UK politics: Budget’s ‘clean bill of health’ from watchdogs should reassure investors, says Reeves – as it happened | UK news

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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.

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.”

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.

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”.

Harriet Sherwood

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:

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.”

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.”

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.

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.”

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.”