• Help for first time buyers, such as 99% mortgages
• A tax on air passenger duty for business class travel
• Cutting back plans to increase departmental spending to save money
Labour said that whatever is announced, it won’t be enough to “undo the economic vandalism of the last decade” – and the tax burden is still set to rise to a record high.
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With Sir Keir Starmer’s party ahead by around 20 points in the polls, some Tory MPs want Mr Hunt to go further and cut personal income tax with an election approaching.
This is seen as a more headline-grabbing measure that benefits more voters, including pensioners.
But the chancellor is said to have decided against this after forecasts from the UK’s fiscal watchdog, the Office for Budget Responsibility (OBR), gave him less fiscal headroom than hoped.
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0:37
Patel: ‘Budget should back working people’
‘Conservatives know lower tax means higher growth’
A 2p cut to income tax would cost around £14bn, whereas the 2p cut to NI will cost around £10bn.
Combined with the 2p cut to NI announced in November, the move will save 27 million workers £900 on average.
In comments released by the Treasury on Tuesday night, Mr Hunt said: “Of course, interest rates remain high as we bring down inflation.
“But because of the progress we’ve made… delivering on the prime minister’s economic priorities, we can now help families with permanent cuts in taxation.
“We do this not just to give help where it is needed in challenging times. But because Conservatives know lower tax means higher growth. And higher growth means more opportunity and more prosperity.”
Image: Jeremy Hunt prepares his budget. Pic: Flickr
Mr Hunt added that growth “cannot come from unlimited migration”, but “can only come by building a high-wage, high-skill economy”.
He also took aim at Labour, claiming a government under Sir Keir Starmer would “destroy jobs” and “risk family finances with new spending that pushes up tax”.
Tories ‘overseeing 14 years of economic failure’ – Labour
But shadow chancellor Rachel Reeves said Labour is “now the party of economic responsibility” as she accused the Tories of overseeing “14 years of economic failure” with the overall tax burden still rising.
She said: “The Conservatives promised to fix the nation’s roof, but instead they have smashed the windows, kicked the door in and are now burning the house down.
“Taxes are rising, prices are still going up in the shops and we have been hit by recession. Nothing the chancellor says or does can undo the economic vandalism of the Conservatives over the past decade.
“The country needs change, not another failed budget or the risk of five more years of Conservative chaos”.
Image: Sir Keir Starmer and Rachel Reeves preparing for Wednesday’s budget. Pic: PA
How will Hunt pay for Budget 2024 giveaway?
Experts have warned that a 2p national insurance cut would not be enough to stop the tax burden rising because of previously announced freezes to personal tax thresholds.
There are also questions about whether Mr Hunt can afford to pay for the measure.
He has said he will not pay for tax cuts with borrowing, meaning a combination of spending cuts and tax rises elsewhere will be necessary.
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2:41
‘Tax at highest level since WWII’
Revenue-raisers Mr Hunt is said to be considering include reducing the scope of non-dom tax relief, which Labour has said it would scrap to fund services such as the NHS.
A new levy on vaping is on the cards, as is a tax on air passenger duty for business class travel and a tax crackdown on those who rent out second homes for holiday lets.
The chancellor is also considering cutting back plans to increase departmental spending by just 0.75% a year, instead of 2%, to raise around £5bn.
Lib Dem leader Sir Ed Davey – who will be targeting Mr Hunt’s “Blue Wall” seat at the election – described the Conservatives as “the great tax swindlers” and said they should be prioritising the NHS.
He said: “Rishi Sunak has led the economy into a recession and forced families to pick up the tab. They have no shame.
“The Conservatives must put the NHS at the heart of the budget. It is no wonder the economy isn’t growing when millions of people are stuck on NHS waiting lists, unable to work.”
Watch Sky News’s coverage of the Budget live from 11am on Wednesday.
In common with many parents across the country, here’s a conversation that I have with my young daughter on a semi-regular basis (bear with me, this will take on some political relevance eventually).
Me: “So it’s 15 minutes until your bedtime, you can either have a little bit of TV or do a jigsaw, not both.”
Daughter: “Ummmm, I want to watch TV.”
Me: “That’s fine, but it’s bed after that, you can’t do a jigsaw as well.”
Fast-forward 15 minutes.
Me: “Right, TV off now please, bedtime.”
(Pause)
Daughter: “I want to do a jigsaw.”
Now replace me with the government, the TV and jigsaw options with axing welfare cuts and scrapping the two-child cap, and my daughter with rebellious backbenchers.
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6:36
Rachel Reeves’s fiscal dilemma
That is the tension currently present between Downing Street and Labour MPs. And my initial ultimatum is the messaging being pumped out from the government this weekend.
In essence: you’ve had your welfare U-turn, so there’s no money left for the two-child cap to go as well.
As an aside – and before my inbox fills with angry emails lambasting me for using such a crude metaphor for policies that fundamentally alter the lives of some of the most vulnerable in society – yes, I hear you, and that’s part of my point.
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9:11
Welfare U-turn ‘has come at cost’
For many in Labour, this approach feels like the lives of their constituents are being used in a childish game of horse-trading.
So what can be done?
Well, the government could change the rules.
Altering the fiscal rules is – and will likely remain – an extremely unlikely solution. But as it happens, one of Labour’s proverbial grandparents has just popped round with a different suggestion.
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5:31
Welfare: ‘Didn’t get process right’ – PM
A wealth tax, Lord Neil Kinnock says, is the necessary outcome of the economic restrictions the party has placed on itself.
Ever the Labour storyteller, Lord Kinnock believes this would allow the government to craft a more compelling narrative about whose side this administration is on.
That could be valuable, given one of the big gripes from many backbench critics is that they still don’t really understand what this prime minister stands for – and by extension, what all these “difficult decisions” are in aid of.
The downside is whether it will actually raise much money.
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16:02
Is Corbyn an existential risk to Labour?
The super-rich may have lots of assets to take a slice from, but they also have expensive lawyers ready to find novel ways to keep their client’s cash away from the prying eyes of the state.
Or, of course, they could just leave – as many are doing already.
In the short term, the future is a bit easier to predict.
If Downing Street is indeed now saying there is no money to scrap the two-child cap (after heavy briefing in the opposite direction just weeks ago), an almighty tantrum from the backbenches is inevitable.
And as every parent knows, the more you give in, the harder it becomes to hold the line.
The UK has re-established diplomatic ties with Syria, David Lammy has said, as he made the first visit to the country by a British minister for 14 years.
The foreign secretary visited Damascus and met with interim president Ahmed al Sharaa, also the leader of the rebel group Hayat Tahrir al-Sham (HTS), and foreign minister Asaad al Shaibani.
In a statement, Mr Lammy said a “stable Syria is in the UK’s interests” and added: “I’ve seen first-hand the remarkable progress Syrians have made in rebuilding their lives and their country.
“After over a decade of conflict, there is renewed hope for the Syrian people.
“The UK is re-establishing diplomatic relations because it is in our interests to support the new government to deliver their commitment to build a stable, more secure and prosperous future for all Syrians.”
Image: Foreign Secretary David Lammy with Syria’s interim president Ahmed al Sharaa in Damascus. Pic: X / @DavidLammy
The Foreign, Commonwealth and Development Office has also announced a £94.5m support package for urgent humanitarian aid and to support the country’s long-term recovery, after a number of British sanctions against the country were lifted in April.
While HTS is still classified as a proscribed terror group, Sir Keir Starmer said last year that it could be removed from the list.
The Syrian president’s office also said on Saturday that the president and Mr Lammy discussed co-operation, as well as the latest developments in the Middle East.
Since Assad fled Syria in December, a transitional government headed by Mr al Sharaa was announced in March and a number of western countries have restored ties.
In May, US President Donald Trump said the United States would lift long-standing sanctions on Syria and normalise relations during a speech at the US-Saudi investment conference.
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1:12
From May: Trump says US will end sanctions for Syria
He said he wanted to give the country “a chance at peace” and added: “There is a new government that will hopefully succeed.
“I say good luck, Syria. Show us something special.”
Secret Service quietly amasses one of the world’s largest crypto cold wallets with $400 million seized, exposing scams through blockchain sleuthing and VPN missteps.