Expect a steady the ship budget with promises of jam tomorrow from Chancellor Jeremy Hunt | Beth Rigby

Published

2 years ago

March 14, 2023

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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.”

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.

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.

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.

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

British surgeon working in Gaza says it is now ‘a slaughterhouse’ amid Israeli bombardment

Published

3 hours ago

May 18, 2025

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British surgeon working in Gaza says it is now 'a slaughterhouse' amid Israeli bombardment

A British surgeon working in southern Gaza has compared the region to a “slaughterhouse” because of the daily bombardment from Israeli forces.

Dr Tom Potokar, who is based at the European Hospital near Khan Younis in southern Gaza, offered his assessment of Israel’s military offensive after Palestinian health officials reported at least 130 people were killed overnight into Sunday.

Israel Defence Forces (IDF) have confirmed their troops have begun “extensive ground operations throughout the northern and southern Gaza Strip”.

In a video, Dr Potokar said it was “another day of devastation here in Gaza”, adding: “The stories coming from the north… absolutely horrific… particularly around the Indonesian Hospital.”

“I mean, it’s difficult to describe in words what’s happening here… [with the] constant sound of bombardment jets overhead.

“If Cambodia was the killing fields, then Gaza now is the slaughterhouse.”

His reference to Cambodia’s killing fields refers to when more than a million people were murdered in mass executions and buried by the extreme communist guerrilla group, the Khmer Rouge, under Pol Pot, between 1975 and 1979.

The Hamas-run health ministry in Gaza said 464 people had died in Israeli military strikes in the week to Sunday.

In a statement on Sunday, IDF said its air force struck “over 670 Hamas terror targets throughout the Gaza Strip to disrupt enemy preparations and support ground operations” over the past week.

Dr Potokar described the impact on those on the ground, saying: “We’ve been operating all morning so far and [treating] awful explosive injuries… [including] one young woman with leg fracture and shoulder fracture and a large wound on her buttock, who came in yesterday and is not yet aware that everyone in our family was killed in the onslaught.”

Israel has launched an escalation of its war in Gaza to ramp up pressure on Hamas, seize territory, displace Palestinians to the south and take greater control over the distribution of aid.

On Sunday, it announced and launched “extensive” new ground operations in Gaza.

It came after airstrikes killed more than 100 people, including dozens of children, overnight and into Sunday, hospitals and medics said, and forced northern Gaza’s main hospital to close.

A spokesperson for the Hamas-run health ministry in Gaza said: “Complete families were wiped off the civil registration record by Israeli bombardment”.

The ministry also said the bombardment had forced the closure of the Indonesian Hospital, the main hospital serving people in northern Gaza.

Nasser hospital, in the southern city of Khan Younis, said more than 48 people – mostly women and children – were killed in the area which includes tents sheltering displaced people.

In Deir al Balah, in central Gaza, at least 12 people were killed in three separate strikes, according to Al Aqsa Martyrs Hospital and the Nuseirat camp’s Awda Hospital.

Meanwhile, the Gaza health ministry and the Palestinian Civil Defence – which operates under the Hamas-run government – reported that 19 people were killed in several strikes in Jabalia in northern Gaza.

The Israeli military had no immediate comment on the strikes.

Read more from Sky News:
How Israel has escalated Gaza bombing campaign

Ceasefire talks are taking place in Qatar this weekend – with Israel saying they involve discussions on ending the war as well as a truce and hostage deal.

A statement from the office of Israeli Prime Minister Benjamin Netanyahu said any lasting truce must include the demilitarisation of Gaza as well as the exile of Hamas militants.

But a senior Israeli official added there had been little progress so far during talks in Qatar’s capital Doha.

Sky News Arabia reported Hamas had proposed freeing about half its Israeli hostages in exchange for a two-month ceasefire and the release of Palestinian prisoners held by Israel.

A Palestinian official close to the discussions said: “Hamas is flexible about the number of hostages it can free, but the problem has always been over Israel’s commitment to end the war.”

World

Russia launches ‘heaviest drone attack’ on Ukraine since start of war

Published

4 hours ago

May 18, 2025

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Russia launches 'heaviest drone attack' on Ukraine since start of war

Russia has launched its heaviest drone attack on Ukraine since the start of the war in 2022, the Ukrainian military has said.

A total of 273 exploding drones were reportedly fired across the Kyiv, Dnipropetrovsk and Donetsk regions between Saturday night and Sunday morning.

Some 88 were intercepted and 128 “lost”, having been electronically jammed, Ukraine’s air force said.

It passes the previous record of 267 drones on the eve of the war’s third anniversary earlier this year.

In Kyiv, a 28-year-old woman was killed, and three people, including a four-year-old child were injured, according to regional governor Mykola Kalashnyk.

Just outside the city, firefighters fought to control flames at business premises destroyed by drone attacks. Russia has not commented.

It comes ahead of a planned phone call between US President Donald Trump and his Russian counterpart Vladimir Putin.

Mr Trump has promised to speak to Mr Putin and then President Volodymyr Zelenskyy on Monday about “ending the war” after the first direct talks between their two countries failed to yield a ceasefire this week.

Mr Putin snubbed Mr Zelenskyy’s offer of face-to-face talks in Turkey.

A source from the Ukrainian negotiation team told Sky News that Russia threatened “eternal war” during talks between officials.

Kremlin representatives are also reported to have threatened that Ukraine may lose “more than just loved ones” while at the negotiating table.

Talks did bring promise of the largest ever prisoner swap between the two nations – involving 1,000 prisoners of war on each side.

Ukraine’s military intelligence chief said he hoped it would take place over the next week.

Elsewhere in Sumy, northeastern Ukraine, on Saturday, nine people were killed and seven injured after a bus evacuating civilians was hit by a Russian drone in the town of Bilopillia, according to Ukrainian officials.

On Sunday, Mr Zelenskyy was in Vatican City attending the inauguration of Pope Leo XIV.

He was pictured shaking hands with US Vice President JD Vance after their tense clash at the White House earlier this year.

World

More than 100 people killed in Israeli strikes on Gaza, say medics

Published

4 hours ago

May 18, 2025

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More than 100 people killed in Israeli strikes on Gaza, say medics

At least 103 people have been killed in Israeli strikes on Gaza overnight and into Sunday, according to hospitals and medics.

Israel has launched an escalation of its war in Gaza to ramp up pressure on Hamas, seize territory, displace Palestinians to the south and take greater control over the distribution of aid.

Meanwhile, Israel says talks with Hamas taking place in Qatar this weekend involve discussions on ending the war as well as a truce and hostage deal.

Addressing the strikes overnight, a spokesperson for the Hamas-run health ministry in Gaza said: “Complete families were wiped off the civil registration record by Israeli bombardment”.

The ministry also said airstrikes had forced the closure of the Indonesian Hospital, the main hospital serving people in northern Gaza.

Nasser hospital, in the southern city of Khan Younis, said more than 48 people – mostly women and children – were killed in the area, including tents sheltering displaced people.

In Deir al Balah, in central Gaza, at least 12 people were killed in three separate strikes, according to Al-Aqsa Martyrs hospital and the Nuseirat camp’s Awda hospital.

Meanwhile, the Gaza health ministry and the Palestinian Civil Defence – which operates under the Hamas-run government – reported that 19 people were killed in multiple strikes in Jabalia, northern Gaza.

The Israeli military had no immediate comment on the latest strikes.

Peace talks include ending war in Gaza

It comes as peace talks between Israel and Hamas continue in Qatar this weekend, including discussions about ending the war.

A statement from the Israeli Prime Minister’s office said on Sunday that any lasting truce must include the demilitarisation of Gaza as well as the exile of Hamas militants.

But a senior Israeli official added that the talks in the capital, Doha, had made little progress so far.

Sky News Arabia reported that Hamas had proposed freeing about half its Israeli hostages in exchange for a two-month ceasefire and the release of Palestinian prisoners held by Israel.

A Palestinian official close to the discussions said: “Hamas is flexible about the number of hostages it can free, but the problem has always been over Israel’s commitment to end the war.”

Four journalists killed in Israeli airstrikes

Details have emerged on Sunday about the deaths of four Palestinian journalists in Gaza following Israeli airstrikes.

Abdel Rahman al Abadleh was missing for two days before his body was found in the town of al Qarara in southern Gaza.

Three other journalists were also killed following strikes on Saturday. Aziz al Hajjar, his wife and children, died in the Bir al Naaja neighbourhood of northern Gaza.

Ahmed al Zenati, his wife Noor al Madhoun and their children Mohammad and Khaled, were killed in Khan Younis.

Meanwhile, in Deir al Balah, central Gaza, Nour Qandil, her husband Khaled Abu Seif, and their young daughter were also killed.

Israel has blocked the entry of medical, food and fuel supplies into Gaza since the start of March. It is attempting to pressurise Hamas into freeing Israeli hostages and has approved plans that could involve seizing the whole of Gaza and controlling aid.

‘Systematic campaign targeting hospitals’

Earlier on Sunday, Gaza’s health ministry issued a statement accusing Israel of “intensifying its systematic campaign to target hospitals”.

“After putting the European Gaza Hospital out of service a few days ago, the Israeli occupation has intensified its targeting and siege of the Indonesian Hospital in the northern Gaza Strip since dawn today,” it added.

Israel has previously denied deliberately targeting civilians and accused Hamas of using hospitals for military purposes.

This week, Israel said it had bombed the European Hospital because it was home to an underground Hamas base, but Sky News analysis has cast doubt on its evidence.

Houthis launch missile towards Israel

Separately, the Israeli military said on Sunday it had intercepted a missile launched from Yemen towards Israel.

Yemen’s Iran-aligned Houthis said they had targeted Ben Gurion Airport near Tel Aviv with two ballistic missiles.

The Houthis have fired at Israel because of the plight of Palestinians in Gaza, while Israel has carried out airstrikes in response, including one on 6 May that damaged Yemen’s main airport in Sanaa and killed several people.

The war in Gaza began on 7 October 2023, when Hamas-led militants attacked southern Israel, killing 1,200 people and abducting 251 others.

Israel’s military response has killed more than 53,000 people, according to the Hamas-run health ministry in Gaza, which does not differentiate between civilians and combatants.