You remember that “dire economic inheritance” the new government keeps talking about?
Earlier in the summer Rachel Reeves produced a document suggesting the state of Britain’s economy and public finances was so dismal – so much worse than expected – that she would be forced into introducing significant measures (which read: lots more tax rises) in this autumn’s budget.
The only thing is, much of the economic news since then has been, well, not dire in the slightest. Inflation is still low – so much so that earlier this month the Bank of England cut interest rates.
More compellingly, the latest estimates of gross domestic product (GDP) – the broadest measure of economic activity – show that far from being in recession, the UK is growing at a decent whack.
Indeed, having been the second-slowest growing economy in the group of seven leading industrialised nations in 2023, Britain is, at least over the first six months of 2024, the fastest growing member of the G7.
Please use Chrome browser for a more accessible video player
2:49
Do Labour’s claims stack up?
So a lot of people have been scratching their chins and wondering whether the new government might be overstating it a bit.
Might they just be making a political point, aimed at their predecessors in government?
Well, this morning we had the latest public finances numbers and here the picture is considerably closer to the Reeves version than those other bits of data.
The key thing here is to look beneath the overall borrowing figures. There you see a couple of key bits of information.
Advertisement
First, despite the fact that the economy is growing faster than expected, it’s not resulting in a big windfall of tax revenues (as often happens).
Instead, according to the Office for National Statistics figures, revenues are basically in line with where the Office for Budget Responsibility (OBR) expected them to be around now.
The OBR forecast back in March that by now (or rather, by July – the figures we got today) the government would have collected around £327bn in tax revenues. Instead it has collected only £326bn – a little bit less. So no big windfall.
But now look at the amount it’s spending, and the story is slightly more stark. The OBR thought the government would have spent around £396bn by this point in the year.
Instead, it’s already spent £405bn.
So it’s making less than expected and spending more than expected. And that overspend might not sound much, at £9bn.
But consider that £9bn happens to be precisely the amount of “headroom” the government has before it breaks its fiscal rules and you see the issue.
And this, bear in mind, is only the data for the first four months of the fiscal year. If these trends continue, the gap could get bigger still.
So on the face of it, today’s public finance numbers provide a clear rationale for the course of action the chancellor has (according to those I talk to in Whitehall) already decided upon: more taxes and more spending cuts in this October’s budget.
Follow Sky News on WhatsApp
Keep up with all the latest news from the UK and around the world by following Sky News
However, it’s worth saying there is one other way for the chancellor to create extra headroom against her fiscal rules, which is to change the particular measure she’s judging that headroom against.
A lot of economists believe the net debt statistic she inherited from the Conservatives is the wrong one to use in her fiscal rules – and that she should use the country’s total national debt, not excluding any debt owned by the Bank of England.
Long story short, if she uses this other measure (and I’m told this is something she is considering) then she suddenly has a lot more headroom.
Even so, don’t expect her to change the tune at the budget in October. There will be more bad news to come.
The UK is on a “slippery slope towards death on demand”, according to the justice secretary ahead of a historic Commons vote on assisted dying.
In a letter to her constituents, Shabana Mahmood said she was “profoundly concerned” about the legislation.
“Sadly, recent scandals – such as Hillsborough, infected blood and the Post Office Horizon – have reminded us that the state and those acting on its behalf are not always benign,” she wrote.
“I have always held the view that, for this reason, the state should serve a clear role. It should protect and preserve life, not take it away.
“The state should never offer death as a service.”
On 29 November, MPs will be asked to consider whether to legalise assisted dying, through Kim Leadbeater’s Terminally Ill Adults (End of Life) Bill.
Please use Chrome browser for a more accessible video player
14:46
Minister ‘leans’ to assisted dying bill
Details of the legislation were published last week, including confirmation the medicine that will end a patient’s life will need to be self-administered and people must be terminally ill and expected to die within six months.
Ms Mahmood, however, said “predictions about life expectancy are often inaccurate”.
Advertisement
“Doctors can only predict a date of death, with any real certainty, in the final days of life,” she said. “The judgment as to who can and cannot be considered for assisted suicide will therefore be subjective and imprecise.”
Under the Labour MP’s proposals, two independent doctors must confirm a patient is eligible for assisted dying and a High Court judge must give their approval.
The bill will also include punishments of up to 14 years in prison for those who break the law, including coercing someone into ending their own life.
Please use Chrome browser for a more accessible video player
However, Ms Mahmood said she was concerned the legislation could “pressure” some into ending their lives.
“It cannot be overstated what a profound shift in our culture assisted suicide will herald,” she wrote.
“In my view, the greatest risk of all is the pressure the elderly, vulnerable, sick or disabled may place upon themselves.”
Labour MP Kim Leadbeater, who put forward the bill, said some of the points Ms Mahmood raised have been answered “in the the thorough drafting and presentation of the bill”.
“The strict eligibility criteria make it very clear that we are only talking about people who are already dying,” she said.
“That is why the bill is called the ‘Terminally Ill Adults (End of Life) Bill’; its scope cannot be changed and clearly does not include any other group of people.
“The bill would give dying people the autonomy, dignity and choice to shorten their death if they wish.”
In response to concerns Ms Mahmood raised about patients being coerced into choosing assisted death, Ms Leadbeater said she has consulted widely with doctors and judges.
“Those I have spoken to tell me that they are well equipped to ask the right questions to detect coercion and to ascertain a person’s genuine wishes. It is an integral part of their work,” she said.
In an increasingly fractious debate around the topic, multiple Labour MPs have voiced their concerns.
In a letter to ministers on 3 October, the Cabinet Secretary Simon Case confirmed “the Prime Minister has decided to set aside collective responsibility on the merits of this bill” and that the government would “therefore remain neutral on the passage of the Bill and on the matter of assisted dying”.
“Immediate action” is being taken after blueprints of jail layouts were shared online.
The maps detailing the layouts of prisons in England and Wales were leaked on the dark web over the past fortnight, according to The Times.
The detailed information is said to include the locations of cameras and sensors, prompting fears they could be used to smuggle drugs or weapons into prisons or help inmates plan escapes.
Security officials are now working to identify the source of the leak and who might benefit from the details.
The Ministry of Justice did not disclose which prisons were involved in the breach.
A government spokesperson said in a statement: “We are not going to comment on the specific detail of security matters of this kind, but we are aware of a breach of data to the prison estate and, like with all potential breaches, have taken immediate action to ensure prisons remain secure.”
The leak comes amid a chronic prison overcrowding crisis, which has led to early release schemes and the re-categorising of the security risks of some offenders to ease capacity pressures.
The UK will “set out a path” to lift defence spending to 2.5% of national income in the spring, the prime minister has said, finally offering a timeframe for an announcement on the long-awaited hike after mounting criticism.
Sir Keir Starmer gave the date during a phone call with Mark Rutte, the secretary general of NATO, in the wake of threats by Moscow to target UK and US military facilities following a decision by London and Washington to let Ukraine fire their missiles inside Russia.
There was no clarity though on when the 2.5% level will be achieved. The UK says it currently spends around 2.3% of GDP on defence.
A spokeswoman for Downing Street said that the two men “began by discussing the situation in Ukraine and reiterated the importance of putting the country in the strongest possible position going into the winter”.
They also talked about the deployment of thousands of North Korean soldiers to fight alongside Russia.
“The prime minister underscored the need for all NATO countries to step up in support of our collective defence and updated on the government’s progress on the strategic defence review,” the spokeswoman said.
“His government would set out the path to 2.5% in the spring.”
The defence review will also be published in the spring.
While a date for an announcement on 2.5% will be welcomed by the Ministry of Defence, analysts have long warned that such an increase is still well below the amount that is needed to rebuild the armed forces after decades of decline to meet growing global threats from Russia, an increasingly assertive China, North Korea and Iran.
They say the UK needs to be aiming to hit at least 3% – probably higher.
With Donald Trump returning to the White House, there will be significantly more pressure on the UK and other European NATO allies to accelerate increases in defence spending.