UK Politics

Sign up for the View from Westminster email for expert analysis straight to your inboxGet our free View from Westminster emailAs the government prepares to unveil it’s last Spring budget before a general election, the chancellor Jeremy Hunt had his annual pre-statement grilling on the Sunday news shows.It is widely expected that Mr Hunt will look to cut taxes and commit to minimal public spending increases as the conservatives commit a last-ditch attempt to win back the electorate.But recent OBR forecasts have given the chancellor less headroom for tax cuts than previously thought, leading the chancellor to dampen expectations around the sort of tax reductions the public can expect.Chancellor Jeremy Hunt said he ‘won’t take risks’ with the UK economy Here’s a look at everything else the chancellor hinted would likely come up in Wednesday’s budget.The government has made progress on the economyWe can expect the chancellor to say the government has made good progress on the economy, as he pointed to reducing inflation and the downgraded “technical” recession. On the BBC’s show with Laura Kuennsberg, Mr Hunt said inflation had fallen from 11 per cent when Rishi Sunak became prime minister to it’s current level of 4 per cent, telling Ms Kuennsberg: “it’s fallen much faster than people predicted”.Despite the UK officially entering a technical recession last month, Mr Hunt said the recession is “much more healthy” than the Bank of England had previously thought.He added that the economy has been “much, much more resilient than people predicted”.The Bank of England said the UK fell into a ‘technical recession’ last month No radical tax-cutsThough the chancellor is a keen proponent of tax cuts, he made it clear that the government will not be committing to any radical tax reductions and was keen to manage expectations around the sort of tax-cuts that can be expected. Talking to Sky News’ Sunday Morning with Trevor Phillips, Mr Hunt said:“When it comes to tax cuts, I do believe that if you look around the world, countries with lower tax tend to grow faster — North America, Asia — and so I do think in the long run we need to move back to being a lower taxed, more lightly regulated economy.”But he cautioned:“It would be deeply unconservative to cut taxes in a way that increased borrowing, wasn’t fully funded.“If I think of the great tax-cutting budgets of the past, Nigel Lawson’s budget in 1988 — the reason that was so significant is because those tax cuts were permanent.“People need to know that these are tax cuts you can really afford, so it will be responsible and everything I do will be affordable.”Though the chancellor would not be drawn into what specific tax cuts the government is considering it is widely tipped that they may introduce further cuts to national insurance or income tax.Jeremy Hunt has said he hoped to “make some progress on that journey” of cutting taxes, describing the 2p cut to national insurance at the autumn statement as a “turning point”.Talking to Sky News he said: “All conservatives believe that the state has a moral duty to leave as much money in people’s pockets as possible because it belongs to the people who earn that money.”Fiscal rules are here to stayDespite opposition from the former Bank of England chief economist, Andy Haldane, Jeremy Hunt insisted that fiscal rules are here to stay.The sustainable investment rule aims to keep debt at a level that does not prove unsustainable or unfair to future generations.Mr Haldane told the BBC that he wanted to hear that “fiscal rules might be tweaked” as “they’re stuning growth for me right now”.He explained that the government’s own self-imposed rules around debt is “constraining our capacity to invest as a nation and therefore grow tomorrow”.However, Mr Hunt insisted that he would not alter the fiscal rules “because I think people would interpret that as Britain losing control of its finances”.He told the BBC: “The reason we have them is to give confidence to the British people and to the world that we are a country that pays back our debt. And if we didn’t have them, people would worry that Britain was going to go on an endless borrowing binge.”Hunt economic adviser Andy Haldane has called for the fiscale rules to be ‘tweaked’ There will be “no gimmicks”Mr Hunt insisted that his budget would be a “responsible” centred on a long-term plan for economic growth. When asked by Ms Kuennsberg if Mr Hunt was considering scrapping the non-dom tax scheme to fund small tax-cuts, the chancellor said the country “sees through gimmicks and we are not going to do gimmicks on Wednesday”.Though Mr Hunt did not rule out stealing the Labour policy, he suggested that all measures taken would be long-term policies as opposed to short-term fixes.Focus on public service “productivity” to unlock moneyThe government have already announced it is undertaking a “public sector productivity drive” in a bid to improve services without ramping up government spending.The announcement features a number of cost-saving measures, including the implementation of artificial intelligence and digitisation across government and the creation of 200 additional child social care places in England.Mr Hunt expanded on announcement this morning, telling the BBC that “we have to think not about the money we’re putting in but whether we can do things more efficiently so that we get more out”.Thus far, Mr Hunt has indicated that the government will not be engaging in any mass public sector spending programmes and will instead free up money by looking to eliminate Whitehall waste and focus on improving productivity and efficiency.There will be minimal public spending increasesDespite squeezed public services, Mr Hunt has maintained that the government will not commit to any mass public-sector spending programmes.The chancellor told the BBC that he didn’t believe in “forever expanding the welfare state” because “I don’t think that’s compatible with bringing the tax burden down in a society that makes work pay”.Last month left-wing thinktank the Resolution Foundation warned that the chancellor’s current spending projections mean that increasing day-to-day spending on public services by 1 per cent was a “fiscal fiction”.It explained that given health, education and defence budgets are all protected, unprotected departments, such as the Home Office, MoJ and local government will see per capita cuts of 17 per cent by 2028-29.On Times Radio, Mr Hunt said “It’s wrong to say the only way to improve public services is by putting more money in”.When asked if the government wouldn’t spend more, Mr Hunt said it was “the wrong question to ask”, but notably refused to answer if public services were in a good state right now. 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Sign up for the View from Westminster email for expert analysis straight to your inboxGet our free View from Westminster emailThe threat of an imminent terror attack in the UK is rising, senior security officials have allegedly arned MPs.The Mail on Sunday has reported that politicians are increasingly being warned about the danger of terror attacks following an “upsurge in extremist activity” as a result of the conflict in the middle east.One MP with knowledge of the most recent briefings reportedly told the Mail: ‘The level of extremist chatter is off the scale. This is something they’ve seen growing and growing.’Referring to intelligence from the last two weeks, the politician added: ‘It’s like when the Twin Towers came down in 2001, there was a big spike of hate.’ MPs are reportedly concerned about the rising threat level in the UK The claims come just days after the government’s independent reviewer of terrorism said that the Israel/Palestine conflict has presented a “risk to our democracy”.Talking to Times Radio, Jonathan Hall KC said:“When you see last week, MPs literally scared to show [in parliament], apparently wanting to change their behaviour in parliament because of threats that they’ve been receiving.He added: “If those are done in order to affect the way in which the government acts and way parliamentarians operate, then actually that does begin to fall within the scope of terrorism and might even call for counterterrorism response.”In October 2021, David Amess, the Conservative MP for Southend West, was fatally stabbed at a constituency surgery in Essex. The attack was committed by a British Islamic State sympathiser and was around the time parliament voted to carry out airstrikes in Syria.Just five years earlier, Labour MP Jo Cox died after being shot and stabbed multiple times in Birstall, West Yorkshire by a right-wing terrorist. The current terrorism threat level is current at “substantial”, but the Mail reports concerns amongst MPs that it should be raised to “severe” to reflect the level of extremist chatter reaching its highest since the terror attack in New York on September 11, 2001.Prime Minister Rishi Sunak gives his speech on extremism in Downing Street In a speech last week, the Prime Minister warned that extremists are trying to “tear us apart” and called on the country to unite to ‘beat this poison’.His comments followed the election of Workers Party MP George Galloway in the Rochdale by-election, who centered his campaign on the conflict in Gaza.Mr Sunak said that it was “beyond alarming” that the Rochdale by-election “returned a candidate who dismisses the horror of what happened on October 7th, who glorifies Hezbollah and is endorsed by Nick Griffin”.Mr Galloway said he “abhors extremism” and has said he is “not responsible” for who endorses him.The prime minister has since pledged to “redouble our support for the Prevent programme”, which tries to steer people away from radicalisation, and has instructed the Home Office to use existing laws to block hate preachers from entering Britain. The Home Office has been approached for comment. More

Sign up for the View from Westminster email for expert analysis straight to your inboxGet our free View from Westminster emailJeremy Hunt has announced a “public sector productivity drive” in a bid to improve services without ramping up government spending.The government says its new measures are part of its plan to move on from the “high spending and high tax approach” that was necessary to “get the UK through the shocks of Covid and Russia’s invasion of Ukraine”. The plans are announced just days before Mr Hunt will deliver his spring Budget in which he is widely anticipated to introduce further tax cuts in the hope of boosting electoral prospects.The £800m investment in public services represent a “new focus” on the “long-term decisions required to strengthen the economy and give people the opportunity to build a wealthier, more secure life for themselves and their family”, the Treasury said. Jeremy Hunt is thought to be considering more tax cuts as he prepares to deliver what is likely to be the last Budget before the general electionThe announcement features a number of cost-saving measures, including the implementation of artificial intelligence and digitisation across government and the creation of 200 additional child social care places in England. The government said the measures will also “free up thousands of police officer hours spent on admin” by rolling out time-saving technologies like drones. It will also see over 130,000 patients, including those waiting for cancer results, receive their test results sooner. It said the changes, due to be in Wednesday’s Budget, have the potential to deliver £1.8bn worth of benefits to public sector productivity by 2029.Mr Hunt is facing pressure to prioritise tax cuts over further public spending as Conservative backbenchers warn the chancellor that only tax-cuts can reverse their electoral fortunes. But hopes of large tax cuts have been dampened as economists have warned against any reductions in public sector spending.The International Monetary Fund (IMF) said that tax cuts would be “very challenging to achieve” considering Britain’s ageing population and mounting debt pile, while the Institute for Fiscal Studies said the chancellor should not announce the tax cuts unless he can “provide more detail on its spending plans”.Recent forecasts from the Office for Budget Responsibility (OBR) have given the chancellor less fiscal headroom than previously thought, leading him to consider unexpected tax rises such as abolishing the non-dom tax status.Last week the OBR informed the government that it would have about £13bn of fiscal headroom in the spring Budget, of which Mr Hunt will leave about £6bn in reserve.Typically, chancellors leave themselves £25bn of headroom to cope with changes in interest rates and inflation without needing to change tax and spending policies, but the chancellor’s room for manoeuvre has been heavily impacted by inflation falling faster than expected, resulting in lower tax revenues, and increased borrowing costs.Bank of England figures show the UK fell into a recession in January The plans announced on Sunday show the chancellor is still eyeing up ways to reduce public spending as the treasury suggest that the proposed measures could return the UK to pre-pandemic levels of productivity.As part of the measures, the Department for Work and Pensions will “move away from paper-based communications” and planning applications will be sped up through the use of a new AI pilot. The government also plan to invest £170m into the justice system which it says will save up to 55,000 hours a year of administrative time through the digitisation of jury bundles and the introduction of new software and more robust data. Introducing the plans, Mr Hunt said: “We shouldn’t fall into the trap of thinking more spending buys us better public services.”“There is too much waste in the system and we want public servants to get back to doing what matters most: teaching our children, keeping us safe and treating us when we’re sick,” he added. “That’s why our plan is about reaping the rewards of productivity, from faster access to MRIs for patients to hundreds of thousands of police hours freed up to attend burglaries or incidents of domestic abuse.”Darren Jones MP, Labour’s shadow chief secretary to the treasury, said: “Nothing in Britain is better off after 14 years of Conservative economic failure.“Millions of people are stuck on hospital waiting lists, our schools are crumbling and our streets are less safe. And yet all the chancellor is offering is more spin without substance.”He added: “It’s time for change. Only Labour offers a long-term plan to grow our economy to deliver more jobs, more investment and to put more money in people’s pockets.” More

Sign up for the View from Westminster email for expert analysis straight to your inboxGet our free View from Westminster emailLabour has accused the Conservatives of depriving hospitals and other public services of £18bn by rejecting its calls to scrap tax breaks for “non-doms” for the last nine years. The party also hit out at the “mother of all U-turns” in its first full-throated attack on expectations Jeremy Hunt will steal one of its flagship policies in the Budget on Wednesday. And in comments that will be widely seen as a reference to Rishi Sunak’s wife, Labour’s shadow health secretary Wes Streeting said the prime minister had been “wedded” to the loophole for too long. Akshata Murty hit the headlines two years ago when The Independent first revealed that she was a non-dom. In response, Ms Murty, whose family business is estimated to be worth around £60bn, announced that she would start paying British taxes on all her worldwide income.Despite previously arguing the move would drive high-earners overseas, the chancellor is considering abolishing the loophole for wealthy foreign nationals. The about-turn comes as he scrabbles to find money for tax cuts in a desperate bid to woo disgruntled voters. Rishi Sunak with his wife Akshata Murty, who was a non-dom But a new analysis by Labour, shared with The Independent, says schools and hospitals could have benefitted from billions if ministers had abolished the tax break in 2015, when the Opposition first pledged to scrap it under then-leader Ed Miliband. Labour analysed 2023 research by academics at the London School of Economics (LSE) and Warwick University, which found abolishing the non-dom rules would raise around £2.3bn a year. Adjusting in line with price changes, the party says the Exchequer has missed out on £18bn in lost tax revenue since 2015. The figure is around a tenth of the NHS’s annual budget, and equivalent to its yearly drugs bill, according to a report last year by LSE, the London School of Hygiene & Tropical Medicine (LSHTM) and the University of York.Wes Streeting, Labour’s shadow health secretary, said: “The Conservatives have thrown everything at defending the non-dom tax status for the past decade, while our schools and NHS have deteriorated. That extra investment could have provided the doctors, nurses, and equipment our NHS desperately lacks today. The Tories chose to keep billions of pounds in the pockets of the wealthiest rather than our public services.“It would be the mother of all U-turns if they reversed their decade-long position now, and far too late for so many patients and schoolchildren. Rishi Sunak should explain why he was so wedded to the non-dom tax status for so long.”The Treasury and No 10 declined to comment.Jeremy Hunt is being urged to increase defence spending ahead of his Budget announcement Mr Sunak and Mr Hunt were forced to rip up their Budget plans earlier this week after the spending watchdog warned they were unaffordable, The Independent understands, prompting expectation they will opt for more revenue-raising measures. But in November 2022, shortly after he became Chancellor, Mr Hunt hit out at calls to scrap the status, saying: “These are foreigners who could live easily in Ireland, France… they all have these schemes. All things being equal, I would rather they stayed here and spent their money here.”He added that he was “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”.And last year, Mr Sunak attacked Keir Starmer over the policy at prime minister’s questions, saying: “He talks about this non-dom thing. I think he’s already spent the money that he’s claimed he’s raised on five different things. Because it’s the same old Labour party – they’re always running out of other people’s money.”Mr Hunt is facing intense pressure from MPs on his own benches to offer voters tax cuts in the run-up to the general election.Some Tory MPs privately concede their party would need a “miracle” to win, after trailing Labour in the polls for two years.Many are fearful the trouncing could be so bad it could consign the party to oblivion for a decade or more. Mr Hunt is also facing pressure from the defence secretary Grant Shapps, who has urged him to increase military spending to 2.5 per cent of GDP in the budget. He joins other senior Tories, including former prime minister Sir John Major, who believe the UK needs to ramp up support for the armed forces as war rages on the edge of Europe and tensions rise in the Middle East. Mr Hunt is expected to resist those calls, however, after his fiscal “headroom”, the amount he theoretically has to spend, fell. More