Politics latest: Rising costs will be 'deeply worrying' for families, minister says - as he defends winter fuel payment change (2024)

Tax rises and spending cuts are expected in the autumn budget as the chancellor continues to claim the Labour government has been left a "dire inheritance" from the Tories.

But do Rachel Reeves's claims stack up?

Sky's Ed Conway assesses if she's correct to profess such gloom.

On the face of it,yesterday's public finance numbersprovide a clear rationale for the course of action the chancellor has (according to those I talk to in Whitehall) already decided upon: more taxes and more spending cuts in this October's budget.

It will, I'm told, be pretty grim.

However, it's worth saying there is one other way for the chancellor to create extra headroom against her fiscal rules, which is to change the particular measure she's judging that headroom against.

A lot of economists believe the net debt statistic she inherited from the Conservatives is the wrong one to use in her fiscal rules - and that she should use the country's total national debt, not excluding any debt owned by the Bank of England.

Long story short, if she uses this other measure (and I'm told this is something she is considering) then she suddenly has a lot more headroom.

Even so, don't expect her to change the tune at the budget in October. There will be more bad news to come.

Read my full analysishere...

Ruth Davidson and Beth Rigby are once again joined by the former Labour MP and ex-shadow culture secretary Thangam Debbonaireto answer listener questions.

They explain the role of special advisers in politics and discuss whether the devolved nations still need their own secretaries of state in Westminster.

They also give us a history lesson on PMQs and dissectpolitical messaging around the economy.

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By Jennifer Scott, political reporter

The government's child poverty taskforce has got to work as ministers begin putting together a strategy to lift families out of destitution.

But despite pressure within Labour and from other parties, it won't be scrapping the controversial two-child benefit cap.

What is the policy?

The two-child benefit cap was announced by the Conservatives in 2015, forming part of their austerity measures.

It means while parents can claim child tax credit or Universal Credit payments for their first and second child, they couldn't make claims for any further children they had.

These are separate payments to child benefit, which has no limit on how many children can be claimed for.

The argument from the Tories limiting the tax credit to two children made the system fairer for taxpayers, ensuring households on benefits "face the same financial choices about having children as those supporting themselves solely through work".

But opposition MPs and campaigners said the measure would drag more children into poverty and hit hard up families.

What is Labour's stance on it?

Labour were strong critics of the policy while in opposition and many expected they would scrap it if they won power.

But last year, Sir Keir Starmer ruled it out due to the public finances.

The Resolution Foundation has said abolishing the two-child limit would cost the government somewhere between £2.5bn and £3.6bn, but the Save the Children charity estimated the move would take half a million children out of relative poverty.

Seven Labour MPs paid the price for trying to force the government to scrap the policy - they were suspended from the parliamentary party for voting against the King's Speech.

Ministers have hinted they don't particularly like the policy - but it's not going anywhere for the foreseeable future.

Sir Keir Starmer today spoke with President Xi Jinping of China, discussing "national security, secure borders and economic stability".

In a readout, Downing Street said the prime minister set out his priorities for government before discussing "potential areas of co-operation between the UK and China".

A spokeswoman added: "As permanent members of the UN Security Council, the leaders agreed on the importance of close working in areas, such as climate change and global security.

"The prime minister added that he hoped the leaders would be able to have open, frank and honest discussions to address and understand areas of disagreement when necessary, such as Hong Kong, Russia's war in Ukraine and human rights.

"The leaders also agreed on the need for a stable and consistent UK-China relationship, including dialogue between their respective foreign and domestic ministers.

"They agreed to stay in touch."

The Metropolitan Police has ended its involvement in the criminal investigation into the placing of bets on the date of the general election.

The force previously said it was probing whether a "small number" of bets on the 4 July poll had involved more serious offences including misconduct in public office.

A number of Conservatives have been caught up in the Gambling Commission inquiry, including Rishi Sunak's former parliamentary aide, Craig Williams.

But the Met said after a review of evidence with the CPS, "it was determined that the high bar for misconduct in public office to be proven was not met".

The investigation by the Gambling Commission into whether offences were committed under the Gambling Act continues.

As we reported yesterday, the Liberal Democrats have said they will put forward a motion in parliament asking MPs to recognise the impact Taylor Swift's Eras Tour has had on the economy.

The party also wants the pop star to be given the freedom of London following the conclusion of her Wembley shows this week.

But just how much can Swift really help a country's economy? It's been suggested the UK's could have had a £1bn boost.

On this episode, Niall Paterson is joined by our entertainment reporter Gemma Peplow to learn more about the appeal of Swift and her place in the music industry.

Niall is also joined by Maria Psyllou, assistant professor in economics at the University of Birmingham, to analyse "Swiftonomics" and its impact.

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The Politics Hub is running a little slower than usual at the moment.

The House of Commons has been on its summer recess since 30 July, and won't return until 2 September.

That means no PMQs, ministerial statements, or other usual business.

And there's nothing going in on the House of Lords, either.

It's a period when MPs may try to get away on holiday, although they are still expected to deal with constituency issues.

Of course, this year's summer recess has proved busy for the prime minister and his top team because of the riots - although parliament wasn't recalled early as a result.

Once parliament returns on 2 September, the next recess period will arrive just 10 days later.

That's for party conference season, when MPs will be spread across the country for some of the biggest events in the political calendar.

Our economics and data editor Ed Conway has warned there's going to be "a lot of bad news" in the autumn budget.

Tax rises will feature, but with the chancellor having ruled out raising income tax, national insurance, and VAT - what could be set for a hike?

Inheritance tax

One of the taxes most likely to be hiked - the threshold could be lowered from £325,000 when someone dies, or people could pay more than 40% on some inheritances.

A leaked recording of Treasury minister Darren Jones, from before he was in government, suggested he favours such a change.

Capital gains tax

This levy is imposed on the profit of a sale of assets.

The government could reduce the minimum limit, or raise the percentage of tax levied - with some calling for it to be set in line with income tax.

Council tax

There is speculation council tax is viewed as "out of date".

While Labour said before the election it would not change the banding of council tax, there may be other updates on the table.

Business rates

This tax is what businesses pay instead of council tax on their properties.

The calculations for how much people pay could be updated to reflect a more current situation with property prices.

Stamp duty

A tax paid on properties over £250,000, which increases for second homes.

Changing this could increase the volume of transactions and raise more money.

Alix Culbertson, political reporter, goes into more detail on the topic of taxes in the piece below:

Three MSPs will battle it out in the Scottish Tory leadership race.

Russell Findlay, Murdo Fraser and Meghan Gallacher will now proceed to a ballot of the party's membership to determine who will replace outgoing leader Douglas Ross.

The trio secured the 100 nominations required from members and saw off competition from fellow MSPs Brian Whittle, Liam Kerr and Jamie Greene.

Mr Whittle, Mr Kerr and Mr Greene dropped out of the race and have thrown their support behind Mr Fraser.