There will be a lot of positive talk from the chancellor when he delivers his autumn statement on Wednesday, but this will be a fiscal event full of illusory gains.
It’s a fantasy because these gains on borrowing are largely the product of high inflation, which has bolstered tax receipts. The government hasn’t admitted it yet, but inflation will inevitably drive up spending too.
It means Hunt’s room for manoeuvre is actually limited if he wants to meet his target of getting debt falling as a proportion of gross domestic product (GDP).
Although interest rates, which have been higher than expected, will weigh on the public finances, the windfall from higher taxes bolstered by inflation and wage growth will more than offset this. The Office for Budget Responsibility (OBR) will likely show that the government’s headroom against that target has grown from £6.5bn to around £13bn.
Jeremy Hunt will want to claim this as a victory, while also tempering expectations for tax cuts. His message will be that the public finances are improving under this government but they are in too poor a shape to allow for any tax cuts.
This is where the political infighting begins. Many MPs within his own party want him to use that headroom to cut taxes. They are perturbed by the fact that a Conservative government has overseen growth in the tax burden to its largest in the post-war era.
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Among the most egregious of these tax rises is the freezing of thresholds, a stealth tax which will see taxpayers pay £40bn a year more by 2028. It has dragged millions of public sector workers, including teachers and nurses, into the higher band of tax.
Tensions over taxation have been simmering in the party and will likely flare up again because Hunt is unlikely to make any big giveaways. The government is insistent that the priority must be to bring inflation down because any tax rises could drive inflation higher. However, with the target to halve inflation now met, MPs will be asking when the tax cuts can begin.
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Image: Jeremy Hunt will deliver his autumn statement on Wednesday
Both Hunt and Rishi Sunak are sensitive to this and will probably throw a bone or two. Downing Street has been looking for options that are relatively inexpensive and less likely to increase inflation.
There are a number of policies under consideration, including the scrapping of inheritance tax, or a reduction in the rate from 40% to 20% on estates above £325,000. The government could also cancel a planned increase on stamp duty. Together, these policies would cost about £5.2bn. The chancellor is also expected to cancel the planned 5p increase in fuel duty from April next year, which will cost £6bn.
So, any giveaways would quickly swallow up the headroom, at a time when government spending will inevitably have to rise. Departmental budgets are set in cash terms and high inflation means that the cost of paying prison guards and running courts has gone up. Without substantial increases, public services face real-terms pay cuts.
On current plans, unprotected departments would see their spending power cut by 16% between 2022-23 and 2027-28, which would be a similar pace of cuts to those implemented by George Osborne in the early 2010s. The Resolution Foundation, a left-leaning think tank, described this scale of the cuts as a “fiscal fiction” that is “undeliverable”.
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Chancellor on ‘next part of economic plan’
The opposition will be keeping a hawk eye on this and will be quick to decry any signs that the country is returning to a period of austerity. It will also be quick to attack any of the government’s tax-raising plans – and there will be a number of them.
Tax thresholds will probably remain frozen into 2029, a policy that could raise another £6bn. The Treasury will also be cracking down on benefits, uprating them in line with October’s inflation rate of 4.6% instead of September’s figure of 6.7%. That could save £2bn. A tweak to the triple lock calculation for pensions could net £600m.
So, for all the large upward revisions to the numbers coming out of the OBR, it’s a fiscal event that is unlikely to inspire. There will be some tweaks around the edges and some big talk on plans to boost economic growth.
However, the government will probably want to keep its powder dry for the budget in March. Unfortunately, that may not be enough to satisfy Tory MPs, who are hungry for tax giveaways now.
It is “shameful” that black boys growing up in London are “far more likely” to die than white boys, Metropolitan Police chief Sir Mark Rowley has told Sky News.
Sir Mark, who came out of retirement to become head of the UK’s largest police force in 2022, said: “We can’t pretend otherwise that we’ve got a history between policing and black communities where policing has got a lot wrong.
“And we get a lot more right today, but we do still make mistakes. That’s not in doubt. I’m being as relentless in that as it can be.”
He said the “vast majority” of the force are “good people”.
However, he added: “But that legacy, combined with the tragedy that some of this crime falls most heavily in black communities, that creates a real problem because the legacy creates concern.”
Sir Mark, who also leads the UK’s counter-terrorism policing, said it is “not right” that black boys growing up in London “are far more likely to be dead by the time they’re 18” than white boys.
“That’s, I think, shameful for the city,” he admitted.
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Police chase suspected phone thief
Baroness Casey was commissioned in 2021 to look into the Met Police after serving police officer Wayne Couzens abducted, raped and murdered Sarah Everard.
She pinned the primary blame for the Met’s culture on its past leadership and found that stop and search and the use of force against black people was excessive.
At the time, Sir Mark, who had been commissioner for six months when the report was published, said he would not use the labels of institutionally racist, institutionally misogynistic and institutionally homophobic, which Casey insisted the Met deserved.
However, London Mayor Sadiq Khan, who helped hire Sir Mark – and could fire him – made it clear the commissioner agreed with Baroness Casey’s verdict.
After the report was released, Sir Mark said “institutional” was political language so he was not going to use it, but he accepted “we have racists, misogynists…systematic failings, management failings, cultural failings”.
A few months after the report, Sir Mark launched a two-year £366m plan to overhaul the Met, including increased emphasis on neighbourhood policing to rebuild public trust and plans to recruit 500 more community support officers and an extra 565 people to work with teams investigating domestic violence, sexual offences and child sexual abuse and exploitation.
Watch the full interview on Sunday Morning with Trevor Phillips from 8.30am on Sunday.
Labour’s largest union donor, Unite, has voted to suspend Deputy Prime Minister Angela Rayner over her role in the Birmingham bin strike row.
Members of the trade union, one of the UK’s largest, also “overwhelmingly” voted to “re-examine its relationship” with Labour over the issue.
They said Ms Rayner, who is also housing, communities and local government secretary, Birmingham Council’s leader, John Cotton, and other Labour councillors had been suspended for “bringing the union into disrepute”.
There was confusion over Ms Rayner’s membership of Unite, with her office having said she was no longer a member and resigned months ago and therefore could not be suspended.
But Unite said she was registered as a member. Parliament’s latest register of interests had her down as a member in May.
The union said an emergency motion was put to members at its policy conference in Brighton on Friday.
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Unite is one of the Labour Party’s largest union donors, donating £414,610 in the first quarter of 2025 – the highest amount in that period by a union, company or individual.
The union condemned Birmingham’s Labour council and the government for “attacking the bin workers”.
Mountains of rubbish have been piling up in the city since January after workers first went on strike over changes to their pay, with all-out strike action starting in March. An agreement has still not been made.
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Rat catcher tackling Birmingham’s bins problem
Ms Rayner and the councillors had their membership suspended for “effectively firing and rehiring the workers, who are striking over pay cuts of up to £8,000”, the union added.
‘Missing in action’
General secretary Sharon Graham told Sky News on Saturday morning: “Angela Rayner, who has the power to solve this dispute, has been missing in action, has not been involved, is refusing to come to the table.”
She had earlier said: “Unite is crystal clear, it will call out bad employers regardless of the colour of their rosette.
“Angela Rayner has had every opportunity to intervene and resolve this dispute but has instead backed a rogue council that has peddled lies and smeared its workers fighting huge pay cuts.
“The disgraceful actions of the government and a so-called Labour council, is essentially fire and rehire and makes a joke of the Employment Relations Act promises.
“People up and down the country are asking whose side is the Labour government on and coming up with the answer not workers.”
Image: Piles of rubbish built up around Birmingham because of the strike over pay
Sir Keir Starmer’s spokesman said the government’s “priority is and always has been the residents of Birmingham”.
He said the decision by Unite workers to go on strike had “caused disruption” to the city.
“We’ve worked to clean up streets and remain in close contact with the council […] as we support its recovery,” he added.
A total of 800 Unite delegates voted on the motion.
Binance co-founder CZ has dismissed a Bloomberg report linking him to the Trump-backed USD1 stablecoin, threatening legal action over alleged defamation.