy cap to rise from £3,000 a year to £2,500 a year beyond April

• UK minimum wage to rise from £9.50 to £10.42 an hour for those aged over 23

• Windfall tax on oil giants’ profits to rise from 25% to 35% and be extended by two years until March 2028

• Additional cost of living payments of £900 for those on benefits and £300 for pensioners

• Spending on public services in England to rise slower than planned

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As a result of 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 election, due in 2024.

Treasury analysis suggests around 55% of households will be worse off as a result of the measures.

Read more: Jeremy Hunt’s autumn statement had all the hallmarks of a Labour budget

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”.

Ms Reeves told Sky News she is “really worried about what’s going to happen to people’s living standards next year from April” and said a Labour government would have done more “to alleviate some of that pressure on the ordinary working person”.

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What does the autumn statement mean?

As Mr Hunt took part in the broadcast round Friday morning, economic think-tank the Resolution Foundation published analysis suggesting his autumn statement’s tax rises would deliver a 3.7% income hit to typical households.

The foundation said the statement had piled further pressure on the “squeezed middle” and that the focus on “stealthy” tax threshold freezes to raise revenue would extend far beyond high earners.

The think tank also found that the budget would reverse much of the government’s levelling up agenda.

“The £15 billion of cuts to capital investment announced yesterday will undo 80% of the remaining increases in public investment announced by previous chancellor Rishi Sunak, which underpinned the levelling-up agenda,” it said.

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Weather latest: Strong winds batter UK as millions set to hit roads over Easter weekend

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Weather latest: Strong winds batter UK as millions set to hit roads over Easter weekend

Winds of up to 70mph have battered the south coast, along with hail and thunder, as millions are set to hit the roads for Easter getaways.

The weekend is set to be “unsettled” but “bright and breezy”, according to the Met Office forecast.

Drivers are being warned of long delays on roads as more than 14 million Easter getaway trips are expected.

Find out the forecast for where you live

A ferry arrives at the Port of Dover in Kent during rough seas. Pic: PA
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A ferry arrives at the Port of Dover in Kent during rough seas. Pic: PA

The RAC and transport analysis company Inrix commissioned a survey which suggested 2.6 million leisure journeys by car will be made on Good Friday.

Meanwhile, at least three major airports have said that the coming days will be their busiest-ever Easter weekend while 493 different pieces of planned engineering works are set to take place on the railways.

Yellow weather warnings for rain and strong winds were issued across parts of the south of England and Northern Ireland respectively on Thursday.

The caution for the south of England expired at 11.59pm on Thursday while the warning for Northern Ireland said “a few” homes and businesses could be flooded and is in place until 3am on Friday.

The unsettled conditions are expected to continue into Easter, as the bank holiday weekend leads into a two-week break for many schools.

Pic: Met Office
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Pic: Met Office

Traffic in Dover as Easter weekend begins. Pic: PA
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Traffic in Dover. Pic: PA

Sky News weather producer Joanna Robinson said Good Friday will be less windy than Thursday, with a few showers around on Saturday and Easter Sunday, along with pleasant sunny spells.

Temperatures of up to 15C (59F) are expected in west London and 14C (57.2F) in Manchester on Sunday, which is typical for the time of year.

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File pic: PA
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PA file pic

Rain is then set to return to the south on Easter Monday.

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Astrocomb breakthrough could help discover Earth-like planets

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Astrocomb breakthrough could help discover Earth-like planets

New Earth-like planets could soon be discovered after scientists made a technological breakthrough.

Physicists have developed an astrocomb that can analyse the blue-green light emitted by stars.

Astrocombs can detect tiny variations in a star’s light created by orbiting exoplanets (those beyond our own solar system) – potentially revealing one similar to Earth.

They have been mainly limited to the green-red part of the light spectrum, but the new system offers the chance to uncover even more space secrets.

The breakthrough was made by physicists at Heriot-Watt University in Edinburgh and Cambridge University.

“This is a really exciting development that will enable us to study smaller planets on longer orbits than ever before – with the aim of discovering the first ‘Earth-like’ planet orbiting around a nearby sun-like star,” said Dr Samantha Thompson from Cambridge.

Heriot-Watt Professor Derryck Reid said the shorter wavelength light the new system can examine is “rich in the atomic absorption features of interest to astronomers”.

More on Space

“Our new approach for the first time provides a continuous sequence of optical markers from the ultraviolet to the blue-green that serve as a precision wavelength scale in this part of the spectrum,” added Professor Reid.

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The technology is being developed for the Extremely Large Telescope (ELT) under construction in Chile’s Atacama Desert.

It will have a 39-metre primary mirror and be the largest visible and infrared light telescope in the world.

The UK team will also work on astrocombs for telescopes in South Africa and the Canary Islands.

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Horizon scandal: More than £1m claimed as Post Office ‘profit’ may have come from sub-postmasters

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Horizon scandal: More than £1m claimed as Post Office 'profit' may have come from sub-postmasters

More than £1m of unexplained transactions were transferred in to Post Office profit at the height of the Horizon scandal, leaked documents have shown.

The papers, seen by Sky News, show a snapshot of transfers from a Post Office “miscellaneous client” suspense account over a four-year period, up to 2014.

A suspense account is where unexplained, or disputed, transactions remain until they are able to be “reconciled”.

Unaccounted-for transactions were transferred out of the Post Office suspense account and into their profit and loss account after three years.

Money latest: Further fall in energy bills expected in summer

Ian Henderson, director of Second Sight – the forensic accountants hired years ago by Post Office – said: “The Post Office was not printing money. It was accumulating funds in its suspense account.

“Those funds belong to somebody, either to third-party clients or to sub-postmasters, and part of the work we were doing in 2015 was drilling into that.”

Mr Henderson said they were sacked not long after asking questions about whether the Post Office profited from shortfalls paid for by sub-postmasters.

Image:
Mr Henderson told Sky News that the money could potentially have come from sub-postmasters’ pockets

More than 900 sub-postmasters were wrongly prosecuted due to faults with Horizon accounting software.

A letter from Alisdair Cameron, the Post Office’s chief financial officer, to Second Sight in February 2015 states some “postings cannot be traced” to “underlying transactions”.

He added: “We are not always able to drill back from the combined totals to itemise all the underlying transactions.”

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‘Compensation paid by summer’

Mr Henderson said the letter shows that “the Post Office was benefiting from this uncertainty due to, frankly, bad record keeping, but taking it to the benefit of their profit and loss account”.

He maintains that it’s impossible to prove for sure that sub-postmasters’ money went into Post Office profit because of a “lack of granularity”.

He says therefore that it is of “sufficient public interest” that a further independent review into the use of suspense accounts should happen.

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Post Office redress delay overshadowed by executive drama

Mr Henderson added: “It didn’t come from thin air, where did the money come from? That’s a fundamental question the Post Office has not answered.”

Meanwhile, separately, a secret recording obtained by Sky News indicates that the Post Office was trying to gag the independent forensic accountants.

The recording is of a meeting in January 2014 between Second Sight, a lawyer and a Post Office representative.

It took place over a year before the accountants were sacked.

In the conference call, there are signs the relationship between the Post Office and Second Sight was beginning to weaken.

There is discussion about a contractual confidentiality agreement, a “letter of engagement” between the parties.

In the recording, Ian Henderson says: “Either, you know, we have unfettered discretion and authorisation to just talk to MPs or we haven’t.

“At the moment, the way the document is drafted, we are prevented from doing that. That’s the issue.”

His colleague at Second Sight, Ron Warmington is heard agreeing.

In another part of the recording, there are more concerns raised that the investigators are being blocked from talking to MPs.

Mr Henderson says: “My point is we should not be gagging either the applicant or Second Sight in being able to respond, you know, fully and frankly to MPs who frankly sort of set this whole process in motion.”

The Post Office representative replies, saying they’re not trying to gag anybody.

Mr Henderson describes “a point of principle”: “In exactly the same way that when we were doing spot reviews, we disclosed to MPs, when they asked us a specific question, the information provided to us by Fujitsu and by Post Office.

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“And that’s why it’s so important to establish this principle that there should be no gagging of Second Sight in relation to being able to discuss our investigative work with MPs.”

In the same meeting, his colleague Ron Warmington said that if it later emerges that Second Sight have been “effectively gagged” in its dealing with MPs, “it’s not going to be Second Sight they are particularly annoyed with, it’s going to be Post Office”.

The representative responds directly with: “I think that’s something that the Post Office will have to deal with if – if it arises.”

Adding that “some of the terminology in terms of gagging is probably an exaggeration of what it is that is trying to be done here, and at the moment you haven’t signed anything.”

The Post Office released a statement in response to the findings, saying: “The statutory public inquiry, chaired by a judge with the power to question witnesses under oath, is the best forum to examine the issues raised by this evidence.

“We continue to remain fully focused on supporting the inquiry to get to the truth of what happened and accountability for that.”

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