Working people will face hidden tax rises following the Chancellor’s Budget, despite his focus on offering “breathing space” for those struggling with the cost of living.
John Healey promised to make Britain “more resilient” to global shocks and to help families with “everyday costs”, announcing a £100 payment to help with energy costs for 20 million households and a tax break for low income pensioners.
But the Office for Budget Responsibility (OBR) has still warned living standards will be challenged by higher energy costs and a ballooning tax burden in the wake of the pandemic.
How much could scrapping gas standing charges save you?
Chancellor John Healey has announced that standing charges on gas bills will be scrapped from next year as part of his Budget.
The announcement is part of the Government’s “cost control framework” to drive down energy bills.
What are gas standing charges?
Gas standing charges are a fixed daily fee you pay for being connected to the gas network.
You are charges this regardless of how much gas you actually use – even if you go weeks without using any at all.
Under the current energy price cap, the average gas standing charge is 29.68p a day for households paying by Direct Debit, or £108 a year.
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What’s the catch?
- It’s important to note that scrapping the standing charge does not mean scrapping the costs it currently pays for – so the price will need to be reflected in bills elsewhere.
- Those costs will instead be moved onto the price you pay for each unit of gas.
- This means some households may see lower energy bills, while others may not notice and others may see an increase
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How much could you save?
- Only six in ten households will see the £45 drop, according to the Government.
- But whether you see a drop depends on how much gas you use, as standing charges will instead be incorporated into normal gas prices.
- Essentially, the less gas you use, the more likely you are to benefit.
- If you use more gas than most, you could see your bill increase.
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What the Budget means for your money
Chancellor John Healey has delivered his long-awaited first Budget, with a raft of changes announced. The measures include a U-turn on a planned cut to cash ISA allowances, £100 in energy support for some households, and extra taxes on banks.
Sale of nicotine products to under-18s banned in Scotland
Under-18s will be banned from purchasing all nicotine and herbal smoking products in Scotland under tougher laws being introduced to protect children and young people from smoking.
What will change?
- It will be illegal for under-18s to purchase pouches, strips and pearls, and any herbal products that can be smoked.
- Anyone selling nicotine products will have to hold a valid registration, so authorities know where products are being sold.
- Vending machines can no longer stock such items.
- Substantial discounts on nicotine products will also
be banned.
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What have health officials said?
“By banning the sale of these products to under-18s, the Scottish Government is taking a crucial step in protecting people’s health,” said public health minister Maree Todd.
“This in turn is helping people across Scotland to live longer, healthier lives.”
Scotland’s chief medical officer Gregor Smith said the changes “will help reduce
the health harms associated with nicotine
addiction and address health inequalities”.
The four snowballing crises Putin refuses
to acknowledge
Vladimir Putin believes victory over Ukraine is inevitable as his missiles pound the country with near impunity and US policy turns in his favour.
Yet Moscow is also showing signs of strain deep into the fifth year of war, with the Russian leader facing mounting problems at home and on the battlefield.
1. Russian battlefield gains stall
Russian forces have made effectively
zero progress on a series of failed offensives this year, according to the latest analysis by the Institute for the Study of War (ISW) in Washington, DC.
While Russian officials claimed that they had seized 6,500 square kilometres since the start of the year, the ISW put this at closer to 73 square kilometres, and since September the Russians had lost 240 square kilometres.
2. The manpower problem
Russia’s poor battlefield situation has come at the cost of around 40,000 casualties per month, the heaviest losses of the war, according to estimates.
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3. Energy drain
Even as Russia escalates attacks on Ukraine’s energy grid for a fifth winter,
its own fuel sector is buckling under a relentless campaign of Ukrainian drone strikes.
- Every oil refinery in western Russia has been hit during this campaign, taking out between one-third to half of the country’s refining capacity by different estimates. Only five refineries remain untouched, according to the International Energy Agency.
4. Economic decline
New budget proposals sent to Russia’s parliament this month show an ongoing transition to a war economy at the population’s expense.
Spending on defence is projected to grow to 7 per cent of Russian GDP, while ordinary Russians and small businesses face interest rates of 14 per cent and inflation that is approaching 8 per cent – pushing up prices for petrol and household goods.
Putin still believes victory is close
Despite the political and economic
pressures the Kremlin is facing, Putin thinks victory is close and is promising Russians the end is in sight, said Anna Matveeva of the Russia Institute at King’s College London.
“Putin is signalling to Russians that Ukraine is not going to hold on for very long, that the military campaign has been making good progress and that society just needs to hold on for a few more months,” Matveeva said.
World news
Could Africa’s Ebola outbreak reach the UK?
One of Africa’s top health officials has warned that the “unprecedented” spread of Ebola across the continent means it could reach the UK and other countries.
What you need to know
Cases pass 10,000
The number of confirmed Ebola cases in the DR Congo has risen above 10,000, according to government data shown on Tuesday.
Fears for global spread
This coincides with fears the epidemic could spread to more African countries and around the world.
Second deadliest
This Ebola outbreak is the second-largest on record – only behind the 2014 outbreak.
‘We want all countries to know that they are not safe’
Dr Jean Kaseya, director general of the Africa Centres for Disease Control and Prevention (CDC), has compared the outbreak to the Covid pandemic.
“We want all countries to know that they are not safe if they don’t take appropriate measures,” reported him as saying.
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East, Central and West Africa have now been affected by Ebola, which Kaseya called “unprecedented”.
- DR Congo on 15 May said it had identified its 17th outbreak since Ebola was identified in 1976.
- Uganda reported 20 cases in May and June but has not recorded any since.
- Nigeria this week confirmed a case in the capital, Abuja. She has since been evacuated on a medical evacuation flight to Switzerland.
Case recorded outside of Africa
France is the only non-African country to have confirmed a case of Ebola so far – a doctor who had returned from DR Congo.
Kaseya said leaders around the world should realise that while cases are so far only ravaging Africa , the situation could change.
“We shouldn’t forget that at the beginning of Covid, many countries said there was zero risk of being affected, but a few months later, they became the hotspot,” he said.
“We don’t want to see the UK and other countries become the hotspot.
What is Ebola?
- Ebola is a highly contagious, severe, and often fatal illness spread through direct contact with the bodily fluids of infected people, such as blood or vomit
- The Bundibugyo virus – the strand recoded in DR Congo – has no approved treatment, though vaccine trials are under way.
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How blood pressure pills could be dementia gamechanger
Vascular dementia is the second most common type of dementia and often gets overshadowed by Alzheimer’s, despite being responsible for up to 30 per cent of cases.
The latest research also suggests it is more common than is thought, often occurring alongside an Alzheimer’s diagnosis but going unrecognised.
Treatment breakthrough?
The good news is that there are several drugs already in use for other conditions that cut the odds of vascular dementia, including the humble blood pressure pill.
And there are further treatments around the corner that could be more potent still.
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What causes Vascular dementia?
- In about a third of those diagnosed with Vascular dementia, the cause is a stroke, a localised area of brain damage caused by a sudden blood clot or bleed.
- In the rest of the cases, the brain damage is spread out and has happened over many years.
- With ageing, blood vessels can become unable to widen to supply enough nutrients to the brain’s nerve cells and take away their waste.
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Drugs that could help
- Those diagnosed with vascular dementia are often told there are no treatments. This ignores the fact that, if caught early, there are known strategies for keeping blood vessels healthy.
- The most obvious step is to keep blood pressure under control, as high blood pressure further damages the brain’s small blood vessels. Blood pressure drugs were shown last year to cut dementia diagnoses.
- The Lancet Commission’s review of dementia prevention identified 14 risk factors that people could avoid, and many involved blood vessel health.
- They include standard lifestyle measures like stopping smoking, cutting alcohol, keeping fit and controlling cholesterol.
Key takeaways as Russell Brand gives evidence in rape trial
Russell Brand on Wednesday responded to allegations made by six women as he gave evidence at Southwark Crown Court, where he is on trial for accusations of rape and sexual assault.
Brand has denied all the allegations made against him.
What you need to know
Brand told the court that he had struggled
to find anyone to give evidence on his behalf, saying the consequences of the 2023 , and Channel 4 investigation into him were “devastating”.
His barrister Ian White asked Brand if anyone with relevant evidence would be willing to testify on his behalf or be “willing to touch [him] with a barge pole”, to which the comedian responded “no”.
‘My entire life has been consumed by these allegations’
Brand told the court that around the time of the Channel 4 documentary, which with and reported the allegations, his baby son had to have open heart surgery at the Great Ormond Street hospital in London.
- Brand told jurors that the hospital refused to let him stay with his son “due to the materials published”.
- The comedian said his “entire life has been consumed by these allegations”.
- “I have devoted myself to these matters,” he said.
Brand ‘misused’ fame for ‘reckless philandering’
Brand told the court he was “in a position of fame – a successful person” and said he “misused that commodity foolishly” and “consensually”.
He said he “was very comfortable allowing that to facilitate sexual access” and built his life around “reckless philandering”.
Brand denies allegations
Brand again denied the allegations against him. He told jurors that he believed consent was “fundamental, essential, necessary, and indeed, in many ways more important than sex itself”.
The trial will resume on Thursday with the defence’s case.
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The decision to keep income tax thresholds frozen until 2031 means millions of earners will be dragged into higher tax brackets, and millions more will pay tax for the first time.
Meanwhile, the public will end up paying for the Chancellor’s decision to remove green levies from energy bills, and taxes on banks and landlords are likely to be passed onto consumers.
Professor David Miles, a member of the OBR’s governing Budget Responsibility Committee, said that during the pandemic, Government borrowing massively increased because of the disruption to the economy and the interventions that were launched to help households and businesses.
He said there is “no easy way” to close the gap between Government spending and tax revenue after the pandemic blew a hole in public finances.
Prof Miles said that after the pandemic, the “lion’s share” of closing the deficit had come from tax hikes. He said the tax increase has already been “very substantial”, adding: “If you go ahead a couple of years, 6 per cent more of GDP is going in tax.”
Here are all the hidden tax rises in Wednesday’s Budget.
Energy bills
The Chancellor announced a series of pledges to curb rising energy costs, promising the beginning of “radical reform of energy to reduce bills in the future”.
This includes a £100 payment towards energy costs for up to 20 million households in council tax bands A to D, paid directly into bank accounts, and the removal of gas standing charges next year “or as soon as possible after”, Healey said.
However, these fixed daily charges on gas bills will be shifted onto the price consumers pay for each unit of energy. Ministers want to extend the reforms to electricity standing charges in due course.
The Treasury has claimed that 60 per cent of households will save an average of £45 a year.
But the savings will only come after the big projected rise to energy bills in January. While lower users will gain the most, higher users – which includes large, low-income families – are likely to pay more than they currently do.
Healey also promised to drive down energy bills in the longer term by removing the link between green levies and the cost of gas and electricity for the consumer.
In his Budget speech, he said: “We will introduce a new Cost Control Framework to drive down all aspects of energy bills and I will scrap the upcoming Gas Shipper’s Obligation – a levy to fund hydrogen projects – and instead back those projects directly from government.”
This means that the expected green levy on energy bills will not be introduced as planned. But if the Government commits to publicly funding hydrogen projects, the money will come out of general taxation.
The cost would therefore hit taxpayers’ pockets in some way or another, though it is not clear yet exactly how.
Millions pushed into higher tax bands
Millions of people face being dragged into paying more income tax after the thresholds remained frozen at this year’s Budget.
The Institute for Fiscal Studies (IFS) – the nation’s leading economics think-tank – warned that it was a “fiddly” Budget, with “very little that will move the dial on growth”.
The effect, known as fiscal drag, occurs when tax thresholds remain frozen while wages rise – meaning people pay more tax as a greater proportion of their income becomes taxable or they are pushed into higher tax bands.
Analysis for The i Paper by tax consultancy Blick Rothenberg suggests that frozen income tax thresholds will leave people earning between £20,000 and £50,000 facing a tax hit of £717 in 2026-27, rising to £814 in 2027-28.
For someone earning £60,000, the estimated figure rises from £2,079 to £2,177, while those earning between £70,000 and £100,000 face a hit of £2,151 this year, increasing to £2,443 next year.
Middle-income pensioners
The Chancellor announced, as had been trailed earlier this week, that pensioners with income less than the full amount of the new state pension (£13,036.40 a year from 6 April 2027) would not have to pay income tax.
However, middle and higher income pensioners face a squeeze due to related tax rules.
Healey said that to avoid a “cliff edge” once a pension income exceeds the allowance, the Government would “gradually” reduce the allowance as income increases.
The Government said this means those earning between £13,037 and £13,319 will receive “some Pension Tax Allowance and pay less income tax than you otherwise would”.
But Sir Steve Webb, former pensions minister under the coalition-era government, said this means around 200,000 low-income pensioners are going to face a marginal income tax rate of 53 per cent.
For each extra pound above the cut-off, they pay 20p in income tax and lose 33p in the tax rebate that those on lower incomes get, meaning each extra pound costs 53p in total, he said.
Higher housing costs
The Chancellor announced that the surcharge on bank profits would be temporarily doubled from 3 to 6 per cent and that landlords face a 4 per cent tax on rental profits and property income.
But critics are warning higher costs will be passed onto renters and onto people securing mortgages.
The OBR said Healey’s extra 2 per cent property tax increase, coming on top of 2 per cent announced by Rachel Reeves last year, “collectively risk leading to a steady rise in rents”.
The UK’s economic forecaster said landlords “are likely to pass on more of these costs to renters in the long-run through a combination of some current landlords leaving, thereby giving more price setting power to remaining landlords, and greater long-run flexibility to raise rents”.
The body warned that potential landlords are now also “less likely to enter the market, reducing long-run rental supply”, which risks a “long-term rise in rents” if demand outstrips supply.
Former Tory Chancellor Sir Jeremy Hunt said increasing the bank levy will “make mortgages more expensive and the cost of living worse”.
He wrote on X: “Bankers are an easy target but it is also risky: banks in London already face a total tax rate of 46 per cent, compared with 39 per cent in Frankfurt and just 28 per cent New York. Less profitable financial services [equals] lower long term tax revenue.”
Announcing the tax, Healey thanked banks for their contribution to the economy, but said he needed to raise the surcharge “to pay for immediate support on energy bills”.
“I’ve made my choice at this Budget: Asking a bit more of our banks to support ordinary people,” he said.