Bank of England left in the dark ahead of new interest rate decision

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...

Another U-turn looms – how much will it save and what else could the chancellor ditch?

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...

Liz Truss insists tax cuts will go ahead despite public spending promise

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...

Public sector job losses could pass 100,000 if government refuses pay rises, says IFS

Chancellor must top up budgets or face industrial action and further recruitment issues, thinktank warns

More than 100,000 public sector workers would lose their jobs this year if the government refuses to fund higher than expected pay awards for nurses, doctors, teachers and care workers, according to the Institute for Fiscal Studies.

The IFS said the chancellor, Kwasi Kwarteng, faced a choice of either topping up public sector budgets or accepting the likelihood of industrial action, further problems recruiting and retaining staff, and a decline in quality of services already under extreme strain.

Continue reading...

Pupil numbers in England set to shrink by almost 1 million in 10 years

Government forecast anticipates 12% decline, mainly due to fewer births, with surplus school places in years ahead

England’s school population is set to shrink by almost a million children over the next 10 years, according to the government’s latest data, raising the prospect of surplus places and school closures in some areas of the country in the years ahead.

Department for Education figures reveal that predicted pupil numbers, already in marked decline according to earlier modelling, have had to be revised down further in line with projections of fewer births than expected.

Continue reading...

Soaring inflation pushes UK borrowing to £14bn in May

Interest on debt payment leaps 70% on a year ago to £7.6bn, a monthly record

Government borrowing was higher than expected in May at £14bn as soaring inflation sent interest payments on the UK’s debt to a monthly record.

The Office for National Statistics (ONS) said debt interest payments leapt 70% on a year ago to £7.6bn, the third highest debt interest payment made by central government in any single month and the highest payment in May on record.

Continue reading...

Schools and libraries face huge cuts after soaring costs create £1.7bn shortfall

Exclusive: Emergency council cuts feared across England caused by inflation and higher energy costs

School-building projects, swimming pools and libraries have been earmarked for emergency funding cuts because town halls have been hit by an unexpected £1.7bn hole in their budgets, the Guardian can reveal.

Rampant inflation and soaring energy bills mean that council leaders have been forced to rip up financial plans from a few months ago, with higher than anticipated staff pay bills also contributing to their newfound deficits. Without help from Whitehall, it will leave them no option but to cut services and put up council tax next April.

Continue reading...

Covid support schemes left ‘open goal’ to fraudsters, says watchdog

Public Accounts Committee report says business department efforts to identify fraud came after trails had ‘long ago gone cold’

The business department’s handling of Covid support schemes left an “open goal” to fraudsters and embezzlers that has added “billions to taxpayer woes”, parliament’s spending watchdog has found.

In its review of the annual report of the Department for Business, Energy and Industrial Strategy (BEIS), the Public Accounts Committee (PAC) said it recognised that the government offered crucial support to businesses at the height of the pandemic.

Continue reading...

England’s crumbling schools are a ‘risk to life’, officials warn No 10

Leak reveals that the education department is battling with the Treasury for £13bn needed for rebuilding projects

Many school buildings in England are now in such disrepair they are a “risk to life”, according to internal government documents leaked to the Observer.

Emails sent by senior officials working for education secretary Nadhim Zahawi to Downing Street show them raising the alarm on two occasions within the last six weeks.

Continue reading...

John Lewis boss calls for Covid-style cost of living aid package

Dame Sharon White follows Tesco chief in urging UK government to help with rising energy and grocery bills

The boss of John Lewis has urged the governmentto intervene with a financial package of support to protect families from the cost of living crisis on the same scale as it did to help the nation deal with the Covid pandemic.

Dame Sharon White, a former second permanent secretary at the Treasury, said the government needed to act urgently as families struggle to pay utility and food costs as energy bills and inflation soars.

Continue reading...

Local government in England ‘hollowed out’ under Conservatives

Major report finds poorer areas worst affected by deep cuts in government funding

Poorer areas have been hit disproportionally by a combination of cuts to neighbourhood services such as parks, libraries, refuse collection and children’s centres that have left English councils “hollowed out” since 2010, a major report into local government has concluded.

The study by the Institute for Government thinktank found that while some councils coped better than others, and reduced spending did not necessarily mean worse results, a lack of information made it difficult to learn lessons.

Continue reading...

Fraud in Covid bounceback loan scheme not being addressed, say MPs

Public accounts committee say government must devote more resources to recovering nearly £5bn

MPs have criticised the government for its “unacceptable” failure to draw up plans to recover nearly £5bn taken from the coronavirus emergency bounceback loan scheme by fraudsters.

The government must give more resources to counter-fraud agencies and account properly for how much of the money will be lost forever, according to a report published on Wednesday by parliament’s influential public accounts committee.

Continue reading...

Rishi Sunak to promise ‘security for working families’ in spring statement

Chancellor expected to announce fuel duty cut in package of measures to tackle cost of living crisis

Rishi Sunak will promise “security” to cash-strapped families as he announces a fresh package of measures to tackle the cost of living crisis on Wednesday, but will continue to underline the importance of fixing the public finances.

The chancellor has been under intense pressure to take action to help households with the rocketing cost of fuel and other essentials. The financial expert Martin Lewis told MPs on Tuesday that many households are facing a “fiscal punch in the face” when the energy price cap rises next month.

Continue reading...

Tory peer Michelle Mone secretly involved in PPE firm she referred to government

Exclusive: Leaked files suggest Mone and her husband were involved in business given £200m contracts

Leaked files appear to suggest the Conservative peer Michelle Mone and her husband, Douglas Barrowman, were secretly involved in a PPE business that was awarded more than £200m in government contracts after she referred it to the Cabinet Office.

Barrowman, an Isle of Man-based financier, may have played a central role in the business deal that enabled PPE Medpro to sell millions of masks and surgical gowns to the government at the start of the pandemic, documents suggest.

Continue reading...

The urinary leash: how the death of public toilets traps and trammels us all

Britain has lost an estimated 50% of its public toilets in the past 10 years. This is a problem for everyone, and for some it is so acute that they are either dehydrating before going out or not leaving home at all

For about an hour and a half before she finishes work and gets the bus home, Jacqui won’t eat or drink anything. Once, while waiting at the bus stop, and suddenly needing the loo, she had to head to the other end of town; the public toilets nearby had closed. She didn’t make it in time. Jacqui, who has multiple sclerosis, which can affect bladder and bowel function, says: “I go everywhere with a spare pair of knickers and a packet of wipes, but it’s not something you want to do if you can help it.”

Jacqui was diagnosed with MS five years ago, and in that time she has noticed a decline in the number of public toilets. Of the ones that are left, one only takes 20p coins, “and in this increasingly cashless society, you have to make sure you always go out with a 20p”. The other block of loos are “up two flights of stairs or the lift, so it’s not the most suitable access”. If she is out for the day, she will research where the loos are, and it has meant missing out on trips with friends, such as to an outdoor festival, where the loos just weren’t accessible enough. The MS Society has given her a card, which she shows in cafes requesting access to their loos when she’s not a customer, and every person she has flashed it to “has been wonderful”. But, she adds: “You use it as a last resort because you don’t really want to burst into a cafe in front of people and say: ‘Excuse me, I need to wee.’”

Continue reading...

Budget 2021: what’s really going on in the UK economy?

Rishi Sunak will be looking at key indicators such as GDP growth, public debt levels and inflation as he draws up his autumn budget

Britain’s economic recovery from Covid is at growing risk from severe shortages of workers and materials, as well as mounting living costs for households, as Rishi Sunak prepares his budget and spending review.

Here are five key charts that will underpin the chancellor’s statement on Wednesday afternoon.

Continue reading...

Rishi Sunak will use budget to declare ‘age of optimism’

Chancellor to strike upbeat tone despite cost-of-living crisis, with spending pledges worth billions

Rishi Sunak will use his budget to insist the UK is entering an economic “age of optimism” despite a looming cost-of-living crisis, after making a deluge of promises to spend billions more on health, transport and skills.

In an attempt to strike an upbeat tone during his second budget on Wednesday, the chancellor will say his aim is to create a “new economy post-Covid”.

Continue reading...

Firm with mystery investors wins £200m of PPE contracts via ‘high-priority lane’

Exclusive: It’s unclear how PPE Medpro’s bids were processed through channel for firms referred by MPs and senior officials

A company with mystery investors and links to the Isle of Man was awarded government contracts worth £200m to supply the UK with personal protective equipment (PPE) after it was placed in a “high-priority lane” for well-connected firms, the Guardian can reveal.

PPE Medpro has not revealed the identities of the financiers and businessmen behind the venture, and it remains unclear how its offer to supply PPE came to be processed through a channel created for companies referred by politicians and senior officials.

Continue reading...

Economic cost of Covid crisis prompts call for one-off UK wealth tax

Tax experts and economists outline ‘fairest, most efficient’ way to repair public finances and quickly raise £260bn

The government has been urged to launch a one-off wealth tax on millionaire households to raise up to £260bn in response to the coronavirus pandemic, as the crisis damages Britain’s public finances and exacerbates inequality.

The Wealth Tax Commission – a group of leading tax experts and economists brought together by the London School of Economics and Warwick University to examine the case for a levy on assets – said targeting the richest in society would be the fairest and most efficient way to raise taxes in response to the pandemic.

Continue reading...

Sunak refuses to apologise for PPE contracts given to firms with ties to MPs – video

The chancellor, Rishi Sunak, declined to apologise for PPE contracts given to companies with links to MPs and ministers during the first wave of coronavirus. 

Appearing on BBC One's The Andrew Marr Show, Sunak was questioned on the government's purchase of 50 million face masks from Ayanda Capital that were later deemed unusable for NHS workers.  

'It was right to try to do everything we can, and I'm not going to apologise for us reacting in that way,' Sunak said. 

Continue reading...