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, 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.
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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.
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.
World
‘The future is in our hands’ scientists say, as 2024 becomes first year to pass 1.5C global warming threshold
Last year was the warmest on record, the first to breach a symbolic threshold, and brought with it deadly impacts like flooding and drought, scientists have said.
Two new datasets found 2024 was the first calendar year when average global temperatures exceeded 1.5C above pre-industrial levels – before humans started burning fossil fuels at scale.
The record heat has not only has real-world implications, as it contributed to deadly flooding in Spain and vicious drought in places like Zambia in southern Africa.
It is also highly symbolic.
Countries agreed in the landmark Paris Agreement to limit warming ideally to 1.5C, because after that the impacts would be much more dangerous.
The news arrives as California battles “hell on earth” wildfires, suspected to have been exacerbated by climate change.
And it comes as experts warn support for the Paris goals is “more fragile than ever” – with Donald Trump and the Argentinian president poised to row back on climate action.
What caused 2024 record heat – and is it here to stay?
Friends of the Earth called today’s findings from both the EU’s Copernicus Climate Change service and the Met Office “deeply disturbing”.
The “primary driver” of heat in the last two years was climate change from human activity, but the temporary El Nino weather phenomenon also contributed, they said.
The breach in 2024 does not mean the world has forever passed 1.5C of warming – as that would only be declared after several years of doing so, and warming may slightly ease this year as El Nino has faded.
But the world is “teetering on the edge” of doing so, Copernicus said.
Prof Piers Forster, chair of the UK’s Climate Change Committee, called it a “foretaste of life at 1.5C”.
Dr Gabriel Pollen, Zambia’s national coordinator for disasters, said “no area of life and the economy is untouched” by the country’s worst drought in more than 100 years.
Six million people face starvation, critical hydropower has plummeted, blackouts are frequent, industry is “decimated”, and growth has halved, he said.
Paris goal ‘not obsolete’
Scientists were at pains to point out it is not too late to curb worse climate change, urging leaders to maintain and step up climate action.
Professor Forster said temporarily breaching 1.5C “does not mean the goal is obsolete”, but that we should “double down” on slashing greenhouse gas emissions and on adapting to a hotter world.
The Met Office said “every fraction of a degree” still makes a difference to the severity of extreme weather.
The California fires were whipped up by strong, dry winds and likely worsened by climate change. Pic: Reuters
Copernicus director Carlo Buontempo added: “The future is in our hands: swift and decisive action can still alter the trajectory of our future climate”.
Climate action is ‘economic opportunity’
Copernicus found that global temperatures in 2024 averaged 15.10°C, the hottest in records going back to 1850, making it 1.60°C above the pre-industrial level during 1850-1900.
The Met Office’s data found 2024 was 1.53C above pre-industrial levels.
The figures are global averages, which smooth out extremes from around the world into one number. That is why it still might have felt cold in some parts of the world last year.
Greenpeace campaigner Philip Evans said as “the world’s most powerful climate denier” Donald Trump returns to the White House, others must “take up the mantle of global climate leadership”.
The UK’s climate minister Kerry McCarthy said the UK has been working with other countries to cut global emissions, as well as greening the economy at home.
“Not only is this crucial for our planet, it is the economic opportunity of the 21st century… tackling the climate crisis while creating new jobs, delivering energy security and attracting new investment into the UK.”
World
Picture shows baby girl moments after birth on packed migrant dinghy heading for Canary Islands
Photographs have captured the moments after a baby girl was born on a packed migrant dinghy heading for the Canary Islands.
The small boat was carrying 60 people and had embarked from Tan-Tan – a Moroccan province 135 nautical miles (250km) away.
One image shows the baby lying on her mother’s lap as other passengers help the pair.
The boat’s passengers – a total of 60 people, including 14 women and four children – were rescued by a Spanish coastguard ship.
Coastguard captain Domingo Trujillo said: “The baby was crying, which indicated to us that it was alive and there were no problems, and we asked the woman’s permission to undress her and clean her.
“The umbilical cord had already been cut by one of her fellow passengers. The only thing we did was to check the child, give her to her mother and wrap them up for the trip.”
Coastguards rescued all 60 people aboard the boat. Pic: Salvmento Maritimo/Reuters
The mother and baby were taken for medical checks and treated with antibiotics, medical authorities said.
Dr Maria Sabalich, an emergency coordinator of the Molina Orosa University Hospital in Lanzarote, said: “They are still in the hospital, but they are doing well.”
When they are discharged from hospital, the pair will be moved to a humanitarian centre for migrants, a government official said.
They will then most likely be relocated to a reception centre for mothers and children on another of the Canary Islands, they added.
Thousands of migrants board boats attempting to make the perilous journey from the African coast to the Spanish Canaries each year.
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In 2024, a total of 9,757 people died on the route, according to Spanish migration charity Walking Borders.
Mr Trujillo said: “Almost every night we leave at dawn and arrive back late.
“This case is very positive, because it was with a newborn, but in all the services we do, even if we are tired, we know we are helping people in distress.”
A real-life drama is unfolding just outside Hollywood. Ferocious wildfires have ballooned at an “alarming speed”, in just a matter of hours. Why?
What caused the California wildfires?
There are currently three wildfires torching southern California. The causes of all three are still being investigated.
The majority (85%) of all forest fires across the United States are started by humans, either deliberately or accidentally, according to the US Forest Service.
But there is a difference between what ignites a wildfire and what allows it to spread.
However these fires were sparked, other factors have fuelled them, making them spread quickly and leaving people less time to prepare or flee.
The main culprit so far is the Santa Ana winds.
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LA residents face ‘long and scary night ahead’
What are Santa Ana winds?
So-called Santa Ana winds are extreme, dry winds that are common in LA in colder winter months.
The California Department of Forestry and Fire Protection warned strong Santa Ana winds and low humidity are whipping up “extreme wildfire risks”.
Winds have already topped 60mph and could reach 100mph in mountains and foothills – including in areas that have barely had any rain for months.
It has been too windy to launch firefighting aircraft, further hampering efforts to tackle the blazes.
These north-easterly winds blow from the interior of Southern California towards the coast, picking up speed as they squeeze through mountain ranges that border the urban area around the coast.
They blow in the opposite direction to the normal onshore flow that carries moist air from the Pacific Ocean into the area.
The lack of humidity in the air parches vegetation, making it more flammable once a fire is started.
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Wildfires spread as state of emergency declared
The ‘atmospheric blow-dryer’ effect
The winds create an “atmospheric blow-dryer” effect that will “dry things out even further”, said Daniel Swain, a climate scientist at University of California, Los Angeles (UCLA).
The longer the extreme wind persists, the drier the vegetation will become, he said.
“So some of the strongest winds will be at the beginning of the event, but some of the driest vegetation will actually come at the end, and so the reality is that there’s going to be a very long period of high fire risk.”
What role has climate change played?
California governor Gavin Newsom said fire season has become “year-round in the state of California” despite the state not “traditionally” seeing fires at this time of year – apparently alluding to the impact of climate change.
Scientists will need time to assess the role of climate change in these fires, which could range from drying out the land to actually decreasing wind speeds.
But broadly we know that climate change is increasing the hot, dry weather in the US that parches vegetation, thereby creating the fuel for wildfires – that’s according to scientists at World Weather Attribution.
But human activities, such as forest management and ignition sources, are also important factors that dictate how a fire spreads, WWA said.
Read more:
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State of emergency as wildfires sweep through LA celebrity suburb
Pic: Reuters
Southern California has experienced a particularly hot summer, followed by almost no rain during what should be the wet season, said Professor Alex Hall, also from UCLA.
“And all of this comes on the heels of two very rainy years, which means there is plenty of fuel for potential wildfires.
“These intense winds have the potential to turn a small spark into a conflagration that eats up thousands of acres with alarming speed – a dynamic that is only intensifying with the warmer temperatures of a changing climate.”
The flames from a fire that broke out yesterday evening near a nature reserve in the inland foothills northeast of LA spread so quickly that staff at a care home had to push residents in wheelchairs and hospital beds down the street to a car park.
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