Jeremy Hunt promises ‘permanent cuts in taxation’ ahead of pre-election budget

Published

3 months ago

March 6, 2024

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Jeremy Hunt has promised to help families with “permanent cuts” in tax ahead of today’s budget.

The chancellor, who is expected to announce a 2p reduction to national insurance (NI) in what could be the last major fiscal event before the next election, said “lower tax means higher growth”.

While he did not confirm what taxes he plans to slash, Sky News understands that a cut to NI is on the cards and the 5p freeze on fuel duty will be extended.

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Mr Hunt is also said to be considering:

• A new levy on vaping products
• 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.

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.

‘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.”

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”.

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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”.

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.

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.

While this would create more scope for tax cuts, it would likely prove controversial given the pressure already on public services, with a spate of local councils going bankrupt in recent months.

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.

Business

£4.7bn spent on EU border checks but some costs ‘unnecessary’ and timetable unclear, says new National Audit Office report

Published

2 hours ago

May 20, 2024

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£4.7bn spent on EU border checks but some costs 'unnecessary' and timetable unclear, says new National Audit Office report

Traders are facing increased costs and more paperwork due to Brexit border controls, according to a new report from the independent public spending watchdog.

The government is estimated to have spent £4.7bn so far but some of that spending was not necessary, the National Audit Office (NAO) has said.

Despite the UK voting to leave the European Union in 2016 – and officially exiting in 2020 – many border control checks are yet to be implemented.

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It is “not clear” when the checks will be fully in place, said Parliament’s spending authority in its trade border report, and there is no timetable for government to achieve its “world’s most effective border” target.

This lack of certainty, as well as “repeated delays” in bringing in import controls, resulted in spending on infrastructure and staff that was “ultimately not needed”, according to the NAO.

Those delays and the associated uncertainty have also impacted businesses by adding extra cost and admin burdens, the watchdog added.

Late policy announcements have reduced the ability of businesses and ports to prepare for changes, the report said.

After five delays, the first phase of border barriers – requiring additional certification – came into force on 31 January this year, with a second phase having started on 30 April when physical checks were introduced at ports.

A third phase, requiring safety and security declarations, is scheduled for 31 October. These phases are partial import controls.

‘Increased biosecurity risk’

The UK is at “increased biosecurity risk” due to the phased implementation approach and having lost access to EU surveillance and alert systems after Brexit, the NAO said.

There is reduced awareness of “impending dangers”, such as African Swine Fever, it added.

Customs declaration work borne by businesses had been estimated to cost organisations a collective £7.5bn, according to HM Revenue and Customs (HMRC) figures in 2019, which the NAO notes has not been updated despite 39m customs declarations being made on goods moving between Britain and the EU in 2022.

The government’s £4.7bn figure is an estimate of post-Brexit border management and does not factor in the full, eventual cost.

Strategy ‘lacks clear timetable’

It has not specified when a full regime will be in place but said it intends to introduce most of the remaining import controls during 2024.

The NAO said the 2025 UK border strategy “lacks a clear timetable” and cross-government delivery plan, with individual departments leading and implementing different parts.

It added that annual reports on progress will not be published until 2025 “at the earliest”, despite the government saying in its border strategy in 2020 that it would publish yearly progress reports.

The NAO recommended full border controls operate at all ports “as soon as possible”.

Business

Online fashion giant Shein approaches Sajid Javid ahead of blockbuster IPO

Published

4 hours ago

May 20, 2024

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Online fashion giant Shein approaches Sajid Javid ahead of blockbuster IPO

Sajid Javid, the former chancellor of the exchequer, has been approached about taking a role at Shein, the online fashion giant which is progressing plans for London’s biggest stock market float for years.

Sky News has learnt that Mr Javid is among a number of senior City figures who have held talks with Donald Tang, Shein’s executive chairman, in recent weeks.

City sources said that if the appointment of Mr Javid proceeded, it could see him either join Shein’s board or become an adviser to the Chinese-founded company.

They added that Baroness Fairhead, the former BBC Trust chair, was also on a list of candidates drawn up by headhunters advising Shein.

One person close to the company said the identities of those being approached reflected both the seriousness with which Shein was taking the issue of corporate governance and the extent of its focus on a London listing.

Since leaving the government, Mr Javid has taken a role with Centricus, an investment firm which tried unsuccessfully to structure an offer for Chelsea Football Club in 2022.

A spokesman for him, who had insisted that Mr Javid would stand for re-election in his Bromsgrove seat a week before publicly announcing the opposite, did not respond to a request for comment from Sky News.

In recent weeks, several reports have repeated Sky News’ revelation that Shein has turned its attention to a London flotation amid difficulties in securing approval from US regulators.

An initial public offering would be likely to value Shein at around £50bn or more.

Paris is also understood to have been considered by the company as a possible listing venue.

Earlier this year, Jeremy Hunt, the chancellor, held talks with Donald Tang, Shein’s executive chairman, to persuade the company to commit to what would be one of London’s biggest-ever corporate flotations.

The meeting between Mr Hunt and Mr Tang underlined the importance that British officials are attaching to the idea of trumping the US in an effort to land the Shein IPO.

If it proceeded, Shein could become the London Stock Exchange’s second-largest IPO in history, behind the 2011 stock market debut of Glencore International, the commodities trading and mining group.

Mr Tang has also met executives from the LSE as well as more junior ministers as part of its IPO preparations.

Shein filed documents for a New York listing last year, but has grown concerned that its application may be rejected by the US Securities and Exchange Commission.

Goldman Sachs, JP Morgan and Morgan Stanley are advising on the deal.

Based in Singapore, Shein has become one of the world’s largest online fashion retailers, although its growth has not been untroubled amid mounting concerns about labour standards.

Last year, Sky News revealed that Shein was in talks to buy the British fashion brand Missguided from Mike Ashley’s Frasers Group.

While the transaction itself was worth only a modest sum, retail analysts said that it could pave the way for Shein to build a more meaningful profile in the UK, potentially through a broader collaboration with Frasers.

Founded in China in 2012, Shein was valued at over $100bn last year, at which point it was worth more than H&M and Zara’s parent company, Inditex, combined.

The company’s valuation was slashed to $66bn as part of a share sale last year.

Shein operates in more than 150 countries.

It has also struck an agreement with SPARC Group, a joint venture between the Ted Baker-owner ABG and Simon Property Group, a US shopping mall operator.

Under that deal, SPARC’s Forever 21 fashion brand gained distribution on the Shein platform, which boasts 150m users globally.

Shein acquired a one-third stake in SPARC Group, while SPARC Group also took an undisclosed minority interest in Shein.

The LSE’s efforts to court Shein come during a challenging period for the City as a listing venue for large multinationals, with ARM Holdings, the UK-based chip designer, opting to float in New York rather than London.

Other companies, such as the gambling operator Flutter Entertainment and drug company Indivior, are planning to shift their primary listings to the US, citing higher valuations and more liquid markets.

In recent weeks, however, London has landed the prospective IPOs of Raspberry Pi, the personal computer maker, and AOTI, a medical technology provider.

Mr Hunt last week hosted a summit at Dorneywood attended by technology companies looking at listing in the UK.

Shein declined to comment.

Business

Record profits at Ryanair after costs rise – but ticket price cuts could be on the way

Published

4 hours ago

May 20, 2024

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Record profits at Ryanair after costs rise - but ticket price cuts could be on the way

Ryanair has reported another year of record profits and passenger numbers.

The average fare at the airline, which is Europe’s largest by passenger numbers, was 21% more expensive than 12 months earlier, its annual results showed.

But the company suggested a cut in ticket prices could be on the way after this summer when prices will either be the same or more expensive than last year.

Annual profits reached €1.92bn (£1.64bn), surpassing the previous record of €1.45bn (£1.26bn) made in the year ending March 2018.

Passenger numbers also outpaced previous all-time highs and are now well above pre-pandemic numbers at 184 million – a rise of 23% on the pre-COVID year of 2019.

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Ticket prices

Those passengers paid fares costing an average of 21% more than the year up to March 2023 but Ryanair’s chief executive Michael O’Leary said if the company has to cut fares to have planes 94% full next April, May and June “then so be it”.

While demand is “strong” for summer flights and its summer schedule will operate over 200 new routes, the low-cost carrier said it remained “cautiously optimistic that peak summer 2024 fares will be flat to modestly ahead of last summer”.

Boeing headwinds

The passenger increase has come despite Boeing‘s delays in delivering new planes to the airline.

Ryanair had staked a large part of its financial success on expansion through 300 new 737 MAX 10 aircraft.

But the plane manufacturer has been beset by delays amid regulatory and media scrutiny of safety at its manufacturing sites after a door blew off an Alaska Airlines Boeing 737 MAX 9 jet.

There’s a risk those delays “could slip further”, Mr O’Leary said.

But Ryanair said it would receive “modest compensation” from Boeing for the delays.

The no-frills carrier also said its fuel bill rose 32% to €5.14bn (£4.4bn).