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.
Image: Reeves is expected to announce a budget including more taxes and more spending cuts
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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.
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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.
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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.
Prince Harry has visited war victims in Ukraine as part of his work with wounded veterans, a spokesperson has said.
The Duke of Sussex was in central London this week for a Court of Appeal hearing over his security arrangements in the UK.
The visit on Thursday to Lviv in western Ukraine, which has frequently been targeted with Russian missiles, was not announced until after he was out of the country.
Image: Prince Harry visits Superhumans Center in Lviv. Pic: Superhumans Center
Harry, who served 10 years in the British Army, visited the Superhumans Center, an orthopaedic clinic in Lviv that treats and rehabilitates wounded military personnel and civilians.
The prince, 40, was accompanied by a contingent from his Invictus Games Foundation, including four veterans who have been through similar rehabilitation experiences.
Image: Harry at the rehabilitation centre in Lviv on Thursday. Pic: Superhumans Center
A spokesperson for the Duke of Sussex said Harry had been invited by the centre’s CEO, Olga Rudneva, a year ago, and at the Invictus Games Vancouver Whistler 2025, which took place in February.
Harry travelled to the centre, which offers prosthetics, reconstructive surgery and psychological help free of charge, to see first-hand the support they provide at an active time of war.
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Image: Prince Harry made an unannounced visit to Ukraine. Pic: Superhumans Center
The duke, who served two tours in Afghanistan, met patients and medical professionals while touring the centre, the spokesperson said.
During his trip to Ukraine, he also met members of the Ukrainian Invictus community, as well as Ukraine’s minister of veterans affairs, Natalia Kalmykova.
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Image: The Duke of Sussex was in London earlier this week.
Pic: PA
Helping wounded soldiers has been one of Harry’s most prominent causes, as he founded the Invictus Games in 2014 to offer wounded veterans the challenge of competing in sports events similar to the Paralympics.
Harry is the second member of the royal family to visit Ukraine since Russia launched a full-scale invasion of its smaller neighbour in February 2022.
His aunt, Sophie, the Duchess of Edinburgh, made an unannounced visit to Ukraine’s capital of Kyiv last year.
The government will fund any further local inquiries into the grooming gangs scandal that are deemed necessary, Sir Keir Starmer has said.
However, the prime minister said it is his “strong belief” that the focus must be on implementing recommendations from the Alexis Jay national review before more investigations go ahead.
It follows a row over whether Labour is still committed to the five local inquiries it promised in January, after safeguarding minister Jess Phillips failed to provide an update on them in a statement to parliament hours before it closed for recess on Tuesday.
Image: Sir Keir Starmer joins police officers on patrol in Cambridgeshire. Pic: PA
Instead, Ms Phillips told MPs that local authorities will be able to access a £5m fund to support locally-led work on grooming gangs.
On Thursday morning, Home Secretary Yvette Cooper insisted the “victim-centred, locally-led inquiries” will still go ahead, while a Home Office source told Sky News more could take place in addition to the five.
Speaking to Sky News’ Rob Powell later on Thursday, Sir Keir confirmed that there could be more inquiries than those five but said the government must also “get on and implement the recommendations we’ve already got”.
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The prime minister said: “Of course, if there’s further local inquiries that are needed then we will put some funding behind that, and they should happen.
“But I don’t think that simply saying we need more inquiries when we haven’t even acted on the ones that we’ve had is necessarily the only way forward.”
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0:41
Yvette Cooper speaks to Sky News
Ms Phillips’s earlier comments led to accusations that the government was diluting the importance of the local inquiries by giving councils choice over how to use the funds.
Sky News understands she was due to host a briefing with MPs this afternoon at 5pm – the second she had held in 24 hours – in an attempt to calm concern amongst her colleagues.
Review recommendations ‘sat on a shelf’
Sir Keir insisted he is not watering down his commitment for the five local enquiries, but said the Jay recommendations were “sitting on a shelf under the last government” and he is “equally committed” to them.
He added: “At the most important level, if there is evidence of grooming that is coming to light now, we need a criminal investigation. I want the police investigation because I want perpetrators in the dock and I want justice delivered.”
In October 2022, Professor Alexis Jay finished a seven-year national inquiry into the many ways children in England and Wales had been sexually abused, including grooming gangs.
Girls as young as 11were groomed and raped across a number of towns and cities in England over a decade ago.
Prof Jay made 20 recommendations which haven’t been implemented yet, with Sir Keir saying on Thursday he will bring 17 of them forward.
However, the Tories and Reform UK want the government to fund a new national inquiry specifically into grooming gangs, demands for which first started last year after interventions by tech billionaire Elon Musk on his social media platform X.
Image: Elon Musk has been critical of Labour’s response to grooming gangs and has called for a national inquiry. Pic: Reuters
‘Fuelling confusion’
Reform leader Nigel Farage said the statement made by Ms Phillips “was one of the most cowardly things I have ever seen” as he repeated calls for a fresh inquiry.
Robert Jenrick, the shadow justice secretary, also told Sky News that ministers were “fuelling confusion” and that the “mess.. could have been avoided if the government backed a full national inquiry – not this piecemeal alternative”.
Tory leader Kemi Badenoch said the government needed to look at “state failings” and she would try and force a fresh vote on holding another national inquiry, which MPs voted down in January.
‘Political mess’
As well as facing criticism from the Opposition, there are signs of a backlash within Labour over how the issue has been handled.
Labour MPs angry with government decision grooming gangs
With about an hour until the House of Commons rose for Easter recess, the government announced it was taking a more “flexible” approach to the local grooming gang inquiries.
Safeguarding minister Jess Philips argued this was based on experience from certain affected areas, and that the government is funding new police investigations to re-open historic cases.
Speaking on Times Radio, former chair of the Equality and Human Rights Commission Sir Trevor Phillips called the move “utterly shameful” and claimed it was a political decision.
One Labour MP told Sky News: “Some people are very angry. I despair. I don’t disagree with many of our decisions but we just play to Reform – someone somewhere needs sacking.”
The government has insisted party political misinformation was fanning the flames of frustration in Labour.
The government also said it was not watering down the inquiries and was actually increasing the action being taken.
But while many Labour MPs have one eye on Reform in the rearview mirror, any accusations of being soft on grooming gangs only provides political ammunition to their adversaries.
One Labour MP told Sky News the issue had turned into a “political mess” and that they were being called “grooming sympathisers”.
On the update from Ms Phillips on Tuesday, they said it might have been the “right thing to do” but that it was “horrible politically”.
“We are all getting so much abuse. It’s just political naivety in the extreme.”
Ms Phillips later defended her decision, saying there was “far too much party political misinformation about the action that is being taken when everyone should be trying to support victims and survivors”.
“We are funding new police investigations to re-open historical cases, providing national support for locally led inquiries and action, and Louise Casey… is currently reviewing the nature, scale and ethnicity of grooming gangs offending across the country,” she said.
“We will not hesitate to go further, unlike the previous government, who showed no interest in this issue over 14 years and did nothing to progress the recommendations from the seven-year national inquiry when they had the chance.
“We will leave no stone unturned in pursuit of justice for victims and will be unrelenting in our crackdown on sick predators and perpetrators who prey on vulnerable children.”
The father of a grooming gang victim has told Sky News the government should be “ashamed” of itself over the confusion surrounding inquiries – accusing it of “messing around with survivors’ lives”.
Safeguarding minister Jess Phillips this week sparked fresh uncertainty over whether regional inquiries into grooming gangs – promised by the government in January – would go ahead.
But her comments have done little to reassure Marlon West, whose daughter Scarlett was a victim of sexual exploitation in Manchester.
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1:19
PM challenged on grooming gang inquiry timeline
Ms Phillips’s statement in parliament on Tuesday – which sparked criticism after it failed to mention the reviews – left survivors “so disappointed”, he said.
The uncertainty “makes you dizzy because you get hope and think ‘I’m getting somewhere now’ then they do a U-turn as they’ve done twice this week”, Mr West continued.
“I think they should be ashamed of themselves,” he said. “The government now are messing around with survivors’ lives and campaigners like me.”
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0:41
Govt denies ‘watering down’ grooming gang inquiries
Throughout her ordeal, Scarlett has “been let down by the local authority, by social workers, by the police force,” he said. “With the government, she’s just been let down again. That’s what’s cruel.”
Mr West added he is “really disappointed” in the government’s decision to push forward with the five regional inquiries instead of a statutory, national one.
Image: Mr West’s daughter Scarlett was a victim of sexual exploitation
He pointed out that police officers and professionals can refuse to give evidence at regional inquiries, whereas national ones can compel them to do so.
“With a statutory inquiry, it’d be more like a [legal] setting,” Mr West said. “Professionals will not be allowed to refuse interviews. They have to attend.
“It needs to [be in a] legal arena where they are compelled to give evidence.”
Image: Scarlett West
His comments came as the prime minister said the government is focussing on implementing the “hundreds” of recommendations from previous inquiries into grooming gangs.
Sir Keir Starmer said: “My strong belief is we’ve got to implement those recommendations.
“At the moment, and under the last government, they just stacked up and sat on a shelf. So they need to be implemented.”
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Both the prime minister and the home secretary have rejected claims the government’s pledge to hold “victim-centred, locally-led inquiries” is being “watered down”.
Asked by Sky News presenter Anna Jones if that was the case, Ms Cooper replied: “No, completely the opposite.
“What we’re doing is increasing the action we’re taking on this vile crime.”
Sir Keir separately said: “We put the money behind it. We’re not watering it down. We’re committed to that.
“But, I’m equally committed to implementing the recommendations that we’ve got.”