Grim budget on the horizon – with tax rises and spending cuts likely
Ed Conway, our data and economics editor, has warned there is a “lot of bad news to come” as Labour try to get a grip of the UK’s finances.
Earlier, we learned government borrowing rose to the highest amount since the pandemic in July, with public sector spending on the rise.
But Ed was clear most of this pre-dates the Labour government.
“It’s showing the state of public finances is not actually terribly good,” he says.
“Having spoken to people in government, they are going to be raising taxes, they are going to be cutting spending.”
‘It’s going to be quite miserable’
A reminder the prime minister and chancellor have vowed not to raise income tax, national insurance, or VAT.
Reports in the Guardian and Mirror newspapers suggest the chancellor may look to raise more from inheritance tax and capital gains tax, among other measures like not scrapping the two-child benefit cap.
Ed says “what we are going to hear about in the budget at the end of October is frankly going to be quite miserable”.
“It’s going to be quite grim.”
He adds: “There’s going to be a lot of bad news to come, I’m afraid.”
Fitting then, that it arrives just in time for Halloween: 30 October.
Prison overcrowding: Can the police and the courts cope?
An emergency plan to try to ease prison overcrowding has been started by the government – as courts continue to hear cases involving those accused of rioting earlier in the month.
Across northern England and parts of the Midlands, those waiting for a court appearance will now be held in police cells until there’s a prison place for them.
Operation Early Dawn was started on Monday morning.
On this episode of Sky News Daily, Niall Paterson assesses the potential impact on courts and the police.
He speaks to Mark Fairhurst, national chair of the Prison Officers’ Association, Philip Jones, custody lead at the National Police Federation, and Sky communities correspondent Becky Johnson.
Becky also explains the context and longer-term plan for the prison system.
👉Listen to the Sky News Daily every at at 5pm – follow here👈
Ex-Tory home secretary says Labour aiming ‘too low’ on immigration
Unsurprisingly, the government’s plans to tackle illegal immigration haven’t won fans among Tory MPs.
James Cleverly, the former home secretary, has said the Labour administration’s aspirations are “too low”.
A reminder that today we’ve had the announcement of more money and specialist officers for the National Crime Agency, and the reopening of two immigration detention centres – tap the link below for more:
Cleverly pines for Rwanda scheme
Mr Cleverly, who’s running to replace Rishi Sunak as Tory leader, said nothing announced matches his party’s scrapped Rwanda plan, something that he reportedly described as “batshit” while in office.
“The first thing the government did upon entering office was to scrap that very deterrent,” he said.
He also pointed to the Home Office having still not recruited a leader for its new Border Security Command, which is being set up to work closely with partner organisations in other countries to combat international people smuggling gangs.
Mr Cleverly said it was nothing but “rhetoric” and Labour’s actions “are falling well below what the country needs”.
Amnesty International criticises government’s migration approach
Amnesty International, the human rights organisation, has criticised today’s announcements on how the government plans to crack down on illegal immigration.
The Home Office has said it will reopen two detention centres, plough more money into the National Crime Agency, including providing 100 new specialist officers, and also target businesses with illegal employees.
The director of Amnesty’s refugee and migrant rights programme has accused the government of “reheating” the previous Tory administration’s rhetoric without providing safe routes for those at risk.
Steve Valdez-Symonds said: “People in urgent need – including those fleeing war and persecution in places like Sudan, Afghanistan, Syria, and Iran – will keep coming to the UK and other countries.
“The government needs to establish safe routes that reduce the perils of dangerous border crossings and the risk of exploitation by ruthless smuggling gangs.”
He said the current approach would only serve to “punish many of the people most in need”, who are also those most at risk of exploitation by criminal smuggling gangs.
UK pledges funding to help contain mpox
The UK government has pledged £3.1m to help tackle mpox in a move that will “ultimately benefit us all”.
Lord Collins, the Africa minister, announced the funding package as the Democratic Republic of Congo suffers a fast-growing outbreak of a more virulent variant of the virus.
According to the World Health Organization (WHO), some 15,000 clinically compatible cases of mpox have been detected there this year, with 500 deaths reported.
Last week saw the first case reported in Europe (Sweden), and on Monday ministers met to discuss the UK’s preparedness.
Professor Chris Whitty, the chief medical officer who became a famous public figure during the COVID pandemic, attended the talks.
Watch: What is the risk from mpox?
UK ‘closely monitoring’ mpox spread
The new funding package aims to support the more than 4.4 million people living in the most affected parts of the Congo, such as through providing vaccines, and prevent the virus spreading further.
Lord Collins said by “helping contain these outbreaks”, the government can help reduce the risk of wider spread.
“This will ultimately benefit us all,” he said.
The government said it remains in regular contact with the WHO and Africa’s Centres for Disease Control and Prevention, while the UK’s Health Security Agency is “closely monitoring the situation”.
Why so quiet?
The Politics Hub is running a little slower than usual at the moment.
The House of Commons has been on its summer recess since 30 July, and won’t return until 2 September.
That means no PMQs, ministerial statements, or other usual business.
And there’s nothing going in on the House of Lords, either.
It’s a period when MPs may try to get away on holiday, although they are still expected to deal with constituency issues.
Of course, this year’s summer recess has proved busy for the prime minister and his top team because of the riots – although parliament wasn’t recalled early as a result.
Once parliament returns on 2 September, the next recess period will arrive just 10 days later.
That’s for party conference season, when MPs will be spread across the country for some of the biggest events in the political calendar.
Who is running in the Conservative Party leadership race?
The race to replace Rishi Sunak still has a long way to run.
Kemi Badenoch, James Cleverly, Robert Jenrick, Dame Priti Patel, Mel Stride and Tom Tugendhat are the six contenders, to be narrowed down to four after parliament returns on 4 September.
Those four will be whittled down to the final two on 10 October by Tory MPs, with the winner chosen by party members through an online ballot on 31 October and announced on 2 November.
Britons oppose tax rises as expectations grow that chancellor will hike them
Just one in seven Britons believe increasing taxes is the right thing to do, new polling from YouGov suggests.
The least popular increases would be to council tax or VAT, supported by just one in eleven (9%), and the basic rate of income tax, with only 13% of the public favouring an increase.
Meanwhile, only 27% would support a higher rate of inheritance tax, something the chancellor is reportedly considering in her first budget.
41% of people polled believe taxation should remain at its current level.
However, the public agree – by 58% to 20% – with the government’s argument that spending cuts are necessary.
And more than half would be in favour of raising the top rate of income tax, hitting the wealthiest people in the country.
The chancellor has ruled out raising income tax, likewise national insurance and VAT.
As our economics and data editor Ed Conway said earlier, it looks as if tax rises could be on the horizon in the 30 October budget.
He said: “Having spoken to people in government, they are going to be raising taxes, they are going to be cutting spending.”
We’d be lying if we said the Politics Hub had been a beacon of positivity this morning, with economic figures pointing towards what looks increasingly like a rough budget in the autumn.
Here’s what you need to know:
- Chancellor Rachel Reeves looks set to raise taxes and cut spending in the Labour government’s first budget on 30 October;
- Our economics and data editor Ed Conway warned of “a lot of bad news to come” when the fiscal event arrives;
- It comes after figures showed government borrowing hit £3.1bn last month, higher than expected and the most for July since the pandemic – driven by the cost of public services and benefits.
- The government has announced more plans for tackling illegal migration, seeking the removal of more illegal migrants and failed asylum seekers;
- Two immigration detention centres will be re-opened and there will be a staffing increase at the National Crime Agency;
- But a former Border Force director general told Sky News those measures alone wouldn’t stop small boat crossings, and our chief political correspondent Jon Craig said voters would eventually run out of patience should the government not make progress.
That’s all from your slightly later than usual lunchtime bulletin.
We’ll have more updates and analysis through the afternoon.
Labour’s plans unlikely to be enough to stop the boats, says ex-Border Force boss
Small boats will continue to cross the Channel for the foreseeable future, the former director general of the UK Border Force has warned.
Tony Smith tells Sky’s Sophy Ridge while the new government’s announcements today – including reopening detention centres and staffing up the National Crime Agency – showed it was “serious about immigration enforcement”, the challenge is vast.
‘This is international organised crime’
“It’s a big ask,” he says of the aim to increase the number of illegal migrants and failed asylum seekers being removed.
Whether you agree Rwanda was a safe country to send people or not, scrapping the plan to deport people there may well have proved an effective deterrent, Mr Smith says.
The prime minister’s commitment to instead “smash the gangs” who smuggle people into the UK is “the right thing to do”, says Mr Smith, but “there’s only so much the government can do”.
“This is international organised crime,” he says.
“It requires an international approach.”
‘Lucrative industry’ will be hard to stop
That means closer co-ordination with agencies like the EU’s Europol.
But people smuggling is such a “lucrative industry” that bringing down one gang would likely just see another take its place, he adds.
In the meantime, Mr Smith suggests an agreement with the EU, whereby people who enter the UK illegally from France can be sent straight back, could provide an option.
But he warns the EU will want something in return – possibly a commitment from the UK to take in more asylum seekers overall.
“We are only the fifth or sixth highest in terms of asylum intake,” he says, noting that France is one of the countries ahead of us.
ICYMI: ScotRail peak fares to return as pilot scheme scrapped over passenger numbers
A pilot scheme scrapping peak-time ScotRail fares will end next month following a “limited degree of success”.
Transport Scotland said the trial – subsidised by the Scottish government – cost £40m but “did not achieve its aims” of encouraging more people to swap their cars for rail travel.
The scheme began in October last year and was extended past its initial six-month run. It will now come to an end on 27 September.
The trial saw the cost of a rush hour ticket between Edinburgh and Glasgow drop from £28.90 to £14.90. Post-pilot, the fare will increase to £31.40.
Those travelling between Inverness and Elgin also saw their fares drop from £22 to £14.40, while the ticket price between Glasgow and Stirling fell from £16.10 to £9.60.