The Chancellor is weighing up tough choices over whether to slash spending on public services or raise billions of pounds through tax rises in the Budget on 28 October.
The Institute for Fiscal Studies (IFS) has warned John Healey may have to raise taxes by up to £35bn to cover looming spending pressures related to increasing defence spending and higher inflation triggered by the Iran war.
It comes amid warnings that the Chancellor’s fiscal headroom could fall from the forecast £23.6bn to roughly £14bn following a surge in the cost of government borrowing, triggered by conflict in the Middle East.
What Trump’s Russia-Ukraine ‘energy ceasefire’ means
The US President made the surprise announcement as he continues to pressure Kyiv to halt attacks on Russian oil refineries.
What did Trump announce?
On Sunday, Donald Trump wrote on social media: “Effective immediately, there is an ENERGY CEASEFIRE in the War between Russia and Ukraine. Both parties have agreed. Do not break it!”
In his regular evening address, Volodymyr Zelensky said “it is only logical” to establish a ceasefire and stop the war, and an energy ceasefire was “good news for everyone”.
Andy Burnham said a ceasefire is “the best route to get energy and fuel back into world markets”.
Russia did not comment on the ceasefire deal on Sunday.
What does this mean?
However, today Zelensky said the surprise announcement was not followed through by the Kremlin.
Speaking in Warsaw, the Ukrainian president said “immediately after [Trump’s] post, Russia launched a targeted strike on a power plant in Kharkiv, causing further damage to our energy system”.
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Trump’s diesel deal
On Friday, Trump announced a diesel deal with Vladimir Putin, claiming Russia would supply more than 2.25 million barrels of diesel to the US and global markets.
Reacting to a possible deal, Lithuanian Prime Minister Mindaugas Sinkevičius told Sky News: “We’re not proud of it. It’s shameful, disgraceful… I’m not sure if it’s even under way or if it’s just a political claim.”
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The latest updates after man dies in Yorkshire tiger attack
Yorkshire Wildlife Park has said it will remain closed on Monday as investigations continue into the death on Saturday.
What happened?
- Emergency services were called shortly after 1.30pm on 10 October.
- A witness claimed that a man had entered the tiger enclosure “to play” with the animal.
- One witness told he saw the man “dancing happily with his headphones in” 20 minutes before entering the enclosure.
- Police said the man was pronounced dead at the scene, and his family have been informed.
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The sequence of events
- Reports that a man jumped into the tiger enclosure at the wildlife park began circulating on social media on Saturday afternoon.
- The park confirmed emergency services were contacted after a man entered the enclosure and was “attacked” by the tiger after 1.30pm.
- Emergency services attended, with two ambulances and a helicopter rushing to the scene.
- Videos circulating online appear to show a man being pawed at and grappled by a tiger in the enclosure.
- One video also appeared to show him wagging a finger at the tiger in an apparent attempt to stop the attack.
The latest updates
The park was evacuated after the incident on Saturday, and a message to ticket holders on Monday morning said anyone with a booking would be offered the chance to reschedule.
The wildlife park said Altai, the Amur tiger involved in the incident, will not be euthanised. Members of park staff who were “deeply affected” by the incident were receiving specialist support.
How remnants of a hurricane will affect UK weather this week
The UK is set for a week of warmer weather, with particularly mild night-time temperatures and conditions getting windier towards the middle of the week.
The forecast this week
Just as autumn beds in, the UK is set to turn milder again this week with the remnants of Hurricane Isaias which hit the US on Saturday.
Day temperatures will be average but the nights will feel warmer, with parts of England forecast to stay as high as 18°C on Monday night.
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What to expect and when
Mild weather returns
Early in the week, temperatures will be slightly above average, reaching the low 20s on Tuesday.
Wet and windy
Early in the week, expect showers, while mid-week will seek some strong winds, with possible gales in Scotland.
Mixed end to the week
Thursday could see temperatures above 20°C again, though this will decline again by Friday.
Comedian and actor Russell Brand has arrived at Southwark Crown Court today with his wife for the start of his trial on rape and sexual assault charges.
What are the charges against him?
Brand, 51, is accused of groping women and forcing them into sexual acts in allegations spanning 10 years from 1999 to 2009.
He denies three charges of rape, three counts of sexual assault, and one allegation of indecent assault, made by six women.
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The story in pictures
What happens now
- The hearing began at 9.30am today.
- Jury selection is expected to begin for a trial, which could last up to 10 weeks.
- Brand pleaded not guilty to the charges during pre-trial hearings and is currently on bail.
- The case is being overseen by High Court judge Mr Justice Bennathan.
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Closer look at accusations
- Previous hearings have heard Brand accused of raping a woman in a hotel room at the Labour Party conference in Bournemouth.
- He has also been accused of grabbing a TV worker’s breasts and forcing her into a sex act in a toilet, and kissing and groping a radio station worker.
- Brand has denied all allegations and pleaded not guilty in a pre-trial hearing.
NHS rolls out new prescriptions alerts – what we know
The latest feature follows the launch of the “Amazon-style” prescription tracker on the NHS app, which officials said has been used by almost 2.9 million people.
What you need to know
- Millions of NHS app users in England can now get alerts on their phones and smartwatches when their prescriptions are ready. Thousands of pharmacies are already live with the service.
- The update will help tackle unnecessary calls or premature trips to the chemist to pick up medication, NHS England said.
- Health innovation minister James Frith urged people to enable push alert notifications on the NHS app to benefit from the new feature.
Embracing new technology
Henry Gregg, chief executive of the National Pharmacy Association, said it would free up staff time from answering phone calls and encourage more patients to use the NHS app.
“Pharmacies want to do all they can to embrace new technology and make the vital services they offer as easy and convenient as possible for patients to access,” he said.
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Welcome progress
It’s something many people have been asking for, and alongside other non-digital ways of accessing information and support, can help make it easier for patients to get the information they need in a way that works for them.
Rachel Power, chief executive of the Patients Association
The likely benefits cuts after PM hints at shake-up
Two reviews due this autumn will shape what comes next for universal credit and personal independence payments (PIP).
Andy Burnham said his Government will show “the same boldness as we did on the triple lock” in responding to youth unemployment.
What could Milburn recommend?
Alan Milburn, a former health secretary, is examining why nearly one million 16- to 24-year-olds are not in education, employment or training .
The group’s out-of-work and disability benefits reportedly cost the government around £8.1bn a year.
His review is expected to recommend wholesale changes to get young people into work and bring down the benefits bill.
But Burnham told the Labour conference that savings would come not from “crude cuts” but from “investing in people in their success”.
Universal credit health element
Ministers are considering removing the universal credit health element for under-25s and replacing it with an intensive back-to-work scheme.
Young people who fail to take up intensive support to help them into work will face benefit sanctions, The i Paper understands
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Personal independence payments
PIP helps with the extra living costs of a long-term condition or disability, whether or not you work.
It is now claimed by four million people, with spending forecast to rise from £28.5bn this year to £41.5bn by 2030-31.
The Timms Review is looking at ways to improve PIP and reduce costs.
has reported that the Government is considering new eligibility criteria, though people with the most severe conditions would not be affected.
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What happens next?
- Parliament is expected to debate the Timms proposals before the end of the year, with the Government responding soon after.
- Milburn’s review is likely to be published shortly after the Budget, with savings not expected until 2027.
It is likely to require primary legislation, which provides scope for a Labour rebellion.
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Sacha Baron Cohen to star in Tarantino’s West End play
star Sacha Baron Cohen will headline when it premieres in London next year.
Quentin Tarantino said he was “keen with anticipation to give the West End a great night out”.
What we know so far
The production marks Tarantino’s first play written for the stage – which he will also direct.
Set in 1830s Europe, has been billed as a “rambunctious comedy of deception and disguise inspired by the grand swashbuckling epics of stage and screen”.
What did Baron Cohen say?
Baron Cohen, best known for comedy characters including Borat and Ali G said: “Quentin called, I said yes before he even got to say his first ‘motherf**ker.”
He added: “When the best director in the world calls, you don’t ask questions. I am beyond delighted that we will be losing our West End virginity together. I have made him [a] promise not to be gentle.”
How can you see it?
- It will premiere at the Phoenix Theatre in London’s West End on 18 March, 2027.
- Tickets go on sale on Monday 12 October.
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If the Government chooses to top up departmental spending without increasing borrowing, it would require huge tax rises by the end of the decade.
However, Andy Burnham has promised to stick within the constraints of Labour’s 2024 election manifesto, which ruled out raising core taxes on working people, including income tax, VAT or employee national insurance.
Here are some of the other options for the Prime Minister and Chancellor, and how likely they are.
Windfall tax on banks
Speculation has intensified that Healey could hit the nation’s biggest banks with a tax rise in his first Budget, after he held talks with finance bosses last week.
The Chancellor reportedly told the chief executives of banks and building societies including Barclays, HSBC, Lloyds, Nationwide and NatWest that the UK is in a tough financial position, but he has not yet decided whether to increase taxes on the industry.
Some Labour backbenchers have been pushing for a windfall tax on banking profits to sit alongside existing taxes on the sector.
Bank executives warned the Chancellor that such a levy could affect lending and make the UK less attractive to investors. They argue this would have wider economic consequences.
However the Trades Union Congress – which represents unions across England and Wales – found that tax cuts for big banks have deprived the government of £6bn in revenue over the last three years.
Hitting banks with a windfall tax has the backing of voters, according to the latest BMG Research survey for The i Paper, which found that half the public support such a move, compared to 13 per cent who are against it.
Extending the mansion tax
Healey has ruled out lowering the threshold for the high value council tax surcharge (HVCTS) – or “mansion tax” – from £2m to £1.5m following warnings it could disproportionately hit middle earners in London.
He had been considering widening the surcharge to include less expensive homes to raise extra money for the Treasury.
In last year’s Budget, then chancellor Rachel Reeves announced that owners of properties in England valued at more than £2m would have to pay a levy of at least £2,500 from 2028.
Lowering the threshold would increase the number of homes expected to pay it from 134,000 to 271,000, based on current values, with around half of the affected properties in London.
The move was criticised by many Labour backbenchers, with one London MP telling this newspaper it would be a “catastrophic electoral own goal”, while even some left-wingers representing seats elsewhere in the country warned it could hit “ordinary families” living in the capital.
Another Labour MP said they were pleased changes to property tax were “on the agenda” and suggested there could still be reform in this area.
Capital gains tax reform
Many economists and Labour insiders saw an increase to the capital gains tax (CGT) as the front-runner after Healey told that the UK has the “lowest capital gains tax (CGT) of any European G7 nation”.
CGT – paid on the profit of the sale of an asset such as a second home or shares – currently sits at 18 per cent for basic-rate income taxpayers and 24 per cent for higher and additional-rate taxpayers. This year, individuals can make £3,000 profit on capital gains before it is taxed.
Labour insiders are pushing for CGT rates to align more closely with income tax rates to remove a loophole for those who earn money on properties and shares, compared with those who pay tax on normal earnings.
CGT reform has previously been backed by Burnham’s second-in-command, First Secretary of State Louise Haigh, and the Defence Secretary, Wes Streeting – although this was before their roles in Burnham’s Cabinet were confirmed.
However, leading economists have warned that increasing CGT could damage investor confidence in the UK, potentially harming economic growth.
The amount it would raise is fiercely contested, with the Institute for Public Policy Research claiming it could generate £14bn a year, but sceptics suggesting it could actually end up costing the Treasury money if people delayed asset sales or moved overseas.
Pensioner tax rises
Pensioners and those saving towards their retirement could face some tax increases.
One option would be to cut the size of the tax-free lump sum people can take from their pensions, which is either 25 per cent of the amount or £268,275 – whichever is lower.
Another idea is to limit pension tax relief. If you pay into a pension, you receive relief at whatever income tax rate you pay, so higher-rate payers get more generous tax relief.
Former pensions minister Sir Steve Webb has called on the Government to raise income tax for the over-40s to help fund a national care service. However, this would be after the next general election, due in 2029 at the latest.
Policy that directly affects older voters is known to be politically toxic as pensioners are more likely to turn out at the polls.
Tax relief for pensioners
However, people who rely on the state pension as their main source of income are set to be protected from being dragged into the income tax threshold.
Because of the triple lock, the state pension is set to climb to more than £13,000 a year in April, putting it above the income tax personal allowance of £12,570 for the first time.
In his speech to Labour conference last month, Burnham confirmed his “commitment to ensure low-income pensioners won’t be dragged into paying income tax in this Parliament”.
The Treasury is expected to outline details of how this will work in the Budget.
Inheritance tax changes
Before becoming PM, Burnham suggested charging inheritance tax as a flat 10 per cent levy on all estates to fund social care.
The PM has since confirmed his mission to reform social care, but said this would only be from the next general election, and would be funded via moving away from the triple lock on state pensions.
However, there is speculation that smaller tweaks to inheritance tax could be made, such as tightening rules around giving gifts. Currently, you can give away up to £3,000 per year without triggering the levy.
Pressure is growing on inheritance tax reform after opposition leader Kemi Badenoch announced a flagship proposal to abolish the levy entirely as soon as public finances permit.