Autumn statement: Jaw-dropping change of tack as Jeremy Hunt announces more spending – and sets trap for next election
There is so much about today’s autumn statement that hurts the head.
The job of today’s statement – the reason it was urgent and necessary and painful – is because there was a huge black hole in the public finances that was unsettling the markets and pushing up government debt.
Yet – amazingly – for the next two years Jeremy Hunt announced the Sunak government will overall spend more money, not less.
A jaw-dropping change of tack
Yes, there are big immediate tax rises that many including Tory backbenchers will hate (£7.4bn worth in the next financial year, for example). But this is offset by an incredible £9.4bn of additional spending on energy help, school budgets, social care and the NHS. A jaw-dropping change of tack.
The argument by the chancellor is that a near-term boost to spending is needed to dampen the recession we are now in and keep more people in their jobs. It’s just a very different message from the one we’ve been hearing for the last month.
Incredibly, as Sky News revealed last night, Mr Hunt is even keeping the Liz Truss Energy Price Guarantee and extending it for another year – the very scheme due to be junked in March because it was too risky. That’s quite something, one month after he binned it dramatically on TV.
There is, however, much more theoretical pain, though not yet. In order to calm the markets, the Sunak government is promising an incredible squeeze will begin after an election.
Yes there will be a small 1% real terms increase in budgets after 2025, but that’s much less than then chancellor Rishi Sunak promised in March, and after a decade of pain.
This creates an accountancy bonanza: it means Mr Hunt is able to say he’s saved a theoretical £27bn in 2027, reducing theoretical future borrowing costs. But is this fantasy, because nobody can make promises about public spending that far ahead, given not a word of either the Labour or Tory manifesto has been written.
Read more on the autumn statement:
Key announcements from autumn statement
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All the key data and analysis
A trap for Labour
So in some regards, today’s autumn statement is a trick, a magician’s prestige, aimed not so much at the public but at the markets.
Will they buy it? Will investment houses upon which the UK depends simply trust the sombre seriously seeming spectacle of Mr Hunt and Mr Sunak more than the Truss-Kwasi double act, even if the actual numbers don’t pass muster? Actually there’s a chance they do, and in that sense it works. But it might not. It’s a gamble.
All of this feels very reminiscent of the way George Osborne would approach his budgets – no wonder he’s been seen going into Downing Street in recent weeks and his old lieutenants are advising Mr Hunt behind the scenes.
The trademark Osborne move embedded in today’s decisions is to set a trap for Labour. By doing a Labour-friendly set of tax rises which focus on the richest, then squeezing spending in the next parliament, Mr Sunak and Mr Hunt want to challenge Labour. If they want to go into the next election promising to spend more on public services, where will they get the cash, they will ask. It’s a dilemma, and it’s unclear how Labour will answer.
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’12 weeks of Conservative chaos’
But again this is a gamble. The short-term tax rises are real – taking us to the highest tax burden since the Second World War – while the increase in the amount people will pay on energy will go up and mortgages are still rising, and public sector pay still squeezed. The Office for Budget Responsibility suggests a 7% real terms drop in living standards next year. This will all feel very real.
Perhaps by the next election, Labour will be put on the spot and have to justify where tax rises will come from. But maybe people will be feeling the squeeze to such a degree they want change without needing to interrogate too much the alternatives.
That’s the battle to be fought out at the next election.
World
UN’s Antonio Guterres condemns ‘teaspoon’ of aid allowed into Gaza after dozens die in airstrikes
The head of the UN has said Israel has only authorised for Gaza what amounts to a “teaspoon” of aid after at least 60 people died in overnight airstrikes.
UN secretary general Antonio Guterres said on Friday the supplies approved so far “amounts to a teaspoon of aid when a flood of assistance is required,” adding “the needs are massive and the obstacles are staggering”.
He warned that more people will die unless there is “rapid, reliable, safe and sustained aid access”.
A woman at the site of an Israeli strike in Jabalia, northern Gaza. Pic: Reuters
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Gaza: ‘Loads of children with huge burns’
Israel says around 300 aid trucks have been allowed through since it lifted an 11-week blockade on Monday, but according to Mr Guterres, only about a third have been transported to warehouses within Gaza due to insecurity.
The IDF said 107 vehicles carrying flour, food, medical equipment and drugs were allowed through on Thursday.
Many of Gaza’s two million residents are at high risk of famine, experts have warned.
Meanwhile, at least 60 people have been killed by Israeli airstrikes across Gaza overnight.
Ten people died in the southern city of Khan Younis, and deaths were also reported in the central town of Deir al-Balah and the Jabaliya refugee camp in the north, according to the Nasser, Al-Aqsa and Al-Ahli hospitals where the bodies were brought.
A body is carried out of rubble after an Israeli strike in Jabalia, northern Gaza. Pic: Reuters
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‘Almost everyone depends on aid’ in Gaza
The latest strikes came a day after two Israeli embassy workers were killed in Washington.
The suspect, named as 31-year-old Elias Rodriguez from Chicago, Illinois, told police he “did it for Gaza”.
Israeli Prime Minister Benjamin Netanyahu accused Sir Keir Starmer, Emmanuel Macron and Mark Carney of fuelling antisemitism following the shootings.
The leaders of the UK, France and Canada are “on the wrong side of humanity and (…) history”, he said, after they threatened “concrete action” against Israel this week if it continues its “egregious” military operations in Gaza.
Mr Netanyahu also accused Sir Keir, Mr Macron and Mr Carney of siding with “mass murderers, rapists, baby killers and kidnappers”.
Palestinians search for casualties in Jabalia, northern Gaza. Pic: Reuters
But UK government minister Luke Pollard told Sky News on Friday morning he “doesn’t recognise” Mr Netanyahu’s accusation.
Earlier this week, Mr Netanyahu said he was recalling negotiators from the Qatari capital, Doha, after a week of ceasefire talks failed to bring results. A working team will remain.
The war in Gaza began when Hamas-led militants attacked southern Israel on 7 October 2023, killing some 1,200 people, mostly civilians, and kidnapping 251 others.
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The militants are still holding 58 captives, around a third of whom are believed to be alive, after most of the rest were returned in ceasefire agreements or other deals.
Israel’s offensive, which has destroyed large swaths of Gaza, has killed more than 53,000 Palestinians, mostly women and children, according to Gaza’s Hamas-run health ministry.
A woman has been arrested after 12 people were reportedly injured in a stabbing at Hamburg’s central train station in Germany.
An attacker armed with a knife targeted people on the platform between tracks 13 and 14, according to police.
They added that the suspect was a 39-year-old woman.
Police at the scene. Pic: AP
Officers said they “believe she acted alone” and investigations into the stabbing are continuing.
There was no immediate information on a possible motive.
The fire service said six of the injured were in a life-threatening condition, three others were seriously hurt, and another three sustained minor injuries, news agency dpa reported.
The attack happened shortly after 6pm local time (5pm UK time) on Friday in front of a waiting train, regional public broadcaster NDR reported.
A high-speed ICE train with its doors open could be seen at the platform after the incident.
Railway operator Deutsche Bahn said it was “deeply shocked” by what had happened.
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Four tracks at the station were closed in the evening, and some long-distance trains were delayed or diverted.
Hamburg is Germany‘s second biggest city, with the train station being a hub for local, regional and long-distance trains.
In mid-May, the World Health Organisation assessed that there were “nearly half a million people in a catastrophic situation of hunger, acute malnutrition, starvation, illness and death”.
“This is one of the world’s worst hunger crises, unfolding in real time,” its report concluded.
Warning: This article contains images of an emaciated child which some readers may find distressing
Israel‘s decision this week to reverse the siege and allow “a basic level of aid” into Gaza should help ease the immediate crisis.
But the number of aid trucks getting in, so far fewer than 100 per day, is considered dramatically too few by aid organisations working in Gaza, and the United Nations accuses Israel of continuing to block vital items.
Israel-Gaza latest: Gaza enduring ‘atrocious death and destruction’, UN boss warns
“Strict quotas are being imposed on the goods we distribute, along with unnecessary delay procedures,” said UN secretary general Antonio Guterres in New York on Friday.
“Essentials, including fuel, shelter, cooking gas and water purification supplies, are prohibited. Nothing has reached the besieged north.”
Nineteen of Gaza’s hospitals remain operational, all of them are overwhelmed with the number of patients and a lack of supplies.
Baby Aya at Rantisi hospital in northern Gaza is dangerously thin
“Today, we receive between 300 to 500 cases daily, with approximately 10% requiring admission. This volume of inpatient cases far exceeds the capacity of Rantisi hospital, as the facility is not equipped to accommodate such large numbers,” Jall al Barawi, a doctor at the hospital, told us.
At least 94% of the hospitals have sustained some damage, some considerable, according to the UN.
Jall al Barawi, a doctor at Rantisi hospital
Paramedic crews are close to running out of fuel to drive ambulances.
The lack of food, after an 11-week blockade, has left thousands malnourished and increasingly vulnerable to surviving injuries or recovering from other conditions.
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Children are the worst affected.
Our team in Gaza filmed with baby Aya at the Rantisi hospital in northern Gaza. She is now three months old and dangerously thin.
Her skin stretches over her cheekbones and eye sockets on her gaunt, pale face. Her nappy is too big for her emaciated little body.
Aya’s nappy is too big for her emaciated little body.
Lethal spiral
Her mother Sundush, who is only 19 herself, cannot get enough food to produce breastmilk. Baby formula is scarce.
Aya, like so many other young children, cannot get the vital nutrition she needs to grow and develop.
It’s a lethal spiral.
This is what Aya looked like shortly after she was born
“My daughter was born at a normal weight, 3.5kg,” Sundush tells us.
“But as the war went on, her weight dropped significantly. I would breastfeed her, she’d get diarrhoea. I tried formula – same result. With the borders closed and no food coming in, I can’t eat enough to give her the nutrients she needs.”
“I brought her to the hospital for treatment, but the care she needs isn’t available.
“The doctor said her condition is very serious. I really don’t want to lose her, because I lost my husband and she’s all I have left of him. I don’t want to lose her.”
Read more:
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Aya and her mother Sundush
Some of the aid entering Gaza now is being looted. It is hard to know whether that is by Hamas or desperate civilians. Maybe a combination of the two.
The lack of aid creates an atmosphere of desperation, which eventually leads to a breakdown in security as everyone fights to secure food for themselves and their families.
Only by alleviating the desperation can the security situation improve, and the risk of famine abate.
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