Expect a steady the ship budget with promises of jam tomorrow from Chancellor Jeremy Hunt | Beth Rigby
After the debacle of Liz Truss’s September mini-budget, with all its mega ramifications, and an autumn statement eight weeks later that performed an about-turn so big that the country’s tax burden hit a 70-year-high, Wednesday’s budget will be all about stability and sticking to the plan.
“No big bangs in this budget,” is how one senior government insider put it to me last week. “It’s got to be a growth budget.
“We’re fighting to be competitive again with Labour. If we can get to next summer and the economy is ticking up, and we can narrow the gap to five to eight points behind in the polls, there’s a chance in an election campaign we can shift the dial.”
Tax cuts, I’m told, will have to wait.
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What the chancellor and prime minister want to project this week is the sense that they are getting the economy back on track, and working towards Rishi Sunak’s pledges to halve inflation, get debt down and get the UK economy growing again.
Do that, argue his allies, and the tax cuts will come – just in time for a general election.
But there is pressure, and lots of it, from voters and from the Tory backbenchers to do more on tax cuts and cost-of-living now, not tomorrow.
And that pressure is all the more palpable after the chancellor received a £30bn windfall in the public finances last month, after it emerged that in the year to January, the public sector had borrowed less than forecast in November by the UK’s official fiscal watchdog.
Floating voters we spoke to in a focus group in one Tory shire seat last week told us that struggling with the cost-of-living and a buckling NHS were top of their concerns, and they expressed scepticism that the government was up to the job.
One voter in the Wycombe constituency in Buckinghamshire described the government as “stale”, with another telling us: “The current crisis emphasises that our government is fairly broken.”
On the cost-of-living, our group of floating voters spoke of their anxiety around energy bills, food prices and childcare.
Charlotte, a working mum, told us she had to change her working hours because she couldn’t afford childcare costs.
“I can’t afford to work full time anymore,” she told us. “It’s not feasible for our family, so I’ve had to rope my mum in to do childcare.
“I wouldn’t say we’re a low earning family. That’s just the way it is now.”
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Voters talk about their priorities with our political editor Beth Rigby.
Food bills were also a concern, with voters saying they’d switched to cheaper supermarkets and cut back in the face of galloping food price inflation.
Ashley, who in the past has voted Conservative but is now undecided, told us he’d switched his weekly shop from Tesco and M&S to Aldi, while energy bills were a problem all round.
“I’ve voted Conservative a long time,” the father-of-two told us. “And then I got a bit tired of, you know, Boris and the promises.
“We need to have some results and I want to see some improvement, not the deflection bit around immigration, [but] some real positive on the cost of living. For me, that’s the most key…it’s what’s important to people.”
Short and long term plans
The Treasury is alive to the pressure, with insiders telling me there will be two parts to Mr Hunt’s budget on Wednesday: a short-term support plan to provide immediate relief on the cost-of-living crisis and then the long-term plan for growth.
On the first part of that, the government is expected to extend the £2,500 energy price guarantee for another three months from April (where there had been a planned rise to £3,000) to give people support on their bills.
The chancellor is also under pressure to again freeze fuel taxes in this budget, at a cost of £6bn.
When it comes to childcare, the chancellor is expected to change rules so that parents on Universal Credit are given more money for childcare and given the funding upfront.
The Treasury is also believed to be planning a cash injection of hundreds of millions into increasing the availability of the 30 hours of free childcare to three to four-year-olds.
Mr Hunt also plans to loosen staff-to-child ratios for two-year-olds, which could make the cost of childcare a little cheaper.
But anything really big bang on childcare, such as extending 30 hours of free childcare to one-and two-year-olds, is unlikely – that policy would cost around £6bn.
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These are some predictions for the budget.
And when it comes to the most obvious way of helping people manage their bills – wage packets – the government is standing firm, with Treasury insiders insisting there will be no above inflation pay sector awards.
Neither is the chancellor expected to offer voters any cuts to personal taxes.
“We haven’t got £30bn to cut taxes,” is how one government insider put it to me, in a nod to the boost from revised public finances.
“What we’ve got to do is get people back into work, be that through better childcare support or incentives to get those in their 50s back into work.
“That is where we have to focus policy, and that could amount to say £5bn and that comes out of the [£30bn] headroom.”
Because beyond the short-term support measures, the focus for this budget will be on trying to get the economy moving and getting people back to work post-pandemic, with a package of measures to try to shift parents, the sick, disabled and older workers back into jobs.
To that end, the chancellor is expected to raise the lifetime allowance for pension savings from £1m to an expected £1.8m – a record level – in order to try to incentivise doctors and other professionals out of retirement and back into work.
He could also lift the annual tax-free allowance for pensions from £40,000 to £60,000.
It’s a package that could cost £2bn a year and would be much welcomed by higher earners, but also opens the chancellor up to criticism that he is giving a tax break to the rich while offering nothing to basic rate taxpayers.
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What to look out for in Hunt’s first budget
And when it comes to the other group of voters the chancellor and PM need to placate, his backbenchers, there is disquiet over the high level of tax burden, with many Tory MPs keen for tax cuts.
One former cabinet minister told me last week that they wanted to see the £30bn windfall in the public finances used to reverse the planned increase in corporation tax from 19p to 25p in April.
It is a pretty popular refrain.
But Treasury insiders insist the tax hike will go ahead and instead the chancellor will offer business tax breaks to try to encourage growth.
When Mr Sunak was chancellor back in March 2021, he created the £25bn “super-deduction” tax allowance for capital investment – a two-year measure offering 130% tax relief on companies’ purchases of equipment – in order to try to boost investment and growth.
Mr Hunt is coming up with a new set of plans to try to support business and could give firms much more generous capital allowances to incentivise investment.
Watch too for policies and reforms targeting certain industries and sectors, from artificial intelligence to green energy and advanced manufacturing: all of it will be framed as the government’s long-term plan for growth.
Rishi Sunak and Jeremy Hunt will be hoping to reassure people they are making the right choices for the UK economy.
Wednesday will be, if you like, the third act of the prime minister’s performance over the past few weeks to try and win a jaded public back around by trying to convince them he will stick to his plan and deliver on promises.
On the international stage, he has rehabilitated the UK with allies after the bumpy years of Prime Minister Johnson and then Prime Minister Truss, symbolised most strongly in a deal with the EU over post-Brexit trading arrangements in Northern Ireland – where even his foes conceded Mr Sunak had got more than they expected.
At home, the PM has put forward his plan to “stop the boats” – a key priority of many of the voters he needs to keep onside or win back in 2024.
Whether the plan, surrounded in legal and practical controversies, will come off remains to be seen.
But Mr Sunak will at least be able, to quote one of his allies, “build a narrative” that blames the failure of the policy around France and the EU refusing to grant the UK a returns agreement and the international courts blocking his plans.
“At least he can then make the argument it wasn’t his fault,” they said.
Narrow path back
On Wednesday, the focus will be on the PM’s three economic targets – halving inflation, cutting debt and growing the economy – as the chancellor tries to lay down the best conditions he can for the Conservatives’ run into the general election in 2024.
Mr Sunak’s allies tell me they think there is a way back to victory for this government at the ballot box once again, but the “path is very narrow”.
A budget then building the foundations rather than lighting the fireworks, all of this the groundwork for the pre-election showstopper next year.
But with the cost-of-living squeeze so acute, the promise of jam tomorrow is unlikely to satisfy the public, particularly if those being given some of the spoils this time around look to be business and the wealthy.
Mr Hunt may be charged with steadying the ship, but he’ll have to be skilful on Wednesday not to lose more ground.
World
Zelenskyy accuses US envoy Witkoff of ‘spreading Russian narratives’ – as he says minerals deal getting closer
Ukrainian President Volodymyr Zelenskyy has accused US envoy Steve Witkoff of “spreading Russian narratives” about the Ukraine war – as he said a much-anticipated minerals deal was moving closer.
His comments came as Mr Witkoff was in Paris for talks with Ukrainian and European officials.
The diplomat met Vladimir Putin last week and later told Fox News he had held “compelling” discussions with the Russian leader.
“This peace deal is about these so-called five territories, but there’s so much more to it,” he said.
He appeared to be referencing occupied Crimea and the four regions annexed in sham referendums in 2022: Kherson, Luhansk, Donetsk and Zaporizhzhia.
The votes were widely condemned and dismissed by the West – and Russia still does not fully control these regions – but Mr Witkoff has been accused of parroting Moscow’s line.
Mr Witkoff met the Russian president in St Petersburg on Friday. Pic: Sputnik/AP
Mr Zelenskyy, speaking at a news conference, also said a “memorandum of intent” on a minerals deal with the US could be signed online on Thursday.
However, speaking at the White House later – where he was hosting the Italian prime minister, US President Donald Trump said it was likely to be next week.
The deal was expected to be done weeks ago but was derailed by the Ukrainian leader’s falling out at the White House.
President Trump wants to share in profits from Ukraine’s natural resources in what he says is repayment for military aid. It’s hoped America having a stake in the country could also help maintain any truce.
In his media conference, Mr Zelenskyy also claimed he had evidence of China helping Russia with artillery.
“We believe that Chinese representatives are engaged in the production of some weapons on the territory of Russia,” the Ukrainian leader said.
He did not specify whether he meant artillery systems or shells.
It comes after Ukraine said recently that it had captured two Chinese citizens fighting in the east of the country.
US efforts to broker a ceasefire have so far failed to provide a breakthrough, with critics accusing Russia of stalling and not really wanting peace.
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‘I don’t hold Zelenskyy responsible’
President Trump was asked on Thursday how long Mr Putin had to respond to his ceasefire proposal before facing either tariffs or more sanctions.
“We’re going to be hearing from them this week, very shortly, actually,” he told reporters.
He also said that while he does not hold President Zelenskyy responsible for the war, he is “not a big fan”.
“I’m not happy with him, and I’m not happy with anybody involved,” he said.
“I’m not blaming him, but what I am saying is that I wouldn’t say he’s done the greatest job. Okay? I’m not a big fan.”
Three killed in drone attack
US envoy Mr Witkoff was joined in Paris earlier by US secretary of state Marco Rubio.
The men held talks with French, British and German representatives – the so-called “coalition of the willing” who could provide security guarantees in the event of a ceasefire.
Ukraine’s presidential chief of staff, foreign minister and defence minister were also there and a follow-up is scheduled for next week in London.
Talks took place at the Elysee Palace in Paris. Pic: Reuters
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Will talks bring Ukraine ceasefire?
While a total ceasefire has proved elusive, a 30-day moratorium on striking energy infrastructure targets was previously agreed.
However, both sides have accused each other of breaking the agreement.
Russian government spokeswoman Maria Zakharova claimed on Thursday that Ukraine had breached it 80 times.
Three were killed and dozens hurt in drone strikes on Dnipro. Pic: Reuters
Pic: Reuters
President Zelenskyy, meanwhile, said Russian energy attacks had decreased but that it was attacking civilian infrastructures instead.
Three people, including a child, were killed overnight in a drone attack on Ukraine’s southeastern city of Dnipro, according to officials, with 30 wounded.
Local authorities said widespread damage was caused to civilian infrastructure, including an educational institution, residential buildings, a gym and a dormitory.
It comes after at least 35 people died in a Russian missile strike on Sumy at the weekend.
The White House has hit out at an “appalling” attempt by a Democratic senator to return a father wrongly deported to El Salvador.
Chris Van Hollen arrived in El Salvador on Wednesday to speak to the country’s leaders about Kilmar Abrego Garcia, who was removed from the US by the Trump administration in March despite an immigration court order preventing his deportation.
Washington acknowledged Mr Garcia was deported due to an “administrative error”.
The US Supreme Court has called on the administration to facilitate his return, upholding a court order by Judge Paula Xinis, but Trump officials have claimed Mr Garcia has ties to the MS-13 gang.
Mr Garcia’s lawyers have argued there is no evidence of this.
Speaking about Mr Van Hollen’s trip to El Salvador, White House spokesperson Karoline Leavitt said the Democrats “still refuse to accept the will of the American people”.
She alleged Mr Garcia was an “illegal alien MS-13 terrorist” and claimed his wife petitioned for court protection against him after alleged incidents of domestic violence.
White House press secretary Karoline Leavitt.
Pic: AP/Jose Luis Magana
After outlining the allegations against Mr Garcia, she went on: “All of that is not enough to stop the Democrat Party from their lies.
“The number one issue they are focused on right now is bringing back this illegal alien terrorist to America.
“It’s appalling and sad that Senator Van Hollen and the Democrats are plotting his trip to El Salvador today, are incapable of having any shred of common sense or empathy for their own constituents and our citizens.”
After making a statement, Ms Leavitt introduced Patty Morin, who described graphic details of her daughter’s murder by an immigrant from El Salvador.
Rachel Morin was raped and murdered by Victor Martinez-Hernandez along a popular hiking trail northeast of Baltimore.
Afterwards, Ms Leavitt left without taking any questions from reporters.
Kilmar Abrego Garcia. Pic: CASA/AP
Senator travels to El Salvador
Mr Van Hollen met with the El Salvador vice president during his trip to the Central American country.
But he did not meet with President Nayib Bukele, who publicly met with Donald Trump in the Oval Office this week, nor did he meet Mr Garcia himself.
US senator Chris Van Hollen has been in El Salvador.
Pic: Reuters/Jose Cabezas
In a post on X, he said he would continue to fight for Mr Garcia’s return.
During Mr Bukele’s trip to the White House earlier this week, he said he would not return Mr Garcia, likening it to smuggling “a terrorist into the United States”.
Along with Mr Garcia, the Trump administration has deported hundreds of people, mostly Venezuelans, who it claims are gang members without presenting evidence and without a trial.
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‘I’m talking about violent people’
Judge’s contempt warning
It comes hours after a US federal judge warned that he could hold the Trump administration in criminal contempt for violating his orders to turn around planes carrying deportees to El Salvador.
The comments are an escalation in a row which began last month when US district judge James E Boasberg issued an order temporarily blocking the deportations.
However, lawyers told him there were already two planes with immigrants in the air – one headed for El Salvador, the other for Honduras.
Mr Boasberg verbally ordered the planes to be turned around, but the directive was not included in his written order. The Trump administration then denied refusing to comply.
Charges could be brought forward by the Justice Department, NBC News, Sky’s US partner network, reported.
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However, that could create an uncomfortable situation for the department, which is headed by the attorney general – a position appointed by the president.
If the executive-led Justice Department refused to prosecute the matter, Judge Boasberg said he would appoint another attorney to prosecute the contempt.
The judge wrote: “The Constitution does not tolerate wilful disobedience of judicial orders – especially by officials of a coordinate branch who have sworn an oath to uphold it.”
He gave the government a 23 April deadline.
White House director of communications Steven Cheung said the administration would seek “immediate appellate relief” – a review of a decision within a lower court before the case has been resolved.
World
Israeli troops will remain in ‘security zones’ in Gaza, Lebanon and Syria indefinitely, minister says
Israel’s troops will remain in “security zones” in Gaza, Lebanon and Syria indefinitely, according to the country’s defence minister.
Israeli forces have taken over more than half of the Gaza Strip in recent weeks in a renewed campaign to pressure the territory’s rulers Hamas to free hostages after a ceasefire ended last month.
Israel has also refused to withdraw from some areas in Lebanon following a truce with Hezbollah last year, and it seized a buffer zone in southern Syria after President Assad’s regime was overthrown last December.
Israeli defence minister Israel Katz said his forces “will remain in the security zones as a buffer between the enemy and [Israeli] communities in any temporary or permanent situation in Gaza – as in Lebanon and Syria”.
He said that “unlike in the past” the military was “not evacuating areas that have been cleared and seized”.
His comments could further complicate talks with Hamas over a ceasefire and the release of hostages.
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Gazans struggle to find bodies under rubble
On Wednesday, health officials said Israeli strikes in Gaza killed 22 people, including a girl who was less than a year old.
Fifty-nine hostages are still inside Gaza, 24 of whom are believed to be alive, after dozens of others were previously released in ceasefire agreements or other deals.
Israeli defence minister Israel Katz. Pic: AP
Meanwhile, Lebanese President Joseph Aoun said Israel’s continued presence in some areas in Lebanon was “hindering” the Lebanese army’s full deployment as required by the ceasefire negotiated with Israel.
The war left over 4,000 people dead, many of them civilians.
Two Israeli drone strikes in southern Lebanon on Wednesday killed two people, the health ministry said. The United Nations said Israeli strikes in Lebanon have killed more than 70 civilians since the ceasefire took effect in November.
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Lack of rescue equipment leaves Gazans dying under rubble
A timeline of events since the 7 October attacks
Israel has said it must keep control of some areas to prevent a repeat of the Hamas attack that triggered the latest conflict in Gaza.
The war began when militants attacked southern Israel on 7 October 2023, killing 1,200 people, mostly civilians, and kidnapping about 250.
Israel’s retaliatory offensive has killed more than 51,000 people, according to Gaza’s health ministry.
The figure includes more than 1,600 people killed since a ceasefire ended and Israel resumed its offensive last month to pressure Hamas to accept changes to the agreement.
The health ministry does not distinguish between civilians and combatants in its total count but said that more than half of the fatalities are women and children.
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