The chancellor has said the budget is “non-negotiable” on a visit to China in the face of volatile markets back in the UK.
Rachel Reeves flew out on Friday after ignoring calls from opposition parties to cancel the long-planned trip because of economic turmoil at home.
The past week has seen a drop in the pound and an increase in government borrowing costs, which has fuelled speculation of more spending cuts or tax rises.
The Tories have accused the chancellor of having “fled to China” rather than explain how she will fix the UK’s flatlining economy, while the Liberal Democrats say she should stay in Britain and announce a “plan B” to address market volatility.
Former prime minister Boris Johnson said Ms Reeves had “been rumbled” and said she should “make her way to HR and collect her P45 – or stay in China”.
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1:14
Chancellor’s ‘pragmatic’ approach to China
Image: The chancellor visits a Brompton bike shop in Beijing. Pic: AP
However, during a visit to Beijing’s flagship store of UK bike maker Brompton, Ms Reeves said she would not alter her economic plans, with the October budget designed to return the UK to economic stability.
“Growth is the number one mission of this government,” she said.
“The fiscal rules laid out in the budget are non-negotiable. Economic stability is the bedrock for economic growth and prosperity.”
The treasury added that making Britain better off will be at the “forefront of the chancellor’s mind” during her visit.
She said that “action” will be taken to meet the fiscal rules. That action is reported to include deeper spending cuts than the 5% efficiency savings already expected to be announced later this year, while cuts to the welfare bill are also said to be under consideration.
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The UK has laid out a new economic relationship with China, and to use one of China’s favourite phrases, both countries are selling it as a “win-win” situation.
It’s a significant development in restoring ties between the countries. The relationship has been beset by years of tension and suspicion. Both sides want to get it back on track.
China delivered a warm welcome for the chancellor.
Rachel Reeves was shuttled from a Beijing Brompton bike shop, to the Great Hall of the People and on to a state guest house.
China’s vice premier He Lifeng said: “The outcomes we have agreed today represent pragmatic co-operation in action.”
Pragmatic. There is that word again. Chancellor Reeves uttered it four times in her closing statement.
Despite the bonhomie, China is still likely to view these British overtures with caution.
She met her counterpart, Vice Premier He Lifeng, in Beijing on Saturday to discuss financial services, trade and investment, before heading to Shanghai for talks with representatives across British and Chinese businesses.
Image: Britain’s Foreign Secretary David Lammy and Chinese Foreign Minister Wang Yi in Beijing. Pic: AP
On Friday, Culture Secretary Lisa Nandy defended the trip, telling Sky News that the climbing cost of government borrowing was a “global trend” that had affected many countries, “most notably the United States”.
“We are still on track to be the fastest growing economy, according to the OECD [Organisation for Economic Co-operation and Development] in Europe,” she told Anna Jones on Sky News Breakfast.
“China is the second-largest economy, and what China does has the biggest impact on people from Stockton to Sunderland, right across the UK, and it’s absolutely essential that we have a relationship with them.”
Rachel Reeves’s trip to China – the first by a British chancellor since 2019 – was always going to be controversial.
In recent years Conservative governments have been keeping Beijing at arm’s length – amid concern about espionage, the situation in Hong Kong, and the treatment of the Uyghurs.
David Cameron’s so-called “Golden Era” of engagement in the pursuit of economic investment, notoriously capped by a visit to an Oxfordshire pub for a pint with President Xi Jinping – has been widely written off as a naive mistake.
There are many – not least the incoming US President Donald Trump – who believe we should maintain our distance.
But in another era of economic turmoil, the pursuit of growth is the government’s number one priority.
This week’s difficult market news – with the cost of government borrowing surging, and the value of the pound falling – has thoroughly raised the stakes.
It is the first UK-China Economic and Financial Dialogue (EFD) since 2019, building on the Labour government’s plan for a “pragmatic” policy with the world’s second-largest economy.
Sir Keir Starmer was the first British prime minister to meet with China’s President Xi Jinping in six years at the G20 summit in Brazil last autumn.
Relations between the UK and China have become strained over the last decade as the Conservative government spoke out against human rights abuses and concerns grew over national security risks.
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2:45
How much do we trade with China?
Navigating this has proved tricky given China is the UK’s fourth largest single trading partner, with a trade relationship worth almost £113bn and exports to China supporting over 455,000 jobs in the UK in 2020, according to the government.
During the Tories’ 14 years in office, the approach varied dramatically from the “golden era” under David Cameron to hawkish aggression under Liz Truss, while Rishi Sunak vowed to be “robust” but resisted pressure from his own party to brand China a threat.
The Treasury said a stable relationship with China would support economic growth and that “making working people across Britain secure and better off is at the forefront of the chancellor’s mind”.
Ahead of her visit, Ms Reeves said: “By finding common ground on trade and investment, while being candid about our differences and upholding national security as the first duty of this government, we can build a long-term economic relationship with China that works in the national interest.”
Scientists are turning detective to work out what British dolphins are up to beneath the waves – by using forensic-style DNA techniques on their poo.
Conservationists have been studying the 250 or so bottlenose dolphins living in Cardigan Bay, west Wales, over many decades.
Up to now, they have only been able to observe the dolphins as they surface to breathe or play, identifying the animals from the unique marks on their dorsal fins to establish which animals were hanging out together and where.
Image: Dolphins in Cardigan Bay. Pic: Sarah Perry/WTSWW
But now for the first time scientists are using DNA excreted by the dolphins in their poo to build a more complete picture of their lives.
It allows them to identify the sex of individuals and how they are related to other animals. Signficantly, it also shows what the dolphins have been eating.
Image: Dolphin poo. Pic: Sarah Perry/WTSWW
Dr Sarah Perry, marine conservation manager at The Wildlife Trust of South and West Wales, said: “In order to be able to conserve them, we need to know why they’re here and a big a missing part of that is, what they’re feeding on.
“Is that changing at different times of the year? Are certain species of fish more important to them early on in the year, in the spring, and the summer months, and then does that change over the autumn and winter months?
“Are certain species important for younger animals? We don’t know that, so that kind of information, we need to find out.”
Image: Dr Sarah Perry
Catching dolphin poo involves a large element of luck.
The animals occasionally eject a cloud of waste material as they swim.
But it quickly sinks, so the scientists’ boat needs to be close enough for them to scoop it out of the sea with a fine-meshed net.
A sample is then sent to a lab at the University of Aberystwyth, where DNA is extracted for analysis.
Results so far suggest the dolphins are having to adapt to a change in fish species as the water warms.
Image: Dr Niall McKeown
Dr Niall McKeown, a marine biologist at the university, said: “We are seeing large amounts of sardine, sprat, and anchovy.
“This is quite interesting because these are species that are known to have increased in abundance in Welsh waters in recent years in response, we believe, to climate change.”
Image: Dr Niall analyses a sample
Scientists unsure why dolphin numbers are falling
But questions remain about the dolphins.
The number in Cardigan Bay seems to be falling, but scientists are not sure whether that’s a natural cycle or a response to other factors.
Boat noise and disturbance from some fishing activities, such as scallop dredging, could impact the animals, which rely on sound to communicate.
Dr Parry said: “How lucky are we to have such an important population of dolphins here? It’s crazy that we really don’t know that much about them.”
Sir Alan Bates has accused the government of presiding over a “quasi kangaroo court” for Post Office compensation.
Writing in The Sunday Times, the campaigner, who led a years-long effort for justice for sub-postmasters, revealed he had been given a “take it or leave it” offer that was less than half of his original claim.
“The sub-postmaster compensation schemes have been turned into quasi-kangaroo courts in which the Department for Business and Trade sits in judgement of the claims and alters the goal posts as and when it chooses,” he said.
“Claims are, and have been, knocked back on the basis that legally you would not be able to make them, or that the parameters of the scheme do not extend to certain items.”
More than 900 sub-postmasters were prosecuted between 1999 and 2015 after faulty Horizon accounting software made it look as if money was missing from their accounts.
Many are still waiting for compensation despite the previous government saying those who had their convictions quashed were eligible for £600,000 payouts.
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6:36
‘It still gives me nightmares’
After the Post Office terminated his contract over a false shortfall in 2003, Sir Alan began seeking out other sub-postmasters and eventually took the Post Office to court.
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A group litigation order (GLO) scheme was set up to achieve redress for 555 claimants who took the Post Office to the High Court between 2017 and 2019.
Sir Alan, who was portrayed by actor Toby Jones in ITV drama Mr Bates Vs The Post Office, has called for an independent body to be created to deliver compensation.
He added that promises the compensation schemes would be “non-legalistic” had turned out to be “worthless”.
It is understood around 80% of postmasters in Sir Alan’s group have accepted a full and final redress, or been paid most of their offer.
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0:29
‘Lives were destroyed’
A Department for Business and Trade spokesperson told Sky News: “We pay tribute to all the postmasters who’ve suffered from this scandal, including Sir Alan for his tireless campaign for justice, and we have quadrupled the total amount paid to postmasters since entering government.
“We recognise there will be an absence of evidence given the length of time which has passed, and we therefore aim to give the benefit of the doubt to postmasters as far as possible.
“Anyone unhappy with their offer can have their case reviewed by a panel of experts, which is independent of the government.”
Sir Keir Starmer could decide to lift the two-child benefit cap in the autumn budget, amid further pressure from Nigel Farage to appeal to traditional Labour voters.
The Reform leader will use a speech this week to commit his party to scrapping the two-child cap, as well as reinstating winter fuel payments in full.
There are now mounting suggestions an easing of the controversial benefit restriction may be unveiled when the chancellor delivers the budget later this year.
According to The Observer, Sir Keir told cabinet ministers he wanted to axe the measure – and asked the Treasury to look for ways to fund the move.
The Financial Times reported it may be done by restoring the benefit to all pensioners, with the cash needed being clawed back from the wealthy through the tax system.
The payment was taken from more than 10 million pensioners this winter after it became means-tested, and its unpopularity was a big factor in Labour’s battering at recent elections.
Before Wednesday’s PMQs, the prime minister and chancellor had insisted there would be no U-turn.
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1:20
Will winter fuel U-turn happen?
Many Labour MPs have called for the government to do more to help the poorest in society, amid mounting concern over the impact of wider benefit reforms.
Former prime minister Gordon Brown this week told Sky News the two-child cap was “pretty discriminatory” and could be scrapped by raising money through a tax on the gambling industry.
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1:22
Brown questioned over winter fuel U-turn
Mr Farage, who believes Reform UK can win the next election, will this week accuse Sir Keir of being “out of touch with working people”.
In a speech first reported by The Sunday Telegraph, he is expected to say: “It’s going to be these very same working people that will vote Reform at the next election and kick Labour out of government.”