Chancellor admits tax rises and spending cuts considered for budget

Published

3 weeks ago

October 15, 2025

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Rachel Reeves has told Sky News she is looking at both tax rises and spending cuts in the budget, in her first interview since being briefed on the scale of the fiscal black hole she faces.

“Of course, we’re looking at tax and spending as well,” the chancellor said when asked how she would deal with the country’s economic challenges in her 26 November statement.

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Ms Reeves was shown the first draft of the Office for Budget Responsibility’s (OBR) report, revealing the size of the black hole she must fill next month, on Friday 3 October.

She has never previously publicly confirmed tax rises are on the cards in the budget, going out of her way to avoid mentioning tax in interviews two weeks ago.

Cabinet ministers had previously indicated they did not expect future spending cuts would be used to ensure the chancellor met her fiscal rules.

Ms Reeves also responded to questions about whether the economy was in a “doom loop” of annual tax rises to fill annual black holes. She appeared to concede she is trapped in such a loop.

Asked if she could promise she won’t allow the economy to get stuck in a doom loop cycle, Ms Reeves replied: “Nobody wants that cycle to end more than I do.”

She said that is why she is trying to grow the economy, and only when pushed a third time did she suggest she “would not use those (doom loop) words” because the UK had the strongest growing economy in the G7 in the first half of this year.

What’s facing Reeves?

Ms Reeves is expected to have to find up to £30bn at the budget to balance the books, after a U-turn on winter fuel and welfare reforms and a big productivity downgrade by the OBR, which means Britain is expected to earn less in future than previously predicted.

Yesterday, the IMF upgraded UK growth projections by 0.1 percentage points to 1.3% of GDP this year – but also trimmed its forecast by 0.1% next year, also putting it at 1.3%.

The UK growth prospects are 0.4 percentage points worse off than the IMF’s projects last autumn. The 1.3% GDP growth would be the second-fastest in the G7, behind the US.

Last night, the chancellor arrived in Washington for the annual IMF and World Bank conference.

‘I won’t duck challenges’

In her Sky News interview, Ms Reeves said multiple challenges meant there was a fresh need to balance the books.

“I was really clear during the general election campaign – and we discussed this many times – that I would always make sure the numbers add up,” she said.

“Challenges are being thrown our way – whether that is the geopolitical uncertainties, the conflicts around the world, the increased tariffs and barriers to trade. And now this (OBR) review is looking at how productive our economy has been in the past and then projecting that forward.”

She was clear that relaxing the fiscal rules (the main one being that from 2029-30, the government’s day-to-day spending needs to rely on taxation alone, not borrowing) was not an option, making tax rises all but inevitable.

“I won’t duck those challenges,” she said.

“Of course, we’re looking at tax and spending as well, but the numbers will always add up with me as chancellor because we saw just three years ago what happens when a government, where the Conservatives, lost control of the public finances: inflation and interest rates went through the roof.”

Blame it on the B word?

Ms Reeves also lay responsibility for the scale of the black hole she’s facing at Brexit, along with austerity and the mini-budget.

This could risk a confrontation with the party’s own voters – one in five (19%) Leave voters backed Labour at the last election, playing a big role in assuring the party’s landslide victory.

The chancellor said: “Austerity, Brexit, and the ongoing impact of Liz Truss’s mini-budget, all of those things have weighed heavily on the UK economy.

“Already, people thought that the UK economy would be 4% smaller because of Brexit.

“Now, of course, we are undoing some of that damage by the deal that we did with the EU earlier this year on food and farming, goods moving between us and the continent, on energy and electricity trading, on an ambitious youth mobility scheme, but there is no doubting that the impact of Brexit is severe and long-lasting.”

UK

Prince Harry expresses pride at fighting for his country and calls for veterans not to be forgotten

Published

1 hour ago

November 5, 2025

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Prince Harry expresses pride at fighting for his country and calls for veterans not to be forgotten

The Duke of Sussex has written about the privilege of serving his country ahead of Remembrance Day and appealed for people to consider former service personnel who carry the “weight of war”.

In a passionate essay, Prince Harry has warned how easy it is for veterans to be forgotten “once the uniform comes off”.

Former soldier Harry, who undertook two frontline tours to Afghanistan, has paid tribute to former servicemen and women across the UK, and describes Remembrance as “not simply a minute’s silence” but “a call to collective responsibility”.

“Every November the world, for a moment, grows quieter. We pause, together, to remember.

“Remembrance has never been about glorifying war. It’s about recognising its cost: the lives changed forever and the lessons paid for, through unimaginable sacrifice. It’s also about honouring those who, knowing that cost, still choose to serve,” he wrote.

In the 647-word essay entitled The Bond, The Banter, The Bravery: What it means to be British, Harry called on people to remember “not only the fallen, but the living” who carry the “weight of war” and urged them to knock on veterans’ doors and “join them for a cuppa… or a pint” to hear their stories and “remind them their service still matters”.

He added that he was “moved” each year by Norfolk-based Scotty’s Little Soldiers charity, which supports bereaved military children.

He also praised the “resilience” of those he met in Ukraine who had been injured in the war, and described the “courage reborn, camaraderie restored” seen at his Invictus Games competition.

It is “proof that service doesn’t end when the uniform comes off”, he wrote in the piece, released as his brother Prince William prepared to hand out awards for his Earthshot Prize in Brazil.

While recognising he is no longer a working royal in the UK, he expressed his love of the “things that make us British”.

He wrote: “Though currently, I may live in the United States, Britain is, and always will be, the country I proudly served and fought for.

“The banter of the mess, the clubhouse, the pub, the stands ridiculous as it sounds, these are the things that make us British. I make no apology for it. I love it.”

Harry’s personal message may feel like an own goal

To us it may feel like an unfortunate clash. William in Brazil to talk about the environment, Harry in Canada for Remembrance, both brothers trying to draw attention to causes they’ve supported for a very long time.

Both, I suspect, wishing we’d focus on what they’re actually trying to say, rather than what we think it means that they’re both on significant trips at the same time.

I know that both sides share a frustration that the headlines will pit them against each other, it has also been suggested that Harry’s team did make royal communications aware of his Canada plans.

The release of a particularly personal article about his life in the military, his observation that it’s easy for veterans to be forgotten and an apparent longing for what he defines as Britain, is intriguing though.

Especially when you can’t help but wonder whether it really needed to be published on the same day as his brother’s Earthshot Awards.

Sometimes these things feel like an own goal when it comes to the stream of stories about brothers divided, although how much should we bear the responsibility for perpetuating that narrative?

Harry also wrote that: “Remembrance isn’t confined to one weekend in November”.

“It’s a lifelong commitment to empathy, gratitude, and action; to be kinder, more united, and braver in protecting what those before us fought to preserve.”

UK

‘Hope won’: London mayor Sadiq Khan compares newly-elected New York mayor to his leadership

Published

3 hours ago

November 5, 2025

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'Hope won': London mayor Sadiq Khan compares newly-elected New York mayor to his leadership

New York has followed London by choosing hope over fear in electing Democrat Zohran Mamdani as its new mayor, Sir Sadiq Khan said.

Mr Mamdani, 34, defeated former New York governor Andrew Cuomo and Republican Curtis Sliwa to become the city’s first Muslim mayor and the first of South Asian heritage.

London mayor Sir Sadiq drew comparisons to his own 2016 victory as he congratulated Mr Mamdani, who will become New York’s youngest mayor in more than a century when he takes office on 1 January.

US latest: Trump downplays Democrats’ wins

Sir Sadiq called it a “historic campaign”, adding on X: “New Yorkers faced a clear choice – between hope and fear – and just like we’ve seen in London – hope won.”

Education Secretary Bridget Phillipson also congratulated Mr Mamdani, telling Sky News: “I wish him well.

“It’s a wonderful job to have secured.”

Green Party leader Zack Polanski said Mr Mamdani’s success “will resonate throughout the world” as he called it a “story where no one is left behind”.

“It’s time to write that story across England and Wales too,” he added.

Mr Mamdani’s victory was a setback for Donald Trump, who had thrown his weight behind Andrew Cuomo, a former Democrat running as an independent.

The mayor-elect described himself as “Trump’s worst nightmare” and said New York had shown “a nation betrayed by Donald Trump how to defeat him”.

The US president had threatened to cut federal funding to New York if Mr Mamdani won.

In his victory speech, Mr Mamdani said: “New York will remain a city of immigrants, a city built by immigrants, powered by immigrants and as of tonight, led by an immigrant.

“If anyone can show a nation betrayed by Donald Trump how to defeat him, it is the city that gave rise to him.”

UK

Manhunt for foreign prisoner after mistaken release from HMP Wandsworth

Published

4 hours ago

November 5, 2025

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Manhunt for foreign prisoner after mistaken release from HMP Wandsworth

Another foreign prisoner is on the run after being mistakenly released, Sky News has learnt.

The error at HMP Wandsworth in south London happened on 29 October – just five days after the high-profile release of migrant sex offender Hadush Kebatu from HMP Chelmsford in Essex.

It was also two days after Deputy Prime Minister and Justice Secretary David Lammy announced enhanced checks on prisoner releases.

Manhunt latest: Foreign prisoner on the loose

The Metropolitan Police confirmed to Sky News: “Shortly after 1pm on Tuesday 4 November, the Met was informed by the Prison Service that a prisoner had been released in error from HMP Wandsworth on Wednesday 29 October.

“The prisoner is a 24-year-old Algerian man.

“Officers are carrying out urgent enquiries in an effort to locate him and return him to custody.”

Sky News understands the prisoner was serving time for trespass with an intent to steal but has previously committed sexual offences.

It is understood he is not an asylum seeker.

‘Utterly unacceptable’

It is not yet clear why it was nearly a week between the latest release at Wandsworth and the police being informed that an offender was at large.

Sir Keir Starmer was not aware of the incident until the Met Police announcement, Downing Street said.

The prime minister’s spokesman told reporters: “The Met have released a statement I think in the last few minutes.”

He said “one mistaken release is one too many” and the case was “utterly unacceptable”.

“It’s important the police are given the time and space to bring him back into custody. And we will look into the circumstances behind this as a matter of urgency,” he added.

The PM’s spokesman could not say when Mr Lammy became aware of the error, after the cabinet minister refused to answer several questions in the House of Commons on the incident from the shadow defence secretary.

Tory leader Kemi Badenoch wrote on X: “James Cartlidge asked the Deputy PM FIVE times to tell us if ANOTHER migrant sex offender had been accidentally released from prison.

“Instead of answering, Lammy lost his temper.

“Now we read it HAS happened again & he’s been on the run for a week.

“This is a shambles of a government.”

Lammy ‘outraged and appalled’

Sky News understands Mr Lammy did know about the prisoner release before he stood up in the Commons and was pressed on the issue by the Conservatives.

“If we knew, one can only assume the justice secretary knew,” a spokesman for Ms Badenoch said, adding Mr Lammy should come back to the chamber “and do a statement as soon as possible”.

Mr Lammy said afterwards he was “absolutely outraged and appalled by the mistaken release of a foreign criminal wanted by the police”, adding his “officials have been working through the night to take him back to prison”.

“Victims deserve better and the public deserve answers,” he said.

It is understood Mr Lammy believed it would have been irresponsible to talk about the case – involving several agencies – while details were still emerging.

Reform UK leader Nigel Farage posted on social media: “Another dangerous criminal is on the loose thanks to Labour. What a total farce.”

The numbers of these types of errors has risen recently, with 262 instances between March 2024 and March 2025.

The Conservatives described the Kebatu episode as a “national embarrassment”.

In the aftermath of the Kebatu manhunt, Mr Lammy promised “the strongest release checks that have ever been in place”.

He also ordered an independent investigation into the Kebatu release, which is being led by former Deputy Commissioner of the Met Police Dame Lynne Owens.

“This latest incident exposes deeper flaws across the failing criminal justice system we inherited,” Mr Lammy added in his statement on Wednesday on the HMP Wandsworth error.

“Dame Lynne Owens’ investigation will leave no stone unturned to identify these issues, so we can fix them, improve safeguards and ensure the public is properly protected.”

‘Dangerous situation’

The Liberal Democrats’ justice spokesperson Jess Brown-Fuller said: “Just when you couldn’t think things could get any worse for the Ministry of Justice, somehow they have. It would be laughable if the situation weren’t so dangerous.

“This is yet another grave mistake from the government. The public deserves a full explanation about how this has happened again. That should start with David Lammy coming back before Parliament this afternoon for why he failed to answer this pressing question in PMQs as well as a full explanation of how it took almost a week for this to come to light.

“It’s utterly unacceptable that public safety has been put at risk yet again. Both the government and the Prison Service must own up to their failures and guarantee that these mistakes will stop happening once and for all.”