Closing summary
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Here is a summary of the latest developments:
The budget’s “clean bill of health” with fiscal watchdogs should give investors confidence in Labour’s plans, Rachel Reeves has said amid market fluctuations. Asked about post-budget market movements on a visit to Newcastle, the chancellor told broadcasters: “I won’t comment on market moves, because markets move all the time. What I am confirming is that the International Monetary Fund has given our budget a clean bill of health and the Office for Budget Responsibility have confirmed that we meet our fiscal rules two years early. That should give confidence to investors that we have a plan to secure our public finances after the instability and chaos of the last few years.”
Reeves has been warned an extra £9bn of tax rises may be required to avoid a fresh austerity drive in key public services as her record tax-raising budget sent tremors through the financial markets. Threatening to undermine the chancellor’s claim that her budget would restore economic stability to Britain, government borrowing costs rose sharply in the City on Thursday as traders turned on Reeves’s tax and spending measures.
City traders warned the higher short-term borrowing levels set out in the budget threatened to derail the Bank of England from pushing ahead with a deep round of interest rate cuts. The pound also fell against the US dollar to its lowest for two months.
However, the Bank of England is expected to cut interest rates next week, despite forecasts that Labour’s autumn budget could lead to higher inflation over the coming year. Policymakers will announce the result of their November meeting on Thursday, where most analysts think they will trim the base rate by a quarter-point to 4.75%.
The UK is in a “very different world” compared with the turmoil which followed Liz Truss’s economic plans, a minister said on Friday as the government seeked to quell post-budget market jitters. Darren Jones, Reeves’s deputy at the Treasury, told Sky News that “markets always respond to budgets in the normal way”. “I think we’ve all got PTSD from Liz Truss,” he added.
Jones also defended the government paying £950 a day to a new value for money chair David Goldstone. Asked by LBC about Goldstone’s salary as the head of the Office for Value for Money (OVFM), Jones said: “It is right that we pay people for their time. We can’t expect people to work for free. That is an important way in which we do things in this country. Actually, the day rate for David is, on a benchmark basis, competitive.”
Liberal Democrat leader, Ed Davey, has raised concerns over the budget creating a “lost generation” of farmers. His comments came as he visited an agricultural college in Maidenhead on Friday. Davey said: “The government is at risk of creating a lost generation of farmers. Young people will lose the opportunity to keep the farms their families have run for generations, while at the same time they are seeing government support for farming slashed.”
The president of the National Farmers’ Union (NFU) has said he is “absolutely baffled” at the government’s decision to “double down” on inheritance tax on farms. Tom Bradshaw, who is meeting environment secretary, Steve Reed, on Monday, said the current plans to change agricultural property relief (APR) and business property relief (BPR) “need to be overturned and fast”. In an interview with the PA news agency, Bradshaw spoke of “tension”, “anger” and “frustration” among farming communities.
In a piece for The Daily Telegraph on Friday, Reed said he “understood farmers’ anxiety at any changes” but that changes to inheritance tax on farms would “make the system fairer”. He added: “Only the richest estates will be asked to pay, not small, family farms as some misleading headlines have claimed. Look at the detail and you’ll see that the vast majority of farmers will not be affected at all. They will be able to pass the family farm down to their children just as previous generations have always done.”
Reeves has been warned that her number one mission to boost Britain’s economy is at risk amid fresh evidence that the budget has damaged business confidence. In a snap poll of more than 700 members of the Institute of Directors, the lobby group said two-thirds felt negatively about the budget and thought that it would not support the government’s growth mission.
The rating agency Moody’s said the budget would do little to improve Britain’s economic growth, and said Reeves’s plans to add to government borrowing in the near-term would pose an “additional challenge” to repairing the public finances.
GP surgeries are not eligible for compensation, the government has confirmed in reference to a PA news agency report that suggested No 10 had hinted that GP surgeries could get help with NICs. The quotes from a No 10 spokesperson were not intended as a hint that extra NICs compensation was coming, government sources have indicated.
The Independent Schools Council (ISC) has said it will launch legal action against the government’s decision to impose VAT on independent school fees. The council, which represents more than 1,400 private schools in the UK and abroad, reached its decision after a board meeting held on Thursday.
Downing Street is confident changes to inheritance tax on farms will not impact food security and said there was adequate financial support available to farmers. A No 10 spokesperson said the government’s message was “clear that we are committed to supporting farmers”, adding: “It is expected that almost three-quarters of estates are expected to be unaffected by this.”
An EU citizen caught up in a Home Office backlog of applications for post-Brexit residency status has been forcibly removed from the UK. Costa Koushiappis, 39, a Greek Cypriot, was put onboard a plane to Amsterdam with only three days’ notice.
Planned strikes by London Underground workers in the RMT have been suspended, the union announced. Workers were due to take action on Friday evening and on several days in the coming weeks in a dispute over pay. The RMT said it had received an improved pay offer. Strikes by members of the drivers’ union Aslef next week and later in the month are still scheduled to go ahead.
GP surgeries will have to consider making staff redundant if the rise in employer national insurance contributions announced in the budget is not covered, the government has been told. Helen Morgan, health and social care spokesperson for the Liberal Democrats, added: “We are urging the chancellor to change course and exempt GPs from a tax hike.”
A care group has called on the government to exempt social care providers from the tax rise or ringfence funding to cover it. Independent Care Group (ICG) chair Mike Padgham said: “The government has to do something and it has to do it quickly, as I am already hearing from providers that this might be the last straw for some of them.”
Scottish councils say they must receive their fair share of new funds from the UK budget, as they called for “sustainable investment” in local authorities. Council umbrella body Cosla has written to the Scottish and UK governments seeking clarity on the funding arrangements, after Reeves said the Scottish government is now in line to receive £47.7bn in the next financial year.
The growth in UK house prices slowed unexpectedly last month, Nationwide said, as it warned buyers to expect a rush in transactions early next year sparked by changes to stamp duty rules in the budget. Robert Gardner, Nationwide’s chief economist, warned that the chancellor’s decision to remove the temporary increase to the nil rate for stamp duty next April could spark a rush to complete purchases before the changes.
Ryanair could cut flights to and from UK airports by 10% next year after Labour’s decision to increase the tax on airline tickets in the autumn budget. The airline’s chief executive, Michael O’Leary, criticised the spending statement on Friday, saying it has “damaged” UK growth prospects and “made air travel much more expensive”. Reeves said air passenger duty (APD) will rise from the 2026/27 financial year, adding up to £2 to the cost of an economy ticket for a short-haul flight.
Updated
Responding to the news that government sources have indicated that GP surgeries will not be eligible for compensation from the government’s employers NICs rise (see 1.36pm GMT), Liberal Democrat Treasury spokesperson, Daisy Cooper said:
The government must scrap this GP penalty immediately.
After years of the Conservatives disgraceful neglect, our primary care services are in crisis and this could push many to reduce the number of staff they employ or just decide to shut up shop.
Instead of investing in our GPs and their staff, the government has put more pressure on them in a move that will make it even harder for patients to see a GP when they need to.”
The Bank of England is expected to cut interest rates next week, despite forecasts that Labour’s autumn budget could lead to higher inflation over the coming year, reports the PA news agency.
Policymakers will announce the result of their November meeting on Thursday, where most analysts think they will trim the base rate by a quarter-point to 4.75%.
The president of the National Farmers’ Union (NFU) has said he is “absolutely baffled” at the government’s decision to “double down” on inheritance tax on farms.
Tom Bradshaw, who is meeting environment secretary, Steve Reed, on Monday, said the current plans to change agricultural property relief (APR) and business property relief (BPR) “need to be overturned and fast”.
Speaking to the PA news agency, Bradshaw spoke of “tension”, “anger” and “frustration” among farming communities. But Reed said that the plans outlined in Wednesday’s budget are a “fair and balanced approach that protects family farms while also fixing the public services those same families rely on”.
The PA news agency reports that according to budget papers, from April 2026 farmers will be able to claim a 100% relief from inheritance tax on the first £1m of combined agricultural and business assets, falling to 50% beyond that.
Writing for The Daily Telegraph on Friday, Reed said:
I completely understand farmers’ anxiety at any changes. But rural communities need a better NHS, affordable housing and public transport we can provide if we make the system fairer.
That is why the Labour government has announced plans to reform agricultural property relief.
Only the richest estates will be asked to pay, not small, family farms as some misleading headlines have claimed.
Look at the detail and you’ll see that the vast majority of farmers will not be affected at all. They will be able to pass the family farm down to their children just as previous generations have always done.”
After reading Reed’s article, Bradshaw told the PA news agency:
Looks like they’ve decided they’re going to double down, which I’m absolutely baffled by.”
Bradshaw said he has never seen the farming industry in the position it is in at the moment, and while this has built up over the last four or five years, he said:
Today the tension, the anger, the frustration, it is so, so tangible. We will work with the government to find a resolution, but I just hope that resolution is forthcoming.
I just think that what our members are saying to us is this is a government that doesn’t understand farming.
They’ve shown us with this budget they just don’t understand what we do to produce the country’s food.”
He said farmers are deemed to be wealthy because they have an asset, but pointed out that the return from that asset is “very, very low”.
Bradshaw added:
I think there’s a real anger in the countryside that this government is demonstrating that they don’t understand the farming industry.
I was so pleased when I saw the Labour manifesto. Those words ‘Food security is national security’ are so important, but those words don’t feed people. It’s the family farms across the United Kingdom that produce people’s food and are going to be adversely impacted by this change.
And I really hope that the government can see that they’ve got this wrong.”
The NFU said Britain’s farmers and growers will take part in a mass lobby of their MPs over the plans on 19 November and Bradshaw said it is already “massively oversubscribed”.
While Reed referred to “misleading” headlines, the NFU has used the same word to describe Treasury figures, according to the PA news agency. Bradshaw said he does not understand the Treasury’s figures, adding:
At a time of huge turmoil in the industry, with all the changes since Brexit, since Covid and the Ukrainian crisis, and all the inflation, to bring this change in now, especially when the secretary of state has talked publicly about understanding the pressures on the industry, the mental health challenges that the industry is facing, and then they brought this change in. I really do not understand who has done the modelling or how they’ve got to this decision.”
The issue has been repeatedly raised in the House of Commons and business minister Douglas Alexander defended the government’s reforms of inheritance tax, saying “difficult and necessary choices” had to be made.
Scottish councils say they must receive 'fair share' of new funds from UK budget
Scottish councils say they must receive their fair share of new funds from the UK budget, as they called for “sustainable investment” in local authorities, reports the PA news agency.
Council umbrella body Cosla has written to the Scottish and UK governments seeking clarity on the funding arrangements, after chancellor, Rachel Reeves, delivered the first Labour budget in 14 years earlier this week.
The Scottish government is now in line to receive £47.7bn in the next financial year – including £3.4bn due as a result of decisions made by the chancellor. Scottish Labour says the budget will lead to a further investment of £1.4bn in a number of local projects over the next decade. These include town plans, levelling up money and green freeports.
Cosla resources spokesperson, Katie Hagmann, said:
Following the UK budget announcement, I have written today to both UK government and Scottish government seeking assurance that local government in Scotland and the communities we serve will receive our fair share of the additional funds announced in the UK budget.
Scottish local government has seen significant cuts to our core settlement over time, and we hope that moving into 2025/26 we can begin to reverse these cuts and ensure that there is sustainable investment in local public services.
We have sought assurances from the UK government around some areas, including the increase to employer national insurance contributions which will not only have a detrimental impact on councils as employers, but also on the many partner organisations who deliver vital services across our communities, for example social care and children’s services.
We will continue to work with both UK government and Scottish government to minimise any detriment to our communities and their local services.”
Commenting on the funding for local projects, Scottish Labour economy spokesperson Daniel Johnson said:
As well as delivering the largest block grant in the history of devolution to the Scottish parliament, the Labour Government is investing another £1.4bn directly in Scotland’s future. This will help to renew infrastructure and promote growth the length and breadth of Scotland.
Labour’s direct investment in these projects will strengthen local communities and economies – but we need a government with ambition in Holyrood too.”
According to the PA news agency, a spokesperson for the Scottish government said:
We are assessing the full implications of the chancellor’s autumn budget statement. Finance secretary Shona Robison will be announcing further details as part of the Scottish budget on 4 December.
We recognise the crucial role councils play in their communities. That is why we are making available record funding of more than £14bn to councils in 2024-25 and our commitment to meaningful budget engagement with Cosla will continue ahead of the Scottish budget.”
A spokesperson for the UK government said:
Funding for local government is a responsibility devolved to the Scottish government and the autumn budget provided it with a record £47.7bn settlement – the largest in real terms in the history of devolution.
Given the impacts of changes to employer national insurance contributions are complex, this settlement does not reflect this additional support the chancellor is providing for the public sector.
We are working through the budget implications with the Scottish government.”
Two-thirds of bosses feel negatively about budget, Reeves is told
Rachel Reeves has been warned that her number one mission to boost Britain’s economy is at risk amid fresh evidence that the budget has damaged business confidence after tremors in the financial markets.
With the government under pressure to defend its tax and spending plans, business leaders said the chancellor had failed to halt a rapid deterioration in sentiment among company bosses ahead of the budget, with damaging consequences for their investment intentions.
In a snap poll of more than 700 members of the Institute of Directors, the lobby group said two-thirds felt negatively about the budget and thought that it would not support the government’s growth mission.
Roger Barker, the director of policy at the Institute of Directors, said:
Even before the chancellor had risen to deliver her budget speech, the confidence of business leaders had hit its lowest level since December 2022. Based on the results of our snap post-budget poll, it seems likely that sentiment will have deteriorated even further.
By imposing significant new tax burdens on business, the government has taken a major risk with the economic recovery. The viability of its future spending plans will be compromised if growth is now snuffed out.”
The rating agency Moody’s said the budget would do little to improve Britain’s economic growth, and said Reeves’s plans to add to government borrowing in the near-term would pose an “additional challenge” to repairing the public finances.
It comes as the yield – in effect the interest rate – on 10-year government bonds stabilised on Friday morning. The government’s borrowing costs on financial markets had risen sharply over the previous two days since Wednesday’s budget to trade above 4.5%, the highest level this year.
City analysts said the reaction was driven by Reeves’s plans to add to the UK’s borrowing levels and the prospect of the Bank of England cutting interest rates by less than previously anticipated. With markets in a delicate position ahead of the US election next week, they also warned investors remained wary of Britain after Liz Truss’s mini-budget.
“We expect financial markets to remain more sensitive to the potential for UK policy missteps, because of the gilt market turmoil that followed the September 2022 mini budget,” Moody’s said in a note to clients.
Updated
Ryanair could cut UK flights by 10% as boss calls budget's air tax rise 'idiotic'
Ryanair plans to cut flights to and from UK airports by 10% next year after Labour’s decision to increase the tax on airline tickets in the autumn budget, reports the PA news agency.
The airline’s chief executive, Michael O’Leary, criticised the spending statement on Friday, saying it has “damaged” UK growth prospects and “made air travel much more expensive”.
According to the PA news agency, he said Ryanair would “review” its schedules and the planned reduction could lead to as many as five million fewer passengers at UK airports.
The chancellor, Rachel Reeves, said air passenger duty (APD) will rise from the 2026/27 financial year, adding up to £2 to the cost of an economy ticket for a short-haul flight. Private jet users will face a 50% rise in APD. Passenger duty rates are based on the length of the flight and the class of cabin.
O’Leary said it is “vital” that the UK makes it cheaper to fly, but that Labour had instead “damaged tourism, and damaged air travel to and from the UK”. He said:
Rachel Reeves’ idiotic decision to further raise the UK’s already high air travel taxes will deliver cuts, not growth.
This shortsighted tax grab will make air travel much more expensive for ordinary UK families going on holidays abroad and will make the UK a less competitive destination compared to Ireland, Sweden, Hungary and Italy where these governments are abolishing travel taxes to stimulate traffic, tourism, and jobs growth in their economies.”
The PA news agency reports that Ryanair set a record for its passenger numbers in August, saying it carried 20.5 million people across the month, but its profits slumped 46% earlier in the year, after average air fares fell by about 15% in the three months to June.
The chancellor told the Commons on Wednesday:
Air passenger duty has not kept up with inflation in recent years so we are introducing an adjustment, meaning an increase of no more than £2 for an economy class short-haul flight.”
O’Leary’s criticism of the policy comes after Karen Dee, chief executive of trade body AirportsUK, described the announcement as “disappointing”.
Updated
At a 40,000-strong rally in Trafalgar Square in London in July, the far-right activist Tommy Robinson, whose real name is Stephen Yaxley-Lennon, was characteristically defiant. “Death, prison or glory, we will never submit to your lies,” he declared. “They want to send me to jail [but] the world will know I told the truth.”
On Monday, Robinson was duly sentenced to 18 months in prison for contempt of court. He had shown no remorse and there was no realistic prospect of rehabilitation, said Mr Justice Johnson at Woolwich crown court. “All of his actions so far suggest that he regards himself as above the law.”
In the dock, Robinson pumped his chest and saluted his loyal supporters in the public gallery. They blew kisses back. He was taken to Belmarsh high-security prison in south-east London.
The jailing of Robinson is the latest episode in his apparently inexorable rise from the owner of a tanning salon in Luton, Bedfordshire, to the brash pin-up hero of the far right in the UK, the US and beyond. He is, arguably, the most potent individual to have emerged on the British far right since Enoch Powell.
Along the way, he has served four jail terms, and has now begun his fifth. None appear to have led him to reflect on and reconsider his actions; indeed, they have reinforced his image as a political martyr to the cause of rightwing extremism.
Robinson is a complex and often contradictory figure, but “we should not underestimate him”, said Nick Lowles, the chief executive of the anti-racism campaign group Hope Not Hate, who has watched him closely for years.
He is “massively charismatic” with “enormous reach”, said Lowles. “He has an ability to bring huge crowds together on a level that we haven’t seen previously. His videos are watched in the millions.”
You can read the full piece by Harriet Sherwood and Ben Quinn here:
Updated
The Guardian’s Esther Addley has written profiles on the background, policies and controversies of the two candidates hoping to lead the Conservative party: Kemi Badenoch and Robert Jenrick.
You can read the profiles here:
Budget's 'clean bill of health' with fiscal watchdogs should give investors confidence, says Reeves
The budget’s “clean bill of health” with fiscal watchdogs should give investors confidence in Labour’s plans, Rachel Reeves has said amid market fluctuations.
Asked about post-budget market movements on a visit to Newcastle, the chancellor told broadcasters:
I won’t comment on market moves, because markets move all the time.
What I am confirming is that the International Monetary Fund has given our budget a clean bill of health and the Office for Budget Responsibility have confirmed that we meet our fiscal rules two years early.
That should give confidence to investors that we have a plan to secure our public finances after the instability and chaos of the last few years.”
RMT suspends planned strikes
Planned strikes by London Underground workers in the RMT have been suspended, the union announced.
Workers were due to take action on Friday evening and on several days in the coming weeks in a dispute over pay.
The RMT said it had received an improved pay offer.
Strikes by members of the drivers’ union Aslef next week and later in the month are still scheduled to go ahead.
An RMT spokesperson said:
Following intense negotiations with London Underground management and a significantly improved offer, we have suspended the strikes scheduled to start this evening.
London Underground have sensibly abandoned their proposed changes to pay structures which now means all our members will receive the same value in any pay award.
Further discussions will take place next week regarding the pay offer but progress has been made which would not have been possible without the fortitude and industrial strength of our 10,000 members on London Underground.”
Updated
GP surgeries not eligible for compensation, government confirms
PA Media has amended the earlier report (see post at 12.35pm) saying No 10 hinted that GP surgeries could get help with NICs.
The quotes from a No 10 spokesperson were not intended as a hint that extra NICs compensation was coming, government sources have indicated.
Updated
Ed Davey says he's concerned the budget will create a 'lost generation' of farmers
Liberal Democrat leader, Ed Davey, has raised concerns over the budget creating a “lost generation” of farmers. It comes as he visits an agricultural college in Maidenhead today with Lib Dem MP Joshua Reynolds.
The Lib Dems say that analysis by the party has “raised fears of a £70m cut to Defra’s food and farming budget hidden in the fine print of the chancellor’s plans, meaning even less government support for farmers who are already struggling after years of chaos and uncertainty caused by the Conservative party”.
The Lib Dems say they are concerned that changes to the agricultural property relief scheme will “force many to sell up small family-owned farms – with young people in rural communities across the country robbed of a future in farming as a result”, and have called on the chancellor, Rachel Reeves, to reverse the changes.
Davey said:
The government is at risk of creating a lost generation of farmers. Young people will lose the opportunity to keep the farms their families have run for generations, while at the same time they are seeing government support for farming slashed.
Hitting British farmers who put food on our tables only risks making the cost-of-living crisis worse. After years of being taken for granted by the Conservative party, rural communities should have been properly supported in this budget.
The chancellor now needs to listen to rural communities, reverse these measures and ensure the next generation of farmers is protected.
Liberal Democrats backed British farmers by demanding an extra £1bn to support them during the election, and we’ll keep being a strong voice for our rural communities.”
Updated
Downing Street is confident changes to inheritance tax on farms will not impact food security and said there was adequate financial support available to farmers, reports the PA news agency.
Asked if ministers were confident the changes will not hurt food security, a No 10 spokesperson said:
Yes. We are committed to supporting farmers. There is an increase in the agricultural budget, there is also an increase in environmental schemes that support sustainable farming and food production.
So, we would encourage farmers to get in contact where they have concerns so we can ensure everyone is receiving the support and schemes available to them, and also that they have the full details of how the agricultural property relief system works.”
The spokesperson said the government’s message was “clear that we are committed to supporting farmers”, adding:
It is expected that almost three-quarters of estates are expected to be unaffected by this.”
GP surgeries could receive extra support in light of the rise in employer national insurance contributions (NICs) later in the year, Downing Street has suggested.
According to the PA news agency, a No 10 spokesperson said contracted workers, including GPs, were not eligible for an exemption from the NICs rise, which she said was consistent with the approach of previous governments.
The No 10 spokesperson said:
There is a general process whereby departments, the Department of Health for example, confirm their funding for general practices.
I think that’s part of the annual GP contract process. I believe that will take place later in the year.”
On social care, the spokesperson said:
We are taking action to support the social care sector more generally. There is a real-terms increase in core local government spending power and I think at least £600m of new grant funding provided to address pressures in the sector.”
* Government sources later clarified that the ‘contract process’ comments did not mean to hint there would be compensation for GPs to deal with the rise in national insurance contributions (see later post at 13.36pm).
Updated
Rachel Reeves’s first budget, shared this week, emphasised raising taxes to help the NHS, as the health service tries to cope with huge waiting lists and an ageing population.
Funding the NHS was a top priority but people in other sectors – from universities to social care – feel the budget was a missed opportunity to tackle impending crises or introduce desperately needed reforms in their areas.
In case you missed this explainer on who lost out in the UK budget, written by our Whitehall editor, Rowena Mason, here is the link:
Private schools to take legal action against planned VAT on fees
The Independent Schools Council (ISC) has said it will launch legal action against the government’s decision to impose VAT on independent school fees.
The council, which represents more than 1,400 private schools in the UK and abroad, reached its decision after a board meeting held on Thursday.
Human rights barrister David Pannick KC will lead the challenge, which will be brought on behalf of parents.
It comes after the chancellor, Rachel Reeves, confirmed in the budget that 20% VAT would be applied to private schools from January, with the government estimating it could raise £460m next year, potentially rising to £1.7bn by 2029/30.
Julie Robinson, the chief executive of ISC, said:
This is a decision that has not been taken lightly and has been under consideration for many months.
At all points throughout this debate, our focus has been on the children in our schools who would be negatively impacted by this policy.
This focus remains and we will be defending the rights of families who have chosen independent education but who may no longer be able to do so as a direct result of an unprecedented education tax.”
The government predicts that private school fees could rise by an average of 10% due to the introduction of VAT.
It projects that about 35,000 pupils will transfer to state schools over time, as well as an additional 2,000 students leaving private institutions, including international pupils. European diplomats have called for the international institutions to retain the exemption.
The German and French ambassadors to the UK, Miguel Berger and Hélène Duchêne, said international schools were distinct from British private schools because the option of transferring to the British state sector was not always realistic for their pupils.
“For expats coming here for two, three or four years wanting their children to go back to the national system, their only option is to go to these schools,” Berger said.
He told the Times:
We would really like to see the British government recognise the importance of these schools – not only for our political and cultural relations but also for the people this will affect.”
The growth in UK house prices slowed unexpectedly last month, Nationwide said, as it warned buyers to expect a rush in transactions early next year sparked by changes to stamp duty rules in the budget.
The building society’s monthly index showed that annual house prices grew at a rate of 2.4% in October, a slowdown from the near two-year high of 3.2% recorded in September.
This was still the third highest rate of annual growth since December 2022, but was lower than experts had forecast, with a Reuters poll of economists predicting a 2.8% increase for the month.
The average house in the UK cost £265,738 in October, a 0.1% increase from September. Robert Gardner, Nationwide’s chief economist, said market activity remained resilient, with mortgage approvals approaching pre-pandemic levels, despite a significantly higher interest rate environment.
However, he warned that the chancellor’s decision to remove the temporary increase to the nil rate for stamp duty next April could spark a rush to complete purchases before the changes.
In September 2022, the government temporarily increased the nil rate of stamp duty, the amount before you have to start paying stamp duty on a purchase, for homebuyers, raising the nil rate for first-time buyers from £300,000 to £450,000, and for those buying an additional home from £125,000 to £250,000.
Rachel Reeves said during her budget on Wednesday that this would be scrapped from 31 March next year.
Gardner said:
The main impact of the stamp duty changes is likely to be on the timing of property transactions, as purchasers aim to ensure their house purchases complete before the tax change takes effect.
This will lead to a jump in transactions in the first three months of 2025 (especially March), and a corresponding period of weakness in the following three to six months, as occurred in the wake of previous stamp duty changes.”
EU citizen caught up in Home Office residency backlog forcibly removed from UK
An EU citizen caught up in a Home Office backlog of applications for post-Brexit residency status has been forcibly removed from the UK.
Costa Koushiappis, 39, a Greek Cypriot, was put onboard a plane to Amsterdam with only three days’ notice. Speaking as he was being escorted on to the aircraft in Edinburgh shortly before 9am on Friday, he said he could not understand his unfolding nightmare.
“I am here with the Border Force. They have all my documents. I can’t talk about how I feel because if I do will have a breakdown,” Koushiappis added.
When it became clear late on Thursday night that his lawyer was unable to get the Home Office to reverse the decision by Border Force, his friends came to his flat to help him pack up.
His employer at Two Wheels motorbike franchise, Stuart West-Gray, described what had happened as a “disgrace”.
He said:
I spoke to him this morning. He said the Border Force officials who had escorted him were very good to him and told him he had conducted himself very well, had adhered to the bail conditions and they didn’t have to come look for him this morning.
But why give someone three days to pack up their life? You would think they would at least give them 28 days so he could mount a legal case.
When he was in the shop last night as we were closing, he said ‘I’ve got to go round and say goodbye to everyone’. He was in tears as he went round the shop floor. It was absolutely heartbreaking.”
Koushiappis arrived in the UK in 2017, before Brexit, and – after an absence due to poor health and then Covid lockdowns – did not return until 2021.
His subsequent application for pre-settled status was rejected by the Home Office on 28 October 2022 but then asked for a closer look at his case, as the rules allow.
Days later, on 2 November, he applied for the “administrative review” but was told as recently as 25 October the decision could take two years to be processed such was the backlog of cases.
Meanwhile, a care group has called on the government to exempt social care providers from the tax rise or ringfence funding to cover it.
Independent Care Group (ICG) chair Mike Padgham said:
The government has to do something and it has to do it quickly, as I am already hearing from providers that this might be the last straw for some of them.”
Geoff Butcher, of the Blackadder Corporation, which owns a number of care homes in England, said he believes the rise in national insurance contributions (NICs) for employers could lead to some homes having to shut.
According to the PA news agency, he told the Today programme:
We will certainly not be taking on additional staff. We will be having to cut back on improvement.
So this morning I was supposed to be going to a home to look at investing in a small extension and a new passenger lift. That almost certainly will have to go.
And I know that colleagues in other services are looking at cutting back on staffing, and I think it will exacerbate the speed of closure of homes and the handing back of contracts by other services, including domiciliary [home] care.”
He said the £600m funding to local authorities for both adult and children’s social care announced in the budget “if it came through” would equate to about only £350 for each employee in the social care sector.
He said:
Staff costs are 80% of our total cost. We’ve got nowhere to go on this.”
Butcher said he finds it “extraordinary that year after year, governments find billions to support the likes of Ukraine, but we don’t find the money to support our very vulnerable people – I think it’s a huge reflection on our society”.
Care England, which represents providers in adult social care, said the national insurance rise, combined with wage rises, will leave the sector with “an additional circa £2.4bn funding hole to plug”.
The Independent Care Group said the new grant funding is likely to be “wiped off instantly” by both.
GP surgeries will have to consider making staff redundant if the rise in employer national insurance contributions announced in the budget is not covered, the government has been told, reports the PA news agency.
The chancellor, Rachel Reeves, announced the tax rise on Wednesday, as organisations representing care homes and hospices voiced concerns about the sector’s ability to plug the funding gap. There have also been concerns about the impact on GP surgeries, with one practice manager suggesting it could cost his practice about £40,000 a year.
Dr Jess Harvey, a GP based in Shropshire, told BBC Radio 4’s Today programme that practices will “really struggle”. She said:
During these contract negotiations for our new contract, unless we’re getting given suitable remuneration to cover this national insurance inflation, then we’re going to really struggle.
There are going to be practices to start to make redundancies. There are practices that were already considering redundancies because it’s so hard to manage financially, and if we don’t get enough money to continue to run these practices, then we’re not going to be able to provide the service that people want.”
When asked if GP wages should “take a hit” to cover costs, Harvey said:
How general practice is funded, this isn’t about GPs, this isn’t about my wage. I don’t want an increase in my wage. What I want to be able to do is to is to provide the same service that I’m providing now, if not better, in the future.”
Harvey also said the amount of money surgeries are getting has not changed in six years, amid a rise in staffing costs. She added:
Yes, we are classed as private businesses, but the money that we get to run that business isn’t generated by profit, as I’m sure you can imagine, in terms of we aren’t charging people for service.
The government give us a specific amount to run our general practice, which is based on the number of patients we have. The amount of money that we are getting at the moment is the same as we were getting in 2018.”
Paul Stanley, a practice manager at Gas House Lane surgery in Morpeth, Northumberland, told the Today programme the changes could cost his surgery about £40,000 a year. He said:
It is a huge amount of money and our staff costs do equate to, I would probably say, about 65-70% of all of the costs of the practice.
I think what we’re looking at is an unfunded increase in our staffing costs, which may ultimately impact on our resources and our staffing levels.”
Helen Morgan, health and social care spokesperson for the Liberal Democrats, said:
We are urging the chancellor to change course and exempt GPs from a tax hike.
This new government must not make the same mistakes as the Conservatives, fixing the GP crisis is crucial for saving the NHS.
If people can be checked quicker, fewer will end up in hospital for treatment. That’s better for patients, better for the NHS and better for taxpayers.”
After this week’s budget, the usually mild-mannered National Farmers’ Union president, Tom Bradshaw, blasted:
Before the election Keir Starmer promised to establish a new relationship with farming and the countryside. Well, he’s certainly done that.”
This highly unusual intervention from the body, which typically favours being “in the room” with prime ministers rather than publicly attacking them, reflected a strength of feeling in the agricultural world not felt since the unpopular Brexit trade deals.
The main issue that is infuriating the farming community is the chancellor’s change to agricultural property relief (APR). Steve Reed, the environment secretary, had promised that Labour had no intention of fiddling with this tax loophole designed to protect the family farm.
On Wednesday Rachel Reeves announced that, from April 2026, the first £1m of the value of agricultural properties will be exempt from inheritance tax (IHT), but above that threshold the combined relief available from APR and business property relief (BPR) will drop to 50% of the standard 40% rate of IHT. This means that inheritance tax of 20% will effectively apply on the full value of farms and rural estates above £1m.
In reference to Reed’s broken vow, Bradshaw said:
When you look farmers in the eye and make them a promise, keep it.”
You can read Helena’s full explainer on this here:
Reform UK is facing a schism over its approach to Tommy Robinson’s supporters, after two high-profile party figures said it was wrong to disavow those who went to a weekend rally backing the far-right leader.
Richard Tice, the deputy leader of Reform, said earlier this week the party “want nothing to do with” Robinson and “all of that lot”. Nigel Farage, the Reform leader, also said after the summer riots that he had never had anything to do with “the Tommy Robinsons and those who genuinely do stir up hatred”.
But two high-profile 2024 candidates, Howard Cox and Ben Habib, took a different position, saying those attending Saturday’s rally were some of Reform’s own people.
Thousands of supporters of Robinson, whose real name is Stephen Yaxley-Lennon, protested in central London on Saturday after he was remanded into custody by police. The far-right activist was jailed on Monday for 18 months for contempt of court for repeating false allegations against a Syrian refugee, in breach of an injunction.
After the sentencing, Cox, who stood as Reform’s London mayoral candidate and as a parliamentary candidate in Dover and Deal, said Robinson should not be in jail and Tice had been wrong to distance the party from those who attended the rally.
You can read the full report by Rowena Mason and Peter Walker here:
Reeves told she will have to raise further £9bn to avoid UK public service cuts
Rachel Reeves has been warned an extra £9bn of tax rises may be required to avoid a fresh austerity drive in key public services as her record tax-raising budget sent tremors through the financial markets.
Threatening to undermine the chancellor’s claim that her budget would restore economic stability to Britain, government borrowing costs rose sharply in the City on Thursday as traders turned on Reeves’s tax and spending measures.
On a day of wider losses in global markets, the negative reaction came despite the International Monetary Fund lending its backing to the first Labour budget in 14 years as the government sought to defend its plans.
The yield – in effect the interest rate – on benchmark 10-year government bonds jumped to the highest level this year, rising by more than 0.15 percentage points to above 4.5% on Thursday, before falling back slightly by the evening. The higher the yield, the more the government has to pay to borrow money.
City traders warned the higher short-term borrowing levels set out in the budget threatened to derail the Bank of England from pushing ahead with a deep round of interest rate cuts. The pound also fell against the US dollar to its lowest for two months.
Some analysts sought to draw comparisons with Liz Truss’s mini budget, when financial markets were thrown into a tailspin, although they cautioned that the gyrations in the City were far less substantial this time. Others said there were dangers in holding the budget in proximity to a closely-fought US election, amid a febrile backdrop for a historic tax and spending package.
Jonas Goltermann, deputy chief markets economist at the consultancy Capital Economics, said the fallout from Reeves’s budget was “still a very long way from the 2022 ‘mini-budget’ debacle”, but that the similarities could trigger alarm bells in Westminster.
“A meltdown of similar proportions remains unlikely, but plainly investors are nervous about the fiscal outlook in the UK (and elsewhere),” he said.
You can read the full piece by Richard Partington and Jessica Elgot here:
More on the comments by the chief secretary to the Treasury, Darren Jones.
Jones said:
Under Liz Truss they sacked the permanent secretary [to the Treasury], they ignored the independent Office Budget Responsibility, they announced £45bn of unfunded tax cuts and said they were only just getting started. And then the market went mad, and we all know what happened then.”
Asked about the market response to the budget, he said:
There’s a lot of new information about the economy and the nation’s finances presented to parliament, and it’s normal for markets to respond.”
But he added:
I understand why you asked the question, because everybody suffered as a consequence of the way the Conservatives managed the economy.”
Jones also defended the government paying £950 a day to a new value for money chair David Goldstone.
Asked by LBC about Goldstone’s salary as the head of the Office for Value for Money (OVFM), Jones said:
The rate of return for the improvements that we will make from looking at these areas of spending will be far, far greater.”
He added:
It is right that we pay people for their time. We can’t expect people to work for free. That is an important way in which we do things in this country. Actually, the day rate for David is, on a benchmark basis, competitive.”
Goldstone is also a non-executive director of the Submarine Delivery Agency and HS2 Ltd, and was previously chief executive of parliament’s Restoration and Renewal Delivery Authority, as well as working as chief operating officer at the Ministry of Defence.
He oversaw the government’s £9.3bn investment for the 2012 Olympics, including the Olympic Park venues and infrastructure.
Budget market reaction 'very different' from Liz Truss turmoil, minister insists
The UK is in a “very different world” compared with the turmoil which followed Liz Truss’s economic plans, a minister has said as the government seeks to quell post-budget market jitters.
The scale of extra borrowing in Rachel Reeves’s budget – around £32bn a year on average – saw yields on government bonds increase as the market responded to the chancellor’s plans. The value of the pound has also fallen against the dollar after Labour’s first budget in more than 14 years.
But Darren Jones, Reeves’s deputy at the Treasury, told Sky News that “markets always respond to budgets in the normal way”. “I think we’ve all got PTSD from Liz Truss,” he added, according to the PA news agency.
The Treasury minister compared Truss’s decision to sack the Treasury’s chief official and snub an analysis of her spending by fiscal watchdog the Office for Budget Responsibility (OBR), with Labour’s plans.
He added:
Completely different in contrast to now: We’ve got verified reports from the independent Office for Budget Responsibility that say we meet our fiscal rules earlier than had been planned originally, 2027-2028, that those tough fiscal rules means there is a fiscal consolidation and that strong approach to public spending. We’re in a very, very different world.”
He conceded that the headline budget tax rise in national insurance contributions (NICs) for employers would impact “working people”, after a similar admission by Reeves.
The £25.7bn change to employers’ NICs is expected to raise about £16.1bn by 2029/30 as firms curb wage rises, cut hours and reduce profits – while public sector employers get compensation in their budgets for the change.
Asked by Sky News if it would impact workers, Jones said:
Yes, but the question in the manifesto, the promise in the manifesto, was not to increase the rate of tax that employees pay in their payslip.
It says that we make a promise to working people, that’s people who go to work and get a payslip, that we will not increase income tax or national insurance.”
The Resolution Foundation economic thinktank has called the increase a “tax on working people”, and said it will show up in their payslips in slower growth.
Jones also admitted to broadcasters that GPs and care homes will have to pay the NICs increase. But he told BBC Breakfast some GPs “may end up in a better position than they were in before” because of extra investment across the NHS.
More on that in a moment, but first, here is an update of the latest developments in UK politics:
Rachel Reeves has been warned an extra £9bn of tax rises may be required to avoid a fresh austerity drive in key public services as her record tax-raising budget sent tremors through the financial markets. Threatening to undermine the chancellor’s claim that her budget would restore economic stability to Britain, government borrowing costs rose sharply in the City on Thursday as traders turned on Reeves’s tax and spending measures.
Reform UK is facing a schism over its approach to Tommy Robinson’s supporters, after two high-profile party figures said it was wrong to disavow those who went to a weekend rally backing the far-right leader.
The Independent Schools Council (ISC) has said it will launch legal action against the government’s decision to impose VAT on independent school fees. The council, which represents more than 1,400 private schools in the UK and abroad, reached its decision after a board meeting held on Thursday.
More than half of people expect the number of those living in poverty to have risen by the end of the government’s current term, according to a study. Four in 10 Labour voters expect this to be the case by 2029, the research from King’s College London (KCL) and the Fairness Foundation suggested.
