Jeremy Hunt to unveil package of tax hikes and spending cuts in autumn statement to plug £54bn black hole

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3 years ago

November 17, 2022

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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.

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.

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.

World

Trump’s USAID cuts could lead to 14 million deaths, report warns

Published

2 hours ago

July 1, 2025

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Trump's USAID cuts could lead to 14 million deaths, report warns

Around 14 million people could die across the world over the next five years because of cuts to the US Agency for International Development (USAID), researchers have warned.

Children under five are expected to make up around a third (4.5 million) of the mortalities, according to a study published in The Lancet medical journal.

Estimates showed that “unless the abrupt funding cuts announced and implemented in the first half of 2025 are reversed, a staggering number of avoidable deaths could occur by 2030”.

“Beyond causing millions of avoidable deaths – particularly among the most vulnerable – these cuts risk reversing decades of progress in health and socioeconomic development in LMICs [low and middle-income countries],” the report said.

USAID programmes have prevented the deaths of more than 91 million people, around a third of them among children, the study suggests.

The agency’s work has been linked to a 65% fall in deaths from HIV/AIDS, or 25.5 million people.

Eight million deaths from malaria, more than half the total, around 11 million from diarrheal diseases and nearly five million from tuberculosis (TB), have also been prevented.

USAID has been vital in improving global health, “especially in LMICs, particularly African nations,” according to the report.

Established in 1961, the agency was tasked with providing humanitarian assistance and helping economic growth in developing countries, especially those deemed strategic to Washington.

But the Trump administration has made little secret of its antipathy towards the agency, which became an early victim of cuts carried out by the Department of Government Efficiency (DOGE) – formerly led by Elon Musk – in what the US government said was part of a broader plan to remove wasteful spending.

In March, US Secretary of State Marco Rubio said more than 80% of USAID schemes had been closed following a six-week review, leaving around 1,000 active.

The US is the world’s largest humanitarian aid donor, providing around $61bn (£44bn) in foreign assistance last year, according to government data, or at least 38% of the total, and USAID is the world’s leading donor for humanitarian and development aid, the report said.

Between 2017 and 2020, the agency responded to more than 240 natural disasters and crises worldwide – and in 2016 it sent food assistance to more than 53 million people across 47 countries.

The study assessed all-age and all-cause mortality rates in 133 countries and territories, including all those classified as low and middle-income, supported by USAID from 2001 to 2021.

World

Thai PM Paetongtarn Shinawatra suspended amid outrage over leaked phone call

Published

4 hours ago

July 1, 2025

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Thai PM Paetongtarn Shinawatra suspended amid outrage over leaked phone call

Thailand’s prime minister has been suspended after a leaked phone call with a senior Cambodian politician caused outrage.

An ethics investigation into Paetongtarn Shinawatra is under way and she could end up being dismissed.

The country’s constitutional court took up a petition from 36 senators, who claimed dishonesty and a breach of ethical standards, and voted 7 to 2 to suspend her.

The prime minister’s call with Cambodia’s former leader, Hun Sen, sparked public protests after she tried to appease him and criticised a Thai army commander – a taboo move in a country where the military is extremely influential.

Ms Shinawatra was trying to defuse mounting tensions at the border – which in May resulted in the death of one Cambodian soldier.

Thousands of conservative, nationalist protesters held a demo in Bangkok on Saturday to urge her to step down.

Her party is clinging on to power after another group withdrew from their alliance a few weeks ago over the phone call. Calls for a no-confidence vote are likely.

Deputy prime minister Suriya Juangroongruangkit will take over temporarily while the court looks into the case.

The 38-year-old prime minister – Thailand‘s youngest ever leader – has 15 days to respond to the probe. She has apologised and said her approach in the call was a negotiating tactic.

The popularity of her government has slumped recently, with an opinion poll showing an approval rating of 9.2%, down from 30.9% in March.

Ms Shinawatra comes from a wealthy dynasty synonymous with Thai politics.

Her father Thaksin Shinawatra – a former Manchester City owner – and aunt Yingluck Shinawatra served as prime minister before her – in the early to mid 2000s – and their time in office also ended ignominiously amid corruption charges and military coups.

World

Benjamin Netanyahu to meet Donald Trump next week amid calls for Gaza ceasefire

Published

11 hours ago

July 1, 2025

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Benjamin Netanyahu to meet Donald Trump next week amid calls for Gaza ceasefire

Israeli Prime Minister Benjamin Netanyahu will be meeting Donald Trump next Monday, according to US officials.

The visit on 7 July comes after Mr Trump suggested it was possible a ceasefire in Gaza could be reached within a week.

On Sunday, he wrote on social media: “MAKE THE DEAL IN GAZA. GET THE HOSTAGES BACK!!!”

At least 60 people killed across Gaza on Monday, in what turned out to be some of the heaviest attacks in weeks.

According to the Hamas-run health ministry, 56,500 people have been killed in the 20-month war.

The visit by Mr Netanyahu to Washington has not been formally announced and the officials who said it would be going ahead spoke on condition of anonymity.

An Israeli official in Washington also confirmed the meeting next Monday.

White House Press Secretary Karoline Leavitt said the administration was in constant communication with the Israeli government.

She said Mr Trump viewed ending the war in Gaza and returning remaining hostages held by Hamas as a top priority.

The war in Gaza broke out in retaliation for Hamas’ 7 October 2023 attacks on southern Israel that killed 1,200 people and saw a further 250 taken hostage.

An eight-week ceasefire was reached in the final days of Joe Biden’s US presidency, but Israel resumed the war in March after trying to get Hamas to accept new terms on next steps.

Talks between Israel and Hamas have stalled over whether the war should end as part of any ceasefire.