Connect with us

Published

on

The budget will increase taxes by £40bn, with the lion’s share coming from a £25bn rise in employers’ national insurance contributions, the chancellor announced at the budget.

Rachel Reeves said the amount businesses will pay on their employees’ national insurance contributions will increase from 13.8% to 15% from April 2025, with the current £9,100 annual threshold lowered to £5,000, in what she called a “difficult choice” to make.

The Office for Budget Responsibility (OBR), which monitors the government’s spending plans and performance, said most of the burden from the increase will be passed on to workers through lower wages, and consumers through higher prices.

It estimated the national insurance hike would reduce the average hours worked by the equivalent of 50,000 hours.

Follow live: All the latest on budget day

The £40bn rise in taxes is thought to be the largest increase at a budget since John Major’s government in 1993 and is set to more than fill the £22bn “black hole” Labour said the Conservative government left them with.

Ms Reeves also announced the current freeze on income tax thresholds will end in 2028/29 and will be uprated in line with inflation after that.

The previous Conservative government froze the thresholds which meant more people paying higher rates of tax as their salary increases and they move into higher tax bands.

The OBR said the tax burden will reach “a historic high of 38% of GDP by 2029/30” and predicted inflation and interest rates will both be higher as a result of the budget.

Ms Reeves said a “line-by-line breakdown” of the black hole will be published, which she said shows there were “hundreds of unfunded pressures on the public finances” under the Conservatives.

The chancellor, who said she was “deeply proud” to be the country’s first female chancellor, insisted the Labour government would “invest, invest, invest” and put “more pounds in people’s pockets”.

Please use Chrome browser for a more accessible video player

‘This budget raises taxes by £40bn’

Some of the other major changes the chancellor also announced include:

• Fuel duty will stay frozen next year and 5p cut to remain

• Capital gains tax lower rate will increase from 10% to 18%, higher rate from 20% to 24%

• Residential property capital gains tax will remain at 18% and 24%

• Two “permanently lower” business tax rates for retail, hospitality and leisure properties

• 40% relief on business rates in 2025-26 up to a £110,000 cap

• Inheritance tax thresholds frozen until 2030

• Higher rate stamp duty for second homes increased to 5% from Thursday

• Alcohol duty rates on non-draught drinks to increase in line with RPI from February

• Draught alcohol duty cut by 1.7% – 1p off a pint

• HS2 will go to Euston in central London

• Every government department must make 2% cuts by next year

• £22.6bn extra for the NHS’ day-to-day health budget, £3.1bn more for the capital budget

• £2.3bn for schools to hire teachers next year, £6.7bn for the schools capital budget

• £2.9bn for Armed Forces next year

• £500m increase in road budgets next year.

Britain's Chancellor of the Exchequer Rachel Reeves poses with the red budget box outside her office on Downing Street in London, Britain October 30, 2024. REUTERS/Mina Kim
Image:
Rachel Reeves and her Treasury team before the budget. Pic: Reuters

The chancellor started her budget speech by saying the country “voted for change” and “responsible leadership” on 4 July at the general election – and went on to attack the “irresponsibility” of the previous Conservative government.

“We must restore economic stability and turn the page on the last 14 years,” she said.

Ms Reeves added: “The party opposite failed our country. Their austerity broke our National Health Service. The British people have inherited their failure.”

“They called an election to avoid making difficult choices,” she continued.

The chancellor outlined her priorities as economic growth and the NHS, and pledged an end to “short-termism”.

Labour promised to keep the triple lock on pensions, where the state pension goes up each year by whichever is higher of 2%, inflation or earnings growth.

She said that means it will be uprated by 4.1% next year so more than 12m pensioners will be up to £470 better off.

She also set aside £11.8bn for compensation for victims of the infected blood scandal, and £1.8bn for victims of the Post Office IT scandal.

Ahead of the first Labour budget since Alistair Darling’s in 2010, Labour committed in its election manifesto to not increase income tax, national insurance or VAT on “working people”, which Ms Reeves said she had kept to.

Various ministers got into a tangle over who exactly qualified as a working person in the weeks before the budget.

Britain's Chancellor of the Exchequer Rachel Reeves poses with the red budget box outside her office on Downing Street in London, Britain October 30, 2024. REUTERS/Isabel Infantes
Image:
Pic: Reuters

A few plans were leaked or announced ahead of the budget, including:

• All private school fees will include VAT from January, business tax relief to be removed from private schools in April

• An increase on employers’ national insurance – but they did not say by how much

• A change to the fiscal rules – the way in which the government borrows and pays back money – in order to allow for greater investment spending

• An increase to the bus fare cap by 50% to £3

• A boost to the national living wage, with the minimum someone aged 21 and over can be paid increasing by 6.7% to £12.21 an hour

• The national minimum wage, for 16 to 20-year-olds, will also increase – by 16.3% to £10 an hour.

Follow Sky News on WhatsApp
Follow Sky News on WhatsApp

Keep up with all the latest news from the UK and around the world by following Sky News

Tap here

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

Please refresh the page for the fullest version.

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

Continue Reading

Politics

Easing trade and signing a defence pact would be manifesto promises delivered – and Starmer could use a win

Published

on

By

Easing trade and signing a defence pact would be manifesto promises delivered - and Starmer could use a win

This EU-UK summit has for months been openly billed by Sir Keir Starmer’s Downing Street as a hugely significant moment for this government.

The Labour leader promised in his 2024 election manifesto that the UK would sign a new security pact with the EU to strengthen cooperation and improve the UK’s trading relationship with the continent.

Since winning power in July, he has embarked on a charm offensive across European capitals in a bid to secure that better post-Brexit deal.

Monday is set to be when the PM makes good on those promises at a historic summit at Lancaster House in London.

Read more: What exactly could the UK-EU reset look like?

Please use Chrome browser for a more accessible video player

From Sunday: ‘No final deal yet’ with EU

There, the EU and UK are expected to sign a security and defence partnership, which has taken on a new sense of urgency since the arrival of President Trump in the White House.

It is an agreement that will symbolise the post-Brexit reset, with the PM, European Commission president Ursula von der Leyen and European Council president Antonio Costa are also expected to sign off on a communique pledging deeper economic cooperation.

More on Brexit

But, rather like the torturous Brexit negotiations I covered for years in London and Brussels under Conservative prime ministers, Sir Keir’s post-Brexit reset talks are going down to the wire.

As of 10.30pm on Sunday, discussions were set to continue overnight, the two sides snared up over details around fisheries, food trade and youth mobility.

It’s not that both sides don’t want the reset: the war in Ukraine and the spectre of the US becoming an unreliable partner have pushed London and Brussels closer together in their common defence interest.

👉 Click here to follow Electoral Dysfunction wherever you get your podcasts 👈

Fishing and youth mobility – the two snags

But the pressure for this deal weighs more heavily on our prime minister than his European colleagues. He’s been talking for months about securing a reset and better trading relationship with the EU to bolster the UK economy.

His need to demonstrate wins is why, suggests one continental source, the Europeans are letting talks go to the wire, with London and Brussels in a tangle over fishing rights – key demands of France and the Netherlands – and a youth mobility scheme, which is a particular focus for Berlin.

“The British came with 50 asks, we came with two – on fishing and the youth mobility scheme,” says one European source.

The EU is asking for longer-term access to UK fishing grounds – a 10-year deal – which the British government has rebuffed, insisting it will not go beyond a four-year deal.

In response, Brussels is saying it will not lift regulatory checks on food, agricultural and animal products unless the UK moves on fishing. This has left the two sides at an impasse.

EU sources say Brussels had offered a time-limited deal to lift checks on animal products – replicating London’s offer on fisheries – but the UK is reluctant to do this as it leaves too much uncertainty for farmers and supermarkets.

Donald Tusk, Friedrich Merz, Emmanuel Macron and Keir Starmer talk to the press after their meeting.
Pic: Reuters
Image:
Poland’s Prime Minister Donald Tusk, Germany’s Chancellor Friedrich Merz, France’s President Emmanuel Macron and Sir Keir Starmer talk to the press after their meeting on May 16, 2025 Pic: Reuters

Scotland election weighing on talks

A deal on food products, known as sanitary and phytosanitary (SPS) goods, would be a boost for the economy, with potentially up to 80% of border checks disappearing, given the breadth of products – paint, fashion goods, leather as well as foods – with an animal component.

Any deal would also mean the UK would have to align with rules made in Brussels and make a financial contribution to the EU to fund work on food and animal standards.

Both elements will trigger accusations of Brexit “betrayal”, as the UK signs up as a “rule taker” and finds itself paying back into the EU for better access.

Government figures had been telling me how they were more than prepared to face down the criticisms likely to be thrown at them from the Conservatives.

But sensitivities around fishing, particularly in Scotland, where Labour is facing elections next year, have weighed on talks.

Read more from Sky News:
UK has not asked about asylum return hubs, other Balkan countries say
‘Ouch’: Starmer condemned for telling MP ‘she talks rubbish’
Joe Biden diagnosed with ‘aggressive’ form of prostate cancer

The other area of huge tension is over a youth mobility scheme, which would enable young adults from member states to study and work in the UK and vice versa.

Government sources familiar with the talks acknowledge some sort of scheme will happen, but want details to be vague – I’m told it might be “an agreement about a future agreement”, while the EU sees this a one of its two core demands.

Please use Chrome browser for a more accessible video player

European leaders gather in Ukraine

In talks late on Sunday night, the UK government appeared to be softening on re-opening the pre-Brexit Erasmus student exchange scheme as perhaps a way to get around the impasse, according to one EU source.

The UK rejoining this scheme had been rebuffed by Sir Keir last year, but was raised again last night in talks, according to a source.

Common ground on defence and security

Wherever the economic horsetrading lands, the two sides have found common ground in recent months is on defence and security, with the UK working in lockstep with European allies over Ukraine and relationships deepening in recent months as Sir Keir Starmer has worked with President Macron and others to try to smooth tensions between Kyiv and Washington and work on a European peace deal for Ukraine.

If details on trade, youth mobility and fisheries are fudged on Monday, the expectation is that the two sides will sign a security partnership that will reiterate the UK’s commitment to build up the continent’s defence capability and stand united against Russian aggression with its partners.

Please use Chrome browser for a more accessible video player

Five years of Brexit explained

The deal should also mean British arms companies will be able to access the EU’s €150bn rearmament programme, which has been set up to create a massive surge in defence spending over the next five years as Europe prepares itself to better repel threats.

As I write this, talks are ongoing, but it is clearly in neither side’s interest for Monday to go wrong.

The EU and UK need to maintain a united front and, more importantly for Keir Starmer domestically, the PM needs to show an increasingly sceptical public he can deliver on his promises.

Easing trade barriers with Britain’s biggest trading partner and signing an EU defence pact would be two manifesto promises delivered.

And with his popularity sinking to a record low in recent days, he could really do with a win.

Continue Reading

Politics

People do feel like strangers in Britain – but it’s not just because of migration, polling finds

Published

on

By

People do feel like strangers in Britain - but it's not just because of migration, polling finds

Last week, Sir Keir Starmer voiced his worry Britain could become an “island of strangers” if immigration was not tackled.

Some claimed this was a controversial and dangerous stance – drawing parallels with Enoch Powell’s Rivers of Blood speech.

But research released today suggests close to half of those in Great Britain feel like “strangers” in their own country.

Politics latest: Follow live updates

The survey, carried out by pollsters at More In Common, asked 13,464 people in Great Britain for their feelings on the matter.

And what is even more surprising is that the survey was carried out over a month before Sir Keir‘s speech.

The research is only being released today, and it is understood that Downing Street had not seen it before the prime minister’s speech.

More on Keir Starmer

However it will likely be welcomed as a justification of a position aimed outside of Westminster.

Please use Chrome browser for a more accessible video player

‘We risk becoming an island of strangers’

Isolation linked to wealth

The prime minister’s concerns about Great Britain being an “island of strangers” was inextricably linked to rising immigration.

But the research out today shows the isolation felt by many is strongly linked to wealth – with the poorest in the country more likely to feel like strangers.

The cost of living was mentioned as a contributory factor by many of those asked.

And when it comes to ethnic breakdown of those saying they feel like strangers, Asian or Asian British people were more likely than either white or black British people to say they felt separate.

Amy, a teacher from Runcorn, told researchers that when “your money’s all going on your bills and the boring stuff like food and gas and leccy and petrol” there is nothing left “to do for ourselves”.

Read more:
Reform tops polls for first time

Reform surge in estimated national vote

Who is Starmer targeting?

Those who criticised Sir Keir for his “strangers” speech tended to accuse the prime minister of appealing to supporters of Reform or the Conservatives.

Suspended Labour MP Zarah Sultana went as far as to claim the speech was a “foghorn to the far right”.

The analysis from More in Common found that people who supported Reform and the Conservatives last year are indeed much more likely to feel like strangers in the UK.

While Labour, Lib Dem and Green supporters are all less likely to feel like strangers, around a third of them do still agree with the statement that they “sometimes feel like a stranger in my own country”.

And the polling also found that Reform and Conservative voters are much more likely to think that multiculturalism threatens national identity, while supporters of the other three parties tend to largely believe multiculturalism is a benefit.

Polling from More In Common on stranger/loneliness. Pic: More in Common

Across the board, supporters of all parties were more likely than not to think that everyone needs to do more to encourage integration between people of different ethnic backgrounds – and similarly a majority think it is everyone’s responsibility to do so.

Luke Tryl, the UK director of More in Common, said: “The prime minister’s warning that we risk becoming an ‘island of strangers’ resonates with millions who say they feel disconnected from those around them.

“But it would be a mistake to say that immigration and lack of integration are the sole causes of our fragmenting social fabric.”

John McDonnell, another former Labour MP, now suspended, told Sky News that having politicians “exploit” resentment fuelled by economic circumstance to shift “the blame onto migrants just exacerbates the problem”.

He said the government needs to “tackle the insecurity of people’s lives and you lay the foundations of a cohesive society”.

With Reform now leading in the polls and the collapse of support for Sir Keir since becoming prime minister, it is unsurprising that what he says seems to match up with what turquoise voters feel.

Labour MP Zarah Sultana, speaks during a protest in Whitehall, London, during the nurses strike, against the Bill on minimum service levels during strikes. Picture date: Wednesday January 18, 2023.
Image:
Zarah Sultana was one of many critics of Sir Keir Starmer. Pic: PA

Work from home alone

The post-pandemic shift to working from home and spending more time alone has also been blamed for an increased feeling of isolation.

Ruqayyah, a support worker from Peterborough, said the shift to home offices had “destroyed our young generation”.

But there are many other reasons that people feel separate from the rest of their country.

Read more:
Internet may help older people’s mental health

No evidence of ‘two-tier policing’ in handling of Southport

Young people are less trusting of strangers, and there is also a deep discontent with the political system.

Many think the system is “rigged” in favour of the wealthy – although this belief is less common the higher the level of education someone has completed.

The tension that exploded during last year’s riots are also highlighted, and many people are worried about religious differences – a situation exacerbated by foreign conflicts like in the Middle East and between India and Pakistan.

The research was carried out alongside the campaign group Citizens UK and UCL.

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

Matthew Bolton, executive director of Citizens UK, said: “We all saw what can happen last summer when anger and mistrust boil over and threaten the fabric of our society.

“The answers to this don’t lie in Whitehall.

“By listening to people closest to the ground about what causes division and what builds unity in their neighbourhood, we can build a blueprint for cohesion rooted in local leadership and community power.”

Continue Reading

Politics

Britain may have to resort to anti-subversion laws, watchdog warns

Published

on

By

Britain may have to resort to anti-subversion laws, watchdog warns

Britain may need anti-subversion laws to counter threats from states determined to undermine democracy, a government watchdog has said.

Jonathan Hall KC, the independent reviewer of state threat legislation, is due to report this week on using counter-terrorism laws against state interference.

Mr Hall was asked by Home Secretary Yvette Cooper to review whether there were elements of counter-terrorism legislation which could be emulated to address state-based security threats last December.

In particular, he was asked to look at what legal measures would be useful against “highly aggressive state bodies” such as Iran’s Islamic Revolutionary Guard Corps (IRGC).

In a speech to the Policy Exchange thinktank on Monday, Mr Hall will say the internet offers intelligence officers a “perfect way of directly recruiting tasking and paying individuals”.

“Young people who might once have been attracted to a terrorist cause are now willing to carry out sabotage for [Russian President Vladimir] Putin’s Russia,” he will add in the John Creaney Memorial Lecture.

“They are recruited in exactly the same way, by groups operating on Telegram”, an encrypted messaging app, the reviewer says.

More on United Kingdom

Telegram app logo. File pic: Reuters
Image:
Telegram app logo. File pic: Reuters


“I am thinking about the measures that may one day be needed to save democracy from itself. What do I mean? I am referring to counter-subversion,” he is set to add.

Counter-subversion was part of MI5’s role in the 1950s and 1970s but fell out of favour, associated with McCarthyism and infiltrations of domestic protest groups by undercover police, Mr Hall says.

Read more from Sky News:
Luke Littler hits out at vandals who targeted his van
Boy dies after ‘disturbance’ at beach

Follow The World
Follow The World

Listen to The World with Richard Engel and Yalda Hakim every Wednesday

Tap to follow

New laws may now be needed but they would need to come with legal safeguards.

“If I was a foreign intelligence officer, of course I would ensure that the UK hated itself and its history,” he says in the speech.

“That the very definition of woman should be put into question, and that masculinity would be presented as toxic.

“That white people should be ashamed and non-white people aggrieved. I would promote antisemitism within politics.

“My intention would be to cause both immediate and long-term damage to the national security of the UK by exploiting the freedom and openness of the UK by providing funds, exploiting social media, and entryism.”

Pro-Russia groups find ideological affinity with “lone actors” by posing as “protectors of Christian civilisation” and position Russia as a “true defender of crumbling Western civilisation,” he says.

Foreign intelligence agents could already be using social media as a “delightful playground for wedge issues”.

They could seek to use online “sextortion” tactics to obtain kompromat and force individuals to carry out tasking, while they may also be seeking to meddle in Brexit, Scottish independence or the independence of overseas territories.

They could also sponsor contentious foreign policy issues such as Gaza, or amplify the lie that the Southport killer was a Muslim who arrived on a small boat, Mr Hall says.

Mourners react during the funeral of Palestinians killed in Israeli strikes, at Al Shifa hospital, in Gaza City, May 18, 2025. REUTERS/Mahmoud Issa
Image:
Foreign intelligence agents could also sponsor contentious foreign policy issues such as Gaza. File Pic: Reuters

They might encourage extreme forms of environmentalism, or policies that would damage adversaries’ economy “or at least sow discord or hopelessness”, the reviewer adds.

Content moderation – removing, blocking, or limiting access to certain content – is “never going to sufficiently address the unprecedented access that the internet accords to impressionable minds,” Mr Hall says.

Legal measures that have proved useful in dealing with domestic terrorist groups may need to be adapted for groups involved in state threats to stop them promoting themselves and inviting support online and offline, he says in the speech.

One answer is the offence of “foreign interference” under the new National Security Act 2023 but proving that a “foreign hand” is at work can be very difficult, Mr Hall says.

Another answer is “social resilience against disinformation” or even “a Cold War mentality that sniffs out subversion”.

“But what if it was necessary to go further? What if it was necessary to investigate, intrusively, the source of funding for protest movements?”

Mr Hall asks if it might be necessary to “bring forward a law, in the interests of national security, banning extremism or subversion”.

He asks if it might be desirable to pass a law banning Muslim Brotherhood candidates from standing in elections.

The Muslim Brotherhood is an Islamist social movement which arose in Egypt in the 1920s but also gave rise to Hamas.

Such laws would be difficult, he acknowledges, because they would have to be based on general principles that apply to individuals equally – such as separatism, hateful extremism, or subversiveness – which have so far eluded politicians.

If such new laws were introduced, they would “need sufficient safeguard in the form of judicial intervention, not cowed by excessive deference to the executive but ready to correct things when they go wrong”, Mr Hall concludes.

Continue Reading

Trending