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.”
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.
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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.
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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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2:54
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, a key battleground in the next election, the chancellor is expected to change the rules so that parents on Universal Credit are given more childcare and given the funding upfront.
The Treasury is also believed to be planning a hundreds of millions cash injection into expanding access to 30 hours of free access to the over threes.
The chancellor also plans to loosen staff to child ratios for two-year-olds, which could make the cost of childcare a little cheaper.
He is also planning to extend the provision of up to 30 hours a week to one and two-year-olds which could form a central plank in his pitch of helping with the cost of living and getting parents into work.
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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.
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.
Image: 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.
The water shortfall situation in England has been described as a “nationally significant incident”, with five areas officially in drought ahead of an amber heat health alert coming into force for large parts of the country.
Six further areas are experiencing prolonged dry weather following the driest six months to July since 1976.
Many river flows and water reservoir levels in England continue to recede compared to June despite some storms and showers in July, which helped mask that it was still the fifth-warmest July on record.
Image: A drone view from June shows vehicles using a bridge to pass over a dry section of the Woodhead Reservoir. Pic: Reuters
Image: A general view of Lindley reservoir near Otley in West Yorkshire with low water levels in June. Pic: PA
Drier conditions have returned in August and now parts of the country are bracing for the fourth heatwave 2025, with today’s amber alert covering the East Midlands, West Midlands, East of England, London, and the South East.
Temperatures are forecast to rise above 30C (86F) in some areas, possibly even soaring past 35C (95F) in the south, threatening this year’s heat record of 35.8C (95.4F) in Faversham, Kent, on 1 July.
A milder yellow heat health alert is in place for the South West, North East, North West, Yorkshire and The Humber.
The alerts by the UK Health Security Agency (UKHSA) are due to be in place from 9am today until 6pm tomorrow, and put more pressure on struggling public water supplies and navigational waterways.
Image: People enjoy the weather in Barnes on Monday. Pic: PA
Image: A man stands on a paddleboard with his dog near the beach at Rhos-on-Sea, Wales. Pic: Reuters
‘We are calling on everyone to play their part’
The National Drought Group (NDG), which includes the Met Office, government, regulators, water companies, the National Farmers’ Union, Canal & River Trust, anglers, and conservation experts, met at the start of the week to highlight the water-saving measures each sector is taking.
The group praised the public for reducing their daily usage, after Yorkshire Water reported a 10% reduction in domestic demand following the introduction of their hosepipe ban, which saved up to 80 million litres per day.
“The situation is nationally significant, and we are calling on everyone to play their part and help reduce the pressure on our water environment,” said Helen Wakeham, NDG chair and director of water at the Environment Agency.
“Water companies must continue to quickly fix leaks and lead the way in saving water.
“We know the challenges farmers are facing and will continue to work with them, other land users, and businesses to ensure everyone acts sustainably.”
Current drought situation in England
– Drought has been declared in: Yorkshire, Cumbria and Lancashire, Greater Manchester Merseyside and Cheshire, East Midlands, West Midlands.
– Areas in prolonged dry weather (the phase before drought) are: Northeast, Lincolnshire and Northamptonshire, East Anglia, Thames, Wessex, Solent and South Downs.
– Yorkshire Water has a hosepipe ban in place for all its customers, while Thames, South East, and Southern Water have postcode-specific bans.
– Reservoirs fell by 2% last week and are now 67.7% full on average across England. The average for the first week of August is 80.5%.
– The lowest reservoirs are Blithfield (49.1%), Derwent Valley (47.2%), Chew Valley Lake (48.3%), Blagdon (46.3%).
– Rainfall in July was 89% of the long-term average for the month across England. This is the sixth consecutive month of below-average rainfall.
– Across the country, 51% of river flows were normal, with the rest below normal, notably low or exceptionally low.
– Two rivers – Wye and Ely Ouse – were the lowest on record for July.
– There are currently navigation closures or restrictions across sections of the Leeds and Liverpool, Macclesfield, Trent and Mersey, Peak Forest, Rochdale, Oxford and Grand Union Canal.
The rainfall at the end of July was welcomed by growers, even though the dry weather is set to have an impact on the harvest, with the National Farmers Union (NFU) noting how water shortages have impacted the growing season.
“Some farms are reporting a significant drop in yields, which is financially devastating for the farm business and could have impacts for the UK’s overall harvest,” NFU vice-president Rachel Hallos said.
Ms Hallos urged that investment in water infrastructure and a more effective planning system was urgently needed “to avoid the swing between extreme drought and flooding and to secure water supplies for food production”.
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2:11
Drought in England explained
The dry weather also impacts the health of the waterways, as low water levels reduce oxygen levels in the water, which can lead to fish deaths, more algae growth, and could prevent wildlife from moving up or downstream.
Water minister Emma Hardy said the government is “urgently stepping up its response” to respond to dry weather, including investment in new reservoirs, but called on firms to do their bit.
“Water companies must now take action to follow their drought plans,” she said.
“I will hold them to account if they delay.”
Tips for staying cool from the UKHSA
Close windows and curtains in rooms that face the sun
Seek shade and cover up outside
Use sunscreen, wear a hat and sunglasses
Keep out of the sun at the hottest times, between 11am and 3pm
Restrict physical activity to the cooler mornings or evenings
Know how to respond to heat exhaustion and heatstroke
“We face a growing water shortage in the next decade,” the minister warned, which she said is why building new reservoirs – something the government has criticised the previous administration for not doing – is so important.
Campaigners have criticised a change to the rules around declarations of interest in the House of Lords as a “retrograde step” which will lead to a “significant loss of transparency”.
Since 2000, peers have had to register a list of “non-financial interests” – which includes declaring unpaid but often important roles like being a director, trustee, or chair of a company, think tank or charity.
But that requirement was dropped in April despite staff concerns.
Tom Brake, director of Unlock Democracy, and a former Liberal Democrat MP, wants to see the decision reversed.
“It’s a retrograde step,” he said. “I think we’ve got a significant loss of transparency and accountability and that is bad news for the public.
“More than 25 years ago, the Committee on Standards in Public Life identified that there was a need for peers to register non-financial interests because that could influence their decisions. I’m confused as to what’s happened in the last 25 years that now means this requirement can be scrapped.
“This process seems to be all about making matters simpler for peers, rather than what the code of conduct is supposed to do, which is to boost the public’s confidence.”
Image: MPs and peers alike have long faced scrutiny over their interests outside Westminster. File pic
Rules were too ‘burdensome’, say peers
The change was part of an overhaul of the code of conduct which aimed to “shorten and clarify” the rules for peers.
The House of Lords Conduct Committee argued that updating non-financial interests was “disproportionately burdensome” with “minor and inadvertent errors” causing “large numbers of complaints”.
As a result, the register of Lords interests shrunk in size from 432 pages to 275.
MPs have a different code of conduct, which requires them to declare any formal unpaid positions or other non-financial interests which may be an influence.
A source told Sky News there is real concern among some Lords’ staff about the implications of the change.
Non-financial interest declarations have previously highlighted cases where a peer’s involvement in a think tank or lobbying group overlapped with a paid role.
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Protesters disrupt House of Lords
Cricket legend among peers to breach code
There are also examples where a peer’s non-financial interest declaration has prompted an investigation – revealing a financial interest which should have been declared instead.
In 2023, Lord Skidelsky was found to have breached the code after registering his role as chair of a charity’s trustees as a non-financial interest.
Image: Lord Skidelsky. Pic: UK Parliament
The Commissioner for Standards investigated after questions were raised about the charity, the Centre for Global Studies.
He concluded that the charity – which was funded by two Russian businessmen – only existed to support Lord Skidelsky’s work, and had paid his staff’s salaries for over 12 years.
In 2021, Lord Botham – the England cricket legend – was found to have breached the code after registering a non-financial interest as an unpaid company director.
The company’s accounts subsequently revealed he and his wife had benefitted from a director’s loan of nearly £200,000. It was considered a minor breach and he apologised.
Image: Former cricketer Lord Botham. File pic: PA
‘Follow the money’
Lord Eric Pickles, the former chair of the anti-corruption watchdog, the Advisory Committee on Business Appointments, believes focusing on financial interests makes the register more transparent.
“My view is always to follow the money. Everything else on a register is camouflage,” he said.
“Restricting the register to financial reward will give peers little wriggle room. I know this is counterintuitive, but the less there is on the register, the more scrutiny there will be on the crucial things.”
Image: Lord Eric Pickles
‘I was shocked’
The SNP want the House of Lords to be scrapped, and has no peers of its own. Deputy Westminster leader Pete Wishart MP is deeply concerned by the changes.
“I was actually quite horrified and quite shocked,” he said.
“This is an institution that’s got no democratic accountability, it’s a job for life. If anything, members of the House of Lords should be regulated and judged by a higher standard than us in the House of Commons – and what’s happened is exactly the opposite.”
Image: Michelle Mone attends the state opening of parliament in 2019. Pic: Reuters
The government has pledged to reform the House of Lords and is currently trying to push through a bill abolishing the 92 remaining hereditary peers, which will return to the House of Commons in September.
But just before recess the bill was amended in the Lords so that they can remain as members until retirement or death. It’s a change which is unlikely to be supported by MPs.
Image: MPs and peers alike have long faced scrutiny over their interests outside Westminster. File pic
A spokesperson for the House of Lords said: “Maintaining public confidence in the House of Lords is a key objective of the code of conduct. To ensure that, the code includes rigorous rules requiring the registration and declaration of all relevant financial interests held by members of the House of Lords.
“Public confidence relies, above all, on transparency over the financial interests that may influence members’ conduct. This change helps ensure the rules regarding registration of interests are understandable, enforceable and focused on the key areas of public concern.
“Members may still declare non-financial interests in debate, where they consider them directly relevant, to inform the House and wider public.
“The Conduct Committee is appointed to review the code of conduct, and it will continue to keep all issues under review. During its review of the code of conduct, the committee considered written evidence from both Unlock Democracy and Transparency International UK, among others.”
A man jailed for plotting to murder a member of the gang that carried out Britain’s biggest-ever cash robbery has been attacked in prison.
Daniel Kelly, 46, was one of three men found guilty of conspiring to murder Paul Allen, 46, who was shot twice as he stood in his kitchen in Woodford, east London, on 11 July 2019.
The attack left the former cage fighter – who was a member of the Securitas heist gang that stole £54m from a cash depot in Tonbridge, Kent, in 2006 – paralysed from the chest down.
Image: Paul Allen was jailed for 18 years over the Securitas heist. Pic: PA
Image: Paul Allen was in the kitchen when he was shot. Pic: Met Police
Kelly was sentenced to 36 years in prison, with an extra five years on licence, at the Old Bailey in April.
Louis Ahearne, 36, was jailed for 33 years, and his brother Stewart Ahearne, 46, was jailed for 30 years over the shooting, likened by detectives to “the plot [of] a Hollywood blockbuster”.
A source told Sky News that Kelly was attacked by another prisoner who tried to slit his throat on his arrival to Frankland prison, in County Durham, last week.
“Danny is a gunman happy to shoot people but not scary with his hands. He’s a dead man walking in jail,” they said.
It is understood Kelly suffered only minor injuries and the Prison Service is treating the attack as a minor incident.
Allen was living in a large detached rented house with his partner and three young children after being released from an 18-year prison sentence over the Securitas raid when he was shot.
In her sentencing remarks, Judge Sarah Whitehouse KC said she believed the three men convicted “were motivated by a promise of financial gain”, but she had “no doubt” others were involved.
The day before the shooting, Kelly and Louis Ahearne used a rented car to carry out a burglary in Kent, accessing the gated community by pretending to be police officers.
A month before that, Kelly and the Ahearnes stole more than $3.5m (£2.78m) worth of Ming dynasty antiques from the Museum of Far Eastern Arts in Geneva, for which the brothers had been jailed in Switzerland.
Kelly is also wanted in Japan over the robbery of a Tokyo jewellery store in 2015 in which a security guard was punched in the face – but extradition proceedings have been put on hold while he serves his sentence.