Treasury minister says markets have ‘PTSD’ from Liz Truss’s budget – UK politics live

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.”

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

Lisa O’Carroll

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.

Helena Horton

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:

Rowena Mason

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:

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:

Matthew Weaver

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.

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.