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.
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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.”
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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, a key battleground in the next election, the chancellor is expected to change the rules so that parents on Universal Credit are given more childcare and given the funding upfront.
The Treasury is also believed to be planning a hundreds of millions cash injection into expanding access to 30 hours of free access to the over threes.
The chancellor also plans to loosen staff to child ratios for two-year-olds, which could make the cost of childcare a little cheaper.
He is also planning to extend the provision of up to 30 hours a week to one and two-year-olds which could form a central plank in his pitch of helping with the cost of living and getting parents into work.
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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.
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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.
The Metropolitan Police has condemned the “intolerable” abuse allegedly suffered by officers who were “kicked and spat on” as they arrested more than 400 people at a protest against the banning of Palestine Action as a terror group.
The arrests were made on Saturday at a protest in London against the banning of the proscribed terror group.
Deputy Assistant Commissioner Claire Smart, who led the policing operation, said: “In carrying out their duties today, our officers have been punched, kicked, spat on and had objects thrown at them by protesters.
“It is intolerable that those whose job it is to enforce the law and keep people safe – in this case arresting individuals committing offences under the Terrorism Act – should be subject to this level of abuse.”
Pic: PA
The force added some protesters had been both physically and verbally abusive in a “coordinated effort to prevent officers carrying out their duties”, and that more than 25 of the arrests were made for assault.
A spokesperson for Defend Our Juries claimed the rally had been “the picture of peaceful protest” and that the Met Police’s statement about its officers being abused was an “astonishing claim”.
“I’ve been here all day and I haven’t seen any violence or aggression from anyone,” they said. “I’ve only seen aggression and violence from the police.”
It comes as the number of those arrested at the protest rose to more than 425 by around 9pm on Saturday, the Met said, but more arrests were expected.
Officers were seen drawing their batons while demonstrators took action in support of the proscribed terror organisation.
One man was seen with blood streaming down his face behind a barrier after being arrested, while the crowd was heard chanting “shame on you” and “you’re supporting genocide”.
Tense scenes on the western side of Parliament Square saw several protesters fall over in a crush while water was thrown at officers.
Pic: PA
Deputy Assistant Commissioner Smart said the majority of protests, including the Palestine Coalition march, attended by around 20,000 people, “passed with very few arrests”.
But “this was not the case at the protest organised by Defend Our Juries in support of the proscribed terrorist organisation Palestine Action”.
“The tactics deployed by supporters of Palestine Action in their attempt to overwhelm the justice system, as well as the level of violence seen in the crowd, required significant resource which took officers out of neighbourhoods to the detriment of the Londoners who rely on them,” she said.
Sky News’ Laura Bundock was at the protest.
She said: “There are hundreds of people here holding their placards proclaiming support for Palestine Action, they know that in itself is a criminal offence and so they are sat around, lying around, waiting to be arrested but with so many people here, it’s taking a long time.”
She added: “Protesters are now appealing to the new home secretary, they don’t see this activism as terrorism and vow they will never back down.”
A protester is carried away by police in Parliament Square. Pic: PA
First arrest after just 12 minutes
The Met announced the first arrests of the day on X just 12 minutes after the protest’s official start time.
The protest’s organiser, Defend Our Juries, said it estimated 1,500 had gathered for the rally, where many of them held signs saying: “I oppose genocide. I support Palestine Action.”
In an update early on Saturday evening, the Met said: “Any assaults against officers will not be tolerated and arrests have already been made. We will identify all those responsible and prosecute to the full extent of the law.”
It had warned before the protest that “expressing support for a proscribed organisation is a criminal offence under the Terrorism Act”.
“Where our officers see offences, we will make arrests,” it said.
Pic: PA
Palestine Action has been banned as a terror group since 5 July after MPs voted overwhelmingly in favour of the move proposed by then-home secretary Yvette Cooper, making it illegal to express support for the group.
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Police and demonstrators in Westminster. Pic: PA
The ban on the group came shortly after two Voyager aircraft suffered around £7m worth of damage at RAF Brize Norton in Oxfordshire on 20 June.
The Home Office is set to appeal against the High Court ruling allowing Palestine Action’s co-founder, Huda Ammori, to proceed with a legal challenge against the government over the group’s ban.
Sir Keir Starmer has reshuffled his cabinet following Angela Rayner’s resignation after admitting she had not paid enough stamp duty on the purchase of a new home.
The prime minister’s former right-hand woman stepped down as deputy prime minister, housing secretary and deputy leader of the Labour Party after standards adviser Sir Laurie Magnus found she had breached the ministerial code.
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She paid standard stamp duty on a flat she bought in Hove, East Sussex, in May after taking advice that it counted as her only home due to her disabled son’s trust owning the family home in Ashton-under-Lyne – but it was established she should have paid more.
Her resignation has left a hole around the cabinet table, which Sir Keir is now filling.
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The rise and fall of Angela Rayner
It was stressed early on Chancellor Rachel Reeves would remain as chancellor, in an attempt to stop the markets moving.
Read more: The working class mum who left school at 16 and became deputy PM
This is who is moving and where to:
David Lammy – foreign secretary to justice secretary and deputy PM
After flexing his diplomatic muscles with Donald Trump and his deputy JD Vance over the past year, Mr Lammy will now move to the justice brief.
The move is likely to be a blow as the PM had promised, most recently in November, he would be foreign secretary for the whole parliament until 2029.
Although he is no longer holding one of the four great offices of state, he has also been made deputy prime minister, presumably to soften the blow.
Mr Lammy is close to Sir Keir, both as a friend and in his next door constituency, and was seen grinning as he went into Number 10 after being appointed.
Yvette Cooper – home secretary to foreign secretary
The Labour stalwart had made tackling illegal migration a priority, so the move could be seen as a disappointment for her.
However, she remains in one of the four great offices of state – PM, chancellor, foreign and home.
Shabana Mahmood – justice secretary to home secretary
A big promotion, the straight-talking Labour MP will be tasked with tackling the small boats crisis and asylum seeker hotel protests.
She is no stranger to making difficult decisions, deciding to free criminals early to reduce prison overcrowding as justice secretary.
Her move makes it the first time all three great offices of state, after the prime minister, are held by women.
Pat McFadden – chancellor of the Duchy of Lancaster and intergovernmental minister to work and pensions secretary and head of “super ministry”
Often seen as Sir Keir’s “number two”, Mr McFadden will take over a newly formed “super ministry”.
It will include the department for work and pensions and the skills remit of the department for education – taking a large part of Education Secretary Bridget Phillipson’s brief and taking over from Liz Kendall as work and pensions secretary.
While it is not a promotion at first glance, it is a much wider role than he has had as chancellor of the Duchy of Lancaster – the highest-ranking Cabinet Office minister after the PM.
Darren Jones – chancellor of the Duchy of Lancaster
It is the second new job in the space of one week for the new chancellor of the Duchy of Lancaster. The close ally of the prime minister was promoted from chief secretary to the Treasury on Monday to chief secretary to the prime minister. And now he gets another new job.
Steve Reed – environment secretary to housing secretary
A promotion for the man who has consistently defended the government lifting inheritance tax relief on farmers.
He takes over one of the two major vacancies left by Ms Rayner and will have the massive task of building 1.5 million new homes during this parliament, as promised by the government.
Jonathan Reynolds – business and trade secretary to chief whip
A slightly odd move for the MP seen as a steady pair of hands in his business secretary role.
He takes over from Sir Alan Campbell and will now have to hustle Labour MPs to vote with the government – something that has sometimes proved difficult with the current cohort.
Mr Reynolds will also attend cabinet, as is necessary so he can liaise between the party and No 10.
Peter Kyle – science secretary to business and trade secretary
A promotion for Mr Kyle, who is taking over from Jonathan Reynolds.
He is seen as a rising star and impressed Labour MPs when he refused to stand down after suggesting Nigel Farage was on the side of people like Jimmy Savile by opposing the government’s online safety law.
Mr Kyle will be in charge of getting trade deals with other countries over the line.
Emma Reynolds – economic secretary to the Treasury to environment secretary
Probably the biggest promotion of the reshuffle, Ms Reynolds is taking on Mr Reed’s role after serving as a junior minister in the Treasury.
She will have to take on farmers and deal with the water companies – a big undertaking.
Liz Kendall – work and pensions secretary to science, innovation and technology secretary
Pat McFadden has taken her role as work and pensions secretary, while Ms Kendall takes over Peter Kyle’s brief.
He has made AI a major facet of his role so we will wait to see which direction Ms Kendall takes the job in.
Douglas Alexander – trade policy minister to Scotland secretary
A promotion for the Blair/Brown minister who returned to politics last year after being ousted in 2015 by then 20-year-old SNP MP Mhairi Black.
He takes over from Ian Murray, who has been removed from the cabinet.
Sir Alan Campbell – Chief whip to Lord President of the Council and leader of the House of Commons
An MP since 1997 and part of Tony Blair and Gordon Brown’s frontbench, Sir Alan is taking over Lucy Powell’s role.
He will be in charge of organising government business in the Commons – a sizeable job.
Anna Turley MP is now Minister of State in the Cabinet Office (Minister without Portfolio). She will attend Cabinet
The Home Office
Sir Keir has also announced big changes at the Home Office, as the government works to get a grip of illegal migration to the UK.
Dame Angela Eagle, who was border security and asylum minister, has been moved to the environment department.
Dame Diana Johnson, who was policing and crime minister, has been moved to the Department for Work and Pensions.
Dan Jarvis has been given a role in the Cabinet Office, in addition to his post as security minister in the Home Office.
And Sarah Jones, who was industry minister, has been moved to the Home Office.
Ministerial changes
As well as making sweeping changes to the cabinet, Starmer has also been making changes to the ministerial team.
These changes include…
Jason Stockwood as Minister of State (Minister for Investment) jointly in the Department for Business and Trade and HM Treasury;
Dan Jarvis as Minister of State in the Cabinet Office. He will remain Minister of State for the Home Department;
Rt Hon Baroness Smith of Malvern as Minister of State (Minister for Skills) in the Department for Work and Pensions. She will remain Minister of State (Minister for Skills and Minister for Women and Equalities) in the Department for Education.
Lord Vallance KCB as Minister of State in the Department for Energy Security and Net Zero. He will remain Minister of State in the Department for Science, Innovation and Technology.
Michael Shanks as Minister of State jointly in the Department for Business and Trade and Department for Energy Security and Net Zero.
Alison McGovern as Minister of State in the Ministry of Housing, Communities and Local Government.
Dame Angela Eagle as Minister of State in the Department for Environment, Food and Rural Affairs.
Rt Hon Dame Diana Johnson as Minister of State in the Department for Work and Pensions.
Sarah Jones as Minister of State for the Home Department.
Who is out?
Lucy Powell has been sacked as leader of the House of Commons.
Ian Murray has been sacked as Scotland secretary.
Justin Madders is no longer minister for employment rights.
Not out – but
Bridget Phillipson remains as education secretary but her brief has narrowed as Mr McFadden has taken over the skills part of her job.
A resident of a hotel housing asylum seekers has been assaulted, police say, after they responded to reports of people throwing firecrackers and flares outside the property.
Officers were called to the Bell Hotel on Friday evening, where people were throwing smoke bombs.
Essex Police said the antisocial behaviour was not carried out by legitimate protesters and was a “change from the peaceful protect we saw on Thursday and on many occasions before”.
Police also received reports a resident of the hotel was assaulted, and arrested a 49-year-old man from Harlow in connection with this.
He remains in custody.
One man was also issued with a Section 42 Notice yesterday evening, under the Criminal Justice and Police Act 2001. This is a legal power that allows police to direct someone to leave the area if their presence is believed to be causing alarm or distress.
Chief Superintendent Simon Anslow said: “I have seen reports that those living at the hotel were throwing flares – I have watched footage of the events yesterday and can say that this is categorically untrue. This is flagrant disinformation, the likes of which we have seen before, designed to cause trouble.
“In fact, flares were being lit and thrown by those purporting to protest, but there is a stark difference between criminal behaviour and those seeking to genuinely exercise their right to protest.”
He continued: “Flares, firecrackers and smoke bombs are not peaceful. Assaulting those living at the hotel is not peaceful. Surrounding and intimidating people living in the hotel is not peaceful.”
The Bell Hotel has been the site of protests in recent weeks. Pic: AP
A dispersal order was put in place on Friday evening, which gives officers the power to disperse anyone suspected of anti-social behaviour.
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