Budget 2025 income tax U-turn: What the hell just happened?

Published

3 weeks ago

November 14, 2025

admin

What the hell’s just happened?

On Thursday night I was told that Chancellor Rachel Reeves and Prime Minister Sir Keir Starmer were now not going to raise income tax, having had anonymous briefings for weeks that a manifesto-breaking tax rise was coming, culminating in the speech in Downing Street by the chancellor last week alluding to that.

Politics live: U-turn on budget income tax rise triggers ‘not normal’ market volatility

I had also heard the prime minister was going to make a speech next week to the same effect.

The U-turn – first broken in the Financial Times – was not something the government wanted to leak, and there is anger in Downing Street.

I was told late last night by a source that the decision had been taken to back off income tax rises.

There is obviously some consternation, to say the least, that ministers, the party, the public have been marched up the hill, only to be marched back down again. It all adds to a sense of chaos and a government out of control. So what on earth is going on?

Let’s first do the economics of it. I was told this morning by Treasury sources that the fiscal forecasts from the Office of Budget Responsibility are stronger than expected.

There had been expectations of a £30bn-£40bn black hole in the public finances.

But I’m told today that black hole is actually closer to £20bn: the chancellor also wants headroom of perhaps up to £15bn, but I’m told the change in forecasts has changed the calculation. I’m told wage growth has been stronger which has helped tax receipts and improved forecasts.

So, where does that leave the government? Treasury figures tell me that the change in forecasts mean the manifesto-busting income tax hike is now not necessary.

I don’t need to spell out the jeopardy for such a move: Rachel Reeves was poised to be the first chancellor in 50 years to raise the basic rate of income tax and break the core manifesto pledge that Labour made to voters last year.

It doesn’t mean taxes are not going up. The government is set to freeze tax thresholds for another two years from 2028. That will raise around £8bn as millions of workers are dragged into higher tax bands and end up paying more tax.

There will also be tax raising around pensions and salary sacrifice schemes and on electric vehicles, as well as other measures, as the chancellor casts around for £20bn.

But what about the politics? Well, one government figure today insists that the decision to drop the income tax plan is nothing to do with the self-inflicted leadership crisis at No 10 after anonymous briefings designed to see off any potential post-budget coup against the prime minister spectacularly backfired. The changed forecasts, I’m told, came in last week.

👉 Click here to listen to Electoral Dysfunction on your podcast app 👈

But of course there’s tonnes of politics in this. The talk of higher wage growth perhaps offsetting some of the productivity downgrades was being flagged a couple of weeks back, before the chancellor made her speech.

It’s extremely unusual for a chancellor to pitch-roll their budget. But Reeves did it for a reason.

That was laying the ground for a massive budget that would bring manifesto-breaking tax rises.

She told us of the difficult environment, ruled out more borrowing or spending cuts before telling us “everyone must play their part”. She repeatedly refused to stick to manifesto promises on tax. It doesn’t get much more stark than that.

That the government has U-turned on that decision is about far more than just the fiscal framework.

Read more: What taxes could go up now?

With trust so low in the government, there were serious worries – and warnings – from the party that such a big manifesto break might be something from which the PM and the chancellor wouldn’t recover.

One senior party figure that thinks there could be a leadership challenge after the May elections told me this week that manifesto-breaking tax rises would only make that more likely because Labour would “need a clean skin” to try and rebuild with the public if Starmer broke his promises in that way.

Lucy Powell, the deputy Labour leader, fired a warning shot last week when she said the party should stick to the manifesto and not raise tax: “We should be following through on our manifesto, of course. There’s no question about that,” she told Matt Chorley on BBC Radio 5 Live.

“Trust in politics is a key part of that because if we’re to take the country with us then they’ve got to trust us and that’s really important too.”

The party will no doubt feel relief today that the chancellor is not going to break the manifesto.

It would have only made things a whole lot worse for a government that is in real trouble.

But the shambles of this week is staggering. From the self-inflicted leadership crisis to leaks over a massive budget U-turn, it all lends to the sense that this is a No 10 out of control, lurching from one mess to another. Strap in.

UK

Search for suspects after ‘pepper spray assault’ at Heathrow Airport

Published

4 hours ago

December 7, 2025

admin

Search for suspects after 'pepper spray assault' at Heathrow Airport

Police are investigating after a “number of people” were believed to have been attacked with pepper spray by a group of men who then fled.

Officers were called at 8.11am to a multi-storey car park at Terminal 3 following reports of multiple people being assaulted, said the Metropolitan Police.

A statement by the force said: “A number of people were sprayed with what is believed to be a form of pepper spray by a group of men who then left the scene.”

What we know so far
• Several assaulted with ‘pepper spray’
• One arrest – police hunt for more suspects
• Incident said to involve people known to each other
• Incident not being treated as terrorism
• 21 people treated by ambulance service – five taken to hospital
• Injuries not believed to be life-threatening
• Traffic disruption reported – but train lines since reopened

Live updates on Heathrow incident

Armed police attended and one man was arrested on suspicion of assault. He remains in custody and enquiries continue to trace further suspects.

Police are not treating the Heathrow incident as terrorism.

London Ambulance Service also attended the scene and treated 21 people, including five who were taken to hospital. Their injuries are not believed to be life-changing or life-threatening.

There is currently some disruption to traffic in the area and Terminal 3 remains open.

Increased police presence

Commander Peter Stevens said: “At this stage, we believe the incident involved a group of people known to each other, with an argument escalating and resulting in a number of people being injured.

“Our officers responded quickly and there will be an increased police presence at Heathrow Airport throughout the morning, to continue enquiries and ensure the safety of those in the area.

“We are not treating this incident as terrorism. I understand the public’s concerns and would like to thank those in the area for their cooperation this morning.”

‘Significant incident’

The London Ambulance Service said a “significant incident” was declared.

There was a “full deployment” of resources and the ambulance service is treating it as ongoing.

A London Fire Brigade spokesperson said: “We were called at 8.14am today to assist emergency service colleagues at an incident near Terminal 3 at Heathrow Airport. Firefighters remain at the scene.”

Heathrow is advising passengers to allow extra time when travelling to the airport and to check with their airline for any queries.

There was disruption to train and Tube services, with some delays on the Elizabeth Line and the Piccadilly Line.

National Rail said on its website that lines had been reopened allowing trains to call at Heathrow “following the emergency services dealing with an incident at the airport”.

It said: “Although lines have now reopened, disruption is expected to continue whilst services return to normal, delays of up to 10 minutes and cancellations can be expected until 11.45am.”

National Highways East said on X: “A serious incident within the @HeathrowAirport Tunnel has resulted in the closure of the #M4 spur road southbound between M4 and J4A.

“@metpoliceuk responding. We’ll keep you updated.”

It later said: “Incident has been resolved and all closures lifted on the #M4 southbound @HeathrowAirport spur road between #M4 and J4A.”

People on social media have reported vehicles were being searched at the airport.

A user on X said there was a “major backlog of cars unable to leave the vicinity or enter the drop-off zone” at Terminal 3.

In footage on X, several armed police were seen in a car park.

UK

England and Scotland fans discover where their opening World Cup games will be played

Published

22 hours ago

December 6, 2025

admin

England and Scotland fans discover where their opening World Cup games will be played

England and Scotland fans have found out where their World Cup group games will be played when the tournament kicks off in June.

England, who are in Group L, will begin their tournament against Croatia in Dallas at 4pm EST (9pm BST) on 17 June. They will then go on to face Ghana in Boston at 4pm EST (9pm BST) on 23 June and Panama in New Jersey, New York, at 5pm EST (10pm BST) on 27 June.

Scotland are in Group C, and their first match will be against Haiti in Boston at 9pm EST on 13 June (2am GMT the following morning).

They will go up against Morocco also in Boston at 6pm EST (11pm GMT) on 19 June and then Brazil in Miami at 6pm EST (11pm GMT) on 24 June.

Fans are expected to rush to sort their travel and accommodation plans now that they know where and when the matches take place.

Wales and Northern Ireland have yet to find out if they will qualify.

Wales must face a play-off against Bosnia and Herzegovina in Cardiff, then either Italy or Northern Ireland, if they are victorious.

If they beat these play-off opponents, they will secure their place in Group B alongside Canada, Qatar and Switzerland.

However, Northern Ireland will also be vying to guarantee their spot in the same group if they can beat Italy and then either Wales or Bosnia and Herzegovina.

This breaking news story is being updated and more details will be published shortly.

Please refresh the page for the latest version.

You can receive breaking news alerts on a smartphone or tablet via the Sky News app. You can also follow us on WhatsApp and subscribe to our YouTube channel to keep up with the latest news.

UK

World Cup 2026 – who England, Scotland, Wales, Northern Ireland and the Republic of Ireland will play

Published

1 day ago

December 6, 2025

admin

World Cup 2026 - who England, Scotland, Wales, Northern Ireland and the Republic of Ireland will play

Scotland and England now know who they will face in the group stage of the next summer’s world cup.

But the fates of Northern Ireland, the Republic of Ireland and Wales won’t be determined until they compete in pre-tournament play-off matches in March.

England are in Group L along with Croatia, Panama and Ghana. Their first match will be against Croatia, who beat them in the semi-finals of the 2018 World Cup in Russia.

Scotland’s first match will be against Haiti, in Group C.

Brazil and Morocco are the other Group C teams – both countries were also in the same opening group as Scotland in the 1998 World Cup in France.

Wales have yet to find out if they will qualify as they must face a play-off against Bosnia and Herzegovina in Cardiff, and then either Italy or Northern Ireland, if they are victorious.

If they can overcome these play-off opponents then they will secure their place in Group B along with Canada, Qatar and Switzerland. But Northern Ireland will also be vying and hoping to guarantee their spot in the same group if they can beat Italy and then either Wales or Bosnia and Herzegovina.

The Republic of Ireland also need to get through the play-offs first and are paired against the Czech Republic for their semi-final. Should Ireland win that match, they will need to beat either North Macedonia or Denmark to get to the finals where an opening group containing joint hosts Mexico, South Africa and South Korea awaits.