Expect a steady the ship budget with promises of jam tomorrow from Chancellor Jeremy Hunt | Beth Rigby
After the debacle of Liz Truss’s September mini-budget, with all its mega ramifications, and an autumn statement eight weeks later that performed an about-turn so big that the country’s tax burden hit a 70-year-high, Wednesday’s budget will be all about stability and sticking to the plan.
“No big bangs in this budget,” is how one senior government insider put it to me last week. “It’s got to be a growth budget.
“We’re fighting to be competitive again with Labour. If we can get to next summer and the economy is ticking up, and we can narrow the gap to five to eight points behind in the polls, there’s a chance in an election campaign we can shift the dial.”
Tax cuts, I’m told, will have to wait.
Politics live: Date confirmed for Johnson to face partygate inquiry
What the chancellor and prime minister want to project this week is the sense that they are getting the economy back on track, and working towards Rishi Sunak’s pledges to halve inflation, get debt down and get the UK economy growing again.
Do that, argue his allies, and the tax cuts will come – just in time for a general election.
But there is pressure, and lots of it, from voters and from the Tory backbenchers to do more on tax cuts and cost-of-living now, not tomorrow.
And that pressure is all the more palpable after the chancellor received a £30bn windfall in the public finances last month, after it emerged that in the year to January, the public sector had borrowed less than forecast in November by the UK’s official fiscal watchdog.
Floating voters we spoke to in a focus group in one Tory shire seat last week told us that struggling with the cost-of-living and a buckling NHS were top of their concerns, and they expressed scepticism that the government was up to the job.
One voter in the Wycombe constituency in Buckinghamshire described the government as “stale”, with another telling us: “The current crisis emphasises that our government is fairly broken.”
On the cost-of-living, our group of floating voters spoke of their anxiety around energy bills, food prices and childcare.
Charlotte, a working mum, told us she had to change her working hours because she couldn’t afford childcare costs.
“I can’t afford to work full time anymore,” she told us. “It’s not feasible for our family, so I’ve had to rope my mum in to do childcare.
“I wouldn’t say we’re a low earning family. That’s just the way it is now.”
Please use Chrome browser for a more accessible video player
Voters talk about their priorities with our political editor Beth Rigby.
Food bills were also a concern, with voters saying they’d switched to cheaper supermarkets and cut back in the face of galloping food price inflation.
Ashley, who in the past has voted Conservative but is now undecided, told us he’d switched his weekly shop from Tesco and M&S to Aldi, while energy bills were a problem all round.
“I’ve voted Conservative a long time,” the father-of-two told us. “And then I got a bit tired of, you know, Boris and the promises.
“We need to have some results and I want to see some improvement, not the deflection bit around immigration, [but] some real positive on the cost of living. For me, that’s the most key…it’s what’s important to people.”
Short and long term plans
The Treasury is alive to the pressure, with insiders telling me there will be two parts to Mr Hunt’s budget on Wednesday: a short-term support plan to provide immediate relief on the cost-of-living crisis and then the long-term plan for growth.
On the first part of that, the government is expected to extend the £2,500 energy price guarantee for another three months from April (where there had been a planned rise to £3,000) to give people support on their bills.
The chancellor is also under pressure to again freeze fuel taxes in this budget, at a cost of £6bn.
When it comes to childcare, the chancellor is expected to change rules so that parents on Universal Credit are given more money for childcare and given the funding upfront.
The Treasury is also believed to be planning a cash injection of hundreds of millions into increasing the availability of the 30 hours of free childcare to three to four-year-olds.
Mr Hunt also plans to loosen staff-to-child ratios for two-year-olds, which could make the cost of childcare a little cheaper.
But anything really big bang on childcare, such as extending 30 hours of free childcare to one-and two-year-olds, is unlikely – that policy would cost around £6bn.
Please use Chrome browser for a more accessible video player
These are some predictions for the budget.
And when it comes to the most obvious way of helping people manage their bills – wage packets – the government is standing firm, with Treasury insiders insisting there will be no above inflation pay sector awards.
Neither is the chancellor expected to offer voters any cuts to personal taxes.
“We haven’t got £30bn to cut taxes,” is how one government insider put it to me, in a nod to the boost from revised public finances.
“What we’ve got to do is get people back into work, be that through better childcare support or incentives to get those in their 50s back into work.
“That is where we have to focus policy, and that could amount to say £5bn and that comes out of the [£30bn] headroom.”
Because beyond the short-term support measures, the focus for this budget will be on trying to get the economy moving and getting people back to work post-pandemic, with a package of measures to try to shift parents, the sick, disabled and older workers back into jobs.
To that end, the chancellor is expected to raise the lifetime allowance for pension savings from £1m to an expected £1.8m – a record level – in order to try to incentivise doctors and other professionals out of retirement and back into work.
He could also lift the annual tax-free allowance for pensions from £40,000 to £60,000.
It’s a package that could cost £2bn a year and would be much welcomed by higher earners, but also opens the chancellor up to criticism that he is giving a tax break to the rich while offering nothing to basic rate taxpayers.
Read more:
What to look out for in Hunt’s first budget
And when it comes to the other group of voters the chancellor and PM need to placate, his backbenchers, there is disquiet over the high level of tax burden, with many Tory MPs keen for tax cuts.
One former cabinet minister told me last week that they wanted to see the £30bn windfall in the public finances used to reverse the planned increase in corporation tax from 19p to 25p in April.
It is a pretty popular refrain.
But Treasury insiders insist the tax hike will go ahead and instead the chancellor will offer business tax breaks to try to encourage growth.
When Mr Sunak was chancellor back in March 2021, he created the £25bn “super-deduction” tax allowance for capital investment – a two-year measure offering 130% tax relief on companies’ purchases of equipment – in order to try to boost investment and growth.
Mr Hunt is coming up with a new set of plans to try to support business and could give firms much more generous capital allowances to incentivise investment.
Watch too for policies and reforms targeting certain industries and sectors, from artificial intelligence to green energy and advanced manufacturing: all of it will be framed as the government’s long-term plan for growth.
Rishi Sunak and Jeremy Hunt will be hoping to reassure people they are making the right choices for the UK economy.
Wednesday will be, if you like, the third act of the prime minister’s performance over the past few weeks to try and win a jaded public back around by trying to convince them he will stick to his plan and deliver on promises.
On the international stage, he has rehabilitated the UK with allies after the bumpy years of Prime Minister Johnson and then Prime Minister Truss, symbolised most strongly in a deal with the EU over post-Brexit trading arrangements in Northern Ireland – where even his foes conceded Mr Sunak had got more than they expected.
At home, the PM has put forward his plan to “stop the boats” – a key priority of many of the voters he needs to keep onside or win back in 2024.
Whether the plan, surrounded in legal and practical controversies, will come off remains to be seen.
But Mr Sunak will at least be able, to quote one of his allies, “build a narrative” that blames the failure of the policy around France and the EU refusing to grant the UK a returns agreement and the international courts blocking his plans.
“At least he can then make the argument it wasn’t his fault,” they said.
Narrow path back
On Wednesday, the focus will be on the PM’s three economic targets – halving inflation, cutting debt and growing the economy – as the chancellor tries to lay down the best conditions he can for the Conservatives’ run into the general election in 2024.
Mr Sunak’s allies tell me they think there is a way back to victory for this government at the ballot box once again, but the “path is very narrow”.
A budget then building the foundations rather than lighting the fireworks, all of this the groundwork for the pre-election showstopper next year.
But with the cost-of-living squeeze so acute, the promise of jam tomorrow is unlikely to satisfy the public, particularly if those being given some of the spoils this time around look to be business and the wealthy.
Mr Hunt may be charged with steadying the ship, but he’ll have to be skilful on Wednesday not to lose more ground.
A controversial Israeli minister has said Gaza could be a “real estate bonanza” – and that a business plan for redeveloping it had been sent to the US president.
Bezalel Smotrich, the country’s far-right finance chief, told a Tel Aviv conference he had “started negotiations” with the US on how to share the proceeds of any future deal.
The comments echo controversial remarks by Donald Trump in February, when he said America would take over Gaza and redevelop it into the “riviera of the Middle East” – with its population going to “various domains”.
He later shared a AI-generated video showing it as a Dubai-style city, featuring exotic beaches, skyscrapers, luxury yachts and people partying.
Mr Smotrich told the urban regeneration event “there’s a business plan set by the most professional people there is and is on President Trump’s table and how this thing turns into a real estate bonanza. I’m not kidding; it pays off”.
The minister, who is sanctioned by countries including the UK, Canada and Australia, claimed discussions were already under way on how cash from redeveloping Gaza’s shattered landscape would be allocated.
Mr Smotrich said Israel had “paid a lot of money for this war, so we need to divide how we make a percentage on the land marketing later in Gaza”.
He added: “We’ve done the demolition phase, which is always the first phase of urban renewal. Now we need to build; it’s much cheaper.”
Please use Chrome browser for a more accessible video player
Tanks roll into Gaza as Israeli offensive begins
Any effort to forcibly displace Gaza’s population for a building project would almost certainly breach the Geneva Convention and cause international outrage – as Mr Trump found when he mooted his plan earlier this year.
Israel’s offensive in Gaza ratcheted up this week as it launched a major ground offensive to seize all of Gaza City and destroy Hamas.
Thousands are heading south with whatever they can in an effort to avoid being killed in the fighting.
The operation has prompted widespread condemnation, with UK Foreign Secretary Yvette Cooper calling it “utterly reckless and appalling”.
Ms Cooper – who helped greet the pro-Israel President Trump when he landed in Britain on Tuesday – said it would “only bring more bloodshed, kill more innocent civilians & endanger the remaining hostages”.
With no sign of an imminent ceasefire in Gaza and the situation increasingly dire, Prime Minister Sir Keir Starmer is expected to shortly announce Britain’s recognition of a Palestinian state.
It is believed he could make the declaration at the weekend to avoid causing division on the issue while President Trump is in the country.
Please use Chrome browser for a more accessible video player
Sky News analysis shows major escalation in war
The two leaders are holding talks today at Chequers, with the prime minister under pressure to urge Mr Trump to use his influence over Israel to rein in its new offensive.
The prime minister said in July that recognition would come unless Israel met certain conditions, including taking “substantive steps” to end the war and commit to long-term peace.
France, Canada and Australia are also set to recognise a Palestinian state at the UN General Assembly next month, while Ireland, Spain and Norway all took the step last year.
Read more:
What does recognising a Palestinian state mean?
Sadiq Khan calls out Gaza ‘genocide’
Israel says the recognition of a Palestinian state is unacceptable, rewards Hamas, and makes it harder to create the conditions needed to free the remaining hostages.
More than 65,000 people in Gaza have now been killed in the war, according to the Hamas-run health ministry. The figure does not specify the number of Hamas members killed.
At least 63 people were killed on Wednesday, with most of the casualties in Gaza City, local health authorities said.
The Hamas terror attack on Israel in October 2023 saw around 1,200 people killed and 251 people taken hostage. Forty-eight remain in Gaza, but fewer then half are thought to still be alive.
A report this week from a UN commission said Israel was committing genocide in Gaza – a claim the country vehemently denies as “distorted and false”.
Sky News analysis shows thousands of families remain in crowded tent camps in Gaza City, with the UN estimating last week that a million people remain there.
Israel, however, believes 40% of the population has already fled south and on Wednesday opened a new evacuation route for 48 hours.
Ukraine’s defence of the crucial city of Pokrovsk, which has held out for more than a year despite fierce Russian assaults, could be coming to an end as invading forces squeeze the resistance out.
Elsewhere, Ukraine’s troops are facing attacks along the frontline, with Moscow reportedly using a pipeline to move personnel in the northeast near Kupyansk as it seeks to create even more pressure on Kyiv’s stretched resources.
It comes after Volodymyr Zelenskyy used an exclusive interview with Sky News to call on Donald Trump to take a “clear position” on a sanctions package for Russia and security guarantees for Ukraine.
Sky News has a look at what has been happening at some key parts of the frontline.
‘Kill zone’ as around Pokrovsk
Ukrainian forces have been engaged in a bitter struggle to hold the key logistics hub of Pokrovsk for more than a year, with Russian troops at times attempting to encircle the defenders there.
The situation there is worsening, says Dr Marina Miron, an expert at the defence studies department at King’s College London.
She cited reports that Russian forces are controlling all supply routes and have “created a kill zone” using drones, making it very difficult for Ukraine to resupply its troops there.
Please use Chrome browser for a more accessible video player
Sky’s exclusive interview with Zelenskyy: What are the key takeaways?
A road and rail node, Pokrovsk had a pre-war population of around 60,000 people. It’s viewed by Russia as “the gateway to Donetsk”.
Capturing it would severely hamper Ukrainian supply lines and endanger crucial cities like Kramatorsk and Sloviansk.
“It will take time because what the Russians are trying to do essentially is to squeeze the Ukrainians out,” Dr Miron told Sky News.
“They don’t want to storm the city as it’s too difficult and too manpower intensive – assuming a lot of losses.” Instead, they are trying to surround it completely, she added.
This reflects a “changed approach”, Dr Miron says, with the Russian military appearing to favour slower encirclement operations rather than the high-casualty assault waves with which places like Bakhmut were captured.
Read more:
Romania scrambles jets after drone ‘breaches airspace’
Trump urges NATO countries to stop Russian oil purchases
Battles in the northeast
Meanwhile, Russian forces have advanced near Kupyansk in northeast Ukraine, not far from the fortress city of Kharkiv, the Institute for the Study of War thinktank reported on Monday.
Like other targets along the Ukrainian frontline, Kupyansk is a key transport and logistics hub, being the location at which several major rail lines converge.
“It seems like they are pretty close,” Dr Miron said, discussing the positions of Russian forces around Kupyansk.
The aftermath of a Russian drone attack in Kharkiv. Pic: Reuters
Earlier this week, Ukraine’s military said Russia had moved personnel to the area via a pipeline, but said the exit from the pipe is under control of Ukrainian defenders.
“A counter-sabotage operation is underway in the city, and search and strike operations are underway around the city,” the Kyiv’s General Staff said on Telegram on Saturday.
A Ukrainian gunner on the Pokrovsk defensive line fires a self-propelled howitzer towards Russian forces. Pic: Reuters
Ukrainian police try to persuade residents to evacuate Pokrovsk. Pic: Reuters
Kupyansk, which was recaptured by Ukrainian troops in their counteroffensive in autumn 2022, has been largely destroyed in the course of the war and continues to face attacks.
Dr Miron said it’s likely that the push towards Kupyansk is part of an effort by Moscow to retake some of those lost territories, or perhaps an effort to seize land that it can then use as a bargaining chip in any future negotiations.
The suspect in the Madeleine McCann case celebrated his release from prison with a fast-food breakfast of chicken nuggets and a burger.
Christian B, 49, was smuggled from a jail near Hanover, hidden in the back of his lawyer’s car and managed to avoid being filmed or pictured by scores of camera operators who had been waiting for several days.
But a photographer caught up with him as he stopped briefly at a McDonald’s restaurant.
Read more: Madeleine McCann suspect released after serving rape sentence
Christian B, who cannot be fully identified under German privacy laws, stood outside and smoked a cigarette before eating his food.
Dressed in a lilac shirt, beige trousers and trainers, he ordered chicken nuggets with sweet-and-sour sauce, a burger and a hot drink.
He wore sunglasses, but they did little to disguise the distinctive features that have appeared on TV and on the front of newspapers around the world.
After 15 minutes, he left the restaurant as police blocked the street to allow him to leave freely.
Pic: Markus Hibbeler/Bild
Pic: Markus Hibbeler/Bild
He was driven off again in the black Audi saloon in which his lawyer Friedrich Fulscher had collected him an hour earlier from Sehnde prison.
It’s not known where Christian B was headed after completing an unrelated sentence for the rape of an elderly woman, or who will help him adjust to his new life of freedom.
As part of his release conditions, he’s been fitted with an electronic ankle tag, has had to surrender his passport and register his permanent address with probation officers.
Another of his lawyers, Philipp Marquort, said: “This is an attempt by the public prosecutor’s office to keep him in a kind of pre-trial detention where they would have access to him at any time. We will not accept that.”
German prosecutor Hans Christian Wolters, who leads the Madeleine investigation, believes Christian B abducted and murdered the three-year-old during a family holiday in Portugal in 2007.
The suspect, who has convictions for child sex abuse, theft, drug trafficking and forgery, denies any involvement.
Explainer: The chequered history of Christian B
Please use Chrome browser for a more accessible video player
Madeleine McCann suspect released from jail
Madeleine vanished from her bed in a rented apartment as her parents and their friends dined nearby at the hotel complex in Praia da Luz.
Mr Wolters told Sky News he had “almost” enough evidence to charge the suspect, but could not justify arresting him and stopping him from being freed.
He said: “He is dangerous, a psychopath, and we hope he does not commit more crimes, but it is likely he will.”
He said he hadn’t ruled out the chance of charging Christian B: “At the moment, we still have lines of investigation we are pursuing, and we hope we may gain more evidence or indications.
“If that happens, our situation would of course improve, and we would prefer to go to court with that stronger position.”
Madeleine McCann has been missing since 2007. Pic: PA
Christian B, who flitted between Germany and Portugal, has served seven years for the rape of a 72-year-old American woman in Praia da Luz – two years before Madeleine vanished.
He is expected to appear in a German court next month to face a charge of using insulting behaviour towards a female prison warder. A conviction could put him back in jail.
He also faces a possible retrial after the prosecutor’s appeal against his acquittal last year on unrelated rape and child sex allegations.
Scotland Yard detectives, who failed to charge anyone in their own investigation, revealed this week they had asked Christian B to answer their questions, but he refused, as he has with their German and Portuguese colleagues.
His lawyers dismissed it as an illegal request because investigators had shared none of the prosecution files with him.
According to the prosecutor, the evidence against Christian B in the Madeleine case is circumstantial; his mobile phone was nearby her apartment at the time she vanished, he was a convicted child sex abuser, he had allegedly confessed to a friend, and he had re-registered his car the day after.
There is no forensic evidence to link the suspect to the abduction – and after 18 years, the chances of finding it must be remote.
Read more from Martin Brunt:
I was reporting during 7/7 bombings – here’s what happened
Sky News tracks down woman in hit-and-run Maddie theory
Officers describe confronting ‘coward’ Southport killer
Please use Chrome browser for a more accessible video player
‘Different theory’ in McCann case
German criminal profiler Mark T Hofmann told Sky News: “I’m a big believer in second chances, but I’m not that much of a big believer in tenth chances.
“So if you commit a crime, and you do it again and again and again and again, then you need to ask yourself like, why should we believe that he will stop now?
“I wish, and I hope that also he realises that he can maybe now live a different life anonymously in some place, and hopefully stop committing crimes.”
Madeleine’s parents Kate and Gerry McCann, from Leicestershire, cling to the hope their daughter might still be found alive, in the absence of any evidence they are aware of to show she is dead.
-
Sports3 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports1 year agoStory injured on diving stop, exits Red Sox game
-
Sports2 years agoGame 1 of WS least-watched in recorded history
-
Sports2 years agoButton battles heat exhaustion in NASCAR debut
-
Sports2 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports4 years ago
Team Europe easily wins 4th straight Laver Cup
-
Environment2 years agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Environment12 months agoHere are the best electric bikes you can buy at every price level in October 2024