Chancellor Rachel Reeves looking to ‘find £40bn’ in budget

Published

8 months ago

October 16, 2024

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Rachel Reeves is looking to fill a £40bn black hole in the country’s finances, Sky News understands.

According to people close to the budget, the gap in funding identified by the chancellor is more than twice what was previously thought.

Politics latest: Stark warning issued over national insurance rise

Ms Reeves has previously said the Conservatives left the new government with a £22bn shortfall, requiring “tough decisions” like axing the winter fuel payment.

This has led to speculation Labour may introduce measures such as a national insurance increase for employers to raise more cash.

The Treasury does not comment on budget speculation.

According to the Financial Times, the £40bn figure represents the funding the chancellor needs to protect key government departments from real terms spending cuts, cover the impact of the £22bn overspend from the last administration and build up a fiscal buffer for the rest of parliament.

The paper said she was eyeing big tax rises to patch up the NHS in particular.

However, the government has left itself with little wiggle room after ruling out a rise in national insurance, income tax and VAT in its manifesto.

Ministers have since said that this meant not “increasing tax on working people” – leaving the door open for the employer element of national insurance to go up.

Budget talk all spin – and we should be used to it

Jon Craig

Chief political correspondent

@joncraig

The “black hole” just got deeper. Or so the chancellor claims.

After telling us for weeks that the funding gap was £22bn, Rachel Reeves says it’s almost double that: £40bn. Fact? Or political propaganda?

She’s told the cabinet the £22bn “black hole inheritance” from the Tories needed to be filled “just to keep public services standing still”.

And Sir Keir Starmer told ministers – at a “political cabinet” with no civil servants present – that the budget would see “tough decisions so we can invest in the future”.

In other words, if the chancellor is to avoid big spending cuts in front line services like health and education, there’ll have to be more unpopular tax rises.

The timing of this apparent deepening of the “black hole” is highly significant. It comes as Labour faces accusations of breaking its manifesto pledge not to increase national insurance.

The new £40bn figure has emerged just hours before Sir Keir faces Rishi Sunak at prime minister’s questions and a potentially embarrassing onslaught over the national insurance tax hike.

A conspiracy theorist might even suggest the new £40bn claim was a cynical attempt by Downing Street to divert attention from the row over the PM meeting Taylor Swift and the star’s blue-light escort.

Shadow chancellor Jeremy Hunt has already claimed the £22bn figure is a lie. But then George Osborne accused Labour of leaving a £12bn black hole when he became chancellor in 2010.

It’s all spin, of course. We should be used to it by now. Reeves also told the cabinet the government can’t turn around 14 years of decline in one year or one budget.

Yet at the same time she said the budget would “protect working people, fix the NHS and rebuild Britain”. That’s an ambitious boast, if the “black hole” really is £40bn.

A one percentage point increase in the Class 1 rate could raise £8.45bn over the 2025 to 2026 tax year, and a two percentage point hike could raise £16.9bn, according to data compiled by HMRC and EY.

Meanwhile, introducing national insurance on employer pension contributions could raise around £17bn per year if taxed at the same 13.8% rate, according to the Institute for Fiscal Studies (IFS).

Experts have cautioned that any increase in employer national insurance would mean higher costs for businesses, which could impact their staff and customers.

Paul Johnson, director of the IFS, told Sky News on Tuesday night that the tax rise could lead to less pay rises and fewer jobs.

The influential thinktank estimates Ms Reeves may need to raise up to £25bn from tax increases if she wants to keep spending rising with national income, and honour Labour’s pledge not to return Britain to austerity.

As well as tax rises, there is also speculation Ms Reeves could change her fiscal rules to enable more borrowing.

It is thought the chancellor could change how debt is calculated, which could in turn alter how much debt the UK officially has and give Ms Reeves room to borrow more.

UK

GPs can prescribe weight loss jabs on the NHS from today – but strict eligibility criteria in place

Published

37 mins ago

June 23, 2025

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GPs can prescribe weight loss jabs on the NHS from today - but strict eligibility criteria in place

GPs will be able to prescribe weight loss jabs on the NHS from today.

About 220,000 people with the “greatest need” are set to receive Mounjaro – with strict criteria for the first year of the rollout.

Initially, only those with a body mass index of over 40 who have at least four other health problems linked to obesity will be eligible.

Some doctors have raised concerns about the additional workload this new programme will bring, while pharmacists fear it could lead to supply shortages.

While an estimated 1.5 million people are now taking weight loss drugs across the UK, they could previously only be accessed through specialist services or private prescriptions.

Dr Claire Fuller from NHS England said: “We urgently need to address rising levels of obesity and prioritise support for those who are experiencing severe ill health – and greater access to weight loss drugs will make a significant difference to the lives of those people.”

She added: “While not everyone will be eligible for weight loss drugs, it’s important that anyone who is worried about the impact of their weight on their health discusses the range of NHS support available with their healthcare professional.”

The chairwoman of the Royal College of GPs welcomed NHS England’s decision to pursue a phased rollout, and said current workloads must be factored in to ensure the jabs can be prescribed safely.

Professor Kamila Hawthorne went on to say: “While weight loss medications have a lot of potential benefits for patients who are struggling to lose weight and who meet all the clinical criteria for a prescription, they mustn’t be seen as a ‘silver bullet’ to aid weight loss.

“We also need to see a focus on prevention, stopping people becoming overweight in the first place so they don’t require a medical intervention later.”

Her remarks were echoed by the National Pharmacy Association’s chairman Olivier Picard, who says “prescribing these medications alone misses the point”.

He argued that they need to be part of a comprehensive strategy that includes lifestyle coaching, exercise and nutritional guidance – but many GPs currently “lack the bandwidth” to provide this support.

“As a result, we could end up in a situation where patients are prescribed the medication, lose weight, and then experience rebound weight gain once the course ends – simply because the foundational lifestyle changes weren’t addressed,” Mr Picard added.

Estimates suggest about 29% of the adult population is obese.

Health Secretary Wes Streeting says the government “is determined to bring revolutionary modern treatments to everyone who needs them, not just those who can afford to pay”.

UK

Met Police chief ‘frustrated’ at planned protest to support Palestine Action – as government moves to ban the group

Published

3 hours ago

June 23, 2025

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Met Police chief 'frustrated' at planned protest to support Palestine Action - as government moves to ban the group

Metropolitan Police Commissioner Sir Mark Rowley says he is “shocked and frustrated” at a planned protest in support of Palestine Action.

The demonstration, due to take place in Westminster later, comes as the government moves to ban the group under anti-terror laws.

Activists from Palestine Action hit the headlines last week after targeting RAF Brize Norton and damaging two military aircraft in a significant security breach.

Home Secretary Yvette Cooper will update MPs on the move to proscribe the organisation, which would make it a criminal offence to belong to or support it.

Sir Mark said that – until this happens – the force has “no power in law” to prevent the protest from taking place, but lawbreakers will be “dealt with robustly”.

He added: “This is an organised extremist criminal group, whose proscription as terrorists is being actively considered.

“Members are alleged to have caused millions of pounds of criminal damage, assaulted a police officer with a sledgehammer and last week claimed responsibility for breaking into an airbase and damaging aircraft.

“Multiple members of the group are awaiting trial accused of serious offences.”

He added that – while the right to protest is essential – “actions in support of such a group go beyond what most would see as a legitimate protest”.

Over the weekend, Business Secretary Jonathan Reynolds said he could not rule out the possibility of a foreign power being behind Palestine Action.

Any move to proscribe the group must be debated and approved by MPs and peers.

Speaking to Sunday Morning With Trevor Phillips on Sky News, former justice secretary Lord Charlie Falconer suggested that vandalising aircraft would not solely provide legal justification for such a move.

Lord Falconer said: “I am not aware of what Palestine Action has done beyond the painting of things on the planes in Brize Norton, they may have done other things I didn’t know.

“But generally, that sort of demonstration wouldn’t justify proscription so there must be something else that I don’t know about.”

Palestine Action has staged a series of protests in recent months – spraying the offices of Allianz Insurance in London, and vandalising Donald Trump’s golf course in Ayrshire.

UK

‘Stability in Middle East is priority,’ says Starmer – as world reacts to strikes

Published

1 day ago

June 22, 2025

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'Stability in Middle East is priority,' says Starmer - as world reacts to strikes

Sir Keir Starmer has said stability in the Middle East is “a priority” following US strikes on Iran’s nuclear facilities, as the world has reacted to the attack.

The prime minister also called on Iran to “return to the negotiating table” to “reach a diplomatic solution to end this crisis”.

Follow latest: Iran considering ‘all options’ after US strikes

In a statement, Sir Keir said: “Iran’s nuclear programme is a grave threat to international security.

“Iran can never be allowed to develop a nuclear weapon, and the US has taken action to alleviate that threat.

“The situation in the Middle East remains volatile and stability in the region is a priority.

“We call on Iran to return to the negotiating table and reach a diplomatic solution to end this crisis.”

The UK was not involved in the strikes but was informed about them in advance by the US, Business Minister Jonathan Reynolds told Sky News’ Sunday Morning with Trevor Phillips.

Sir Keir and Foreign Secretary David Lammy had been pushing for a diplomatic solution. On Thursday, the prime minister warned of a “real risk of escalation” in the conflict.

The US struck three sites in Iran early on Sunday morning, with Donald Trump boasting the country’s key nuclear sites were “completely and fully obliterated” in an address to the nation from the White House and warned there could be further strikes if Iran retaliates.

Netanyahu praises Trump

Israel‘s Prime Minister Benjamin Netanyahu praised Mr Trump for the strikes, saying: “Your bold decision to target Iran’s nuclear facilities with the awesome and righteous might of the United States will change history…

“History will record that President Trump acted to deny the world’s most dangerous regime the world’s most dangerous weapons.”

UN secretary-general ‘gravely alarmed’ by US attack

But UN secretary general Antonio Guterres said he was “gravely alarmed by the use of force” by the US against Iran.

“This is a dangerous escalation in a region already on the edge – and a direct threat to international peace and security. There is a growing risk that this conflict could rapidly get out of control – with catastrophic consequences for civilians, the region, and the world.”

European Union foreign policy chief Kaja Kallas urged all sides to step back and return to the negotiating table. “Iran must not be allowed to develop a nuclear weapon,” she said in a post on X.

“I urge all sides to step back, return to the negotiating table and prevent further escalation,” she said, adding that EU foreign ministers will discuss the situation tomorrow.

How the world reacted to the strikes

Cuba’s President Miguel Diaz-Canel said on X: “We strongly condemn the US bombing of Iran’s nuclear facilities, which constitutes a dangerous escalation of the conflict in the Middle East.

“The aggression seriously violates the UN Charter and international law and plunges humanity into a crisis with irreversible consequences.”

Venezuela’s foreign minister Yvan Gil said his country’s government “condemns US military aggression” and “demands an immediate cessation of hostilities”.

In a statement, an Australian government spokesperson said Iran’s nuclear and ballistic missile programme “has been a threat to international peace and security”.

Japan’s Prime Minister Shigeru Ishiba said it is “crucial that there be a quick de-escalation of the conflict”.

Italy’s foreign minister Antonio Tajani said after the attack that his country’s government hopes “a de-escalation can begin and Iran can sit down at the negotiating table”.

The US attack came after more than a week of strikes by Israel, which have significantly degraded Iran’s air defences and offensive missile capabilities, and damaged its nuclear enrichment facilities.

Israel’s strikes on Iran have killed at least 865 people and wounded 3,396 others, according to the Washington-based group Human Rights Activists. The group said of those killed, 365 were civilians and 215 were security force personnel.