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Children and young people face becoming a lost generation due to rising education inequality, high taxes and climbing house prices, leading economists have warned.Analysis shows that, despite spending touted in Rishi Sunak’s Budget on education and childcare, those in further education over the next three years will face funding that is still 10 per cent lower than it was in 2010.Tax hikes introduced by the chancellor will also disproportionately hit younger people as they target work over wealth. Cohorts entering the jobs market will also face stagnant pay packets, with wages which are 40 per cent lower than predicted before the financial crash of 2008. They face the highest tax burden as a percentage of GDP since 1950 by 2026, equivalent to £3,000 per household even as inflation may reach 5 per cent next year.Kate Green, the shadow education secretary, told The Independent: “The chancellor has got the wrong priorities and young people are paying the price for it.“This is a Budget that will leave millions of families on lower incomes worse off, fails to match the scale of the education recovery challenge with the funding the government’s own catch-up commissioner Sir Kevan Collins said was needed, and still leaves sixth forms and colleges with less funding than they had more than a decade ago,” she added.Weak pay growth comes as younger people also face higher property prices. According to the Office for National Statistics the average UK house price was £25,000 higher in August than a year earlier, at a time of low interest rates and after the government cut stamp duty – a move widely criticised for further inflating the market.Economists said Mr Sunak had chosen to back measures that would have less of an impact on elder generations rather than those that would hit all ages equally.“In the autumn 2021 Budget, it’s notable that extra public spending is concentrated on health and social care for older people,” said Lord Willetts, president of the Resolution Foundation’s Intergenerational Centre.“We do have an obligation to older generations, but we need to do more for younger people as well,” he added.Funding for sixth form colleges will still be 10 per cent lower in real terms than in 2009-10 by 2024, when accounting for inflation, even as evidence suggests starkly deepening educational gaps between children and young people from wealthier and poorer backgrounds.Overall, the total allocation for schools’ Covid recovery in the budget amounted to £4.9bn. This was less than a third of the total requested by former government education tsar Sir Kevan, who resigned his post in June over dissatisfaction with the catch-up funding offered by the Treasury.In response to the Budget, the education expert wrote in The Times, that it was a “surrender” in the effort to recover lost learning. “The short-term saving offered by a limited recovery programme will be dwarfed by the long-term cost of successive cohorts leaving education with lower skills, an effect that will be most apparent in our poorest communities,” Sir Kevan added. The Budget “represents a false economy and a step towards a less equal society”.Older students were particularly poorly catered for in the budget, according to the IFS.“Spending per student in further education and sixth form colleges will remain well below 2010 levels. This is not a set of priorities which looks consistent with a long-term growth strategy,” director Paul Johnson said.Younger people were also hit harder than elders with higher taxation, despite the new health and social care levy, which aims to raise £12bn per year to address the pressures of an ageing population.“Both NICS [the health and social care levy] and changes to the personal allowance and higher rate threshold will affect younger people who are working rather than pensioners who are out of work,” said Xiaowei Xu, a senior research economist at the IFS. “The chancellor could have chosen to raise something like council tax that would have linked to homeowners and therefore linked to pensioners as well,” she added.While there was a clear need to increase funding for the NHS and social care, the chancellor needed to reconsider how much support he was offering younger people, economists said.The announcement of the increases to national insurance contributions, which will become a health and social care levy, came several weeks ahead of the Budget. The major tax increase was criticised at the time as being a tax on the working age population, rather than those most likely to be using social care services for age-related needs.The Budget was also criticised for falling short on childcare provisions. It also offered an increase in benefits only to those universal credit recipients who can work, as opposed to those who may need to care for their children full time. Children in those households will be, in relative terms, worse off even after changes to the national living wage and the universal credit taper.Shadow chancellor Rachel Reeves described the Budget as “hammering working people, while giving banks a tax cut”.“The Tories have no plan to tackle the cost-of-living crisis, no plan to shift the unfair taxes they’ve hit working people with and no plan for growth,” she said.Low interest rates have also fuelled higher asset prices in recent years, making it harder for younger workers to get on the housing ladder. “We have a continued period of significantly negative real interest rates, probably therefore continued high levels of asset prices and very poor levels of earnings growth, all of which tends to favour those who are older and wealthier relative to those who are younger and less wealthy,” Mr Johnson said.A Treasury spokesperson, said: “This Budget means billions of pounds to deliver the priorities of the British people by investing in stronger public services, including our education system, levelling up opportunity, driving business growth and helping working families with the cost of living.“It makes work pay by cutting the universal credit taper rate from 63p to 55p, and raising the national living wage by 6.6 per cent to £9.50 an hour in April 2022, which the Low Pay Commission estimate will benefit 2 million workers. And we ensured our action to fund health and social care announced in September applied fairly across generations by extending the health and social care levy to apply to those working over state pension age.” More

Wednesday’s autumn Budget is set against a backdrop of economic uncertainty, thanks to the lasting impact of the coronavirus pandemic. The Treasury has sought to build days of positive coverage of giveaways in the days before the chancellor, Rishi Sunak, gets to his feet in the House of Commons. Here’s the headline pledges so far with a sense of what they may mean in practice.Public sector payWhat’s new? On Monday the Treasury confirmed, as widely trailed, that it would be thawing the public sector pay freeze. The justification used for the freeze had been that private sector wages were fragile, dampened by employer’s nervousness due to Covid-19 restrictions. Now, the economy has opened up and the cost of living is climbing sharply. With even private sector pay growth struggling to keep pace with inflation, the argument to hold firm on public sector pay has become too hard to defend. Still, it’s not clear exactly what the settlement will look like and how it will measure up against rising inflation.This price growth, as measured by the Consumer Price Index could reach as high as 5 per cent early next year, the Bank of England’s chief economist has said. The small print: However, business minister Paul Scully avoided saying in interviews on Tuesday whether or not the pay rise would match the increased cost of living.He said on Sky News that it “could be anything”, and that the exact figure would be determined after reports from pay review bodies, next April. So, the government has not ruled out a real terms cut in pay: if pay doesn’t rise by more than the growth in prices.The bottom line: A real terms cut could increase the risk of industrial action among public sector workers.Minimum wageWhat’s new? The Chancellor will accept a recommendation from the Low Pay Commission to increase the National Living wage to £9.50 an hour from £8.91 from next April for workers aged 23 and over. The small print: However, it is important to compare what’s happening to the lowest earners in the UK in pre- and post-tax terms and what the impact will be for those people on Universal Credit. Before tax, a full-time worker on the minimum wage will now earn £1,074 more a year from next April. But there’s a ‘taper’ for those people on Universal Credit, so for every £1 earned above a threshold for the benefit, a worker loses 63p. If that effect is combined with the increase in taxes, particularly national insurance contributions planned from April next year, the £1,074 increase then drops to around £260 per year after tax. (This assumes the increase is above the earnings allowance for someone in receipt of Universal Credit).That’s compared to being around £1,000 per year worse off if you receive Universal Credit after the government scrapped a £20 per week uplift introduced amid the pandemic. There are also lots of Universal Credit recipients, around one in five according to government figures, who cannot work. They will therefore not see their lot improved by an increase in the minimum wage. The bottom line: This increase in the minimum wages means there are fewer low paid workers in the UK, part of a long-term trend if you compare hourly rates of pay over time. However, this does not address the concern that benefits are too low for those who are out of work, unable to work enough hours or who are unable to work at all. The basic rates of benefits are at their lowest level since 1990, according to Torsten Bell, chief executive of the Resolution Foundation think tank.NHS fundingWhat’s new? There will an additional £5.9 billion allocated to the NHS in the Budget. This is on top of the £12 billion expected to be raised from what will become the Health and Social Care Levy. This money is for physical infrastructure and other long-term spending such as new equipment. That means it is technically investment, rather than so-called day-to-day spending. The small print: It’s not going to be spent on costs such as near-term staff recruitment. That means it will not fix the huge backlog of delayed care due to the pandemic, which has been linked to chronic staff shortages across the health services, as NHS trusts across the country report challenges in hiring specialist workers.The bottom line: Along with the need to have MRI and Ultrasound machines is the need to have staff to operate them. That, and when scans and tests are completed, many surgeries will require intensive care treatment afterwards, a challenge if there are not enough specialist ICU nurses or too little space due to Covid-19 patients.What’s new? The government has topped up a pledge on transport to increase funding for trams, trains, buses and cycleways. The small print: Only a small share of this cash is, in fact, new money. The Chancellor’s £7bn pre-Budget pledge for new transport projects contains only £1.5bn of additional funding.The bottom line: It does not look like HS2 is set to deliver what was promised. The Independent revealed earlier this week that the eastern leg of the project is set to be scaled back. The high-speed trains will therefore have to slow down to run on old tracks between Yorkshire and the Midlands.Other announcements: Health research: £5 billion for research into healthcare including into genomic testing, cancer and obesity.Housing: £1.8 billion to build new homes on brownfield sitesEducation: £2.6 billion over three years for education for children with special needs and disabilities Childcare: £500m for childcare projects including family hubs, which Labour have criticised as similar but less ambitious than Sure Start centers, which were closed as a result Conservative spending cuts closed. More

Economists and the head of the UK’s energy regulator have thrown doubt on Boris Johnson’s assertion that inflation fears are “unfounded”. The prime minister played down concerns about price rises and the cost of living in a range of TV interviews on Tuesday, the day before univeral credit – a major pillar of the social benefits system – is due to be cut by £20 per week. His remarks came as gas prices breached £3 per therm in the UK for the first time, while also climbing across Europe. Tuesday’s rise now means prices have tripled in the last two months and broader measures of the cost of living are also rising sharply.  Consumer prices rose 3 per cent in the 12 months to August, while the Bank of England expects inflation to reach 4 per cent by the end of the year, potentially outstripping what experts at the Office for National Statistics (ONS) believe is the best guess at true pay growth of between 3.2-4.4 per cent.The prime minister told Sky News that supply pressures and rising costs were symptomatic of the global economy “coming back to life very rapidly” after the Covid-19 pandemic.“People have been worrying about inflation for a very long time, I am looking at robust economic growth, and by the way, those fears have been unfounded,” he said, adding: “Supply will meet demand.” However, his remarks flew in the face of analysis from economists across the political spectrum, and the head of the UK’s energy regulator, Ofgem. Chief among concerns shared by economists and interest rate setter the Bank of England is that prices are rising while economic growth shows some signs of stalling. Measures of wage growth which appear to show an uptick in pay, and which the prime minister has repeatedly used to justify a hard line of immigration post-Brexit, have been distorted by the pandemic, according to independent experts at the ONS. They argue that they do not show wage growth which is as robust as the prime minister’s choice use of some figures suggests. This paints a falsely positive picture due to the slump in pay earlier in the pandemic and limits on how to measure pay rolls amid furlough and sudden lockdowns.“The public policy discussion this week has lost all touch with reality,” tweeted Torsten Bell, head of think tank the Resolution Foundation. This was because while wages in a few sectors had risen, price rises were taking hold across the economic spectrum, creating a cost-of-living squeeze, he added. Meanwhile Ofgem’s chief executive told the Scottish parliament that soaring natural gas prices will be “pretty difficult” for customers to contend with. The effect would last through this winter and beyond, he told MSPs.Energy bills for 15 million households were set to increase by at least £139 under the price cap introduced at the start of October, as suppliers grapple with soaring wholesale prices following the collapse of many smaller firms. For those consumers on prepayment meters, average prices will rise by £153.Natural gas prices have climbed sharply this year, adding to pressure on energy suppliers who may not have hedged their entire portfolio of customers, by locking in fuel prices ahead of time and forcing some out of business.Ofgem’s CEO, Jonathan Brearley, told Holyrood’s energy committee that “unprecedented changes” in the gas prices “were putting strain on the wholesale market”, but he argued that the price cap was still offering customers good value for money.Mr Brearley added that “a series of factors internationally” were “constraining supply”. He said: “It looks like there is little over and above long-term contracts coming from Russia and equally there are some issues with some of the liquefied natural gas (LNG) terminals – all of which means supply is constrained and demand is higher than you’d expect.“In terms of duration, it is very, very hard to tell and our view is we need to be open-minded about how long it might last, and for a range of scenarios.”Meanwhile hopes among some analysts that Russia might increase its gas supply to Europe in order to ease the pressures on supply going into winter, at a time of depleted reserves in the UK and continental Europe, appeared misplaced.Russian leader Vladimir Putin said that the supply crunch in Europe and beyond was the result of “unbalanced decisions” and “drastic steps” in order to reduce carbon dioxide emissions, according to a report by the Reuters news agency. “You see what is happening in Europe. There is hysteria and some confusion in the markets. Why? Because no one is taking it seriously,” he said.“Some people are speculating on climate change issues, some people are underestimating some things, some are starting to cut back on investments in the extractive industries. There needs to be a smooth transition.” More

Washington is celebrating the UK’s effort to push a Chinese company out of a sensitive nuclear power project, according to people familiar with US engagement on the issue. The US, long an opponent of the UK’s energy ties with China, considers London’s plans to require Chinese energy giant, CGN to give up its 20 per cent stake in the Sizewell C nuclear plant in Suffolk a long-fought-for diplomatic win. The British government’s discomfort with China’s grip on its energy sector has grown in recent months. Meanwhile, the Biden administration launched a fresh drive to protect energy infrastructure from attacks, including cyberattacks, earlier this year. This plan was created specifically with adversaries Russia and China, and their cyber-hostility in mind, according to a person briefed on the plan.It comes as the UK has sought to further cement its close security ties with Washington, via the tripartite nuclear submarine deal with the US and Australia termed ‘Aukus’ in recent weeks. The agreement is part of the wider effort to “preserve security and stability in the Indo-Pacific,” prime minister Boris Johnson said in a statement earlier this month which avoided a direct reference to China. The US has also been examining the energy security of its NATO allies, and their respective dependence on China and Russia. Now, an effort to take control of the CGN stake by the British government is viewed as a pay-off for Washington, after it lobbied London over China’s ties to Britain’s sensitive nuclear energy infrastructure.“It’s a win for sure, for the US, and for the UK. Serious threats posed by some countries to energy security seem to be getting the right attention,” one of the same people familiar with US energy security policy said.Britain is weighing taking hold of CGN’s 20 per cent stake in the £20 billion Sizewell C nuclear plant project. The government may then sell the stake to institutional investors, or float it on the stock market, according to a person familiar with the government’s thinking. EDF, which holds the remaining share of the Sizewell project and Hinkley point C, declined to comment. CGN did not respond to a request for comment.There is no official figure which captures the full extent of Chinese ownership of British assets within the energy sector, in part because it is hard to determine the extent of the regime’s use of intermediaries. However, China’s hold over a range of parts of the UK’s energy infrastructure is considerable. The Chinese state holds an interest in UK gas distributor, Cadent Gas, via its sovereign wealth fund after the Chinese Investment Corporation led a consortium to buy the network from National Grid. State-backed Chinese companies also own stakes in British oil and gas companies, and renewable energy sites, including windfarms.CGN is also involved in building the Hinkley Point C site in Somerset alongwith French energy company EDF, offering nearly a third of the investment in the site. Washington was troubled by both the Sizewell and Hinkley projects, but most concerned about plans for a plant in Bradwell-on-Sea in Essex which could use China’s own nuclear reactor technology, rather than following more familiar European technology. The same people familiar with US energy engagement expect China to be cut from the Bradwell-on-Sea project. A government spokesperson said: “CGN is a valued partner at Hinkley Point C and a shareholder in Sizewell C up until the point of the government’s Final Investment Decision. Negotiations are ongoing and no final decision has been taken.”The government, which said it believes nuclear power is a crucial part of the energy mix as the UK moves seeks to reduce its carbon emissions, is expected to put forward new legislation on how to fund big nuclear energy projects going forward.The favoured approach is a regulated asset base (RAB) route, whereby investors can collect money from consumers via energy bills during construction of a power plant.A representative for the US government did not offer a comment ahead of publication. More

More than half of all non-motorway petrol stations have run dry after a weekend of panic-buying by spooked motorists, forcing ministers to consider putting the army on notice to drive tankers to forecourts.The government has suspended competition laws to allow fuel companies to co-ordinate deliveries, and Boris Johnson is set to decide on Monday whether to send in soldiers to ease the crisis.The Petrol Retailers Association reported alarming shortages among its independent members as oil giant BP warned that almost a third of its sites had no supplies.Government pleas for drivers to stop filling their cars “when they don’t need it” fell on deaf ears as long queues formed at forecourts, operators rationed supplies – and police were called to one scuffle in London.With Christmas just three months away, shoppers were also warned of turkey shortages, while toy sellers report delays and higher prices shipping goods into Brexit Britain.Business Secretary Kwasi Kwarteng announced at 9pm on Sunday that petrol firms are temporarily exempt from the Competition Act 1998. Officials said the “Downstream Oil Protocol” would make it easier for firms to share information and prioritise delivery of fuel to parts of the country most in need.Brian Madderson, the PRA’s chairman, revealed a survey of its members, who make up the majority of the UK’s 8,000-odd petrol stations.“They serve the main roads, the rural areas, the urban roads, and anywhere between 50 per cent and 90 per cent of their forecourts are currently dry – and those that aren’t dry are partly dry and running out soon,” he told the BBC.“One of them mentioned to me that yesterday they had a 500 per cent increase in demand compared to a week ago, which is quite extraordinary.”BP, which operates 1,200 petrol stations, said: “With the intense demand seen over the past two days, we estimate that around 30 per cent of sites in this network do not currently have either of the main grades of fuel.”Earlier, Grant Shapps, the transport secretary, sparked anger when he claimed industy leaders were responsible for the chaos, despite the government having admitted to a lack of lorry drivers. He was accused of a “disgraceful attack” on hard-pressed hauliers and of “shamefully passing the buck” for the queues.The row blew up after The Mail on Sunday quoted a government source claiming the Road Haulage Association (RHA) is “entirely responsible for this panic and chaos”.The transport secretary backed the claim, saying: “There was a meeting which took place about 10 days ago, a private meeting, in which one of the haulage associations decided to leak the details to media.“And that has created, as we have seen, quite a large degree of concern as people naturally react to those things.”Calling the leak “irresponsible”, Mr Shapps told the BBC’s Andrew Marr Show: “The good news is there is plenty of fuel. The bad news is, if everyone carries on buying it when they don’t need it, then we will continue to have queues.”But the RHA hit back quickly, pointing out its managing director Rod McKenzie had not even been at the meeting where a BP executive had discussed stock levels.“He was not, as the government source claimed, “aware of the comments” and certainly did not “weaponise” them in subsequent TV interviews,” a statement said.“Indeed he repeatedly stressed the need not to panic buy and that there were adequate fuel stocks.“The RHA believes this disgraceful attack on a member of its staff is an attempt to divert attention away from their recent handling of the driver shortage crisis.”Sarah Olney, the Liberal Democrat business spokesperson, said: “Grant Shapps is shamefully passing the buck for the government’s own failures.“The Conservatives have repeatedly ignored calls from businesses to address the shortage of drivers. It is a bit rich for ministers to now blame the public and the road haulage industry for the mess we find ourselves in.”Mr Shapps’s comments came after the announcement of emergency visas for foreign lorry drivers to come to the UK to ease the crisis was dismissed as a damp squib.As expected, the offer will be made to 5,000 HGV drivers – plus 5,500 poultry workers – but the visas will run out on Christmas Eve, triggering criticism they are too little, too late.Keir Starmer suggested 100,000 foreign drivers are needed – the RHA estimate of the shortfall – saying: “We are going to have to do that. We have to issue enough visas to cover the number of drivers that we need.”The Labour leader said: “I’m astonished the government, knowing the situation, is not acting today. The prime minister needs to say today what he is going to do.”Meanwhile, a poultry association said big firms have already scaled back production of turkeys for the festive season, because they would not have enough staff to for more orders.Kate Martin, chairwoman of the Traditional Farm Fresh Turkey Association, said: “It’s looking like there is a national shortage of turkeys when we’re talking about supermarket shelves, rather than buying direct from your farm.”Footage circulated on social media showed two men in helmets tussling with each other at a petrol station in north London, before the police were called to the scene.A man was arrested on suspicion of assault and taken into custody, but no injuries were reported. More

The UK is on course to lose its status as one of Germany’s top 10 trading partners for the first time since 1950, official German statistics suggest.In the first six months of this year, German imports of British goods drop by nearly 11 per cent, according to data from the Federal Statistics Office.Britain left the EU’s single market, which allows frictionless trade and the free movement of people between member states, at the end of 2020. But even before this, Germany had already begun to reduce ties with the UK.Before the 2016 referendum, the UK was Germany’s fourth most important trader. By the end of this year, Britain is projected to be in the 11th spot.A December 2020 survey showed one in five German companies were reorganising supply chains in order to source goods from EU suppliers instead of British ones.“More and more small and medium-sized companies are ceasing to trade (in Britain) because of these (Brexit-related) hurdles,” Michael Schmidt, President of the British Chamber of Commerce in Germany, told Reuters.The decline in the first half of 2021 was driven by pull-forward effects before new barriers, such as customs controls, kicked in in January.“Many companies anticipated the problems… so they decided to pull forward imports by increasing stocks,” Mr Schmidt said.In particular, the agriculture and pharmaceutical sectors were particularly hit hard. The data shows German imports of British agricultural products fell by more than 80 per cent in the first six months, while imports of pharmaceutical products nearly halved.“Many small companies simply can’t afford the extra burden of keeping up to date and complying with all the kicked-in customs rules such as health certificates for cheese and other fresh products,” Mr Schmidt said.In contrast, German goods exports to Britain rose by 2.6 per cent. Mr Schmidt said the new trade realities had harmed British companies more than German ones.“In Britain, the picture is different. For many small British firms, Brexit meant losing access to their most important export market… It’s like shooting yourself in the foot. And this explains why German imports from Britain are in free-fall now.””The UK’s loss of importance in foreign trade is the logical consequence of Brexit. These are probably lasting effects,” Gabriel Felbermayr, President of the Kiel-based Institute for the World Economy (IfW), told Reuters.Additional reporting by Reuters More

Business groups have criticised the government over its raft of new Covid guidance, saying companies and customers have been left with “mixed messages and patchwork requirements” ahead of the planned easing of curbs on 19 July. Under plans to relax restrictions next week, ministers have said wearing a face mask in indoor settings will switch from a legal requirement to a matter of personal choice. From Monday, all legal limits on the numbers meeting indoors and outdoors will be scrapped and all businesses will reopen, including nightclubs – for the first time since March 2020.However the advice has led to confusion with some members of the government continuing to advise the public to use face coverings in certain settings, such as on public transport and in crowded spaces. Leading businesses and transport bodies have said they will continue to mandate masks despite the change in the rules.Transport for London, Heathrow Airport and several major restaurant and pub chains – including the owner of the Gaucho chain and City Pub Group – have said they will continue to ask customers to cover their nose and mouth.Bookshop chain Waterstones has also said it will request shoppers wear masks.However there is uncertainty over how the rules will be implemented in many of the UK’s supermarkets.Sainsbury’s has confirmed that many of the Covid measures customers will stay in place in their shops after 19 July.From Monday, new signs and tannoy messages in Sainsbury’s stores will encourage customers to continue to wear a face covering, and staff will be encouraged to wear a face covering, unless they are behind a screen.Barriers between self-service checkouts and dividing checkout queues will be gradually removed from its stores in England, but they will remain in place between colleagues and customers when they are being served at checkouts.Other supermarkets have said they are awaiting further guidance or are still conducting a review of their mask policy with days to go before the rules change.Roger Barker, policy director at the Institute of Directors, accused the government of announcing a “series of mixed messages and patchwork requirements” which he said had dampened enthusiasm among businesses for the unlocking.The Association of Convenience Stores warned that the “tensions in government messaging will play out not in the corridors of government departments but on trains and buses and in the aisles of shops”.Hannah Essex, co-executive director of the British Chambers of Commerce, complained companies had “just five days to make this judgment call and effectively communicate it to staff and customers”.Asked on Sky News if the government had created confusion for businesses, minister Robert Jenrick said: “I disagree with that. We’ve published guidance and the guidance reflects the huge diversity of businesses.“There might be situations where businesses might choose to pursue these policies based on their best judgement … this is the sort of discretion they want.”“You can already see TfL, that manages the Tube in London, have come to, in my opinion, a perfectly sensible judgement that in the confines of the Tube you should be using a mask.“And there are also some supermarkets coming to that conclusion as well. Waterstones, who I understand will be asking their customers to wear masks … that seems a logical decision.“We trust businesses just as we trust the public to come to sensible, reasonable positions.” More