Jeremy Hunt to unveil package of tax hikes and spending cuts in autumn statement to plug £54bn black hole
Jeremy Hunt will promise to weather an economic “storm” by raising taxes, cutting public spending and scaling back energy support to fill a £54bn black hole in the nation’s finances.
The chancellor will insist to MPs on Thursday that his autumn statement puts the UK on a “balanced path to stability” as he tackles the “enemy” of inflation, which has soared to a 41-year high.
But the measures could put him on a collision course with Tory MPs on the right of his party who are already voicing anger about the prospect of some of the plans.
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An 11th hour petition from two dozen Tory MPs, led by Jonathan Gullis, has been sent to the chancellor asking him not to hike fuel duty in the statement.
The package will be in the form of £30bn of spending cuts and £24bn in tax rises over the next five years – a stark contrast to Kwasi Kwarteng’s unfunded tax-slashing spending splurge two months ago.
Among the measures, annual energy bills for a typical household will stay capped at £2,500, but this will rise to £3,000 in April 2023, when support will become more targeted with additional payments for low-income households and pensioners, Sky’s political editor Beth Rigby understands.
On tax rises, those with the broadest shoulders will bear most of the burden, but there will be pain all around.
The chancellor is expected to lower the threshold for paying the highest rate of tax to £125,000 – down from the existing £150,000.
This is a marked difference to Liz Truss’s plans to scrap the 45p rate altogether, giving the highest earners an average tax cut of £10,000.
Analysis says lowering the threshold will bring an extra 246,000 people into the highest bracket at a cost to them of around £580 each a year, which in turn would raise the Treasury £1.3bn a year.
Mr Hunt is also expected to announce a freeze on personal income tax and national insurance tax thresholds lasting until 2028.
Sometimes referred to as a “stealth tax”, freezing tax thresholds drags more earners into paying higher rates of tax.
Mr Hunt has already hinted he will make it easier for local authorities to increase council tax, with reports suggesting the threshold for raising bills without a referendum could increase from 2.99% to 5%.
There is also expected to be a big increase in the windfall tax on energy companies, and a new tax on electricity generators.
Labour has previously said a windfall tax extension could raise an additional £50bn, and criticised what it calls the “loophole” that allows gas and oil firms to offset their tax liability if they invest back into the UK.
On spending cuts, departments are expected to be told to live within an envelope of the March Spending Review, when inflation at was 3%.
With inflation now at 11.1%, that amounts to a real-terms cut across the board, meaning tough choices will be necessary.
However, there will be some exceptions, with the NHS expected to get more money.
There is also likely to be some protection for the schools budget, Sky’s deputy political editor Sam Coates understands.
“There will inevitably be some good news after the weeks of doom-laden warnings,” he said.
Mr Sunak and Mr Hunt have spent weeks warning that tough choices lay ahead.
However, the prime minister told Sky News on Tuesday that “fairness and compassion” will be at the heart of his decisions.
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Rishi Sunak refuses to apologise for the economic turmoil Liz Truss’s short-lived government caused for the UK
It is understood the chancellor will keep the triple lock for pensioners in his autumn statement – honouring a manifesto commitment.
He is also expected to uprate benefits in line with inflation, rather than earnings (a controversial move that would have saved £5bn).
The government has not confirmed what measures will be in the statement, but there has been a constant stream of measures reportedly being considered.
This “pitch rolling” helps markets get an idea of what is coming down the road and avoids spooking traders.
When Ms Truss and Mr Kwarteng made several surprise announcements in their mini-budget in September, it contributed to the financial chaos which saw the pound crash and the Bank of England forced to intervene to prevent pension funds from collapsing.
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Analysis released on Monday by the independent Resolution Foundation think tank found the mistakes they made cost the UK £30bn, doubling the sum the Treasury says will have to be raised.
Mr Hunt will say that his “difficult decisions” are necessary to keep mortgage rates low and tackle the rocketing energy and food prices intensifying the cost of living crisis.
“Families across Britain make sacrifices every day to live within their means, and so too must governments because the United Kingdom will always pay its way,” he is expected to say.
But Tories on the right of the Conservative Party are already voicing anger about the prospect of raising taxes.
Among the Tory critics, former cabinet minister Esther McVey has warned she will not support tax rises without the scrapping of the “unnecessary vanity project” of HS2.
Former business secretary Jacob Rees-Mogg told ITV’s Peston he would vote for the budget so as to not bring the government down, but warned he opposes tax increases, which he believes “risks making a recession worse”.
Labour has also warned that Britain is “falling behind on the global stage”.
Shadow chancellor Rachel Reeves said: “The country is being held back by 12 years of Tory economic failure and wasted opportunities and working people are paying the price.
“What Britain needs in the autumn statement are fairer choices for working people, and a proper plan for growth.”
And Sharon Graham, the general secretary of the Unite union, warned Mr Hunt “workers are ready to take a stand”.
“He can choose to inject investment into the NHS and deliver a fair pay deal – or he can leave it as it is today, in danger of fatal collapse,” she said.
This community in Sri Lanka’s Kandy District is a mass of mud and loss.
The narrow, filthy streets in Gampola are filled with broken furniture, sodden toys and soiled mattresses. A torrent of floodwater ripped through this neighbourhood and many people had no time to escape.
Trying to reach their now destroyed homes is like wading through treacle – the mud knee-deep.
Many locals say they were not warned about the threat Cyclone Ditwah posed here before it struck last Friday, and weren’t told to evacuate. They say they’ve received very little help since.
Resourceful neighbours were left to try to help rescue survivors. But some had to carry the bodies of the dead, too. Mohamed Fairoos was one of them.
Fairoos Mohamed
“We took five bodies from here,” he says, gesturing to a house full of debris, where mattresses hang drying over the balcony.
“We took nine bodies in total and handed them over to the hospital.” He appears both shocked and exasperated at the lack of support this community received.
The house where Fairoos pulled the bodies from
“When I took the bodies, the police, the navy, no one sent for us.” He tells me he even posted a video online appealing for boats, hoping it might help.
I ask him if he thinks the government has done enough. “No,” he says forcefully. “No one called for us. No one helped us. No one gave us any boats.”
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Kumudu Wijekon and her husband Kumar Premachandra
‘Five people were killed here’
Just a few doors down, a group of volunteers have come to clear another home filled with floodwater. “Five people were killed here,” one of them tells me.
Five of them came from one family: a mother, father, their two daughters and son. Kumudu Wijekon tells me she was friends with them and they’d fled here to a friend’s house, hoping to escape the threat.
“There was heavy rain, but they didn’t think there would be flooding. They left their own home to save themselves from landslides. If they had stayed, they would have survived.”
Chamilaka Dilrukshi
‘We don’t have a single rupee’
A short drive away, Chamilaka Dilrukshi is sobbing inside the photography studio she shares with her husband Ananda. They have two children aged four and 11.
Chamilaka is clutching a bag of rice – she says it’s been donated by a friend and it’s all they have to eat.
Ananda Wijebandara and his wife Chamilaka Dilrukshi
Everything in the shop is wrecked – expensive cameras and lighting equipment covered in thick layers of mud, and outside, rows of broken frames and ripped pictures.
They think they’ve lost nearly £2,500 and their home is severely damaged. She weeps as she tells us: “We don’t have a single rupee to start our business again. We spent all of our savings on trying to build our house.”
Like Mohamed, she believed they should have been warned. “We didn’t know anything. If we did, we would have taken our cameras and our computers out. We just didn’t know it was coming.”
The studio was caked in mud
Anger at government’s perceived failings
Sri Lankan president Anura Kumara Dissanayake has declared a state of emergency to deal with the aftermath of the cyclone, and international aid has arrived.
But many people are angry at the government’s perceived failings. It’s been criticised for not taking the warnings from meteorologists seriously two weeks before the cyclone made landfall, as well as for not communicating enough messages in the Tamil language.
It is going to take places like Gampola a long time to rebuild, repair and restore trust. And in a country still recovering from an economic collapse, nothing is guaranteed.
The Americans were given the full VIP treatment on their visit to Moscow.
There was a motorcade from the airport, lunch at a Michelin-starred restaurant, and even a stroll around Red Square.
It felt like Steve Witkoff and Jared Kushner were on more of a tourist trail than the path to peace.
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Trump’s envoys walk around Moscow
They finally got down to business in the Kremlin more than six hours after arriving in Russia. And by that point, it was already clear that the one thing they had come to Moscow for wasn’t on offer: Russia’s agreement to their latest peace plan.
According to Vladimir Putin, it’s all Europe’s fault. While his guests were having lunch, he was busy accusing Ukraine’s allies of blocking the peace process by imposing demands that are unacceptable to Russia.
The Europeans, of course, would say it’s the other way round.
But where there was hostility to Europe, only hospitality to the Americans – part of Russia’s strategy to distance the US from its NATO allies, and bring them back to Moscow’s side.
Vladimir Putin and Steve Witkoff shaking hands in August. AP file pic
Putin thinks he’s winning…
Russia wants to return to the 28-point plan that caved in to its demands. And it believes it has the right to because of what’s happening on the battlefield.
It’s no coincidence that on the eve of the US delegation’s visit to Moscow, Russia announced the apparent capture of Pokrovsk, a key strategic target in the Donetsk region.
It was a message designed to assert Russian dominance, and by extension, reinforce its demands rather than dilute them.
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‘Everyone must be on this side of peace’
…and believes US-Russian interests are aligned
The other reason I think Vladimir Putin doesn’t feel the need to compromise is because he believes Moscow and Washington want the same thing: closer US-Russia relations, which can only come after the war is over.
It’s easy to see why. Time and again in this process, the US has defaulted to a position that favours Moscow. The way these negotiations are being conducted is merely the latest example.
With Kyiv, the Americans force the Ukrainians to come to them – first in Geneva, then Florida.
As for Moscow, it’s the other way around. Witkoff is happy to make the long overnight journey, and then endure the long wait ahead of any audience with Putin.
It all gives the impression that when it comes to Russia, the US prefers to placate rather than pressure.
According to the Kremlin, both Russia and the US have agreed not to disclose the details of yesterday’s talks in Moscow.
I doubt Volodymyr Zelenskyy is filled with hope.
FIFA has backed away from using dynamic pricing for all 2026 World Cup tickets amid concerns about the cost of attending the tournament in North America.
The organisers insisted they always planned to ring-fence tickets at set prices to follow your own team.
But the announcement comes just days ahead of Friday’s tournament draw in Washington DC, which Donald Trump plans to attend.
Fans will have to wait until Saturday to know exactly where and when their teams will be playing in next summer’s tournament.
Scotland will be one of the teams in the tournament, held in North America and Mexico
Variable pricing – fluctuating based on demand – has never been used at a World Cup before, raising concerns about affordability.
England and Scotland fans have been sharing images in recent days of ticket website images highlighting cost worries.
But world football’s governing body said in a statement to Sky News: “FIFA can confirm ringfenced allocations are being set aside for specific fan categories, as has been the case at previous FIFA World Cups. These allocations will be set at a fixed price for the duration of the next ticket sales phase.
“The ringfenced allocations include tickets reserved for supporters of the Participating Member Associations (PMAs), who will be allocated 8% of the tickets for each match in which they take part, including all conditional knockout stage matches.”
FIFA says the cheapest tickets are from $60 (£45) in the group stage. But the most expensive tickets for the final are $6,730 (£5,094).
There will also be a sales window after the draw from 11 December to 13 January when ticket applications will be based on a fixed price for those buying in the random selection draw.
It is the biggest World Cup with 104 matches after the event was expanded from 32 to 48 teams. There are also three host nations for the first time – with Canada and Mexico the junior partners.
The tournament mascots as seen in Mexico in October. Pic: Reuters
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FIFA defended using fluctuating pricing.
“The pricing model adopted for FIFA World Cup 26 reflects the existing market practice for major entertainment and sporting events within our hosts on a daily basis, soccer included,” FIFA’s statement continued.
“This is also a reflection of the treatment of the secondary market for tickets, which has a distinct legal treatment than in many other parts of the world. We are focused on ensuring fair access to our game for existing but also prospective fans.”
The statement addressed the concerns being raised about fans being priced out of attending.
FIFA said: “Stadium category maps do not reflect the number of tickets available in a given category but rather present default seating locations.
“FIFA resale fees are aligned with North American industry trends across various sports and entertainment sectors.”
Ireland, Northern Ireland and Wales could also still qualify.
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