Jeremy Hunt’s budget leaves household incomes stagnant and people paying higher taxes despite cuts to public services, the Resolution Foundation has said.
The think tank, which aims to improve the standard of low and middle-income families, said the chancellor had announced an “impressively broad suite of policies” to encourage more people into work.
However, it said: “Britain’s economy remains stuck in a deep funk – with people supported into work but getting poorer, and paying more tax but seeing public services cut.”
Here are the key findings of the Foundation’s budget analysis.
Beating the odds on a recession
The UK is forecast to have gone through “the biggest energy and inflation shock since the 1970s, while avoiding a recession, with unemployment peaking at just 4.4%,” the Foundation said.
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It compared it to the mid-1970s energy shock which saw a recession with a 3.9 peak-to-trough fall in GDP.
A decline in living standards
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However, RF pointed to a “disastrous decline in living standards”, with typical real household disposable incomes on track to remain lower by the end of the forecast in 2027-28 than they were before the pandemic.
“If even the slow growth of the past decade had continued, incomes would still be £1,800 higher than currently projected for 2027-28,” it said.
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2:40
Key moments from Hunt’s first budget
Taxes on track to hit 70-year high
RF said taxes as a share of GDP are on track to hit 37.7% by the end of the forecast, a 70-year-high and a 4.7% increase since 2019-20, the equivalent to nearly an extra £4,200 for every UK household.
It said despite this the chancellor only has a quarter of the average fiscal headroom of his three predecessors and would not meet the fiscal targets set by Rishi Sunak, Philip Hammond or George Osborne when they were chancellor.
Help for parents
The analysis notes the budget includes the biggest increase in childcare support on record, which it said would encourage more parents to work and make it worthwhile for many to work longer.
RF said under the current childcare system, a single parent of a one-year-old earning the National Living Wage would see their income fall after childcare costs by £370 if they moved from 25 to 35 hours of work a week.
However under the new system the same single parent would receive an income boost of £700.
However, RF said the richest fifth of households are set to gain £180 on average from the extra childcare entitlement, compared to £130 for the middle fifth of households and £20 for the bottom fifth.
‘An unneeded tax break for wealthy pension savers’
The report was critical of the chancellor raising the annual allowance and scrapping the lifetime allowance for tax-free saving, which it said cost around £1.2bn and were expected to increase employment by 15,000 – a cost of around £80,000 per extra worker.
However, the Foundation said “even those employment gains may be overstated, given that giving very large wealth boosts will actually encourage some people to retire earlier than they otherwise would have done”.
It said someone with a £2m pension pot will have received a tax cut of almost £250,000.
Austerity
RF said the chancellor had chosen to “ignore pressures on public services”, even though unprotected departments face 10% cuts to real day-to-day spending per capita by the end of the budget, raising to 14% if the newly announced aspiration to raise defence spending to 2.5% of GDP is met over the next parliament.
An investment ‘roller-coaster’
The Foundation said the £28bn three-year increase in investment allowances represents the fifth major corporate tax change in two years, which it said illustrated “the lack of certainty that has frustrated businesses”.
It said: “The policy will deliver a temporary 3% boost to investment, when what Britain actually needs is a permanent 30% boost to catch up with our competitors (France, Germany and the US).”
Torsten Bell, chief executive of the Resolution Foundation, said: “Jeremy Hunt’s first budget was a much bigger affair than many expected, combining improvements to the dire economic and fiscal outlook with a significant policy package aimed at boosting longer-term growth in general, and the size of the workforce in particular.
“A step change in childcare support stands out.
“But stepping back, the UK’s underlying challenges remain largely unchanged.
“We are investing too little and growing too slowly. Our citizens’ living standards are stagnant. We ask them to pay higher taxes, while cutting public services.
“No one budget could turn that around, but it’s time Britain did.”
Radicalised nine-year-olds, teenagers mixing incel culture with extreme right ideologies and a Muslim who idolises Hitler – this is just some of the casework of those tasked with deradicalising young extremists in the UK.
Monday will mark 20 years since the 7/7 attacks on the London transport network when four suicide bombers killed 52 people and injured 770 others.
A year later the government set up its deradicalisation programme Prevent as part of its counter-terrorism strategy.
Sky News has spoken to two leading intervention providers (IPs) at Prevent who both say their work is getting ever more complex and the referrals younger.
The Metropolitan Police’s Prevent co-ordinator, Detective Superintendent Jane Corrigan, has also told Sky News it is “tragic” that when it comes to terrorism, “one in five of all our arrests is a child under 17”.
She believes parents should talk to their children about what they are reading and seeing online.
“Parents instinctively know when something doesn’t feel right when their child is becoming withdrawn or isolated – not wanting to engage,” she says.
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People worried that someone they know has thoughts that could lead to terrorism can refer them to Prevent.
Image: File pic: iStock
‘A pic-n-mix of ideologies’
Home Office figures show 11-year-olds are the largest age group to get referred.
Concerning cases are passed on to IPs such as Nigel Bromage who told Sky News: “Often there will be a pic-n-mix of ideologies.
“From my own examples and experience, we are aware of people looking at the incel culture and mixing that with some far-right elements.”
Image: Sky’s Jason Farrell with intervention provider Nigel Bromage, who was exposed to extremism when he was a child
Incels, meaning “involuntary celibates” are men who have been unable to have a relationship with women despite wanting one and become misogynistic and hateful as a result.
Like many IPs, Mr Bromage from Birmingham comes from an extremist background himself, having once been a regional organiser for the proscribed Neo-Nazi group Combat 18.
For him too, it began as a child.
“It all started with someone giving me a leaflet outside my school gates,” Mr Bromage says.
“It told me a horrific story about a mum getting killed by an IRA bomb explosion – and at the end of the leaflet there was a call to action which said: ‘If you think it’s wrong then do something about it’.”
He developed a hatred for Irish republican terrorism which morphed into general racism and national socialism.
“At the very end I thought I was going to go to prison, or I would end up being hurt or even killed because of my political beliefs,” he says.
Image: Mr Bromage says his youngest case involved a nine-year-old
Boy, 9, groomed by his brother
Mr Bromage reveals his youngest case was a nine-year-old who had been groomed by his brother.
“He was being shown pro-Nazi video games, and his older brother was saying ‘when I go to prison or I get in trouble – they you’re the next generation – you’re the one who needs to continue the fight’,” he says.
“Really, he had no interest in the racist games – he just wanted to impress his brother and be loved by his brother.”
Every year, nearly 300 children who are 10 or younger are referred to Prevent.
Home Office figures show that over the last six years 50% of referrals were children under the age of 18.
Eleven-year-olds alone make up a third of total referrals, averaging just over 2,000 a year, with the figure rising even higher in the most recent stats.
Another IP, Abdul Ahad, specialises in Islamic extremism.
He says the catalyst for radicalisation often comes from events aboard.
Ten years ago, it was Syria, more recently Gaza.
“It is often a misplaced desire to do something effective – to matter, to make a difference. It gives them purpose, camaraderie and belonging as well – you feel part of something bigger than you,” he says.
Image: Fifty-two people were killed on 7 July 2005 when four suicide bombers blew up three London Underground trains and a bus. Pic: PA
Clients want someone to ‘hear them’
Some of his clients “don’t fit into any particular box”.
“I’m working with a guy at the minute, he’s a young Muslim but he idolises Hitler and he’s written a manifesto,” he says.
“When you break it down, some people don’t know where they fit in, but they want to fit in somewhere.”
Mr Ahad says the young individual mostly admires Hitler’s “strength” rather than his ideologies and that he was drawn to darker characters in history.
Often his clients are very isolated and just want someone to “hear them”, he adds.
Image: Intervention provider Abdul Ahad specialises in Islamic extremism
Mr Ahad is also an imam who preaches at the Al-Azar Mosque in South Shields, a well-regarded centre for community cohesion and outreach.
He uses his understanding of the Islamic faith in his Prevent sessions to help guide his referrals away from extreme interpretations of the Koran by offering “understanding and context”.
He says: “We quote the correct religious texts – we explain their responsibility as a Muslim living in the UK and we re-direct their energies into something more constructive.”
Common theme of mental health issues
Mental health problems are a common theme among those referred to Prevent including depression and autism.
Her mother was critical of Prevent, as well as the police and MI5 after she had referred her daughter to the deradicalisation programme and Rhianan was subsequently charged with terrorism offences.
Last month a coroner found some failings in the processes around protecting Rhianan, but none of them attributable to Rhianan taking her own life.
Det Supt Corrigan says a referral doesn’t mean individuals end up being arrested or on an MI5 watchlist.
She says: “You’re not reporting a crime, but you are seeking support. I would say the earlier you can come in and talk to us about the concerns you have the better. Prevent is just that – it is a pre-criminal space.
“It’s tragic when you see the number of young people being arrested for very serious charges. Just look at terrorism – one in five of all our arrests is a child under the age of 17. We need to think about how we respond to that.”
Prevent has been criticised for failures such as when Southport killer Axel Rudakabana failed to be recognised as needing intervention despite three referrals, or when MP David Amiss’ killer Ali Harbi Ali went through the programme and killed anyway.
Image: Axel Rudakubana failed to be recognised as needing intervention despite three referrals. Pic: Merseyside police
It’s harder to quantify its successes.
Mr Ahad says he understands why the failures hit the headlines, but he believes the programme is saving lives.
He says: “I think the vast majority of people get radicalised online because they are sitting in their room reading all this content without any context or scholarly input. They see one version of events and they get so far down the rabbit hole they can’t pull themselves out.
“I really wish Prevent was around when I was a young, lost 15-year-old because there was nothing around then. It’s about listening to people engaging with them and offering them a way of getting out of that extremism.”
Image: File pic: iStock
‘Radicalisation can happen in days to weeks’
Det Supt Corrigan says: “I’ve sat with parents whose children have gone on to commit the most horrendous crimes and they all spotted something.
“Now, with hindsight, they wished they had done something or acted early. That’s why we created this programme, because radicalisation can happen in days to weeks.”
Twenty years on from 7/7 the shape of the terrorist threat has shifted, the thoughts behind it harder to categorise, but it is no less dangerous.
Image: Liverpool’s captain Virgil van Dijk. Pic: Reuters
Image: Liverpool’s Ryan Gravenberch and Cody Gakpo (right) arrive at the funeral of Diogo Jota and Andre Silva. Pic: PA
Jota, 28, leaves behind his wife of only 11 days, Rute Cardoso, and three young children.
His younger brother, 25, was an attacking midfielder for Penafiel in the second tier of Portuguese football.
Liverpool manager Arne Slot, captain Virgil Van Dijk and teammates including Andy Robertson, Conor Bradley, Ryan Gravenberch, Cody Gakpo, Curtis Jones, Darwin Nunez and Joe Gomez were seen at the service.
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Former teammates Jordan Henderson, James Milner and Fabinho were also there.
Van Dijk carried a red wreath with Jota’s number 20, while Robertson had a wreath featuring number 30, Silva’s number at Penafiel.
Image: Manchester United and Portugal player Bruno Fernandes. Pic: PA
Image: Liverpool’s captain Virgil van Dijk and Liverpool’s player Andrew Robertson. Pic: Reuters
Some of Jota’s teammates in the Portuguese national side also attended, including Bruno Fernandes, of Manchester United, Ruben Dias and Bernardo Silva, of Manchester City, Joao Felix and Renato Veiga, of Chelsea, Nelson Semedo, from Wolves, Joao Moutinho and Rui Patricio.
Ruben Neves was one of the pallbearers after flying in from Florida where he played for Al Hilal in the Club World Cup quarter-final on Friday night.
‘More than a friend’
In a post published on Instagram before the service, he told Jota he had been “more than a friend, we’re family, and we won’t stop being that way just because you’ve decided to sign a contract a little further away from us!”
Jota’s fellow Liverpool midfielder, Alexis Mac Allister, said on Instagram: “I can’t believe it. I’ll always remember your smiles, your anger, your intelligence, your camaraderie, and everything that made you a person. It hurts so much; we’ll miss you. Rest in peace, dear Diogo.”
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Porto FC president Andre Villas-Boas and Portugal national team manager Roberto Martinez were also in attendance.
‘With us forever’
Speaking after the ceremony, Martinez said the period since their deaths had been “really, really sad days, as you can imagine, but today we showed we are a large, close family.
“Their spirit will be with us forever.”
The service was private, but the words spoken by the Bishop of Porto, Manuel Linda, were broadcast to those standing outside the church.
He told Jota’s children, who were not at the service, that he was praying for them specifically, as well as their mother and grandparents.
“There are no words, but there are feelings,” he said, adding: “We also suffer a lot and we are with you emotionally.”
The brothers died after a Lamborghini they were travelling in burst into flames following a suspected tyre blowout in the early hours of Thursday morning.
No other vehicles are said to have been involved in the incident.
Liverpool have delayed the return of their players for pre-season following Jota’s death and players past and present paid tribute to him and his brother on social media.
Rachel Reeves has hinted that taxes are likely to be raised this autumn after a major U-turn on the government’s controversial welfare bill.
Sir Keir Starmer’s Universal Credit and Personal Independent Payment Bill passed through the House of Commons on Tuesday after multiple concessions and threats of a major rebellion.
MPs ended up voting for only one part of the plan: a cut to universal credit (UC) sickness benefits for new claimants from £97 a week to £50 from 2026/7.
Initially aimed at saving £5.5bn, it now leaves the government with an estimated £5.5bn black hole – close to breaching Ms Reeves’s fiscal rules set out last year.
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Rachel Reeves’s fiscal dilemma
In an interview with The Guardian, the chancellor did not rule out tax rises later in the year, saying there were “costs” to watering down the welfare bill.
“I’m not going to [rule out tax rises], because it would be irresponsible for a chancellor to do that,” Ms Reeves told the outlet.
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“We took the decisions last year to draw a line under unfunded commitments and economic mismanagement.
“So we’ll never have to do something like that again. But there are costs to what happened.”
Meanwhile, The Times reported that, ahead of the Commons vote on the welfare bill, Ms Reeves told cabinet ministers the decision to offer concessions would mean taxes would have to be raised.
The outlet reported that the chancellor said the tax rises would be smaller than those announced in the 2024 budget, but that she is expected to have to raise tens of billions more.
Sir Keir did not explicitly say that she would, and Ms Badenoch interjected to say: “How awful for the chancellor that he couldn’t confirm that she would stay in place.”
In her first comments after the incident, Ms Reeves said she was having a “tough day” before adding: “People saw I was upset, but that was yesterday.
“Today’s a new day and I’m just cracking on with the job.”
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“In PMQs, it is bang, bang, bang,” he said. “That’s what it was yesterday.
“And therefore, I was probably the last to appreciate anything else going on in the chamber, and that’s just a straightforward human explanation, common sense explanation.”