UK Politics

Sign up for the View from Westminster email for expert analysis straight to your inboxGet our free View from Westminster emailRishi Sunak has been warned that falling mortgage rates will not boost his electoral hopes as 1.3million households face higher payments before the general election.The PM had hoped a better economic outlook and falling rates would provide a boost in time for an autumn election, saying “2024 is going to be a better year”.But House of Commons research, commissioned by the Lib Dems and seen by The Independent, reveals 1.3 million fixed-rate mortgage deals will expire before Britons go to the polls for an election expected in October.And, after the PM was accused of “bottling” a May contest, the figures showed an additional 600,000 families will face mortgage hikes before the election.Economists, mortgage brokers and pollsters have now warned the PM that voters heading to the polls will decide based on “how they feel in their pockets, not what the stats say about the economy”.And they have said that while it is positive mortgage rates are falling, voters can only expect to be made “slightly less poor than they would have”.The prime minister has been warned falling mortgage rates will not boost the Tories’ chances at a general election At the beginning of 2022, an average two-year fixed-rate mortgage carried 2.38 per cent interest.At the beginning of this year, that had risen to 5.93 per cent, meaning monthly repayments would be £395 higher, according to data from Moneyfacts.While that is £116 less than the payments homeowners would have faced when mortgage rates spiked after Liz Truss’s mini-budget, it could still add close to £5,000 to a household’s annual bills.For the same household renewing a five-year deal, they would still face a £291 monthly increase.Pollster Luke Tryl, UK director at More in Common, told The Independent the “key point” is that the public decide their vote on how they feel, not “what the stats say about the economy, inflation or interest rates”.“The reality for most people isn’t that they’ll be paying less, but instead they still be paying more and seeing a bigger part of their pay package going on mortgage and other interest payments,” he said.Mr Tryl added: “Saying to people ‘but you could have been paying even more’ isn’t a very compelling electoral argument.”And the Liberal Democrats, who commissioned the House of Commons research, said it showed more households face “mortgage misery” the longer Mr Sunak waits to call an election. The Institute of Fiscal Studies said that while those re-mortgaging now will get a better deal than a few weeks ago, “they will still face a sharp hike in costs when rolling off a fixed rate”.Senior research economist David Sturrock told The Independent: “That’s because the interest rates they face are still well above those two to five years ago.”He said monthly repayments based on interest rates of 5 per cent would be £119 less than at 6 per cent, but still £221 more than the 3 per cent interest rates typically seen two years ago.Simon Pittaway, Senior Economist at the Resolution Foundation, told The Independent that mortgage rates spiked during Trussonomics under Mr Sunak’s predecessor. They peaked last year amid a slew of Bank of England interest rate hikes.And Mr Pittaway said that while mortgage rates falling is good news, “households having to re-mortgage this year should be under no illusions that they’ll be getting a cheaper deal”.The New Economics Foundation think tank said households renewing fixed-term mortgages this year will still face “far higher” bills than they would have been paying.“Although mortgage rates are falling slightly, they are still much higher than they were for many years prior to the disastrous Truss mini-budget just over two years ago,” he said.Mr Sunak ruled out a spring vote and raised the prospect of a lengthy and bitter campaign on Thursday when he confirmed it was his “working assumption” that he would call the election in the second half of the year.Conservative polling guru Robert Hayward told The Independent that the PM was “wise” to wait in the hope of an economic revival.The Tory peer thinks the “general perception” of the Tories could improve because of the slightly rosier outlook for first-time buyers. “The longer you can put between the Truss period and the election the better for the government,” Lord Hayward said.The Tories would need a major rebound to catch Labour in the polls, with Sir Keir’s party commanding a 19-point lead. It is the biggest lead a year out from an election for any party since Sir Tony Blair’s landslide 1997 win.And mortgage broker Lewis Shaw, of Shaw Financial Services, told The Independent: “The notion that the electorate will celebrate with glee at being made slightly less poor than they would have is for the birds.“That’s akin to only getting whipped twice a day rather than the normal three. The current government has directly and consciously contributed to the crisis millions of households are facing and the crisis millions are already in.”Labour piled on the pressure over rising mortgage bills Liberal Democrat Treasury spokesman Sarah Olney warned the longer Mr Sunak waits to call an election, the more families will face “mortgage misery”. “People are seeing their monthly mortgage payments go up by hundreds of pounds a month, while the government is bogged down in endless chaos and infighting,” she said.Labour’s Shadow Chief Secretary to the Treasury, Darren Jones MP, said: “Interest rates beginning to fall is good news but the 197,000 homeowners coming off fixed rate mortgages this month alone will still experience huge hikes in their monthly payments, which are typically set to increase by £240.”Darryl Dhoffer of The Mortgage Expert said: “The Tories are trying to paint falling rates as a victory lap, but for many mortgage holders, it’s more like a sucker punch disguised as a glove tap.“My clients who locked in at historically low rates three years ago are now staring at a doubling of their monthly payments. Falling rates won’t help them dodge that uppercut.”Craig Fish, managing director of the brokerage Lodestone, told The Independent: “People are now, or soon will be, paying more than ever for their mortgages and daily expenses, leaving a bitter taste that only a change in government seems likely to remedy.”A Treasury spokesman said: “Interest rates are high across the developed world as economies work to tackle high inflation and the UK is no different. But now inflation has halved, the economy is turning a corner – starting with tax cuts for 27 million people this month, saving the average earner £450 a year.“We are also supporting households worth £3,700 between 2022 and 2025 and our Mortgage Charter can make it easier for people to manage monthly repayments and gives extra protections against repossessions.” More

Rishi Sunak denied that he had significant doubts about the Government’s Rwanda bill after leaked No 10 documents revealed his uncertainty.He appeared on Sunday with Laura Kuenssberg on BBC One on Sunday, 7 January.When asked to admit the doubts by Mrs Kuenssberg, he said: “No. I haven’t seen these documents so I can’t comment on them specifically but I discussed it with the prime minister and ultimately funded the plans and the scheme.The documents revealed the Prime Minister’s doubts back in 2022, where he questioned whether it would actually stop boats crossing, and if it was value for money. More

Sign up for the View from Westminster email for expert analysis straight to your inboxGet our free View from Westminster emailThe UK is to launch a £300 million drive to push Vladimir Putin further out of the global energy market though an investment in high-tech nuclear fuel. Ministers will vow to end what they say is Russia’s reign as the only commercial producer of a type of enriched uranium needed for the next generation of reactors. It comes as the world prepares for the second anniversary of Russia’s invasion of Ukraine next month. The UK has warned Russia that if casualties continue at their current rate it will have lost over half a million personnel in the conflict by the end of 2024.The war also triggered a shock in the world’s energy markets leading the government to rethink Britain’s energy security.Energy secretary Claire Coutinho said ministers would not allow Putin to “hold us to ransom on nuclear fuel. “Britain gave the world its first operational nuclear power plant, and now we will be the first nation in Europe outside of Russia to produce advanced nuclear fuel,” she said. “This will be critical for energy security at home and abroad and builds on Britain’s historic competitive advantages.” The government says the plans will help build new supplies of affordable and clean domestic power. It will involve a £300 million investment in high-assay low enriched uranium (HALEU).The programme will provide jobs and investment in the north west of England, as part of plans to deliver quarter of the UK’s electricity needs through nuclear power by 2050. Another £10 million will be used to develop the skills and sites needed to produce other advanced nuclear fuels in the UK.Ministers argue the move will help mean the transition to ‘net zero’ does not mean higher prices for consumers. The UK has agreed with other G7 nuclear partners to reduce global dependence on Russian fuel. On Saturday the Ministry of Defence (MoD) said that the average daily number of Russian casualties in Ukraine rose by almost 300 during the course of last year. “If the numbers continue at the current rate over the next year, Russia will have lost over half a million personnel in Ukraine,” it added. More

Sign up for the View from Westminster email for expert analysis straight to your inboxGet our free View from Westminster emailRishi Sunak has warned he will curb benefits and government spending to help fund tax cuts.In a new interview, the prime minister said his priority was cutting taxes, but that would result in “difficult decisions” having to be made on public spending, without going into specifics. His comments came after he revealed earlier this week he was aiming for an election in the second half of this year, having ruled out going to the polls in 2025. Rishi Sunak has said he will cut benefits and government spending to fund tax cutsThe prime minister told The Sunday Telegraph: “When I say that I want to keep cutting taxes, that’s what we’re going to deliver. We’re going to do that responsibly. That requires difficult decisions on public spending. It requires difficult decisions to control welfare. Those, I believe, are the right things to do for our country. “I want to control public spending, I want to control welfare, which we’re doing and because we’re doing that, and because we’re being disciplined with borrowing and our debt, we’re going to be in a position to cut taxes.“I want to keep cutting people’s taxes. There’s no way we can do that unless we restrain the growth in the public sector and government spending.”Sir Kier Starmer is currently on course to win power, commanding an 18-point leadThe Tories used last year’s autumn statement to unveil a two per cent cut to National Insurance in a bid to boost the party’s fortunes, which chancellor Jeremy Hunt said will save the average worker £450 a year. The cut came into effect from Saturday but changes to other taxes, including the freezing of tax thresholds under Mr Sunak as chancellor, mean the tax burden facing households is still rising.The Resolution Foundation has said anybody earning under £26,000 will be worse off, with the tax cut benefiting those earning £50,000 a year the most. The Institute for Fiscal Studies (IFS) has said a worker earning the average salary of £35,000 would be £440 worse off by 2028 and overall, the tax burden is still on course to be the highest since the Second World War.Mr Sunak is reportedly considering scrapping inheritance tax in the March Budget, as he scrambles to appeal to voters ahead of next year’s general election. Opinion polls have for two years consistently given Labour a double-digit lead over the Conservatives, who have churned through three prime ministers in 18 months amid a stuttering economy and frequent scandals. More

Get the free Morning Headlines email for news from our reporters across the worldSign up to our free Morning Headlines emailJeremy Hunt is under fire as it emerged that his key Budget promise to expand free childcare in 2024 is fast unravelling amid “chaos” over funding arrangements.The chancellor had announced a major extension of free care for this spring in a bid to win back voters – but experts say the sector has not been given enough cash or support to deliver his pledge.With the Tories hoping for a boost in the run-up to this year’s general election, eligible working parents of two-year-olds have been told they can claim 15 hours a week of free childcare from 1 April.However, council bosses have warned that the funding will not be in place for nurseries by then – with cash-strapped providers facing a “huge crisis” over the number of children places they can offer.Experts say many families could miss out at the last minute – with some parents telling The Independent they have already been told by their local nursery they cannot offer Mr Hunt’s flagship policy.Critics laid the blame squarely on Rishi Sunak’s government – saying Mr Hunt and fellow ministers had not backed up their “ill-thought-out” policy with enough financial support.Chancellor Jeremy Hunt during a visit to Busy Bees Battersea Nursery in south LondonLabour shadow children’s minister Helen Hayes said the Tories’ childcare offer to voters in the election year has fallen at the first hurdle.The frontbencher said the government had squeezed the timeline for funding confirmation, adding: “By failing to plan for delivery, their promises on childcare have been set up to fail.”The Liberal Democrats said there was a huge crisis looming – with the prospect of some nurseries collapsing – unless the government comes forward with proper funding guarantees.The party’s education spokesperson Munira Wilson said: “How does this government expect to roll out expansion of childcare when the amount they invest in childcare services is a fraction of what’s needed?” The Department for Education (DfE) says local authorities have until the end of March to confirm how much they will pay nurseries for extra places.But childcare under the programme is set to begin on 1 April – meaning many parents may not receive confirmation about a place until weeks after they want to start.Rishi Sunak and Jeremy Hunt are under pressure to deliver wider free childcare before an election expected later in 2024 One expert said parents may even be forced to abandon their returns to work at the last minute if do not get the free childcare they expect.Neil Leitch, chief executive of the Early Years Alliance, said: “This chaos is the fault of the government. The government introduced this new childcare system, they are responsible for funding it. It is an ill-thought-out policy.”Louise Gittins, chair of the Local Government Association’s children and young people board, said: “Unfortunately, information for local authorities and providers has only recently been made available by central government, and this means they are having to work within a challenging timeframe to ensure arrangements are in place to expand before the start of the April rollout.”A mother-of-one living in Northamptonshire told The Independent her local nursery has just warned parents they will not be offering Mr Hunt’s flagship policy and will stop providing the funded places for three-year-olds they previously offered.The Independent recently revealed thousands of nurseries had been forced to close their doors amid staff shortages and a lack of funding, sparking warnings that Mr Hunt’s Budget pledge to offer 30 hours of free childcare for under-fives from 2025 was doomed to failure.A lot of people are pinning their hopes upon this materialising. I don’t think the government have grasped the danger of making false promises to parents who can’t keep their head above water. Sarah RonanThe Early Years Alliance said eligible parents who apply for the scheme through the government website will be given a code to take to a childcare provider who will then notify them if they have spaces available.Mr Leitch said: “You may qualify for your entitlement but that does not guarantee you a place. It is a huge assumption that you would automatically be given a place. If you are, it may not be the hours you are looking for.“Alternatively, you could be placed on a waiting list until a space becomes available. This code is then useless – it is a bit like telling someone you can have this free food in a supermarket but then seeing empty shelves when you arrive.”Mr Leitch, whose organisation represents nurseries, preschools and registered childminders among others, said they have encountered parents who have been on waiting lists for 18 months.“Waiting lists are likely to grow and grow,” he added. “Parents desperate to return to work will have to abandon their plans and take stock of what to do next. Even if providers have the funding for spaces, the fact is that they may well be struggling to recruit adequate people.”Mr Leitch argued that Mr Hunt’s new measures are an example of “announce first and do the thinking afterwards”.The expert noted the childcare sector is already struggling to provide the 30 hours of free childcare per week in term time for three- and four-year-olds in England that was rolled out by ministers in 2017.Mr Sunak and education secretary Gillian Keegan visit Busy Bees nursery in Harrogate Lauren Ellis, a teacher, said her “fantastic” local nursery has been pushed into a position where they can no longer offer any funded places.“It is a nationwide issue,” the 35-year-old said. “It is not their fault. If the funding had come in, it would have halved my childcare costs. It is another government promise which looks great on the face of it and is a great headline. It looks great going to an election but it is completely flawed. There is a lot of confusion among parents and they can’t plan ahead or plan for other children.”Ms Ellis said her mortgage had shot up to an extortionate rate for their small two-bedroom house, and childcare was their second highest outgoing.“We have cut down on holidays,” she added. “We now have no chance of going abroad. Buying new cars – no chance. Also on takeaways and our own clothes shopping.”Sarah Ronan, director of the Early Education and Childcare Coalition, said she has spoken to parents who are delaying having children until the new offer is rolled out.“A lot of people are pinning their hopes upon this materialising,” Ms Ronan added. “I don’t think the government have grasped the danger of making false promises to parents who can’t keep their head above water.”If the funding had come in, it would have halved my childcare costs. It is another government promise which looks great on the face of it and is a great headline. It looks great going to an election but it is completely flawed. Lauren EllisShe urged local authorities to tell providers rates for the new free-hours policy as quickly as possible – explaining services will remain unsure if they can deliver the scheme and how many places they have available until they know the rate.Ms Ronan added: “The government has run this sector into the ground. The government has knowingly underfunded the sector.”Recent figures from the schools’ inspectorate Ofsted revealed that 3,320 of the 62,300 nurseries and childminders caring for under-fives in England had shut their doors in the past year alone, leaving 17,800 fewer childcare places available.The number of nurseries and early years services for under-fives has plummeted by a quarter in recent years, from 84,970 in 2015-2016 to 63,207 in 2022-2023.Meanwhile, the Confederation of British Industry has estimated that implementing the government’s expanded childcare plans will cost £8.9bn rather than the £4bn ministers have allocated to fund the increase in places.Responding for the government, a DfE spokesperson said: “We are rolling out the single biggest investment in childcare in England ever, and are confident in the strength of our childcare market to deliver 30 free hours of childcare for working parents from nine months old up to when they start school.“Our data shows the number of early years staff and places increased in 2023 – but we know there is more to be done. That’s why we are investing hundreds of millions of pounds to increase hourly funding rates and have allocated £100m in capital funding for more early years and wraparound places and spaces.”They added: “We published our 2024-25 hourly funding rates in November and encourage local authorities to update providers on initial budgets as early as possible ahead of the first phase of the rollout in April.” More

Sign up for the View from Westminster email for expert analysis straight to your inboxGet our free View from Westminster emailRishi Sunak faces a growing battle over his flagship Rwanda legislation after his former immigration minister threatened to lead a parliamentary revolt to try to toughen the bill. Robert Jenrick warned that if the prime minister did not strengthen the new emergency laws then he would lay amendments next week to ensure they were “sufficiently robust”.Mr Jenrick dramatically quit the government last month saying the Rwanda legislation would not work – just hours after former home secretary Suella Braverman told Mr Sunak he faced electoral ‘oblivion’ over the issue.Mr Jenrick revealed his plan to Sky News as Mr Sunak was accused of “conning” the public over the controversial Rwanda deal after leaked documents suggested he harboured significant doubts about the scheme – and argued for it to be scaled back – while he was chancellor. Mr Sunak was unsure the plan to deport asylum seekers would achieve its ultimate goal, to deter channel crossings, a month before it was unveiled by then prime minster Boris Johnson. He was concerned about the cost of sending asylum seekers to the Africa country and wanted to limit the numbers, according to the documents seen by the BBC The prime minister faces a battle this month to get new emergency legislation through the Commons, after the Supreme Court ruled his Rwanda plan unlawful. Losing the vote could imperil the future of the scheme and even Mr Sunak’s leadership, as Tory MPs pile pressure on Mr Sunak to fulfil his pledge to voters to stop the boat ahead of a looming general election. Mr Sunak committed to keeping the Rwanda plan as he fought to win the leadership contest to replace Mr Johnson as Tory leader. Asked about the leaked reports, Mr Jenrick told Sky News: “I know the prime minister very well and I believe that he does see the urgent need to control our borders to get the Rwanda plan up and running – because that’s such a critical element to stopping the small boat crossings.”But it is important that we get that right.”And as I said last year, I don’t think that the bill that’s going through parliament is sufficient – if we say we’re going to do whatever it takes, we have to do whatever it takes and that means strengthening that bill.”I hope that he will strengthen the bill that’s coming through parliament.” He added: “And I’ve been very clear that if he doesn’t do that, then I will lay amendments to the bill next week to make sure that it is the piece of legislation that is necessary that is sufficiently robust to do the job that the British public expect.” Shadow home secretary Yvette Cooper said the papers shows the Rwanda plan was a “total con” and “how incredibly weak Rishi Sunak is”.“He knew costs were extortionate (and) resisted as Chancellor. But he’s now so weak he’s writing £400m cheques to Rwanda for no one to be sent,” she said.She accused the government of “continually going for gimmicks rather than ever getting a grip.”When he was chancellor Mr Sunak wanted to reduce the numbers the scheme would send to Rwanda, from 1,500 in the first year to 500, and from 5,000 to 3,000 in the two years after that, according to the documents seen by the BBC. He is also described as believing the “deterrent won’t work” and that he felt “hotels are cheaper” than reception centres to house migrants. In a sign of the tactics used over the Rwanda policy No 10 suggested Mr Sunak should be told to consider his “popularity with the base” if he was reluctant to sign up. David Campbell Bannerman, the chair of the Conservative Democratic Organisation, questioned if Mr Sunak had sought to “sabotage” the Rwanda plan “right from the start?” “These papers suggest Treasury undermined plan by cutting resources for it,” he tweeted. A government source said: that as Chancellor, Mr Sunak had funded the Rwanda scheme and then went on to “put it at the heart of his 10-point plan the month after becoming PM”. More

Sign up for the View from Westminster email for expert analysis straight to your inboxGet our free View from Westminster emailJeremy Hunt has said buying a first home in Britain today is a “real struggle” after the boss of NatWest claimed it was “not that difficult”. Sir Howard Davies said that people would “have to save more”, but suggested the system had simply reverted to how it “used” to be. Housing campaigners criticised his claim while shadow chancellor Rachel Reeves branded Sir Howard “out of touch”.Asked about the comment, Mr Hunt pointed to much higher mortgages rates compared to 18 months ago. “We know that makes it a real struggle for people trying to buy their first home,” he said. He insisted the way to deal with the problem was to continue to focus on cutting inflation. Defending his comments, Sir Howard said: “You have to save and that is the way it always used to be.”But he later sought to clarify his remarks, saying his claim was meant to reflect easier mortgage access.He said: “Given recent rate movements by lenders there are some early green shoots in mortgage pricing and while funding remains strong, my comment was meant to reflect that in this context access to mortgages is less difficult than it has been.“I fully realise it did not come across in that way for listeners and as I said on the programme, I do recognise how difficult it is for people buying a home and I did not intend to underplay the serious challenges they face.”Mr Hunt made his comments in an interview on the BBC’s Today programme designed to highlight his National Insurance cut, announced in the Autumn Statement, which comes into effect today. He also again hinted at cutting taxes in the Budget, if the economic picture allows. Asked about is comment that inheritance tax is “pernicious” he said: “I think lots of taxes are pernicious”. And he urged the public “don’t bet against the British economy – we have actually done far better than everyone said”. Despite the struggles of recent years “we can now look forward to things getting better”, he added. The chancellor also said he “profoundly” disagrees with Chris Skidmore after the former net zero tsar announced he was quitting the Conservatives and Parliament over the Government’s stance on oil and gas .Mr Hunt said: “It is very sad to lose a respected colleague like Chris Skidmore, so I should start by saying that – I worked closely with him when I became Chancellor on climate change issues.”But I do profoundly disagree with the reasons that he gave for resigning.”The independent panel for climate change (the Climate Change Committee) that we have in this country are very clear that even when we reach net zero in 2050, we will still get a significant proportion of our energy from fossil fuels. And domestic oil and gas is four times cleaner than imported oil and gas.”Asked whether he viewed Mr Skidmore as a “rat leaving a sinking ship”, Mr Hunt said: “No, I think he is just wrong on that issue. He feels very passionate about that… But the point is, I think he is wrong on North Sea oil and gas.”When you have the problems in the Red Sea (with international cargo ships being attacked by Iran-backed Houthi rebels), it is very important for energy security that we have domestic sources of that kind of energy as we go into transition.” More

Sign up for the View from Westminster email for expert analysis straight to your inboxGet our free View from Westminster emailRishi Sunak was unsure the government’s scheme to send migrants to Rwanda would stop channel crossings when he was chancellor, according to documents.The BBC said it had seen No 10 papers from March 2022, a month before the plan was announced by then prime minister Boris Johnson, which showed that Mr Sunak was not convinced of the plan’s effectiveness.Mr Sunak, who became prime minister in October 2022, has made the Rwanda plan one of his top priorities despite a string of delays due to legal challenges.The documents suggest Mr Sunak felt “hotels are cheaper” than reception centres to house migrants and that he was also concerned about the cost of sending asylum seekers to Africa and wanted to limit the numbers.The BBC said the documents revealed the “chancellor wants to pursue smaller volumes initially” with 500 flown to Rwanda in the first year of the scheme, instead of the proposed 1,500.They say he then proposed “3,000 instead of 5,000 in years two and three”.He is described as believing the “deterrent won’t work”.The documents, which say No 10 suggested Mr Sunak needed to “consider his popularity with the base” over the Rwanda plan, said the then chancellor was reluctant to fund “Greek-style reception centres” at a cost of £3.5 million a day to house migrants in favour of hotels.Mr Sunak has pledged to continue with the plan for migrant flights to Rwanda, despite a ruling by the UK Supreme Court that it was unlawful, while the BBC said a source close to the prime minister said he was “always fully behind the principle of the scheme” but need to ensure money was “appropriately spent” in his role as chancellor.Shadow home secretary Yvette Cooper told the BBC: “The prime minister knew the plan was incredibly costly and wouldn’t work, and resisted it while he was chancellor.“But he is so weak he has now agreed to write cheques to Rwanda for £400 million without sending a single person there in a desperate attempt to shore up his leadership.”Mr Sunak reiterated his support for the Rwanda plan on Tuesday, saying: “I am focused on delivering on my commitment to stop the boats and get flights off the ground to Rwanda.” More