Is chancellor’s spending review the start of a ‘national renewal’ – or too good to be true?
If you sat through the entire spending review speech delivered by Rachel Reeves in the House of Commons, you might have been lulled into a sense that the UK was awash with a wealth of riches as the chancellor sprinkled billions across the land.
There were billions for social housing, nuclear power stations, rail lines and research and development to power the economy.
There was money for schools, the police, the NHS, and defence spending, as the chancellor sketched out her roadmap for Britain for years to come, with an acknowledgement that the government – and particularly this chancellor – had endured a difficult first year.
“We are renewing Britain. But I know that too many people in too many parts of our country are yet to feel it…the purpose of this spending review is to change that,” she said.
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There was £113bn of borrowing to fund capital investment and an extra £190bn over the course of the parliament for public services, fuelled by those contentious tax rises in the budget last autumn. This was a Labour chancellor turning her back on austerity.
“In place of decline, I choose investment. In place of retreat, I choose national renewal,” she said.
The chancellor deserves credit for the capital investment, which she hopes will unlock jobs and power economic growth. But when something sounds too good to be true, it normally is.
For me, former shadow chancellor John McDonnell hit the nail on the head on Wednesday night as he remarked rather wryly to me that “the greater the applause on the day, the greater the disappointment by the weekend”.
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Sky’s economics editor Ed Conway looks at the key takeaways from the spending review.
Could tax hikes be needed?
Because, in talking up the prospect of national renewal, the chancellor glossed over what the “hard choices” mean for all of us.
There are questions now swirling about where the cuts might fall in day-to-day budgets for those departments which are unprotected, with local government, the Home Office, the Foreign Office, and the Department for Environment all facing real-terms cuts.
My colleague Ed Conway, analysing the government figures, found cuts in the schools budget for the last two years of this parliament – the chancellor’s top line figure showed an overall rise of 0.6% over the five-year period of this Labour government.
There are questions too over whether council tax bills might be increased in order to top up local government and police budgets.
Ms Reeves told me in an interview after her speech that they won’t, but she has predicated increases in police funding and local government funding coming locally, rather than from central government, so I will be watching how that will play out.
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The chancellor tells Sky News council tax will not have to rise as a result of measures in her spending review.
Even with the increase in health spending – the NHS is getting a 3% boost in its annual budget – there are questions from health experts whether it will be enough for the government to hit a routine operations target of treating 92% of patients within 18 weeks.
My point is that this might not be – to again quote Mr McDonnell – “mathematical austerity”, but after over a decade where public dissatisfaction in public services has grown, the squeeze of day-to-day spending could make it hard for the chancellor to persuade working people this is a government delivering the change for them.
There is pressure to reverse some of the welfare cuts, and pressure to lift the two-child benefit cap, while the pressure to reverse the winter fuel allowance has already resulted in Reeves this week making a £1.25bn unfunded spending commitment (she will set out how she is paying for it at the next budget).
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Treasury minister refuses to rule out tax rises later this year.
Will voters feel the ‘renewal’?
Reeves told me on Wednesday there was no need for tax rises in the autumn because the spending envelope had already been set, and the money now divvied out. It’s a very live question as to whether that can hold if the economy weakens.
She did not rule out further tax rises when I asked her last week, while Treasury minister Emma Reynolds told my colleague Ali Fortescue on Wednesday night: “I’m not ruling it in, I’m not ruling it out.”
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The gamble is that, by investing in infrastructure and getting spades in the ground, and tilting limited public money into the NHS, the government can arrive at the next election with enough ‘proof points’ to persuade voters to stick with them for another five years.
On Wednesday, the chancellor laid the foundations she hopes will turn the government’s fortunes around. The risk is that voters won’t feel the same by the time they are asked to choose.
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‘No evidence’ malign activity caused Wednesday’s air traffic disruption, says transport secretary
There is no evidence that malign activity was responsible for yesterday’s outage of air traffic control systems, the transport secretary has said.
Heidi Alexander said she has spoken with the chief executive of National Air Traffic Service (NATS), Martin Rolfe, and added that what happened was an isolated incident.
NATS has apologised for the IT problems after thousands of passengers suffered extensive travel disruption during one of the busiest times of the year.
The technical glitch led to more than 150 flight cancellations, leaving airlines reacting furiously.
Transport Secretary Heidi Alexander
Ms Alexander wrote on X: “I have spoken with NATS CEO Martin Rolfe who provided further detail on yesterday’s technical fault.
“This was an isolated event and there is no evidence of malign activity.
“I know that any disruption is frustrating for passengers.
“Flights are now resumed and I am grateful to airlines who are working hard to get people to where they need to be.
“I will continue to receive regular updates. Passengers should check with airlines before travelling.”
Read more: Flight delayed or cancelled? These are your rights
Officials said a “radar-related issue” caused the air traffic control failure.
A spokesperson for NATS said: “This was a radar-related issue which was resolved by quickly switching to the back-up system during which time we reduced traffic to ensure safety.
“There is no evidence that this was cyber related.”
The problem occurred at NATS’ control centre in Swanwick, Hampshire, and affected the vast majority of England and Wales.
Aviation analytics company Cirium said 84 departures and 71 arrivals were cancelled to or from UK airports up to 10pm on Wednesday, with several flights diverted to other European airports.
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Travel expert Paul Charles: This is a major outage
There was limited disruption on Thursday, with a handful of British Airways flights cancelled because aircraft and crew were out of position.
Heathrow and Gatwick airports said they had resumed normal operations.
Affected passengers are unlikely to be entitled to compensation as the disruption was outside of airlines’ control, but they will be able to claim expenses for a reasonable amount of food and drink, a means to communicate and overnight accommodation if required.
Martin Rolfe in 2023. Pic: PA
Ryanair has called on Mr Rolfe to resign, claiming “no lessons have been learnt” since a similar systems outage in August 2023.
The airline’s chief operating officer Neal McMahon said: “It is outrageous that passengers are once again being hit with delays and disruption due to Martin Rolfe’s continued mismanagement of Nats.”
Airlines have reacted furiously after a technical glitch in air traffic control systems led to more than 150 flight cancellations.
The National Air Traffic Service (NATS) has apologised for the IT problems – and said systems were back up and running 20 minutes after the “radar-related issue” was detected at 4.05pm.
But with thousands of passengers suffering extensive travel disruption, during one of the busiest times of the year, airline executives have warned this isn’t good enough.
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Departures resume after ATC problem
Ryanair’s chief operating officer Neal McMahon has called for NATS chief executive Martin Rolfe to resign – and claimed Wednesday’s incident was “utterly unacceptable”.
He said: “It is outrageous that passengers are once again being hit with delays and disruption due to Martin Rolfe’s continued mismanagement of NATS.
“It is clear that no lessons have been learnt since the August 2023 NATS system outage, and passengers continue to suffer as a result of Martin Rolfe’s incompetence.”
Mr McMahon was referring to a glitch that affected more than 700,000 passengers two years ago – and said that, if Mr Rolfe refuses to step down, the government should intervene.
“Heidi Alexander must act without delay to remove Martin Rolfe and deliver urgent reform of NATS’ shambolic ATC service, so that airlines and passengers are no longer forced to endure these preventable delays caused by persistent NATS failures,” he added.
The Department for Transport says Ms Alexander does not have any direct control over NATS – and no powers over staffing decisions at the service.
Martin Rolfe in 2023. Pic: PA
EasyJet’s chief operating officer David Morgan added: “It’s extremely disappointing to see an ATC failure once again causing disruption to our customers at this busy and important time of year for travel.
“While our priority today is supporting our customers, we will want to understand from NATS what steps they are taking to ensure issues don’t continue.”
NATS is yet to comment on the calls for Mr Rolfe’s resignation – but has stressed that the glitch is not believed to be “cyber related”.
“This was a radar-related issue which was resolved by quickly switching to the back-up system during which time we reduced traffic to ensure safety,” a spokesperson had said.
Departures at airports across the country have now resumed – but passengers are being urged to check with their airline before heading to terminals.
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Travel expert: This is a major outage
John Carr, from Stourbridge, was on his way from Heathrow to Norway to help arrange his brother’s wedding when he discovered his flight was cancelled after checking in.
“I’m pretty gutted,” he said. “We’ve got loads of stuff in the suitcases to set up the venue, because we’re obviously flying to Norway. We’ve got the wedding rehearsal to do. It’s quite stressful.”
Liberal Democrat leader Sir Ed Davey called for an urgent investigation and also referred to the “utterly unacceptable” disruption two years earlier.
“With thousands of families preparing to go on a well-earned break, this just isn’t good enough. The public deserve to have full confidence in such a vital piece of national infrastructure.”
Listen to The World with Richard Engel and Yalda Hakim every Wednesday
Flights departing or arriving at a UK airport, or aircraft operated by a UK airline arriving in the EU, are subject to rules concerning delays or cancellations.
Airlines may have to provide compensation, although there are exemptions for “extraordinary circumstances”, according to the UK’s Civil Aviation Authority.
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