Guardian understands early drafts of UK government’s autumn statement include at least £35bn reduction in spending
Jeremy Hunt will set out tax rises and spending cuts totalling £60bn at the autumn statement under current plans, including at least £35bn in cuts, the Guardian understands.
Ministers must submit the key points of the autumn statement to the Office for Budget Responsibility (OBR) by Monday morning.
Continue reading...Officials are also looking at incorporating cut in tax-free allowance for dividends into autumn statement
Treasury officials are examining whether the autumn statement could include changes to non-dom status and moves to raise taxes on dividends by cutting tax-free allowances.
No final decisions have been taken but Whitehall sources said options were being examined by the Treasury’s high net worth individuals policy team.
Continue reading...PM set to hike taxes across the board to repair nation’s finances after Liz Truss’s disastrous mini-budget
Rishi Sunak is preparing years of tax rises for Britain in an effort to make up for a £50bn fiscal hole left by Liz Truss’s disastrous tenure in Downing Street, according to a Treasury insider.
After a meeting between the prime minister and Jeremy Hunt on Monday to plan the upcoming autumn statement, a Treasury source said things were going to get “rough”.
Continue reading...Coalition of 40-plus charities and groups launches amid fears of spending cuts to plug public finances
Pressure is building on the leaders of Britain’s two biggest political parties to support higher taxes on wealth amid growing fears over the impact that a renewed austerity drive would have amid the cost of living crisis.
In an intervention which comes as the new prime minister, Rishi Sunak, considers options for filling a £35bn black hole in the public finances, a new coalition of 40 charities and campaign groups – including Oxfam, Save the Children and Christians Against Poverty – said Britain’s tax system was broken and those who paid the most should “pay their proper share”.
Continue reading...With fiscal statement deferred and mixed government messaging on tax and spending the BoE has little to go on
The Bank of England will next week consider how much to raise interest rates without having received any guidance from the government about its tax and spending policies, after Jeremy Hunt pushed back the date for this year’s “autumn statement”.
Its policymakers meet on 3 November to decide the increase in the cost of borrowing required to tackle a rate of inflation that climbed above 10% in September.
Continue reading...No 10 not committing to keeping triple lock or inflation-linked benefits rise in 17 November statement
Ministers are to re-examine the pensions triple lock and increasing benefits in line with inflation over the next fortnight, according to No 10, after Rishi Sunak delayed the announcement of the government’s fiscal plans from 31 October to 17 November.
The Treasury has said the new date will now be a full autumn statement, with Sunak telling his cabinet that time needed to be made to do things in the proper way.
Continue reading...Tax Justice UK calls on Rishi Sunak’s government to introduce five reforms targeting the richest people
Rishi Sunak’s new government could raise up to £37bn to help pay for public services and the energy bills support scheme if it introduced a string of “wealth taxes”, according to tax equality campaigners.
Tax Justice UK called on the government to introduce five tax reforms targeting the very wealthy, who the campaign group said had done “really well financially” during the coronavirus crisis and national lockdowns, rather than seek to save money with further cuts to public services.
Equalising capital gains tax with income tax could raise up to £14bn a year. At present many well-paid people collect their salaries via sole trader or business partnership companies, and can pay capital gains tax at a rate of 20% rather than income tax, which is as high as 45% for earnings over £150,000. CGT also applies to income from renting out a second home, and dividend income on stocks and shares.
Applying national insurance to investment income could raise £8.6bn.
Closing loopholes on inheritance tax could raise £1.4bn.
Scrapping the non-dom regime and taxing their offshore income could generate £3.2bn.
And introducing a 1% tax on super-rich people’s assets over £10m could raise an additional £10bn.
Continue reading...Heads say they will be in deficit next academic year, even without cuts Jeremy Hunt is planning
Nine out of 10 schools will have run out of money by the next school year as the enormous burden of increased energy and salary bills takes its toll, the Observer can reveal.
Early data from the National Association of Head Teachers – results of a survey of its members are due later this month – shows that 50% of heads say their school will be in deficit this year, with almost all expecting to be in the red by next September,when their reserve run out. This comes as Jeremy Hunt has made clear that all departments, including education, will be expected to make cuts as part of the government’s debt reduction plan, to be announced on 31 October.
Continue reading...Latest updates: chancellor to make statement after leader of Commons denied PM was hiding under a desk
Judging by what Conservative MPs have been telling journalists in private over the last few days, the consensus (but not unanimous) view among Tories seems to be that Liz Truss will have to be replaced as party leader before the next election. But very few MPs are saying that in public, and Sky’s Tom Larkin, who is running a spreadsheet of Tories calling for Truss’s resignation, has only got three names on it.
Damian Green, the former first secretary of state, was on the Today programme and you would expect him to be on the Larkin list. He is chair of the One Nation Conservatives caucus, the group most horrified by Truss’s experiment with hardline free market ideology. But he insisted that Truss did have the credibility to carry on as PM, despite the fact she is abandoning most of the key tax policies at the heart of her leadership campaign. He explained:
She is a pragmatist - she’s realised that the first budget didn’t work in spectacular fashion, so she’s now taken the sensible view that we will now try something else, and she’s appointed a very sensible chancellor in Jeremy Hunt.
I obviously don’t know what he’s going to say, but clearly what he’s going to do is already beginning to reassure the markets, and I hope will continue to do so afterwards.
Yes, because if she leads us into the next election, that will mean that the next two years have been a lot more successful than the past four weeks have been. That would not only be good for the Conservative party, that would be particularly good for the country as well, so I think everyone would welcome that.
Continue reading...The prime minister ditched her close ally Kwasi Kwarteng to save her own job – but now Conservative MPs are openly plotting to replace her
After an astonishing eight-minute press conference, in which Liz Truss attempted to salvage her imploding leadership by firing her closest political ally and ditching a totemic policy that won her the job, the most telling reaction was that of officials who had served in Boris Johnson’s chaotic Downing Street.
Just a few short months ago, they had been forced to endure months of scandal, followed by the resignations of dozens of ministers. They had even awkwardly brushed shoulders with cabinet members gathered in Downing Street to tell Johnson that his time was up. But after watching Truss’s hunted demeanour on Friday afternoon, their suffering suddenly seemed trifling.
Continue reading...New chancellor vows to be ‘completely honest with country’ amid rumours PM has only weeks left in role
The new chancellor, Jeremy Hunt, has spoken of “mistakes” made by the Liz Truss administration and predicted “difficult decisions ahead”.
Appearing on Sky News on Saturday, in his first interview since replacing Kwasi Kwarteng on Friday, the former health secretary signalled he would have a “clean slate” when it came to the budget, and vowed to be “completely honest with the country” amid rumours that Truss has only weeks left as prime minister.
Hunt, who was parachuted into No 11 in an attempt to restore order to Truss’s ailing government, also suggested that some taxes could rise, as he promised to bring stability to the UK in the wake of the disastrous mini-budget.
Continue reading...PM’s move to replace chancellor and commit to raising corporation tax fails to placate markets or Tory MPs
Liz Truss is desperately clinging to her premiership after she sacked her chancellor and ripped up the mini-budget but failed to calm the financial markets or furious Conservative MPs.
In a humiliating reversal, the prime minister backed down on plans to scrap an £18bn rise in corporation tax and replaced Kwasi Kwarteng as chancellor with Jeremy Hunt.
Continue reading...Source close to sacked chancellor briefs Times that ‘wagons are still going to circle’ around embattled prime minsiter
The Conservative peer, Ed Vaizey, said he disagreed with the international trade secretary, Greg Hands, who earlier said Kwasi Kwarteng’s early return is not unusual. “It is quite unusual for this to happen,” he said.
Speaking to Sky News, Vaizey said the chancellor cutting his trip to the US short is “not a good sign”. He said:
I’m afraid the chancellor coming back a day early doesn’t fill one with confidence.
The fact that people were speculating about the prime minister’s leadership this early in her premiership is not ideal, but I think he’s just got to bite the bullet. He’s got to try to give the markets confidence in the British economy.
If he can do that then perhaps he can say: ‘Well, I had to do some difficult choices, slightly humiliating choices, but the result is stabilisation and I can move forward.’
Continue reading...Speculation that reversal on leadership campaign pledge risks split with her chancellor, Kwasi Kwarteng
Liz Truss has bowed to intense pressure from Conservative MPs and the markets by agreeing to redraw her mini-budget, paving the way for a major U-turn on her signature corporation tax cut.
In another serious blow to her authority as prime minister, government sources told the Guardian that a climbdown on the plan to scrap the rise in corporation tax was now “on the table”.
Continue reading...Corporation tax plans likely to be latest to be dropped – bad news for Kwarteng’s credibility, but good for his balance sheet
Liz Truss is on the verge of reversing one of the last major pillars of her chancellor’s disastrous September mini-budget.
While Kwasi Kwarteng mingles with finance ministers at the International Monetary Fund gathering in Washington DC, discussions are taking place in London that would see the promise to freeze corporation tax rates binned. There is also speculation about dropping smaller measures including a more generous tax treatment of share dividends. These U-turns would come hard on the heels of the humiliating climbdown on Kwarteng’s promise to scrap the 45p top rate of tax.
Continue reading...Reversing key plank of her leadership pitch would be much bigger humiliation for Liz Truss than 45p rate U-turn
The clamour among Conservative MPs for a third U-turn by Liz Truss started the same as the others: one MP begins as an outrider, backed by some party veterans or ex-cabinet ministers, and the question catches alight across broadcasters who ask every MP they see. Soon enough, it is received wisdom.
Most MPs who are squeamish about deposing their third prime minister had hoped that they would see change in the markets and contrition from No 10 and 11 after the U-turn on the 45p rate. Over the course of the past week, it has been clear to them that will not happen.
Continue reading...Below-inflation rise would save exchequer tenth of £40bn to be given out through tax cuts, says thinktank
If the government raises benefits in line with earnings rather than inflation next year, it would drastically cut the incomes of poorer working-age families, while saving less than a tenth of the cost of recent tax cuts, a leading economic thinktank has calculated.
Such a change, which would mean a significant real-terms cut given that wages are rising at 5.5% with inflation close to 10%, could see the effective income of some families reduced by up to £1,000 a year, the Resolution Foundation said.
Continue reading...PM suggests borrowing will rise as she surprises MPs by saying she has no plans to cut public spending
Liz Truss has said the Conservatives will push ahead with tax cuts without cutting public spending, instead allowing borrowing to rise over the next few years.
Senior economists had warned on Wednesday that such a strategy, if set out by Kwasi Kwarteng in the chancellor’s fiscal plan at the end of this month, would be likely to spook investors, creating renewed market turmoil.
Continue reading...Latest updates: Labour leader hoping to put party on war footing ahead of next election
In the supreme court Dorothy Bain KC, the lord advocate, the Scottish government’s most senior law officer, is now setting out her case.
Here is the 50-page submission to the court setting our her case that was released in July.
Despite the political context of this reference, the questions the court has to decide are limited to technical questions of law. The court will decide them by applying legal principles.
The court will require time after the hearing to prepare its judgement. The hearing is the tip of the iceberg. We also have more than 8000 pages of written material to consider.
Therefore, as usual, is likely to be some months before we get our judgement.
Continue reading...IFS says Kwasi Kwarteng’s mini-budget will leave ministers making serious reductions in public services
Kwasi Kwarteng will need to find £60bn of savings by 2026 to fill the gap left by unfunded tax cuts and the costs of extra borrowing triggered by a panicked reaction on international money markets to the chancellor’s “mini-budget”, according to the Institute for Fiscal Studies.
The UK will also struggle to hit the chancellor’s 2.5% growth target, with economic forecasts by the investment bank Citigroup that the IFS uses to underpin its analysis showing the UK will struggle to grow at more than 0.8% on average over the next five years.
Continue reading...