The Telegraph 2024-03-06 22:30:34


Jeremy Hunt signals end of National Insurance

Jeremy Hunt has revealed an ambition to abolish National Insurance for workers as a centrepiece of the Conservative re-election bid.

In his Budget speech on Wednesday, the Chancellor criticised “double taxation” by income tax and NI, vowing to “end this unfairness”.

He lowered the rate of employee NI from 10 per cent to eight per cent from next month, benefiting 27 million workers and matching a similar 2p drop in the autumn.

Downing Street and Treasury sources confirmed that the aim was to get rid of the employee element of NI entirely, suggesting it could be a key manifesto pledge.

No schedule for the radical ambition was given, and it would cost around £50 billion – drawing scepticism from policy experts over whether it would be realised.

But it appeared to open up an immediate dividing line with Labour. A Labour spokesman declined to match the goal, saying: “We will comment on policy, not weird commitments designed to give a bit of a lift to a Budget which does seem to have been a bit of a damp squib for some of his backbenchers.”

On Wednesday night, Rishi Sunak confirmed that abolishing NI was “our ambition long term”. Speaking at a dinner to mark the 50th anniversary of the Centre for Policy Studies, he said the NI cuts to date were “a personal tax cut worth £20 billion”.

He said: “Our country faces a profound choice. If the Opposition win this year, they will use the shocks of the last few years, or the need to transition to net zero, to justify massively bigger government. It means more influence for vested interests and trade unions.”

Invoking Margaret Thatcher, he added: “Mrs T knew that hard work should be rewarded, and any extra penny our country earns is better spent by businesses and individuals than by the state. All else equal, lower taxes are better for growth.”

The NI cut was the most eye-catching element of a Budget that saw Mr Hunt focus his limited spare money from the tight public finances on tax cuts.

The salary point at which people no longer receive child benefit was raised to £60,000 in a boost to half a million families when tweaks to how it is withdrawn are taken into account.

But non-dom status was abolished, the oil and gas windfall tax extended, a new vape tax introduced and tax breaks for holiday lets scrapped to raise money for the tax cuts.

Overall, the Budget cut the tax burden by £13.5 billion this year, meaning it will no longer reach the record high forecast in November. But it remains on course to hit 37.1 per cent of GDP in 2028 – its highest point since 1948.

The lack of new financial support for pensioners received criticism. Unlike reducing workers’ NI, an income tax cut would have helped them.

In interviews on Wednesday night, Mr Hunt repeatedly declined to promise that a reduction in income tax would come before the next election, despite Mr Sunak pledging as much at various points in recent years.

He also moved to play down speculation that a May election would be called, saying the “working assumption” was that it would be held in the autumn but adding that it was Mr Sunak’s decision.

The Chancellor decided against reducing public spending plans for the years after the election after critics warned against deeper spending cuts to unprotected departments to fund lower taxes.

By delaying a full spending review to spell out where cuts to unprotected departments would come, he has tied Labour’s hands, with Sir Keir Starmer, the Labour leader, forced to make those difficult decisions should he win the election.

There were some positive financial signs, with the Office of Budget Responsibility (OBR) saying the UK was now out of recession after the economy shrank in the second half of last year.

Inflation is also expected to halve to below the Bank of England’s two per cent target within months, and is expected to remain there for the rest of the decade. 

But living standards were still found to have suffered their biggest drop since records began.

The OBR said personal tax cuts announced last autumn and on Wednesday only reversed around half the total extra tax revenue raised from the freezing of thresholds until 2028.

Predicted rises in council tax are also expected to wipe out any benefit felt by households from the cut to NI announced in the Budget, figures suggest.

Forecasts for net immigration also increased, while the employment rate is estimated to fall in the coming years despite Mr Hunt’s efforts to get people off benefits and into work.

Near the end of his Budget speech, the Chancellor said: “The way we tax people’s income is particularly unfair. If you get your income from having a job, you pay two types of tax – National Insurance Contributions and income tax.

“If you get it from other sources, you only pay one. This double taxation of work is unfair. The result is a complicated system that penalises work instead of encouraging it.”

He added later that “our long-term ambition is to end this unfairness” and said: “When it is responsible, when it can be achieved without increasing borrowing and when it can be delivered without compromising high-quality public services, we will continue to cut National Insurance as we have done today so we truly make work pay.”

The position is likely to feature prominently in the coming election campaign, according to government insiders familiar with Budget planning. 

The phrase “double taxation” performed well in polling, according to one Downing Street source, with the new positioning seen as helping re-establish Tory tax-cutting credibility.

Employee NI was reduced from 12 per cent to 10 per cent in last year’s Autumn Statement and then lowered to eight per cent on Wednesday. Similar reductions in the NI paid by the self-employed have been seen.

Treasury estimates suggest that stopping all workers paying NI would cost around £50 billion, and potentially benefit the average worker by around £2,000 a year. The new position does not include ending the NI contributions paid by employers.

Mr Hunt and other ministers declined to give any detail on how or when the ambition would be delivered. Mr Sunak previously raised NI when chancellor.

Some Tory MPs demanded specifics, with John Stevenson, who chairs the Northern Research Group, calling for a commitment to abolish NI in the election manifesto.

Others bemoaned the lack of income tax cuts, with Suella Braverman, the former home secretary, saying: “I do regret income tax was not chosen as the tax to cut, because pensioners have lost out as a result.”

David Davis, the former Brexit secretary, said: “If I’d had my way, I would not have gone for National Insurance – I’d have gone for reducing income tax.”

Julian Knight, a former Tory MP and now an independent, said the Budget was supposed to be a “do or die” moment but appeared “more not do, and then unfortunately we die”.

With the Tories still around 20 percentage points behind Labour, there was debate about whether the Budget provided a major boost to the party’s election chances, as Tory MPs had hoped it would.

George Osborne, the former Tory chancellor, said on his Political Currency podcast: “It is not the silver bullet that’s going to rescue the Tory party’s fortunes, but it is a strong salvo that opens the long campaign to the next general election.”

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Nikki Haley quotes Thatcher as she quits US presidential race

Nikki Haley invoked Margaret Thatcher and refused to endorse Donald Trump as she quit the presidential race.

After a bruising defeat in the Super Tuesday primaries, the former US Ambassador said she had “no regrets” as she suspended her campaign.

Ms Haley said she wished Donald Trump “well” in his bid for the White House but stopped short of throwing her support behind her former rival.

“I have always been a conservative Republican and always supported the Republican nominee”, she said during her brief remarks in South Carolina.

“But on this question, as she did on so many others, Margaret Thatcher provided some good advice when she said, “Never just follow the crowd. Always make up your own mind.’”

It was a fitting end to Ms Haley’s campaign, which she had kicked off with a tribute to the late British Prime Minister. Ms Haley used one of Baroness Thatcher’s favourite poems in a video to set out her campaign for the 2024 US presidency.

Mr Trump shared his reaction Ms Haley’s withdrawal on his social media platform Truth Social, saying she was “trounced” in a “record setting” defeat and inviting her supporters to join his cause. 

Ms Haley’s decision to end her campaign effectively kicks off the general election between Mr Trump and President Joe Biden.

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Volodymyr Zelensky’s convoy narrowly avoids Russian missile

A Russian missile nearly hit a convoy carrying Volodymyr Zelensky to a meeting with the Greek prime minister in Odesa.

The strike landed “very close” to the Ukrainian president’s motorcade in the southern port city, Kyriakos Mitsotakis told reporters.

A Greek official later said it exploded just 300 metres from the Ukrainian president.

“We saw this strike today,” Mr Zelensky told an open-air news conference outside the ruins of the Transfiguration Cathedral, which was partially reduced to rubble in a Russian missile attack last summer.

“You see who we’re dealing with. They don’t care where they strike. I know there were casualties today. I don’t know all the details yet, but I know there were casualties – dead and wounded.”

Neither leader nor any members of their entourages were injured in the attack, which local media reports suggested was carried out with Iskander or Onyx missiles.

The Ukrainian president added: “Please accept my condolences but you see that they don’t care if these are military, civilians or international guests.

“Whoever it is, these people don’t care. They’ve either lost their minds or they’re completely out of control of what their terrorist army is doing. That’s what we’re seeing.”

Mr Mitsotakis said: “When we heard some sirens and shortly afterwards when we were going to our cars we heard a big explosion.

“For us it is the best reminder that there is a real war going on here. Every day. Which does not only affect the front.

“We didn’t have time to go to a protected place, it’s a very impressive experience,” he added.

The sound of air raid sirens followed by the deafening blast were clearly audible from central Odesa on several video clips shared via social media of the impact of the missile.

In one clip, gasps could be heard from a church congregation as the blast interrupted their service.

A photograph showed a plume of smoke blocking out sunlight over the city.

Five people were killed in the Russian attack on port infrastructure, according to a report by Ukrainska Pravda, citing Dmitry Pletenchuk, a Ukrainian naval spokesman.

Sirens sounded across the wider Odesa region at 10.41am local time, with the explosion rocking the city shortly after. Ukraine’s air force declared a ballistic missile warning four minutes later.

It was not clear whether the attack was aimed at Mr Zelensky, who was visiting the port in Odesa at the time.

The Ukrainian president’s aides did not immediately respond to questions over the strike.

Mr Zelensky has been subjected to at least a dozen failed assassination attempts since the start of the Russian invasion in February 2022, according to Mikhail Podolyak, his senior adviser.

Russia has not shied away from attacking major Ukrainian cities while overseas dignitaries are visiting.

Notably, a barrage of Russian missiles were aimed at Kyiv as a delegation of African leaders arrived in the capital in the hope of brokering peace talks between Russia and Ukraine. 

Earlier this month, Annalena Baerbock, the German foreign minister, cut her visit to the Ukrainian capital short after she was trailed by a Russian drone.

Ursula von der Leyen, the European Commission’s president, condemned the latest strike as “vile”.

“No one is intimidated by this new attempt at terror – certainly not the two leaders on the ground nor the brave people of Ukraine,” she wrote on X, formerly known as Twitter.

Odesa is considered symbolic for Athens after waves of Greeks arrived in the city in the eighteenth century. The Society of Friends, a revolutionary movement, which aimed to free Greece from the Ottoman empire, was later founded there.

Mr Mitsotakis, who has pledged to help rebuild the city, described it as a “vital hub of Hellenism on the shores of the Black Sea”.

Russia later claimed it had hit a hangar housing Ukrainian naval drones. The defence ministry said in a statement: “The goal has been achieved. The target has been hit.” 

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Southampton match called off after huge fire near St Mary’s Stadium

A Championship football match due to be played on Wednesday night has been postponed after a huge fire broke out at a factory in Southampton.

Southampton Football Club said the fixture against Preston North End had been called off after the blaze, close to the club’s St Mary’s Stadium, resulted in the closure of several roads and caused “significant disruption”.

Emergency services were tackling the fire on Wednesday evening, which sent thick smoke and flames billowing into the sky.

Hampshire and Isle of Wight Fire and Rescue Service said it had been called to reports of an incident at around 1pm.

A factory on Marine Parade, near St Mary’s Stadium, appeared to be at the centre of the fire, which emergency services said then spread. 

In a statement, Southampton FC said: “We are grateful for the co-operation of Preston and the EFL [English Football League] and, while we appreciate the disappointment fans may feel, we hope they will understand the need to put the safety of supporters and staff of both clubs first.

“The game will be postponed to a new date, which will be announced in due course, and all tickets for the match will be valid for the rearranged fixture.”

A total of 18 fire engines were sent to the scene, with water cannon directed towards the building in an attempt to control the flames.

A Hampshire and Isle of Wight Fire and Rescue Service spokesman said: “Additional fire engines are now heading to the scene to make it up to 18. The fire currently involves four industrial units.

“There is lots of smoke, and people in the area are reminded to keep doors and windows closed. Some roads local to the incident are closed and people are advised to avoid the area to allow movements of emergency vehicles.”

Nikki Delaney, who witnessed the fire, told the Daily Echo: “The flames are high and it’s getting worse. The heat from the flames is a lot, and I’m not even close.”

Hampshire Constabulary has been contacted for comment. 

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Sir Michael Gambon’s girlfriend left out of will as estate goes to wife of 61 years

Sir Michael Gambon has bequeathed his £1.5…

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Union threatens strike over Birmingham council’s ‘devastating’ cuts

One of Britain’s biggest unions has threatened to strike over “devastating” cuts at England’s largest local authority.

The Unite union has said it will do “everything in its power” both “politically and industrially” to ensure that workers do not pay the price for the financial crisis facing Birmingham City Council.

The union represents hundreds of Birmingham workers, with the potential for strikes to disrupt key services such as bin collections and social care.

On Tuesday night, the Labour-run authority – which declared itself effectively bankrupt by issuing a Section 114 notice last year – voted to make £300 million of cuts over the next two years in an attempt to balance the books.

At the same time, council tax will rise by 10 per cent in April and 10 per cent the year after, adding £350 to average bills.

The vote came a day after Nottingham City Council, which also issued a Section 114 notice last year, voted through its own cost-cutting budget, including a rise in council tax and new charges for public toilets and garden bin collections.

Six local authorities have effectively declared bankruptcy since 2021, with research suggesting one in six council bosses expect theirs to do the same in the coming year.

Last year, a survey by the Local Government Association found some 17 per cent of council leaders and chief executives in England think their chief finance officers are likely to issue a Section 114 notice in 2024-25.

Local authorities in England face a £4 billion funding gap over the next two years just to keep services at a standstill, the organisation said, with urgent help needed from the Government to avoid “drastic cuts”.

Councils claim they have been squeezed dry by dramatic cuts to Government funding and rising demand for services, while the Tories blame poor financial management at a local level.

Birmingham issued a Section 114 notice in September, halting all new spending, after facing equal pay claims of up to £760 million and an £80 million overspend on an under-fire IT system.

Independent commissioners were brought in by Michael Gove, the Levelling Up Secretary, to help run the council, which owes almost £3 billion to lenders.

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Activists swap Union flag for Palestinian on UK Government building in Edinburgh

A Palestinian flag has been hoisted above a major UK Government building in Edinburgh by protesters claiming Britain is “complicit in genocide” in Gaza.

A Union flag was removed and hurled to the ground by activists who scaled Queen Elizabeth House (QEH) in the city on Wednesday morning.

The front of the building has also been doused in red paint as a Palestinian flag was flown in place of the Union Jack.

Four people from the Scottish This is Rigged campaign group, which also focuses on climate change issues, said they had taken part in the protest.

The group said three of the activists, Fred Spoliar, 31, Ruby Hamill, 19, and Daniel Knorr, 22, hurled water balloons filled with red paint at government signage.

Catriona Roberts, 21, sprayed the glass front of the building with a fire extinguisher full of red paint.

The group said the building, the UK Government’s most prominent base in Scotland, had been targeted “specifically due to the UK Government’s ongoing endorsement of this genocide”.

Ms Roberts, a history student from Perthshire, said: “As long as the UK Government refuses to call for a ceasefire, we will continue to call not in Scotland’s name.

“As Palestine is bombed, burned and starved, this Government is complicit. I cannot emphasise enough the importance of screaming out into the world that we will not abide genocide.”

It comes days after Rishi Sunak’s Downing Street speech in which he denounced extremist pro-Palestinian protesters who do not respect the rule of law.

He said police would be encouraged to take a harder line, though policing in Scotland is a devolved matter. Police Scotland said its officers were “in attendance” at the protest, which began at around 10.30am.

A spokesman for the UK Government said: “We are aware of the protests and the police are in attendance. All of the staff in QEH are safe and no one has entered the building.”

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