Billions of pounds that could be spent on fixing public services and filling the “black hole” in the UK’s finances is being lost through unpaid taxes, MPs have warned.
An “eye-watering” £42bn is outstanding in tax debt, with about 5% of tax owed each year failing to be collected by HMRC, according to the Commons Public Accounts Committee.
The Liberal Democrats labelled the amount “absolutely staggering” as the country battles a cost of living crisis and the biggest outbreak of industrial action in a generation – with multiple sectors striking over pay in the face of high inflation and stretched public finances.
In his Autumn Statement in November, Chancellor Jeremy Huntannounced a raft of tax hikes and spending aimed at making £54bn worth of savings.
But Dame Meg Hillier, chair of the committee, said: “The eye-watering £42bn now owed to HMRC in unpaid taxes would have filled a lot of this year’s infamous public spending black hole.”
MPs on the committee criticised ministers for not doing more to claw back the money owed to the public purse.
Dame Meg said HMRC will only employ more staff to tackle compliance over the next few years and that is “not fast enough to dent the tax gap at a time of huge public sector spending pressures”.
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According to the 22-page document, £731.1bn was collected in taxes and duties in 2021-22.
Although this was the highest on record as the UK emerged from the pandemic, the committee said more could be done to claim unpaid taxes.
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Sky’s Economics and Data Editor Ed Conway unpicks the impact of a year shaped by the cost of living crisis and the mini budget.
The report said that for every £1 that HMRC spends on compliance activities, it recovers £18 in additional tax revenue – and the government “is missing the opportunity to recover billions in lost revenue by not resourcing compliance”.
MPs warned more is now owed in tax debt than before the pandemic, with the debt also expected to fall more slowly than previous years as taxpayers feel the effects of the cost of living crisis.
Dame Meg said HMRC is “settling for trying to recover less than a quarter of estimated losses in schemes such as furlough”.
“We recognise the problems HMRC faces – due to poor controls, the horse has bolted – but we believe there is a moral duty to pursue fraud,” she said.
“HMRC must ensure dishonesty is not seen to create advantage.”
HMRC ‘have 6,000 fewer customer service staff than five years ago’
The Chartered Institute of Taxation (CIOT) welcomed the report and said the current levels of service being provided by HMRC are not acceptable.
The CIOT said HMRC has 6,000 fewer customer service staff than five years ago and the government “appear to have cut staff numbers anticipating efficiencies and time savings from digitalisation that have not yet arrived”.
Susan Ball, president of the CIOT, said members tell them every day “of the delays they face getting answers and action from HMRC”.
She said: “It is crazy that people trying to get help from HMRC on paying the right amount of tax find it so difficult to get through, especially when an estimated £3bn a year is lost to the Exchequer from non-deliberate taxpayer error.
“The first principle of compliance surely has to be making it easy for willing taxpayers to comply with their obligations.”
Christine Jardine, the Liberal Democrat Cabinet Office spokeswoman, said: “This government is losing absolutely staggering amounts of money through its incompetence and inability to collect the tax it’s owed.
“We need to see serious action to close this tax gap black hole.
“Ministers need to immediately get a grip on this situation, anything less would be a failure for millions of people who are struggling with the cost of living crisis.”
Leaving school aged 16, pregnant and with no qualifications, Angela Rayner has had a meteoric rise to the second-highest office in the UK – and a spectacular fall from grace.
Sir Keir Starmer’s right-hand woman has now resigned after she admitted to Sky News political editor Beth Rigby she had not paid enough stamp duty on a second home she bought in Hove, East Sussex, earlier this year.
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Rayner admits she didn’t pay enough tax
Growing up in poverty on a council estate in Stockport, Greater Manchester, Angela Bowen (her maiden name) and her two siblings were brought up by her grandmother, as her mother had bipolar disorder. She has said they had no books because her mother could not read or write.
She left school at the age of 16, without any qualifications, after becoming pregnant and has said her son, Ryan, “saved me from where I could have been, because I had a little person to look after”.
The teenage mother, now 45, studied part-time and gained a qualification in social care, working for Stockport Council as a care worker.
She entered politics when she was elected as a Unison trade union representative and then convenor of Unison North West – the region’s most senior official, becoming a Labour Party member during her time there.
Image: Angela Rayner in 2016, a year after becoming an MP
She married Unison official Mark Rayner in 2010 and they had two sons, Charlie and Jimmy. Charlie, now 17, was born at 23 weeks old and is disabled.
In 2017, her eldest son Ryan had a son, making Ms Rayner a grandmother at the age of 37. She gave herself the nickname “Grangela”.
She and her husband separated in 2020 and their divorce was completed in 2023. Since 2022, she has been in a relationship with former Labour MP Sam Tarry, with a break in 2023.
Image: Pic: PA
NHS compensation and a trust
Days before her resignation, she revealed compensation was paid to Charlie by the NHS due to the circumstances around his birth, which left him with “life-long disabilities”.
A trust was set up to manage the compensation and to ensure her son was properly looked after, and so that he and his brother could remain living in their family home in Ashton-under-Lyne as part of a “nesting arrangement”, where children of divorced parents live in one house while parents take it in turn to stay there.
She said she sold her stake in that home to the trust in January this year and used that money as a deposit on the Hove flat.
The Labour MP said she was given legal advice that the coastal flat did not have to be considered as a second home for stamp duty but sought further legal counsel after media reports claimed she avoided £40,000 in stamp duty.
Her initial lawyers said they never gave her tax advice and said they were being made “scapegoats”.
Ms Rayner gave a tearful interview to Sky’s Beth Rigby before her resignation, telling the Electoral Dysfunction podcast she had spoken to her family about “packing it all in”.
MP to Labour deputy in five years
Ms Rayner rose up the Labour ranks quickly after becoming an MP for Ashton-under-Lyne in 2015.
She was made deputy Labour Party leader in 2020 and was made deputy prime minister and housing, communities and local government secretary after last summer’s general election.
A self-described socialist, “but not a Corbynite” (in her own words), she became well known for calling the Conservatives “scum”, for which she eventually apologised after initially refusing to.
Image: Pic: Reuters
Council house and donor controversies
During last summer’s election campaign, Ms Rayner was investigated by Greater Manchester Police over allegations she misled tax officials in the sale of her council house in 2015 under the right to buy scheme.
She was cleared of any wrongdoing and HMRC concluded she did not owe any capital gains tax. She accused the Tories of using “desperate tactics” against her and went on to win her seat with a 19.1% majority.
Not long after becoming deputy PM and housing secretary, she was embroiled in another scandal in which she was accused of failing to properly register her use of Labour peer Lord Waheed Alli’s $2.5m New York apartment and being given clothes worth £3,550 by him.
She later announced she would no longer accept clothes from donors.
Image: Sir Keir Starmer and Angela Rayner during a visit to a construction site in Cambridge. Pic: PA
Building pledge
One of the Labour government’s biggest pledges was to build 1.5m new homes in this parliament and, as housing secretary, this came under Ms Rayner’s remit.
Sir Keir admitted in December the pledge might be “a little too ambitious”.
Ms Rayner was warned by some of the UK’s biggest developers there was not enough skilled labour to get anywhere near that target, but she has insisted it will happen.
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‘House building target is achievable’
She also led the charge to overhaul planning rules, announcing planning officers would be able to rubberstamp development proposals without permission from council committees if they complied with locally agreed plans.
The changes will be made through the planning and infrastructure bill, which was introduced to parliament in March and is making its way through the Commons.
It also promises to unblock 150 infrastructure projects, such as gigafactories, windfarms and railways, while protecting the environment and nature by setting up a fund to help builders meet their environmental obligations faster by pooling contributions to fund larger nature protections
Right to buy
In February, somewhat controversially given she bought the council house she grew up in, Ms Rayner announced it would be harder for tenants to buy their own council homes to help reverse the housing stock shortage.
She also announced “Awaab’s Law” – introduced by the Conservatives in 2023 and named after two-year-old Awaab Ishak, who died from damp and mould – would come into force in October 2025, forcing social housing landlords to fix dangerous damp and mould in a set amount of time and emergency hazards within 24 hours.
In her role as deputy PM, Ms Rayner occasionally stood in for Sir Keir at Prime Minister’s Questions, one time facing Tory Oliver Dowden and saying it was the “battle of the gingers”.
The Duchess of Kent has died at the age of 92, Buckingham Palace has said.
Katharine – who became the oldest living member of the Royal Family when Queen Elizabeth II died in 2022 – was known for consoling Wimbledon finalists, notably a tearful Jana Novotna in 1993.
A skilled pianist, organist and singer, she dropped her HRH style, preferring to be known as Mrs Kent, and retreated from royal life to spend 13 years teaching music at a primary school in Hull.
Image: The duchess famously comforted emotional Wimbledon runner-up Novotna after the 1993 final. Pic: AP
The palace said in a statement on Friday: “It is with deep sorrow that Buckingham Palace announces the death of Her Royal Highness The Duchess of Kent.
“Her Royal Highness passed away peacefully last night at Kensington Palace, surrounded by her family.
“The King and Queen and all Members of The Royal Family join The Duke of Kent, his children and grandchildren in mourning their loss and remembering fondly The Duchess’s life-long devotion to all the organisations with which she was associated, her passion for music and her empathy for young people.”
The Union Flag at Buckingham Palace was lowered to half-mast as a mark of respect shortly after the duchess’s death was announced. A formal framed announcement is displayed on the palace railings.
Image: Katharine meeting Nelson Mandela in 1998. Pic: PA
Image: The duchess, who volunteered for Unicef, is greeted in northern India in 1996. Pic: PA
An online condolence book will be available in the coming days and funeral details will be announced in due course.
Katharine married Prince Edward, the Duke of Kent – who is the cousin of the late Queen Elizabeth II – in a grand ceremony at York Minster in 1961.
The couple have three surviving children, George, Earl of St Andrews, Lady Helen Windsor, and Lord Nicholas Windsor.
Image: The Duke and Duchess of Kent at their York Minster wedding. Pic: PA
The duchess suffered heartbreak when she was forced to have a termination after catching German measles while pregnant in 1975. Two years later, she endured the devastation of giving birth to a stillborn son, Patrick.
She led a separate life from the Duke of Kent for many years but the couple did not divorce – and were said to be closer than ever after Edward suffered a stroke in 2013, which prompted his wife to move back into their Kensington Palace home.
Katharine’s famous Wimbledon moments
Her appearances at Wimbledon, where she presented the winners’ trophies, became a familiar feature of the summer sporting calendar.
Image: Venus Williams receives the women’s singles trophy from the duchess in 2001. Pic: Reuters
In 1993, she put royal formalities and protocol aside to hug tearful runner-up Jana Novotna after she lost the ladies’ singles final to Steffi Graff.
Her relationship with Wimbledon authorities later soured, when she was refused permission to take the young son of murdered headmaster Philip Lawrence into the royal box at the tournament.
So far, the nationalities of 11 of the people who died have been released by the authorities. They are: five people from Portugal, including four workers at a charity based near the funicular, three from Great Britain, two from Korea, and one person from Switzerland.
Brakeman Andrew Marques is the only person killed to have been identified so far.
All but one of the victims was declared dead at the scene, with the other dying of their injuries in hospital.
Sky News has contacted the UK Foreign, Commonwealth and Development Office for further information on the three British victims.
A spokesperson for Prime Minister Sir Keir Starmer said he is “deeply saddened” to hear of the British nationals who have died.
“His thoughts are with families and those affected,” they said. “We stand united with Portugal during this time.”
Image: Emergency workers scramble to rescue people at the scene. Pic: Enex
Majority of dead and injured foreign nationals
Among the injured are 12 women, seven men, and a three-year-old child, according to Portugal’s Civil Protection Authority.
Three who suffered injuries are from Portugal, two from Germany, one from Spain, one from Korea, one from Cape Verde, one from Canada, one from Italy, one from France, one from Switzerland, and one from Morocco.
According to CNN Portugal, the two from Germany were the three-year-old child and his mother, who were both pulled from the wreckage.
Image: The lower carriage in the foreground with the remains of the one that crashed further up the hill in Lisbon. Pic: AP
Image: The Gloria funicular connects Lisbon’s Restauradores Square to the Bairro Alto viewpoint
The Gloria funicular is hugely popular with tourists and classified as a national monument.
Its journey between Restauradores Square in downtown Lisbon and the Bairro Alto neighbourhood is just 265m (870ft) and three minutes long, but climbs up a steep hill, with two carriages travelling in opposite directions.
It was believed to be operating at full capacity as rush hour began in the Portuguese capital on Wednesday evening when the top car hurtled down the hill, left the tracks, and crashed into a building 30m (98ft) from the bottom.
According to the people who were in the lower carriage, a few metres into their ascent, it started going backwards. When they saw the other car speeding towards them, they jumped through the windows to escape.
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Lisbon funicular crash: ‘We felt no brakes anymore’
Preliminary crash report due on Friday
It is not clear what caused the crash.
The Portuguese government office for air and rail accident investigations said it has completed its analysis of the crash site and will release a preliminary report on Friday.
Engineer Dave Cooper told Sky News on Thursday that the two carriages may have become detached from one another because of a fault with the cables.
Image: The second carriage is lifted from the crash site to be removed overnight on Thursday. Pic: Reuters
Image: The funicular tracks empty after both carriages were removed overnight on Thursday. Pic: AP
Image: Flowers for the victims at the foot of the hill where the funicular is in downtown Lisbon on Friday. Pic: AP
Emergency services and engineers worked throughout the night on Thursday to remove both carriages from the site, while the other two funiculars in the city remained closed until the crash investigation concludes.
A mass was held, attended by Portuguese Prime Minister Luis Montenegro and Lisbon mayor Carlos Moedas, in memory of the victims at a nearby church on Thursday evening.
Lisbon declared three days of municipal mourning, while Portugal observed a national day of grief on Thursday.
This breaking news story is being updated and more details will be published shortly.