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.
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2:41
What will the budget include?
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.
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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.
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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.
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.
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.
Damien Dalmayne, 17, is autistic. He also battles mental health issues that have left him unable to get out of bed and contemplating harming himself.
Warning: This story contains references to suicide
“There were thoughts of me doing stuff to myself. I never did but there were stages where it would get pretty hard and it really did get to that point that I was really considering it,” Damien says.
His depression spiralled during the COVID lockdowns and when he was 15 he was referred to his local NHS mental health team in Greenwich.
The paediatrician who made the referral recommended that Damien be seen “urgently”.
But Child and Adolescent Mental Health Services (CAMHS) rejected the referral, instead referring Damien and his family to a local social services team.
Damien believes he was rejected because of his autism diagnosis.
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“They [CAMHS] think they can’t help people with special needs. They think ‘that’s just a terminal illness’ even though it’s not,” says Damien.
In its rejection letter, Greenwich CAMHS agreed Damien “experiences emotional difficulties”.
But, noting his autism diagnosis, it suggested he see the area’s Children with Disabilities Team, rather than a specialist mental health service.
Crucially, his mother, Emma Dalmayne, says this meant they were unable to access specialist services like therapy to help Damien.
Autism and mental health ‘seen as separate issues’
Ms Dalmayne says a confused social worker called her after Damien’s referral was redirected to their team.
“They said ‘why have we been called?’ I said ‘I don’t know’.”
“CAMHS see autism and mental health as separate for some reason,” says Ms Dalmayne.
“If you’re not well you go to a doctor, you get help. But no, if you’re mentally ill and autistic and go to a doctor, you’re not getting anything. You’re told ‘well we can’t see you because you have a neurological difference’.”
The NHS trust responsible for Greenwich CAMHS said it is unable to comment on individual cases but stressed it does accept referrals for autistic children who have a “severe and enduring mental health need”.
However, it said children may be referred to other services “where referrals do not meet the threshold for CAMHS”.
CAMHS are run by different health trusts throughout the UK.
Image: Ms Dalmayne is campaigning for better access to CAMHS for autistic children
Ms Dalmayne says she has spoken to other parents with autistic children who have had similar experiences.
She says she knows one mother who is scared to tell her local CAMHS that her son has been diagnosed as autistic because she worries they will stop his care.
“It’s not an inclusive world. We don’t feel included at all,” says Ms Dalmayne, who is also autistic.
Damien believes NHS services don’t think autistic people can engage effectively with therapy.
“It’s not like just talking to a wall. They [autistic children] will end up listening and if they can they will end up talking.”
He says his experience with CAMHS left him feeling “inhuman”.
Damien ended up using his disability benefits to pay for private therapy.
“If I had waited probably six months [longer to get therapy], I probably wouldn’t be here. They [CAMHS] really put my health at risk,” he says.
Oxleas NHS Foundation Trust, which administers Greenwich CAMHS, said: “Currently, just over 16% of our CAMHS caseload includes children and young people with both an autism diagnosis and a severe and enduring mental health need. This does not include children and young people either waiting for or currently being assessed by an autism diagnostic service alongside CAMHS.
“Should individual circumstances change, re-referrals can be made. CAMHS is just one part of a much larger collection of services delivering emotional health and wellbeing support and services to children and young people.”
People with autism more likely to experience mental health issues
Sky News tried to get a clearer picture of autistic children’s access to CAMHS across the UK, but when we requested data from health trusts, the majority did not disclose the number of referrals and rejections for autistic children.
We did learn of the serious pressure facing services nationally, with data showing total referrals to CAMHS had risen by 60% between 2018 and 2023. Rejections from CAMHS were up by 30% across the same period.
While it’s difficult to get a sense of the number of autistic children accessing CAMHS, autistic people are more likely to experience mental health problems than people who aren’t autistic.
Image: Damien says the rejection by CAMHS put his health at risk
Sky News spoke to one CAMHS nurse anonymously – we aren’t identifying the health trust she works for.
She said nationally it’s a mixed picture in terms of the level of care autistic children receive.
“We [CAMHS] certainly don’t do enough for children that have been diagnosed with autism in terms of their post-diagnostic support.”
She says she has witnessed preconceptions about autism among staff that can lead to autistic children not getting the care they need.
Skills ‘aren’t consistent’ across health service
“Some people [working in CAMHS], sometimes might tend to say ‘well it’s [their issues are] because of their autism’ as opposed to thinking well actually they might be autistic but they can also have a mental health difficulty that can be supported,” says the nurse.
“A child that has autism and mental health needs, that’s not going to be solved by social services, they need mental health support.”
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She says skills aren’t “consistent” across the health service and that autistic children can be at a disadvantage if their behaviour means more traditional forms of talking therapy aren’t appropriate.
The nurse continues: “I’ve known it happen where people say ‘oh this person is not engaging’ so they get discharged.
“Sometimes therapy is not always helpful, then it’s about different, more holistic ways to support children and support behavioural changes.
“I do think there’s a need to increase skills within CAMHS absolutely. [Staff] recruitment and retention has been difficult across the board.”
Ms Dalmayne is campaigning for better access to CAMHS for autistic children, her biggest fear is that autistic children and adults are hurting, and even killing themselves, if they can’t access mental health support.
“It makes me feel we’ve got to do everything we can to change it,” she says.
Anyone feeling emotionally distressed or suicidal can call Samaritans for help on 116 123 or email jo@samaritans.org in the UK. In the US, call the Samaritans branch in your area or 1 (800) 273-TALK
Sir Keir Starmer will host a virtual meeting of world leaders today to discuss peacekeeping in Ukraine, and he will use the call to say that now is the time for “concrete commitments”, Downing Street has said.
Around 25 leaders are expected to join the call this morning, in which they will discuss in more detail the peacekeeping mission the prime minister has called the ‘coalition of the willing’.
Sir Keir will ask allies to continue to ramp up military support to Ukraine.
He will also say countries need to increase economic pressure on Russia in the short term, and be prepared to support an eventual peace deal over the long term, should an agreement be reached.
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Attendees will also receive an update on the discussions of defence ministers and military chiefs in Paris this week, and they will all set out details of their own efforts to unlock further military support for Ukraine.
Downing Street has confirmed that some European countries, the EU Commission, NATO, Canada, Ukraine, Australia and New Zealand are expected to join the virtual meeting.
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1:27
Is a ceasefire in Ukraine still viable?
Starmer: The world needs to see action
In a statement ahead of the call, the prime minister said: “We can’t allow President Putin to play games with President Trump’s deal.
“The Kremlin’s complete disregard for President Trump’s ceasefire proposal only serves to demonstrate that Putin is not serious about peace.
“If Russia finally comes to the table, then we must be ready to monitor a ceasefire to ensure it is a serious and enduring peace, if they don’t, then we need to strain every sinew to ramp up economic pressure on Russia to secure an end to this war.”
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3:47
Peace ‘must be secure’, PM tells Sky News
He went on to accuse the Russian president of “trying to delay” by “saying there must be a painstaking study before a ceasefire can take place”.
“The world needs to see action, not a study or empty words and pointless conditions,” he continued.
“My message to the Kremlin could not be clearer: stop the barbaric attacks on Ukraine, once and for all, and agree to a ceasefire now. Until then, we will keep working around the clock to deliver peace.”
Sir Keir has said Britain could send peacekeepers to Ukraine in the event of a ceasefire deal, but has called on Washington to offer a security ‘backstop’ to those forces.
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2:14
Putin lists ceasefire conditions
Moscow has reportedly also presented a “list of demands” to the US to end the war, which would include international recognition of Russia’s claim to Crimea and four Ukrainian provinces and an agreement that foreign troops not be deployed in Ukraine.
Ukraine’s President Volodymyr Zelenskyy said Mr Putin’s remarks were “very predictable” and “very manipulative”, adding that the Russian president was preparing to reject the ceasefire proposal he agreed with the US.
The Russian captain of the Solong container ship involved in the North Sea crash has been charged with gross negligence manslaughter.
Vladimir Motin, 59, of Primorsky, St Petersburg, has been remanded in police custody and is due to appear at Hull Magistrates Court on Saturday, Humberside Police said.
On Monday morning, about 13 miles off the coast of East Yorkshire, the Solong sailed into the US-registered oil tanker Stena Immaculate, which was carrying jet fuel for the US Navy.
One member of the Solong crew is presumed dead. He has been named by the Crown Prosecution Service as 38-year-old Filipino national Mark Angelo Pernia.
Image: The MV Solong cargo ship following Monday’s North Sea crash. Pic: AP
Five Russians had been on board the Solong, Russian state agency TASS quoted the Russian embassy in London as saying, Reuters reported.
In the immediate aftermath of the collision, dozens of people were forced to abandon the vessels as they caught fire.
The coastguard rescued 36 crew members after the alarm was raised at 9.48am on Monday.
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The Stena Immaculate, operated by US firm Crowley, was stationary and at anchor while waiting for a berth to become available at the Port of Killingholme, on the River Humber, when it was struck by the smaller Solong, causing huge fires and explosions – the smoke from which was visible from space.
The Solong had been sailing from Grangemouth in Scotland to Rotterdam in the Netherlands at the time.
It was initially feared it was carrying sodium cyanide but the German owner Ernst Russ said four containers on the vessel had previously been carrying the chemical.
Salvage companies boarded the two vessels on Thursday and were carrying out initial damage assessments. Small fires were still being reported on the Solong’s top deck, the coastguard said.
Image: The US oil tanker MV Stena Immaculate after the collision. Pic: PA
Police said extensive lines of inquiry were continuing but it was taking time given the vessels were still at sea and there were a large number of witnesses.
Frank Ferguson, from the CPS, said: “We have authorised Humberside Police to charge a Russian national in relation to a collision involving two vessels in the North Sea off the east coast of England.
“The Portuguese-registered cargo ship, the Solong, collided with the American-registered oil tanker, the Stena Immaculate, just before 10am on Monday, 10 March 2025.
“Filipino national Mark Angelo Pernia, 38, died.
“Vladimir Motin, 59, from St Petersburg, Russia, who was the vessel’s captain, is due to be charged with one count of gross negligence manslaughter.”
This breaking news story is being updated and more details will be published shortly.