Connect with us

Published

on

Wednesday’s budget is going to be big.

It will be big in terms of tax rises, big in terms of setting the course of the economy and public services, and big in terms of political jeopardy for this government.

The chancellor has a lot of different groups to try to assuage and a lot is at stake.

“There are lots of different audiences to this budget,” says one senior Labour figure. “The markets will be watching, the public on the cost of living, the party on child poverty and business will want to like the direction in which we are travelling – from what I’ve seen so far, it’s a pretty good package.”

The three core principles underpinning the chancellor’s decisions will be to cut NHS waiting lists, cut national debt and cut the cost of living. There will be no return to austerity and no more increases in government borrowing.

Politics Live: Reeves’s ‘mansplaining’ claims are just a ‘smokescreen’, says shadow chancellor

What flows from that is more investment in the NHS, already the big winner in the 2024 Budget, and tax rises to keep funding public services and help plug gaps in the government’s finances.

More on Budget 2025

Some of these gaps are beyond Rachel Reeves’ control, such as the decision by the independent fiscal watchdog (the Office for Budget Responsibility) to downgrade the UK’s productivity forecasts – leaving the chancellor with a £20bn gap in the public finances – or the effect of Donald Trump’s tariffs on the global economy.

Please use Chrome browser for a more accessible video player

Will PM keep his word on taxes?

Others are self-inflicted, with the chancellor having to find about £7bn to plug her reversals on winter fuel allowance and welfare cuts.

By not pulling the borrowing lever, she hopes to send a message to the markets about stability, and that should help keep down inflation and borrowing costs low, which in turn helps with the cost of living, because inflation and interest rates feed into what we pay for food, for energy, rent and mortgage costs.

That’s what the government is trying to do, but what about the reality when this budget hits?

This is going to be another big Labour budget, where people will be taxed more and the government will spend more.

Only a year ago the chancellor raised a whopping £40bn in taxes and said she wasn’t coming back for more. Now she’s looking to raise more than £30bn.

That the prime minister refused to recommit to his manifesto promise not to raise income tax, VAT or national insurance on working people at the G20 in South Africa days ahead of the budget is instructive: this week we could see the government announce manifesto-breaking tax rises that will leave millions paying more.

Please use Chrome browser for a more accessible video player

Starmer’s G20 visit overshadowed by Ukraine and budget

Freeze to income thresholds expected

The biggest tax lever, raising income tax rates, was going to be pulled but has now been put back in neutral after the official forecasts came in slightly better than expected, and Downing Street thought again about being the first government in 50 years to raise the income tax rate.

On the one hand, this measure would have been a very clean and clear way of raising £20bn of tax. On the other, there was a view from some in government that the PM and his chancellor would never recover from such a clear breach of trust, with a fair few MPs comparing it to the tuition fees U-turn that torpedoed Nick Clegg’s Lib Dems in the 2015 general election.

Instead, the biggest revenue raiser in the budget will be another two-year freeze on income tax thresholds until 2030.

This is the very thing that Reeves promised she would not do at the last budget in 2024 because “freezing the thresholds will hurt working people” and “take more money out of their payslips”. This week, those words will come back to haunt the chancellor.

Please use Chrome browser for a more accessible video player

Will this budget help lower your energy bills?

Two-child cap big headline grabber

There will also be more spending and the biggest headline grabber will be the decision to lift the two-child benefit cap.

This was something the PM refused to commit to in the Labour manifesto, because it was one of the things he said he couldn’t afford to do if he wanted to keep taxes low for working people.

But on Wednesday, the government will announce it’s spending £3bn-a-year to lift that cap. Labour MPs will like it, polling suggests the public will not.

What we are going to get on Wednesday is another big tax and spend Labour budget on top of the last.

For the Conservatives, it draws clear dividing lines to take Labour on. They will argue that this is the “same old Labour”, taxing more to spend more, and more with no cuts to public spending.

Having retreated on welfare savings in the summer, to then add more to the welfare bill by lifting the two-child cap is a gift for Labour’s opponents and they will hammer the party on the size of the benefits bill, where the cost of supporting people with long-term health conditions is set to rise from £65bn-a-year to a staggering £100bn by 2029-30.

Please use Chrome browser for a more accessible video player

Why has chancellor U-turned on income tax rises?

Mansion tax on the cards

There is also a real risk of blow-up in this budget as the chancellor unveils a raft of revenue measures to find that £30bn.

There could be a mansion tax for those living in more expensive homes, a gambling tax, a tourism tax, a milkshake tax.

Ministers are fearful that one of these more modest revenue-raising measures becomes politically massive and blows up.

👉Listen to Politics at Sam and Anne’s on your podcast app👈

This is what happened to George Osborne in 2012 when he announced plans to put 20% of VAT on hot food sold in bakeries and supermarkets. The plan quickly became an attack on the working man’s lunch from out-of-touch Tories and the “pasty tax” was ditched two months later.

And what about the voters? Big tax and spend budgets are the opposite of what Sir Keir Starmer promised the country when he was seeking election. His administration was not going to be another Labour tax and spend government but instead invest in infrastructure to turbocharge growth to help pay for better services and improve people’s everyday lives.

Seventeen months in, the government doesn’t seem to be doing things differently. A year ago, it embarked on the biggest tax-raising budget in a generation, and this week, it goes back on its word and lifts taxes for working people. It creates a big trust deficit.

Pic: PA
Image:
Pic: PA

Government attempts to tell a better story

There are those in Labour who will read this and point to worse-than-expected government finances, global headwinds and the productivity downgrades as reasons for tax raising.

But it is true too that economists had argued in the run-up to the election that Labour’s position on not cutting spending or raising taxes was unsustainable when you looked at the public finances. Labour took a gamble by saying tax rises were not needed before the election and another one when the chancellor said last year she was not coming back for more.

After a year-and-a-half of governing, the country isn’t feeling better off, the cost of living isn’t easing, the economy isn’t firing, the small boats haven’t been stopped, and the junior doctors are again on strike.

Read more:
Reeves hints at more welfare cuts
Reeves vows to ‘grip the cost of living’

What tax rises could chancellor announce?

Please use Chrome browser for a more accessible video player

Budget jargon explained

The PM told me at the G7 summit in Canada in June that one of his regrets of his first year wasn’t “we haven’t always told our story as well as we should”.

What you will hear this week is the government trying to better tell that story about what it has achieved to improve people’s lives – be that school breakfast clubs or extending free childcare, increasing the national living wage, giving millions of public sector workers above-inflation pay rises.

You will also hear more about the NHS, as the waiting lists for people in need of non-urgent care within 18 weeks remain stubbornly high. It stood at 7.6m in July 2024 and was at 7.4m at the end of September. The government will talk on Wednesday about how it intends to drive those waits down.

But there is another story from the last 18 months too: Labour said the last budget was a “once in a parliament” tax-raising moment, now it’s coming back for more. Labour said in the election it would protect working people and couldn’t afford to lift the two child-benefit cap, and this week could see both those promises broken.

Please use Chrome browser for a more accessible video player

Can the Tories be blamed for the financial black hole?

Can PM convince his MPs?

Labour flip-flopped on winter fuel allowance and on benefit cuts, and is now raising your taxes.

Downing Street has been in a constant state of flux as the PM keeps changing his top team, the deputy prime minister had to resign for underpaying her tax, while the UK’s ambassador to the US, Peter Mandelson, was sacked over his ties to the Jeffrey Epstein, the late convicted paedophile. It doesn’t seem much like politics being done differently.

All of the above is why this budget is big. Because Wednesday is not just about the tax and spend measures, big as they may be. It is also about this government, this prime minister, this chancellor. Starmer said ahead of this budget that he was “optimistic” and “if we get this right, our country has a great future”.

But he has some serious convincing to do. Many of his own MPs and those millions of people who voted Labour in, have lost confidence in their ability to deliver, which is why the drumbeat of leadership change now bangs. Going into Wednesday, it’s difficult to imagine how this second tax-raising budget will lessen that noise around a leader and a Labour government that, at the moment, is fighting to survive.

Continue Reading

UK

Labour accused of another manifesto breach after major workers’ rights U-turn

Published

on

By

Labour accused of another manifesto breach after major workers' rights U-turn

The Labour government is facing accusations of two manifesto breaches in as many days after turning its back on a promise to protect workers from unfair dismissal from day one in a job.

A day after Rachel Reeves confirmed an extended freeze on income tax thresholds that critics said amounted to a manifesto-breaching tax hike on working people, the business secretary announced a key measure in the flagship Employment Rights Bill would be watered down.

The qualifying period for unfair dismissal is currently two years, and Labour said in their manifesto they would bring it down to one day.

But Peter Kyle announced on Thursday it would now be six months, having faced opposition from businesses.

Mr Kyle defended the change, insisting “compromise is strength”, but Tory leader Kemi Badenoch described it as “another humiliating U-turn” and a number of Labour MPs aren’t happy.

Andy McDonald, MP for Middlesbrough and Thornaby East, branded the move a “complete betrayal”, while Poole MP Neil Duncan-Jordan said the government had “capitulated”.

Former employment minister Justin Madders, who was sacked in Sir Keir Starmer’s reshuffle earlier this year, also disputed claims the move did not amount to a manifesto breach.

“It might be a compromise,” he said, “but it most definitely is a manifesto breach.”

What did the manifesto say?

The Employment Rights Bill was a cornerstone of Labour’s 2024 election manifesto, and also contains measures that would ban zero-hours contracts.

The party manifesto promised to “consult fully with businesses, workers, and civil society on how to put our plans into practice before legislation is passed”.

“This will include banning exploitative zero-hours contracts; ending fire and rehire; and introducing basic rights from day one to parental leave, sick pay, and protection from unfair dismissal,” it said.

Angela Rayner was a key driver of the bill before she left cabinet, but Peter Kyle (below) is now calling the shots. Pic: PA
Image:
Angela Rayner was a key driver of the bill before she left cabinet, but Peter Kyle (below) is now calling the shots. Pic: PA

Pic: Reuters
Image:
Pic: Reuters

How did we get here?

But the legislation – which was spearheaded by former deputy prime minister Angela Rayner – has been caught in parliamentary ping pong with the House of Lords.

Last month, some peers objected to the provisions around unfair dismissal, suggesting they would deter some businesses from hiring.

They also opposed Labour’s move to force employers to offer guaranteed hours to employees from day one, arguing zero-hour contracts suited some people.

Ministers said reducing the qualifying period for unfair dismissal turned the bill into a “workable package”.

Read more:
Budget 2025: The key points at a glance
Starmer insists Labour ‘kept to our manifesto’

Please use Chrome browser for a more accessible video player

Employment Rights Bill is ‘anti-growth blueprint’

Businesses have largely welcomed the change, but unions gave a more hostile response.

Sharon Graham, the general secretary of Unite, said the bill was now a “shell of its former self”.

“With fire and rehire and zero-hours contracts not being banned, the bill is already unrecognisable,” she said.

The TUC urged the House of Lords to allow the rest of the legislation to pass.

Paul Nowak, the general secretary, said: “The absolute priority now is to get these rights – like day one sick pay – on the statute book so that working people can start benefitting from them from next April.”

‘Strikes the right balance’

The Resolution Foundation said the change in the unfair dismissal period was a “sensible move that will speed up the delivery of improvements to working conditions and reduce the risk of firms being put off hiring”.

It said the change “strikes the right balance between strengthening worker protections and encouraging businesses to hire” and deliver “tangible improvements to working conditions”.

The Confederation of British Industry (CBI) added: “Businesses will be relieved that the government has agreed to a key amendment to the Employment Rights Bill, which can pave the way to its initial acceptance.

“This agreement keeps a qualifying period that is simple, meaningful and understood within existing legislation.

“It is crucial for businesses confidence to hire and to support employment, at the same time as protecting workers.”

Continue Reading

UK

Budget 2025: Reeves urged to ‘make the case’ for income tax freeze – as PM hits out at defenders of ‘failed’ policy

Published

on

By

Budget 2025: Reeves urged to 'make the case' for income tax freeze - as PM hits out at defenders of 'failed' policy

Rachel Reeves needs to “make the case” to voters that extending the freeze on personal income thresholds was the “fairest” way to increase taxes, Baroness Harriet Harman has said.

Speaking to Sky News political editor Beth Rigby on the Electoral Dysfunction podcast, the Labour peer said the chancellor needed to explain that her decision would “protect people’s cost of living if they’re on low incomes”.

In her budget on Wednesday, Ms Reeves extended the freeze on income tax thresholds – introduced by the Conservatives in 2021 and due to expire in 2028 – by three years.

The move – described by critics as a “stealth tax” – is estimated to raise £8bn for the exchequer in 2029-2030 by dragging some 1.7 million people into a higher tax band as their pay goes up.

Rachel Reeves, pictured the day after delivering the budget. Pic: PA
Image:
Rachel Reeves, pictured the day after delivering the budget. Pic: PA

The chancellor previously said she would not freeze thresholds as it would “hurt working people” – prompting accusations she has broken the trust of voters.

During the general election campaign, Labour promised not to increase VAT, national insurance or income tax rates.

Sir Keir Starmer has insisted there’s been no manifesto breach, but acknowledged people were being asked to “contribute” to protect public services.

He has also launched a staunch defence of the government’s decision to scrap the two-child benefit cap, with its estimated cost of around £3bn by the end of this parliament.

Please use Chrome browser for a more accessible video player

Prime minister defends budget

‘A moral failure’

The prime minister condemned the Conservative policy as a “failed social experiment” and said those who defend it stand for “a moral failure and an economic disaster”.

“The record highs of child poverty in this country aren’t just numbers on a spreadsheet – they mean millions of children are going to bed hungry, falling behind at school, and growing up believing that a better future is out of reach despite their parents doing everything right,” he said.

The two-child limit restricts child tax credit and universal credit to the first two children in most households.

The government believes lifting the limit will pull 450,000 children out of poverty, which it argues will ultimately help reduce costs by preventing knock-on issues like dependency on welfare – and help people find jobs.

Please use Chrome browser for a more accessible video player

Budget winners and losers

Speaking to Rigby, Baroness Harman said Ms Reeves now needed to convince “the woman on the doorstep” of why she’s raised taxes in the way that she has.

“I think Rachel really answered it very, very clearly when she said, ‘well, actually, we haven’t broken the manifesto because the manifesto was about rates’.

“And you remember there was a big kerfuffle before the budget about whether they would increase the rate of income tax or the rate of national insurance, and they backed off that because that would have been a breach of the manifesto.

“But she has had to increase the tax take, and she’s done it by increasing by freezing the thresholds, which she says she didn’t want to do. But she’s tried to do it with the fairest possible way, with counterbalancing support for people on low incomes.”

Read more:
Labour’s credibility might not be recoverable
Budget 2025 is a big risk for Labour’s election plans

She added: “And that is the argument that’s now got to be had with the public. The Labour members of parliament are happy about it. The markets essentially are happy about it. But she needs to make the case, and everybody in the government is going to need to make the case about it.

“This was a difficult thing to do, but it’s been done in the fairest possible way, and it’s for the good, because it will protect people’s cost of living if they’re on low incomes.”

Continue Reading

UK

Prostate cancer: NHS screening programme could come one step closer today

Published

on

By

Prostate cancer: NHS screening programme could come one step closer today

An NHS screening programme for prostate cancer could come one step closer if it’s backed today by a key committee that advises the government.

The National Screening Committee, comprised of doctors and economists, will reveal whether it now believes the benefits of screening outweigh any risks, and whether testing could be done at a reasonable cost to the NHS.

When it last looked at the evidence in 2020, it rejected calls for screening, even though prostate cancer kills 12,000 men a year.

But in recent months, there has been growing pressure for screening from high-profile public figures such as Olympian Sir Chris Hoy and former Sky News presenter Dermot Murnaghan.

Both have been diagnosed with advanced prostate cancer, yet the disease is curable if detected in its early stages.

Please use Chrome browser for a more accessible video player

Sir Chris Hoy and Dermot Murnaghan on facing cancer

Former prime minister David Cameron has also backed the campaign for screening this week after revealing he had been treated for the cancer.

The committee will decide whether new research has tipped the scales in favour of screening older men, or whether to target only those at higher risk, such as black men and those with a family history of the disease.

The case for…

Lithuania is currently the only country to screen all men aged 50-69 with a blood test for PSA, a protein released by prostate cells.

A low level is normal. But levels can rise steeply in men with cancer.

A recent study showed that regular PSA testing of men over 50 could reduce deaths by 13%.

That’s about the same survival benefit of breast screening.

Please use Chrome browser for a more accessible video player

Cameron treated for prostate cancer

…and the case against

But the PSA blood test isn’t completely reliable.

One in seven men with prostate cancer actually have a normal PSA level.

And even those with a high level may have a cancer that is so slow growing that it’s just not a threat.

That’s why the National Screening Committee has warned in the past that PSA screening could lead men to have surgery or other treatment that they don’t actually need. Treatment can result in incontinence or impotence.

But the evidence has moved on.

These days men with a high PSA should have an MRI scan of their prostate, which significantly reduces the risk of unnecessary treatment. And the treatment itself is getting safer.

But the committee may judge that the risks and benefits of screening all men in their 50s and 60s are still too finely balanced to give the go-ahead.

They may wait for results from the Transform trial, which has just been launched and will compare different screening strategies. That could take many years.

Please use Chrome browser for a more accessible video player

‘When I was diagnosed, it was too late’

Read more from Sky News:
TGI Fridays’ UK chain up for sale
U-turn over unfair dismissal policy

But campaigners are hopeful that the committee will recommend the screening of men at higher risk of prostate cancer in the meantime.

Black men have twice the risk of those from other ethnic groups.

Men whose father or brothers have had prostate cancer are two and a half times the risk.

And there is also an increased risk for men whose mother or sisters have had breast or ovarian cancer.

Roughly 1.3 million men fall into one of the risk groups.

But identifying and inviting them for screening could prove tricky. GPs don’t always note a patient’s ethnicity in their medical records, and they would usually only know about a patient’s family history if they have been told.

If the committee recommends screening in some form, it is likely to go out to a public consultation before landing on the desk of Health Secretary Wes Streeting for a final decision.

Ultimately, it is his call whether at least some men are screened for what is now the most common cancer in England.

Continue Reading

Trending