Summary of the day
It was a busy morning today as reaction to the chancellor’s autumn statement emerged. Here are all the key points:
The Institute for Fiscal Studies (IFS), a leading thinktank, said in a briefing that the key takeaway from the autumn statement was that the UK had got “a whole lot poorer” after a “series of economic own goals” by the Conservatives, and because of the “extraordinary scale” of spending on debt interest due to high borrowing in recent years, combined with sluggish long-term growth and the pressures of an ageing population.
The IFS director, Paul Johnson, said the tax burden was unlikely to go back to pre-Covid levels for decades, and that threshold freezes meant the country was in a “new era” of high taxation and high public spending. He added that the chancellor, Jeremy Hunt, had done “the minimum he needed to regain credibility” following the disastrous mini-budget of his predecessor Kwasi Kwarteng.
In the morning, broadcasters grilled Hunt about his decision not to abolish the non-dom tax loophole. He defended the move as encouraging the super-rich to stay and continue to spend their money in the UK, which he suggested was good for the economy. Labour accused the chancellor and the prime minister, Rishi Sunak – whose wife is a non-dom – of shielding the super-rich from paying their fair share of taxes.
Hunt also said it had been a “difficult” decision to delay the social care cap, but said that he had to do it for the country.
Hunt also conceded to broadcasters that Brexit had harmed the economy and said the UK needed “unfettered trade” with the European Union.
The latest Ipsos Political Monitor, taken 9-16 November shows the shadow chancellor, Rachel Reeves, would be preferred as chancellor to Hunt, as high levels of economic pessimism persist and Labour retains a healthy poll lead over the Conservatives.
The Resolution Foundation, another leading thinktank, said that Britain’s workers would miss out on pay rises worth £15,000 over the next five years as the chancellor’s tax-heavy budget pressured the nation’s “squeezed middle”. Its research director said Hunt’s cuts did not appear achievable, and that unprotected departments would face George Osborne-style “2014-15 levels of austerity”.
Thanks for following the blog today, we’re closing for the evening but will reopen again on Monday morning. Have a wonderful weekend.
The Guardian’s political correspondent Aubrey Allegretti reports on how a veteran objector has managed to get a private member’s bill through all stages in just three minutes.
Fridays in the Commons are often sleepy – with most MPs back in their constituencies and the few that do hang around in Westminster trying to get their ideas for draft laws put on to the statute book.
They do this through what is called a “private member’s bill”, and these are usually taken and considered by the dozen or so MPs who sit in parliament to listen to such suggestions.
The Tory backbencher Christopher Chope is well-known for his objections, and caused controversy in the past by blocking such bills (including one to outlaw “upskirting”).
This is because he believes bills that have the government’s support but which are introduced through the private member’s bill system are clogging up the method used for backbench MPs to enact their own laws.
It only takes one MP to shout “object” to kibosh a private member’s bill, so it was a great surprise on a normal Friday sitting when Chope managed to get one of his through without a government whip alert enough to block its progress.
The “mobile home pitch fee bill” was presented by Chope, but remained unopposed – meaning it flew through its first reading, second reading, committee stage then report stage, and finally passed its third reading without opposition.
The whole process took three minutes and 11 seconds – a speed remarked upon by the deputy speaker Eleanor Laing, who confirmed it was the first time a private member’s bill had completed all its stages at once since 1998.
She said to laughs from the Commons:
Many a worthy bill has appeared to have support of all members but one.
It is noticeable that this particular bill is brought by that very member and its worthiness has therefore outweighed its procedural position. Interesting and notable.
The Guardian’s education editor, Richard Adams, has spoken to the school leaders’ union to get their view on the autumn statement.
Despite Jeremy Hunt’s extra £2bn for schools in England next year, the Association of School and College Leaders (ASCL) has said it will hold its first ever consultative ballot on industrial action.
Geoff Barton, the general secretary of ASCL, said:
While yesterday’s extra money is welcome, it comes in the context of a decade of real-terms cuts and a teachers’ pay award this year which is both inadequate to improve recruitment and retention and unaffordable because there isn’t enough money for schools to be able to pay it.
We will now be asking members to participate in our consultative ballot and guide our next steps.
The union, which represents many senior leaders in secondary schools, said the consultative ballot “follows a period of extensive consultation … where we heard the strength of our members’ feelings about the continued underfunding of education and the major consequences this is having both for ASCL members and for the children and young people they serve”.
The International Monetary Fund’s managing director, Kristalina Georgieva, has told the chancellor, Jeremy Hunt, that his autumn statement “strikes the right balance”, after the UN financial institution criticised Kwasi Kwarteng’s mini-budget.
In a call with Chancellor Hunt today, I welcomed [British] autumn statement prepared at a difficult time for the UK economy, against strong global headwinds.
It strikes the right balance between fiscal responsibility and protecting growth & vulnerable households.
The Guardian’s education editor, Richard Adams, reports on the reaction to the chancellor’s decision not to widen eligibility for free school meals:
Campaigners including the celebrity chef Jamie Oliver said they would not give up their efforts to tackle food poverty by widening eligibility for children to receive free school meals, despite having their hopes dashed by Jeremy Hunt’s autumn statement.
The high-profile campaign backed by the chief executives of major supermarkets and chefs such as Oliver and Tom Kerridge, urges the government to extend coverage to the estimated 800,000 children from families in England receiving benefits who are ineligible for free school meals (FSM).
But the Treasury was unmoved, despite support from Conservative MPs for the measure.
Kerridge, who has campaigned on behalf of the Feed The Future coalition, said:
The decision today is a disgrace, especially when MPs get £17m in food subsidies. The government has a moral obligation to these children, the most vulnerable in our society and we will not stop fighting for these kids.
I ask all government ministers to put themselves in the shoes of these parents, to put themselves in the shoes of these children and do the right thing and extend school meals. No child should be going to school hungry.
Every day kids are asked to not give up and to keep trying at school. I just wanted to let the education secretary, Gillian Keegan, know that we won’t give up until every kid who needs it has access to a free school meal.
Only children whose households receive universal credit and earn less than £7,400 net of taxes and benefits are eligible for FSM in England. The £7,400 ceiling on earnings has not risen since 2018, and the Liberal Democrats argue that up to 110,000 more children would be eligible for FSM if the ceiling had risen in line with inflation to £8,575.
Labour accuses Sunak of protecting super-rich from tax
Labour has accused Rishi Sunak and Jeremy Hunt of shielding the super-rich from paying their fair share of tax by refusing to abolish the non-dom loophole.
Keir Starmer accused the government of having “gone after working people” with tax hikes while doing “nothing about non-dom status”.
He told broadcasters during a visit to Swindon:
The super-rich are not paying their taxes in this country.
The shadow chief secretary to the Treasury, Pat McFadden, said the Conservatives were refusing “to make fairer choices”.
They continue to shield non-doms from paying their fair share of tax in Britain, leaving billions on the table.
The Institute for Public Policy Research estimates that abolishing the non-dom tax status would raise £3bn a year.
Sunak’s wife, Akshata Murty, was forced to say in April she would pay UK taxes on all her worldwide income after they faced criticism over her non-dom status.
It was estimated that Murty, a fashion designer and the daughter of an Indian billionaire, could have saved up to £20m in UK tax through the arrangement.
This week Sunak said he would publish his personal tax return, in a bid for transparency.
A small point on the Ipsos Mori polling on Hunt. Reader
@ds9074, states in the comments: “I’m pretty certain Kwasi Kwarteng would have had an even lower rating, he just wasn’t in the job long enough for them to conduct a poll!”
Others have wondered the same, and indeed Ipsos Mori points out that the question “Who would make the most capable chancellor … was not asked during Kwasi Kwarteng’s short period in office.”
The Times’ Rachel Sylvester and Alice Thomson have a long, in-depth interview with Keir Starmer today, which the Labour leader’s team is likely to be delighted with.
It paints a broadly positive picture of Starmer, who talks in depth about the impact of his mother’s illness on his life, his working-class roots and his approach to politics.
Starmer talks about his mother’s illness – she was diagnosed with Still’s disease, an aggressive juvenile form of arthritis, when she was 11 – and how “towards the end of her life she couldn’t walk. She couldn’t really move her limbs. She couldn’t feed herself. In the end, she couldn’t speak.”
He says her determination to confront problems head-on informed his own attitude:
If anything it has given me determination and courage to run towards a problem, run towards a challenge, and overcome it, that’s all come from the steely resolve of my mum.
On his background, the interviewers write:
With his knighthood, his smart suits, his smooth lawyer’s manner and his north London home, Starmer looks like he was born into the liberal metropolitan elite. But his childhood was far from privileged. He is convinced that his tough upbringing was a good preparation for the political battles he has faced.
My dad worked in a factory all his life. My mum was a nurse, but she soon became too busy with four children and too ill to carry on working. I’m not going to plead poverty or any greater hardship than anyone else, but it was tough going at times. Our phone was cut off. The carpet on the stairs was threadbare. We didn’t feel poor, we didn’t feel put upon – it was just the way it was.
One of the things that helps me in the cost-of-living crisis we’re going through now is knowing what it’s like to struggle to make ends meet. Many people this winter are worrying about how they can pay their bills and I know what that feels like.
The piece provides an interesting insight how Starmer and his shadow ministers are already preparing for government. They write:
The former director of public prosecutions, who spent his legal career painstakingly building up evidence, is leaving nothing to chance. His frontbenchers are already having masterclasses about running Whitehall departments and Starmer himself has started taking advice about being prime minister.
They quote him saying:
I’ve been talking to Tony Blair and Gordon Brown for some time now. I’m conscious that we’ve been out of power for 12 years. That means I don’t have people around the shadow cabinet table who’ve got huge experience in government. So I’m determined that we need to be ready to hit the ground running.
And if Starmer does make it to No 10, he and wife, Victoria – who works for the NHS in occupational health – are apparently unlikely to do an expensive makeover.
I don’t think it’s going to be to my taste. There will be no stories about what we’re doing to redecorate if we get that far, but as Vic always says, one step at a time.
Poll: shadow chancellor Rachel Reeves preferred to Jeremy Hunt
Jeremy Hunt is already as unpopular as George Osborne was after the 2012 omnishambles budget, according to polling from Ipsos Mori, carried out last week before the Autumn Statement.
The latest Ipsos Political Monitor, taken 9-16 November shows Shadow Chancellor Rachel Reeves preferred as Chancellor to the Conservatives’ Jeremy Hunt as high levels of economic pessimism persist and Labour retains a healthy poll lead over the Conservatives.
When asked who would make the most capable Chancellor, 35% opted for Labour Shadow Chancellor Rachel Reeves and 29% for the current Conservative Chancellor Jeremy Hunt, says the pollster.
This is the first time a Labour Shadow Chancellor has led since June 2013 when Ed Balls led George Osborne by 38% to 35%
Nicola Sturgeon has said Scotland’s budget for next year will be a “difficult balancing act”.
Responding to the Chancellor’s autumn statement made on Thursday, the First Minister wrote in the Daily Record newspaper that - “despite repeated requests” - there would be no support for the Scottish government to deal with inflationary pressures in this year’s budget.
Instead, some £1.5bn in Barnett consequentials will made available to the devolved administration over the next two years, described by Jeremy Hunt as “extra help”.
Over the coming days, officials will scrutinise the numbers to understand precisely what the chancellor’s statement means for next year’s Scottish budget, which will be presented to Parliament on 15 December.
It clearly will be a difficult balancing act, but we will do all we can within our limited resources to mitigate the impact of the cost of living crisis on Scotland’s families and businesses and continue building a fairer, greener and more prosperous Scotland.
Key points from the IFS briefing
Here are the main takeaways from the Institute of Fiscal Studies’ briefing on the autumn statement this morning:
The UK has got “a whole lot poorer” after a “series of economic own goals” and because of the “extraordinary scale” of spending on debt interest due to high borrowing in recent years, combined with sluggish long-term growth and the pressures of an ageing population.
The economic own goals include Brexit, political instability, slashing investment spending, cutting education spending and the mini-budget.
We are in a “new era” of higher taxation, higher spending as a fraction of national income and a bigger state, with more people being pulled into the higher rate of taxation due to a plan to freeze thresholds for six years.
The autumn statement isn’t a particularly “fiscally conservative statement”, and postpones big spending cuts until after the next general election, with spending rising in the interim period. The chancellor is probably hoping for easing the debt burden to become someone else’s problem, or to be resolved by economic growth.
Although spending is rising, this follows years of cuts and in many areas such as healthcare doesn’t compensate for increased costs.
The two-year delay to implementing social care reforms may be a “death knell” for the policy.
There will be the biggest fall in income growth over a two year period possibly ever following a “painful decade” – those on middling incomes will be worst hit.
This was a “tax-raising budget”, but the chancellor opted for “easy revenue raisers rather than coherent reform” – this is “not a good way to make policy”.
Real household disposable incomes will fall by 7% over the next two years – the largest since records began.
Governments have opted to pursue political priorities rather than economic growth in recent years.
The IFS briefing has now wrapped up, but you can catch up on director Paul Johnson’s opening remarks and see all the graphs and slides on their website here.
Schools spending is growing in real terms, says the IFS’s Ben Zaranko, but he warns that this follows 15 years of lost schools funding growth so the picture is not as rosy as it might sound.
Emmerson added that this applied to other areas – after years of spending cuts it is harder to make additional cuts, especially in areas such are healthcare which are grappling with increased costs following the pandemic.
Here’s the Guardian’s city editor Anna Isaac’s full report on the IFS briefing this morning:
Rising rates of people who are off work with long-term sickness, many of whom often don’t return to work, is very concerning for longer term economic growth, says the IFS’s Xiaowei Xu.
This means there is a falling labour supply and – combined with lower immigration – means “we’ll really have to look at how we can get productivity going again”.
Johnson added there are growing numbers of young people on personal independence payments due to mental health problems. “The government needs to get a grip on this,” he said.
Deputy director Carl Emmerson said we need a set of policies that offer “sustianble growth” rather than pumping money into the economy.
Serious tax reform rather than tinkering with tax rates, also education and planning reforms, he suggested.
Doing them isn’t easy and there’s a reason why government shy away, he said.
The returns will be in the long run – if you get education policy right it will take decades to reap the rewards. “There are no quick fixes here,” he said.
Johnson added that governments have prioritised “other things” than growth in recent years.
Brexit was 'very clearly' an economic own goal for the government, says IFS director
IFS director Paul Johnson has been pressed by journalists in the Q&A what the “economic own goals” he alluded to in his opening remarks are.
He said they include the following:
Slashing investment spending in 2010, announced by last Labour government but continued by George Osborne. “Not a good way to get growth,” he said.
Cutting spending on education especially “huge cuts” to vocational and further education but also schools. Although schools spending is going up, FE didn’t get a mention in the autumn statement.
Brexit “very clearly” – economically speaking that has been “very bad news indeed” and continues to be, especially because of the hard Brexit and distancing from single market.
The mini-budget “obviously didn’t help” – “another large own goal”.
The general economic and political instability and uncertainty, with three prime ministers and four chancellors in a few months, “and to be reversing policy here, there and everywhere”.
Xu said the uprating of the benefits cap is “welcome” and will come as a relief to families – but in a context where prices have increased by 24% it still represents a big cut since April 2016.
The current uprating is just keeping pace with inflation and real benefit levels won’t return to pre-pandemic levels until April 2024, she added.
Senior research economist Xiaowei Xu says real household disposable incomes will fall by 7% over the next two years.
Since 2008 we’ve seen more shocks than in previous decades – but falls over next two years are the largest since records began. This follows a “lost decade” since 2008.
We won’t return to pre-pandemic levels of household incomes until after 2027/28. We’ll be a third poorer than we would have been had pre-2008 growth trend continnued.
We’re heading for another lost decade despite a large package of government support for the cost-of-living crisis such as the energy price guarantee, she said.
This was a “tax-raising budget, but the chancellor opted for “easy revenue raisers rather than coherent reform” – this is “not a good way to make policy”, said Adam.
Taxation of property, electric vehicles and capital gains need “serious thought and well-considered reform”.
Adam said he would like to have seen the mini-budget cut to stamp duty maintained, although this will raise £1.6 bn.
He adds that capital tax gains is badly in need of reform, but cutting the tax allowance by 3/4 isn’t what he would consider a priority.
The oil and gas windfall tax will contribute an additional £19 bn to the economy – but rather than being a huge additional boost, this still only brings it up to average levels over most of the last 40 years after years of low taxation on the industry, Adam said.
This tax rise is also only temporary in the autumn statement.
Adam is sharing how the taxation system has changed dramatically in the last 30 years.
In 1990, around 4% of adults were higher and additional rate taxpayers – with the autumn statement that will rise to over 14%.
Senior economist Stuart Adam is presenting on the changes to taxation.
Freezing the income tax threshold will raise £1.3 bn over the next two years – it’s now the case that every signficant threshold is being frozen over a long time. “That’s just not a sensible way to make policy,” because it depends on what inflation turns out – it’s an “accidental and arbitrary outcome”.
Freezing employer national insurance contributions until 2028 raises £3.6bn.
Reducing the 45% rate from £150,000 to £125,000 raises £0.9bn.
Zaranko has suggested that an alternative plan would see spending on the NHS increase to 3.8% of GDP rather than 3.1%, enabling longer-term workforce planning and pay rises to address the staffing crisis.
Schools spending could be frozen, rather than facing a reduction, and defence could rise to 2.5%.
This would cost an extra £17bn, he said.
Spending plans after the next five years look “implausibly tight”, he said.
Senior research economist Ben Zaranko says that despite what we might think, the “overall generosity” of last year’s spending plans hasn’t shifted much on paper.
What’s going on? He asks.
The measure of inflation is higher in the short term, although not that much higher, and it’s forecast by the OBR to be lower in the medium term.
The measure also doesn’t include the main source of inflation in the UK – imported food and energy – but instead focuses features domestic inflation, which is lower.
These lower inflation rates flatter long-term growth in the government’s spending plans, he says.
He says local government is unexpectedly a “winner” out of the autumn statement, receiving funding that had been planned to fund the social care reforms. Extra money in the short-term for NHS and schools will be “welcome” – though there risks still being a shortfall in relation to demand.
Other budgets will be left facing a squeeze, however.
Emmerson is explaining that the UK is now a higher tax country, as more people are being pushed into the top rate of tax due to thresholds being frozen. This isn’t a problem – Scandinavian countries pay a higher tax burden. tax will now represent an unprecedented 37% of national income.
But he asks how “credible” a six-year freeze is.
Debt, he added, is barely falling over the coming years due to continued high borrowing – Hunt has “just about” got it falling although very marginally.
“There are some big risks” around the forecast the autumn statement is based on – especially on revenue, for example projected uprating of fuel duties.
IFS deputy director Carl Emmerson is presenting the outlook for the public finances and the key risks around the forecast.
He’s looking into the Office for Budget Responsibility’s optimistic forecast – it is closer to other independent forecasts than the Bank of England’s gloomier projections.
The outlook for the economy is weaker, so that adds to borrowing going forwards, he explained. The government is also now spending on debt interest at its highest share of GDP in 70 years.
But Emmerson thinks debt interest spending won’t rise as sharply as projected by the OBR, which is based on market expectations of where interest rates are going, rather than independent forecasters.
This is an area of the forecast which we can “very much hope” might turn out better than forecast.
UK economy hit by 'series of economic own goals'
The chancellor is hemmed in by rising interest rates and dreadful growth prospects, Johnson said.
He’s allowed borrowing to rise and put off tough decision for a couple of years – hoping things will be better or it’ll be someone’s problem.
We’re reaping the costs of long term failure to grow the economy, an ageing population and high borrowing.
“What a combination,” he said.
The situation has been made worse by a series of “economic own goals”.
Corporate tax revenues will hit “record levels” as rate rises to 25%, says Johnson.
Freezes to income tax constitute “a very, very big tax increase”.
The changes which hit the better off – changes to capital gains tax and the 45% rate – are “hardly game changers” as they do not recoup big revenues for the Treasury.
The game changer is the huge structural change to income tax since the 90s, with 8 million now paying the 40% rate of income tax.
Biggest fall in income growth over a two year period possibly ever, Johnson said.
“We are significantly poorer as a result not least of what’s been happening to energy rises,” he said.
Those on middling incomes will feel the biggest hit because won’t benefit from targeted support, housing costs are rising, wage growth is flat.
All of this follows a “painful decade” for earnings and incomes.
We’ll be 30% worse off than we would have expected to be had pre-financial crisis trends continued.
There’s also a delay until 2028 in moving out of work benefits onto universal credit, “with no explanation given”.
“This looks horribly like an effort to push a relatively small increase in spending to beyond the forecast horizon,” Johnson said.
“This is very concerning,” and something for the IFS to dig into.
Spending numbers should be taken with a “very large pinch of salt” as they’re pencilled in for after the next election, Johnson said.
If they go ahead, they will be small cuts – but spending will probably turn out higher than planned, so there will likely be higher taxes or more borrowing to compensate.
It’s “awful” the social care reforms won’t be implemented next year as planned – there’s a two-year delay which may amount to a “death knell”. “Government should not be making then reneging on promises like this which matter so much to vulnerable people,” he said.
Tax burden unlikely to go back to pre-Covid levels in 'next few decades'
We’re in a “new era” of higher taxation and higher spending as a fraction of national income as a bigger state.
Charts show there is a “sharp change”, Johnson said. “I’d be most surprised if the tax burden gets down to its long term pre-Covid levels at any point over the next few decades,” he said.
On public spending, numbers aren’t too bad over the next few years, he says. It will only grow “marginally less quickly” relative to last year’s generous spending review.
The government is still not going to be able to fund public sector pay rises that anywhere near match inflation. This will remain “one of the biggest challenges” facing the government this year.
Borrowing will be high into the foreseeable future, our tax burden will settle “at its highest level in history” relative to national income, says Johnson.
This might sound like it equates to lots of spending, but actually post-election spending plans are “really pretty austere”. “That’s a pretty nasty place to be”.
This is because we “just got a whole lot poorer” because of the “extraordinary scale” of spending on debt interest due to high borrowing in recent years – “we’ll be spending more on debt interest than any other public service bar the NHS”.
IFS: Hunt doing 'minimum he needed to regain credibility'
The Institute of Fiscal Studies is presenting its analysis of the autumn budget. I’ll keep you updated on the key lines.
The key point, says director Paul Johnson, is that Hunt is “more fiscally responsible’” than his predecessor Kwasi Kwarteng, he did “relatively little” to offset some big increases in borrowing.
He decided it’s fine to cover current spending and is meeting his fiscal rules in five years’ time “by a hair’s breadth”.
This was “not a particularly fiscally conservative statement”, in rather Hunt was doing “the minimum he needed to to regain credibility. All the tightening is coming after the next election – in fact, spending is rising over the next couple of years.
Given the precarious state of the economy there is “good reason for that”. “He’s clearly hoping for good news later on” so the spending cuts pencilled in aren’t needed.
But things could turn out worse than predicted.
Here’s a glimpse into Chancellor Jeremy Hunt’s morning, as he was getting miked up ahead of his BBC television interview, in which he was grilled on his autumn statement.
Speaking to BBC Radio Scotland, Chancellor Jeremy Hunt said:
We’re all having to cope with inflation, and what we’ve announced yesterday is extra help for the Scottish government to deal with those pressures, just as we’ve announced extra help for the NHS in England and for schools in England.
What I would say is we want to deal with these problems and we want to make sure that vital public services like the NHS are protected through a difficult period.
The reason for that is it’s the NHS that helps get people back to work when they’re not well, if they’ve got long Covid, they’re waiting for an operation - the NHS has been under enormous pressure in Scotland as it has in the rest of the UK.
Hunt said he hoped the share of the cash coming to Scotland as a result of health spending would be invested in the NHS - a longstanding Scottish Government commitment that was reaffirmed by the Deputy First Minister later on the same programme.
The Chancellor also claimed the health budget had been cut in Scotland “recently”, although it is not clear what he was referring to.
Scottish chancellor John Swinney responded on Good Morning Scotland:
There are decisions that the UK Government has taken to invest in the National Health Service, we do take the view that money allocated to the NHS by the UK Government should then be transferred onto and allocated to health and social care within Scotland.
That’s been our policy for some time.
Without pre-judging our budget, I would give the assurance that there will be investment in the health service as a consequence of the decisions that have been arrived at yesterday, because that will be the application of the long-term policy commitment that was given to pass on Barnett consequentials from changes to health expenditure in England on the NHS and social care system in Scotland.
But Swinney said the extra cash “does not change” the position of the Scottish government on public sector pay deals as the cash will only flow into next year’s budget.
Currently, NHS staff and teachers are among a raft of workforces threatening strike action over pay.
Speaking to BBC Radio 4’s Today programme Chancellor Jeremy Hunt said that Spain, Ireland, France and other neighbouring countries had similar tax arrangements for non-doms and that he wanted to avoid making sweeping changes to encourage them to settle and spend money here.
Here’s the clip in which he was asked on BBC Radio 4’s Today programme if he knew how much taxing non doms could raise.
He said he didn’t believe Labour’s figures and was told by the Treasury that it would not help the economy. He didn’t say whether or not the Treasury had its own figures.
Meanwhile on Sky News, shadow chancellor Rachael Reeves criticised the government’s unwillingness to change its policy on the tax status of non-doms in the UK.
Reiterating a line of attack she brought up yesterday in her response to the chancellor’s autumn statement, Reeves told Sky News that taxing non-doms could raise up to £3.2bn which could be used to “invest in the NHS workforce.”
Here’s the clip from Reeves in parliament yesterday:
Hunt said UK needs 'unfettered trade' with European Union
Chancellor Jeremy Hunt has conceded that Boris Johnson’s hard Brexit deal has caused damaging trade barriers with the European Union, as he said immigration will be “very important” for the economy.
Hunt insisted the UK would find a way to improve trading ties with the EU without rejoining the single market.
His comments came after the Office for Budget Responsibility (OBR) said Brexit caused a “significant adverse impact” to trade volumes and business relationships between UK and EU firms.
Asked if rejoining the single market would boost growth, the Chancellor told BBC Radio 4’s Today programme:
I think having unfettered trade with our neighbours and countries all over the world is very beneficial to growth.
I have great confidence that over the years ahead we will find outside the single market we are able to remove the vast majority of the trade barriers that exist between us and the EU. It will take time.
Pressed on the single market, he said:
I don’t think it’s the right way to boost growth because it would be against what people were voting for when they supported Brexit which was to have control of our borders and membership of the single market requires free movement of people.
So I think we can find other ways that will more than compensate for those advantages.
Hunt insisted that immigration is required to boost growth.
There needs to be a long-term plan if we’re going to bring down migration in a way that doesn’t harm the economy.
We are recognising that we will need migration for the years ahead - that will be very important for the economy, yes.
Resolution Foundation says 'hard to see' how spending cuts will be delivered
The Resolution Foundation’s research director has said Jeremy Hunt’s cuts do not appear achievable, saying unprotected departments would face George Osborne-style “2014/15 levels of austerity”.
Research director James Smith said:
They don’t look obviously deliverable. If you take the spending cuts that are in place and subtract out the protected departments like health and defence, you end up with really big falls in those unprotected departments.
Hard to see how given the legacy of austerity, given public sector wages are already lagging behind and given this is effectively tying the hands of governments, it’s really hard to see how those will be delivered.
Smith added that Thursday’s autumn statement had seen the biggest deterioration in forecasts since the Office for Budget Responsibility (OBR) was launched in 2010 due to the “damage” from higher interest rates.
What we saw yesterday was the biggest deterioration in the overall forecasts since the OBR started producing these forecasts.
What is doing the damage here is higher interest rates.
Higher inflation and higher interest rate costs are both doing damage to the fiscal position.
Money-saving expert Martin Lewis said the “honest truth” is people need to be looking at their finances to budget and plan for next spring ahead of a “very difficult year ahead”.
Speaking to Good Morning Britain, Lewis said:
Look, I mean the Chancellor has at least been upfront that we’re in for a very difficult year ahead.
So what everybody has to do is take the help they’ve been given and on everything else, the honest truth is you have to look at your own finances.
You should be budgeting and planning now for next year, seeing what room you’ve got and making sure you’re being as efficient as you can on everything.
There is a point out there, and this is not to abrogate responsibility from government from protecting people, but if you’re not going to be protected because that is the situation, or your not getting help, this is the time to look at your own finances and see what you can do to shimmy and shape them into a little bit better style.
It won’t solve everything but it might make things a bit easier.
Lewis added that he met the Chancellor earlier this week where he pushed hard for mortgage flexibility and forbearance for the “squeezed middle” ahead of spring.
He told LBC Radio:
We will see next spring we are going to have this perfect storm of energy bills going up, cost of living continuing to rise and energy bills at their peak. My concern is what do we do to get people over that hump.
He said he had “pushed hard for there to be some improvements in the flexibility and the forbearance in mortgage packages such as mortgage holidays and temporarily extending repayment terms.
He said he discussed with the chancellor calling a mortgage summit with the regulator and big lenders to discuss how they are going to get people through next spring.
That was an important section missing in the budget yesterday but I’m thinking what the Chancellor wants to do is solve that through the private sector by pushing and encouraging the private sector to make changes and I’m pushing and encouraging the Chancellor to make sure he does that.
We’re looking at interest rates in the UK at 5% and that means higher mortgage rates when people come off their (fixed-rate mortgages) next spring - What is he going to do to protect those in the squeezed middle with mortgages and paying private rents?
Richard Hughes, chairman of the Office for Budget Responsibility (OBR), said it had been more optimistic with its forecasts than the economic projections from the Bank of England because it believes households will draw on their savings to help them spend more.
He told PA:
Our forecast is in line with other forecasters and the bank is more of an outlier on the downside.
One reason we are more optimistic is that lots of households built up savings during the pandemic - we believe households might draw down on these to fill the gap.
The Bank of England assumes that savings don’t fall but plateau.
We think that people might dip into their savings as a form of consumption.
We think if ever there was a time when they would dip into savings, it is now, which might support consumption when incomes are falling to bridge the gap as their real earnings start to recover.
Jeremy Hunt insists non-doms are good for the economy
Jeremy Hunt was questioned why he did not do anything about the non-dom tax status. The chancellor said the Treasury did not give him estimates on how much abolishing the non-dom tax status would raise, but added he would rather the super rich “stayed here and spent their money here”.
The Chancellor told BBC Radio 4’s Today programme:
They said to me that they were very unsure about the figures that were being bandied around, as far as the savings were concerned.
Like me they wanted to be very sure they weren’t doing things that damaged the UK’s attractiveness. These are foreigners who could live easily in Ireland, France, Portugal, Spain, they all have these schemes. All things being equal, I would rather they stayed here and spent their money here.
Pressed whether the Treasury gave him a figure on how much abolishing the status would bring in, he said:
No, because we don’t agree with the figures that Labour have given.
The Treasury did not tell me it was going to help the economy to do this, that’s why I chose not to do it.
I’m not going to do anything that’s going to damage the long-term attractiveness of the UK, even though it gives easy shots to opposition parties, I think it would be the wrong thing to do in terms of creating jobs in the UK.
Shadow chancellor Rachel Reeves said that Labour would have got rid of non doms, and made different tax decisions such as VAT on private school fees and going bigger on windfall taxes.
But she told Sky News she is “pleased” about the decisions the Government made on the triple lock and benefits, but said she was still concerned with energy bills rising.
Challenged about the budget containing many measures Labour should like, Ms Reeves said:
I didn’t feel like that. I’m really worried about what’s going to happen to people’s living standards from April.
She said Labour would not be laying out specific proposals for the economy until the next election, but added:
Even if you have a difficult fiscal inheritance, and we know that a Labour government will have that due to the choices the Conservatives have made, you can still make different choices and prioritise different things.
Hunt defends delay to social care cap
Jeremy Hunt has said it was not “easy” for him to delay the social care cap, which he insisted he “passionately did not want to do”.
The decision to delay the cap until October 2025 has been criticised by the economist behind the plan. Sir Andrew Dilnot, who advised several conservative governments on fixing the care sector, said he was “astonished, puzzled and deeply disappointed”.
He added that the government had now broken a 2019 manifesto promise to “fix social care” and implement changes that were finalised a year ago. They included raising the amount of assets a person can have before getting state funding for social care from £23,250 to £100,000 as well as capping lifetime care costs at £86,000.
This morning Hunt told BBC Breakfast: “I don’t pretend this was an easy thing for me to do given what I said in 2013 but it does mean we can give overall a bigger increase to social care than it’s ever had in its history.
“Some of those decisions are very hard for me as chancellor. I’m a Conservative chancellor that has put up taxes, I’ve had to delay those Dilnot reforms to social care which is something I passionately did not want to do.
“But I’m doing it because we face an international economic crisis and I recognise that people are worried about the future and I’m prepared to do difficult things even if they’re things I wouldn’t personally choose to do, because they’re the right thing for the country.”
The shadow chancellor was also out and about this morning to lay out Labour’s alternative to Tory budget plans.
Rachel Reeves told BBC Breakfast Labour would tax “the better off to pay more to ease that pressure on ordinary people”.
PA Media carries her quotes:
The most important thing is to grow the economy because that is the way to lift living standards for everybody.
“And what we saw in the numbers yesterday was that living standards are going to fall by the biggest amount for more than 70 years.
“The International Monetary Fund is predicting that the UK will have the slowest growth in the next few years of all of the big industrialised economy because there is no serious plan from this government for growth and that I think is the big difference between Labour and the Conservatives.”
Resolution Foundation: UK workers will miss out on pay rises worth £15,000
Jeremy Hunt’s autumn statement will mean Britain’s workers will miss out on pay rises worth £15,000 over the next five years as the chancellor’s tax-heavy budget pressures the nation’s “squeezed middle”.
Figures published alongside the Jeremy Hunt’s autumn statement on Thursday by the Office for Budget Responsibility said the UK was in a recession that would wipe out eight years of growth, with British households set to face the biggest fall in living standards since records began.
The Resolution Foundation thinktank said on Friday that the dire economic outlook means that real wages are now not expected to return to 2008 levels until 2027.
If pay had continued to grow at the pre-crisis peak, workers would be £292 a week, or £15,000 annually, better off over the next five years.
You can read the full story here:
Reactions to Jeremy Hunt’s autumn statement dominate the UK’s front pages on Friday – and my colleague Jonathan Yerushalmy has done a round-up.
The Guardian’s goes with “From bad to worse” and reports that the chancellor’s £30bn of delayed spending cuts and £25bn of backdated tax increases “laid bare the country’s dire economic predicament”.
The i splashes with “UK’s lost decade”, and what the paper calls the “biggest drop in living standards on record … sending British earnings back to 2013”.
Its report says the country is paying the price for “Putin’s war in Ukraine, the pandemic, Brexit policies and Liz Truss’s damage to market confidence”.
Usually reliably sympathetic to the Tory party, the Daily Mail turns its ire on Hunt’s budget with the headline “Tories soak the strivers”.
The paper’s political editor reports that the overall tax burden will be pushed to its “highest level since the second world war”, “with highest earners hardest hit”.
The verdict of the paper’s star columnist, Sarah Vine, is carried on the front page: “And there was me thinking we’d voted in the Conservatives!”
The Telegraph, too, is blunt in its assessment, quoting an economist in its headline: “‘The rhetoric of Osborne … with the policies of Brown’”.
The paper’s main story says that Britain’s welfare bill is to rise by almost “£90bn after Jeremy Hunt shielded benefit claimants and pensioners from soaring inflation with a raid on workers”.
The Tory peer and former Brexit negotiator David Frost writes in a front-page opinion piece that the “ship has been steadied – but we’re all left with less money of our own.”
The Mirror’s headline simply reads “Carnage”. The paper quotes shadow chancellor Rachel Reeves as saying that “all the country got today was an invoice for the economic carnage that the government has created”.
The Times writes that as the chancellor seeks to balance the books, there will be “years of tax pain ahead”.
The Financial Times carries a similar headline with “Hunt paves way for years of pain,” quoting the chancellor as saying: “We need to give the world confidence in our ability to pay our debts.”
Scotland’s Daily Record harks back to another era of Tory rule with the headline “You’ve never had it so bad”, as does Metro.
The Record says that after 12 years of Conservative rule the UK faces its “biggest-ever clump in living standards” as well as a “surge in unemployment and a year-long recession”.
The Express is able to find some good new in it all, however. Splashed on to a full-page image of Hunt, the paper claims “Victory” in its campaign to secure a 10.1% increase in the state pension, saying it will “help millions cope with the cost-of-living crisis”.
Jeremy Hunt says next two years will be 'challenging'
Welcome to the politics blog. Jeremy Hunt has been doing the morning media round to defend his autumn statement and has warned that the next two years will be challenging.
The UK chancellor appeared on Sky News the day after announcing that millions more people will pay more in tax and spending cuts of £30bn.
The chancellor said his plans would help get the economy “on an even keel”, but added: “Over the next two years it is going to be challenging. But I think people want a government that is taking difficult decisions, has a plan that will bring down inflation, stop those big rises in the cost of energy bills and the weekly shop, and at the same time is taking measures to get through this difficult period.”
We’ll bring you the latest news and reactions on the autumn statement. Here’s what’s coming up today:
9am: The Resolution Foundation will publish its take on Hunt’s measures.
10.30am: The Institute for Fiscal Studies will present its findings.
1pm: The Institute for Government has an autumn statement event, which will be attended by the OBR’s Richard Hughes.