The government’s flagship immigration policy, known as the Rwanda plan, is hanging in the balance this morning as ministers wait for the judgement of the highest court in the land.
But what is the scheme? Why is it so controversial? And how has it ended up in the judicial system?
The Rwanda plan was first proposed by Boris Johnson back in April 2022 as the government came under increasing pressure to tackle the growing number of small boats crossing the Channel.
The then-prime minister outlined his policy that would see anyone arriving in the country illegally deported to the east African nation.
Those who successfully applied for refugee status when there would then be given the right to remain in Rwanda – not return to the UK.
But if their claim was unsuccessful, they could then be removed to their country of origin.
The deal, signed by the home secretary at the time, Priti Patel, and her Rwandan counterpart, cost the government £120m.
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1:35
Boris Johnson: ‘We must defeat people smugglers’
Mr Johnson said it would help deter people from making the dangerous crossing to the UK and tackle the “barbaric trade in human misery” caused by people traffickers.
Opposition parties and charities deemed the plan “cruel and nasty”, and claimed the policy would break international human rights laws.
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There were even reports that King Charles – then the Prince of Wales – was a critic of the scheme.
But the government pushed ahead, with the first flight to Kigali set to take off in June 2022.
Come the day, there were only seven asylum seekers on board the plane.
Numerous court cases were launched by refugee charities, as well as the Public and Commercial Services union, ahead of take off, calling the policy “inhumane” and demanding the deportations were stopped.
Protesters also tried to stop the flight, locking themselves together with metal pipes and blockading exits of the Colnbrook Immigration Removal Centre at Heathrow, where the migrants were believed to be held.
However, English judges ruled the seven people could be deported, saying there had been an “assurance” from government that if the policy was found to be unlawful at a later stage, steps would be taken to bring back any migrants.
This didn’t stop further last minute legal challenges to prevent take off though.
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0:49
Labour’s Sir Keir Starmer dubbed the government’s Rwanda plan a ‘gimmick’.
The government said it would appeal against the ruling, with Tory MPs angered that a European court could overrule the decision of English judges.
But campaigners said it showed the “inhumanity” of the plan for the human rights watchdog to intervene.
In the months that followed, there was a change in government, with Liz Truss taking the keys to Number 10 and Suella Braverman heading up the Home Office.
However, both women stood by the Rwanda plan and, even when Ms Truss was ousted weeks later, her successor Rishi Sunak also gave it his backing.
The ruling of the ECHR – which ensures the European Human Rights Convention is adhered to – was still fresh in the minds of Tory backbenchers, as they saw it as holding up the policy they believed would stop the boats.
And it led to a number of calls for the UK to leave the convention, though they appeared to remain in the minority.
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1:07
Suella Braverman is a vocal advocate of the Rwanda policy
The plan itself headed back to the courts as campaigners tried a new tactic to stop it in its tracks, launching a judicial review on the Home Office’s assessment of Rwanda as a safe third country.
The government doubled down on its belief in the scheme – with Ms Braverman telling the Conservative Party conference it was her “dream” to see flights take off.
And come December of 2022, that dream looked closer to reality, as the High Court ruled in the favour of ministers, saying the scheme did not breach either the UN’s Refugee Convention or human rights laws, and that Rwanda was a “safe third country” for migrants to be sent to.
Lord Chief Justice Lord Burnett concluded Rwanda was not a safe place for people to be housed while their asylum claims were processed, adding: “The result is that the High Court’s decision that Rwanda was a safe third country is reversed, and unless and until the deficiencies in its asylum process are corrected, removal of asylum seekers will be unlawful.”
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2:18
The Court of Appeal ruled against the government
The government was outraged, with the prime minister saying he “fundamentally disagreed” with the ruling, and would do “whatever is necessary” to get the removal flights going.
The anger of Ms Braverman and her right wing supporters also grew, with further demands to leave the ECHR, and others calling for the human rights convention to be overhauled.
The government got approval to appeal that ruling and, as a result, it was sent to the Supreme Court.
Those judges will announce their decision today – and if they stick by the ruling of the Court of Appeal, that would signal the end of the government’s long fought for, but extremely controversial, Rwanda scheme.
Follow the Supreme Court ruling at news.sky.com, on the app, or on Sky News from 10am
Crypto-friendly White House economic adviser Kevin Hassett has reportedly emerged as a top candidate for the next Federal Reserve chair, replacing Jerome Powell when his tenure is up in May.
President Donald Trump’s advisers and backers see Hassett as the frontrunner to take over as Fed chair, as he’s expressed sympathy with Trump’s desire to cut rates, Bloomberg reported on Tuesday, citing people familiar with the matter.
Hassett is the director of the National Economic Council, who oversees the White House’s digital asset working group that Trump created in January. This group released a report in July outlining policy considerations for crypto.
Hassett is one of many reported crypto-friendly Fed chair picks who have backed Trump’s desire for the central bank to cut rates to juice up the markets. Powell’s time as chair is up in May, but his tenure on the Fed Board extends until January 2028.
Asked by Fox News on Tuesday if he would take a job as Fed chair, Hassett said, “Of course I’d have to say yes, because I want to serve my country and I want to serve my president.”
Kevin Hassett was speaking to Fox News on Tuesday. Source: Fox News
“President Trump and I have talked a lot about it,” he added.
Hassett owns Coinbase stocks, was a crypto adviser
In June, Hassett reportedly disclosed that he owned at least $1 million worth of Coinbase (COIN) stock.
He also disclosed that he received a $50,001 salary from Coinbase for serving on the crypto exchange’s Academic and Regulatory Advisory Council, which the company created in 2023 and also included Manhattan US Attorney Jay Clayton.
Hassett has previously served on the advisory board for the crypto fund manager One River Digital Asset Management and was chair of the White House Council of Economic Advisers from 2017 to 2019, in Trump’s first term.
Also on the potential to take over the Fed is its vice supervision chair, Michelle Bowman, who said Fed staff should be allowed to invest a small amount in crypto to get a “working understanding of the underlying functionality.”
Whoever Trump picks, he’ll be pressuring them to cut rates. The Fed has cut rates twice this year by a total of 50 basis points.
The market has turned bullish on a Christmas cut when the Fed meets in December, with CME’s FedWatch putting the chances of a 25-basis-point cut at around 85%.
A raft of tax rises is expected in the budget this lunchtime – with the chancellor acknowledging that voters are “angry at the unfairness in our economy”.
In a newly released video, Rachel Reeves said the public is “frustrated at the pace of change” – but vowed to “take the fair and necessary choices” to tackle the cost of living crisis.
And in a dig at the Conservatives – especially former prime minister Liz Truss – she pledged not to impose austerity, lose control of public spending, or engage in more reckless borrowing.
But given the chancellor had ruled out such a measure last year – because it would “hurt working people” and “take more money out of their payslips” – this will attract criticism from opposition parties.
The chancellor has backed away from raising income tax rates outright, a move that would have breached Labour’s manifesto, but she still needs to find the cash to pay for her public spending plans.
Image: Watch our special programme for Budget 2025 live on Sky News from 11am
Some measures already confirmed by the government include:
It is being reported that the chancellor will also put a cap on the tax-free allowance for salary sacrifice schemes, raise taxes on gambling firms, and bring in a pay-per-mile scheme for electric vehicles.
Setting the scene ahead of the budget at 12.30pm, Ms Reeves said she will “push ahead with the biggest drive for growth in a generation”, promising investment in infrastructure, housing, security, defence, education, and skills.
Although she has vowed not to “duck challenges” nor “accept that our past must define our future”, she admitted that “the damage done from austerity, a chaotic Brexit, and the pandemic were worse than we thought”.
What are the key timings for the budget?
11am – Sky News special programme starts.
About 11.15am – Chancellor Rachel Reeves leaves Downing Street and holds up her red box.
12pm – Sir Keir Starmer faces PMQs.
12.30pm – The chancellor delivers the budget.
About 1.30pm – Leader of the Opposition Kemi Badenoch delivers the budget response.
2.30pm – The independent Office for Budget Responsibility (OBR) holds a news conference on the UK economy.
4.30pm – Sky News holds a Q&A on what the budget means for you.
7pm – The Politics Hub special programme on the budget.
The fiscal black hole is down to several factors – including a downgrade in the productivity growth forecast, U-turns on cuts to benefits and the winter fuel allowance, as well as “heightened global uncertainty”.
Nonetheless, the chancellor has promised more investment to cut NHS waiting lists, deal with “waste in the public sector”, and reduce the national debt.
“This budget is for you, the British people. So that together we can build a fairer, stronger, and more secure Britain,” she said.
Conservative shadow chancellor Sir Mel Stride has said Ms Reeves is “trying to pull the wool over your eyes” – having promised last year that she would not need to raise taxes again.
Meanwhile, Liberal Democrat deputy leader Daisy Cooper has accused her and the prime minister of “yet more betrayals”.
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2:08
What is the ‘milkshake tax’?
What could her key spending announcements be?
As well as filling the black hole in the public finances, these measures could allow the chancellor to spend money on a key demand of Labour MPs – partially or fully lifting the two-child benefits cap, which they say will have an immediate impact on reducing child poverty.
Benefits more broadly will be uprated in line with inflation, at a cost of £6bn, The Times reports.
In an attempt to help households with the cost of the living, the paper also reports that the chancellor will seek to cut energy bills by removing some green levies, which could see funding for some energy efficiency measures reduced.
Other measures The Times says she will announce include retaining the 5p cut in fuel duty, and extending the Electric Car Grant by an extra year, which gives consumers a £3,750 discount at purchase.
The government has already confirmed several key announcements, including:
Extra funding for the NHS will also be announced in a bid to slash waiting lists, including the expansion of the “Neighbourhood Health Service” across the country to bring together GP, nursing, dentistry and pharmacy services – as well as £300m of investment into upgrading technology in the health service.
And although the cost of this is borne by businesses, the chancellor will confirm a 4.1% rise to the national living wage – taking it to £12.71 an hour for eligible workers aged 21 and over.
For a full-time worker over the age of 21, that means a pay increase of £900 a year.
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11:05
What the budget will mean for you
Britons facing ‘cost of living permacrisis’
However, the Tories have hit out at the chancellor for the impending tax rises, with shadow chancellor Sir Mel Stride saying in a statement: “Having already raised taxes by £40bn, Reeves said she had wiped the slate clean, she wouldn’t be coming back for more, and it was now on her. A year later and she is set to break that promise.”
He described her choices as “political weakness” – choosing “higher welfare and higher taxes”, and “hardworking families are being handed the bill”.
The Liberal Democrat deputy leader Daisy Cooper is also not impressed, and warned last night: “The economy is at a standstill. Despite years of promises from the Conservatives and now Labour to kickstart growth and clamp down on crushing household bills, the British people are facing a cost-of-living permacrisis and yet more betrayals from those in charge.”
She called on the government to negotiate a new customs union with the EU, which she argues would “grow our economy and bring in tens of billions for the Exchequer”.
Green Party leader Zack Polanski has demanded “bold policies and bold choices that make a real difference to ordinary people”.
The SNP is calling on the chancellor to “help families” rather than “hammer them with billions of pounds of cuts and damaging tax hikes that destroy jobs and hurt economic growth”.
A headline tax-raising measure expected in today’s budget is an extension of the freeze on income tax thresholds for another two years beyond 2028, which should raise about £8bn.
The amount people pay is dependent on how much they earn, with different tax bands kicking in at different income levels.
In the past, these thresholds have been increased in line with inflation. But more recently they have been frozen, leaving people paying more to the exchequer even if actual tax rates stay the same.
Sky News looks at what the thresholds are, the implications of freezing them, and how that causes “fiscal drag”.
Income tax thresholds
England, Northern Ireland and Wales all have the same income tax rates, set by the British government.
Scotland’s income tax bands are set by the Scottish government, so Westminster budget announcements on income tax do not affect workers in Scotland.
For England, Northern Ireland and Wales, there is a “personal allowance” of £12,570, under which no income tax is paid.
For those earning above £100,000, the personal allowance goes down by £1 for every £2 of income, and can go down to zero, so a person can end up paying income tax on all of their income.
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Thresholds were previously increased annually by consumer price index (CPI) inflation – the estimate of the level of prices of goods and services bought by households.
But, because income tax thresholds have been frozen while wages continue to rise, more people are being brought into higher bands and having to pay more income tax.
A worker whose earnings just keep up with inflation is paying a larger proportion of their salary in tax due to the freeze.
This means more money for the government – a lot more.
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11:05
The budget vs your wallet: How the chancellor could raise billions
The Office for Budget Responsibility (OBR) estimates a continuing freeze in thresholds would raise about £42.9bn annually by the 2027/28 tax year.
And the Institute for Fiscal Studies (IFS) has projected that freezes to the basic and higher rates of income tax alone would raise £39bn a year by 2029-30.
That is roughly similar to the amount of revenue that would be raised by increasing all income tax rates by 3.5 percentage points.
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3:35
Sky News goes inside the room where the budget is decided
Fiscal drag
Freezing income tax thresholds without tax rates increasing has been branded a “stealth tax”, as the government collects more revenue without having to pass a law to raise tax rates.
It is also known as fiscal drag, as more people are pulled into paying tax, or into paying tax at a higher rate.
The OBR estimates the freeze will bring nearly four million more people into paying income tax, three million more people into the higher rate (40%) and 400,000 more into the additional rate (45%) by 2028-29.