Starmer says the autumn budget will be ‘painful’
Starmer said “things are worse than we ever imagined” after discovering a £22bn “black hole” in the public finances. The prime minister is using this argument to warn that the budget – on 30 October – will be “painful”.
The prime minister said:
There is a budget coming in October, and it’s going to be painful. We have no other choice, given the situation that we’re in.
Those with the broadest shoulders should bear the heavier burden, and that’s why we’re cracking down on non-doms.
Those who made the mess should have to do their bit to clean it up, that’s why we’re strengthening the powers of the water regulator and backing tough fines on the water companies that let sewage flood our rivers, lakes and seas.
But just as when I responded to the riots, I’ll have to turn to the country and make big asks of you as well, to accept short-term pain for long-term good, the difficult trade off for the genuine solution.
And I know that after all that you have been through, that is a really big ask and really difficult to hear. That is not the position we should be in. It’s not the position I want to be in, but we have to end the politics of the easy answer, that solves nothing.
He said “things are worse than we ever imagined”, telling the press conference:
In the first few weeks we discovered a £22bn black hole in the public finances and before anyone says ‘Oh this is just performative or playing politics’ let’s remember the OBR (Office for Budget Responsibility) did not know about it, they wrote a letter setting that out.
They didn’t know because the last government hid it and even last Wednesday, just last Wednesday, we found out that thanks to the last government’s recklessness we borrowed almost £5bn more than the OBR expected in the last three months alone. That’s not performative, that’s fact.
Rachel Reeves, the chancellor, is planning to raise taxes, cut spending and make changes to benefits in October’s budget. Reeves will receive the OBR’s initial assessment of the state of the economy early next month, but she believes there is nothing to suggest the government’s underlying financial position is getting any better. Starmer says it “won’t be business as usual” when parliament returns on Monday.
Key events
The press conference is over now. Starmer refused to say whether more safe and legal routes to the UK would be created under his leadership.
Asked if safe and legal routes would be extended, he said:
So far as stopping the boats is concerned, we have got to take down the gangs that are running the vile trade in the first place, which is why we’re setting up the Border Security Command.
It’s why, when we had the European political community meeting just two weeks after I was elected and we had 46 European leaders to Blenheim.
I discussed with them in some detail how we would work better together to take down the gangs that are running this bar trade in the first place. I’m absolutely clear in my own mind that that’s how it will be most effectively done.
Starmer added that he would be drawing on his “experience of having taken down terrorism gangs, those that smuggle guns and drugs” in his previous role as chief prosecutor.
The home secretary, Yvette Cooper, recently announced plans to recruit 100 investigators and intelligence officers to target people-smuggling gangs as part of measures to clampdown on illegal migration.
More than half of the passengers travelling to the UK on small boats have come from countries, such as Afghanistan, Syria, Iraq and Iran, so unstable there is no chance they can be returned. Almost all come from states with which the UK has no agreement to return those not granted asylum.
‘I can’t build a prison by Saturday’, Starmer says as he defends early release scheme
Starmer was asked if he can guarantee early-released prisoners won’t commit crime. From 10 September, thousands of prisoners will start being released 40% of the way through their sentence as part of emergency measures. The prime minister said a framework has been put in place to ensure those who “create the greatest risk” are not released.
Starmer said the previous government pretended that you could have “longer and longer sentences”, while not building more prison spaces to deal with the increase in numbers in the prison estate.
“Here we are without the prison places we need,” Starmer said, adding that opening up prison space will take time.
“I can’t tell you how shocked I was when I discovered the full extent of what they’ve done with our prisons, and it’s going to take time to fix it. I can’t build a prison by Saturday,” he told the media.
“I shouldn’t be sitting in the Cobra room with a list of prison places across the country on a day by day basis, trying to work out how we deal with disorder. But that’s the position I was put in.”
Starmer said that he will stick to his general election campaign pledge that he will not increase income tax, VAT or national insurance on “working people”. He said that spending cuts and tax rises are not the only levers the Treasury has at its disposal.
The prime minister stressed that his government will focus on growing the economy, and says fixing the transport system and the NHS will both help this. He acknowledged, though, that he will have to take “tough decisions” to plug the black hole left by the Tories but did not specify what these decisions will be.
Starmer was asked specifically if spending cuts are being considered. The prime minister said he won’t “pre-empt the chancellor” in relation to the 30 October budget. There is speculation there could be wealth taxes, pension tax raids and a crack down on non-doms in the budget.
Starmer is taking questions from journalists. Kiran Stacey, the Guardian’s political correspondent, asked why Starmer cancelled the appointment of his new national security adviser. He asked if the PM can pledge there will be an “open and transparent” process to replace that person.
“Yes, of course, there’ll be an open and transparent process. And no. I’m not going to publicly, discuss, individual appointments,” Starmer replied.
Stacey reported earlier that Starmer had cancelled the appointment of one of Britain’s top generals as the national security adviser.
The prime minister overturned the decision made in April by his predecessor, Rishi Sunak, to appoint Gwyn Jenkins, then the vice-chief of the armed forces, to the most senior security position in the government, officials said.
Although Jenkins will be allowed to apply again for the job, some in Whitehall believe Starmer’s decision is another sign of his determination to promote allies to the most important roles in the civil service.
Starmer says the autumn budget will be ‘painful’
Starmer said “things are worse than we ever imagined” after discovering a £22bn “black hole” in the public finances. The prime minister is using this argument to warn that the budget – on 30 October – will be “painful”.
The prime minister said:
There is a budget coming in October, and it’s going to be painful. We have no other choice, given the situation that we’re in.
Those with the broadest shoulders should bear the heavier burden, and that’s why we’re cracking down on non-doms.
Those who made the mess should have to do their bit to clean it up, that’s why we’re strengthening the powers of the water regulator and backing tough fines on the water companies that let sewage flood our rivers, lakes and seas.
But just as when I responded to the riots, I’ll have to turn to the country and make big asks of you as well, to accept short-term pain for long-term good, the difficult trade off for the genuine solution.
And I know that after all that you have been through, that is a really big ask and really difficult to hear. That is not the position we should be in. It’s not the position I want to be in, but we have to end the politics of the easy answer, that solves nothing.
He said “things are worse than we ever imagined”, telling the press conference:
In the first few weeks we discovered a £22bn black hole in the public finances and before anyone says ‘Oh this is just performative or playing politics’ let’s remember the OBR (Office for Budget Responsibility) did not know about it, they wrote a letter setting that out.
They didn’t know because the last government hid it and even last Wednesday, just last Wednesday, we found out that thanks to the last government’s recklessness we borrowed almost £5bn more than the OBR expected in the last three months alone. That’s not performative, that’s fact.
Rachel Reeves, the chancellor, is planning to raise taxes, cut spending and make changes to benefits in October’s budget. Reeves will receive the OBR’s initial assessment of the state of the economy early next month, but she believes there is nothing to suggest the government’s underlying financial position is getting any better. Starmer says it “won’t be business as usual” when parliament returns on Monday.
Starmer has set out some of his legislative priorities to reverse “14 years of rot”. This includes accelerating planing to build homes, harnessing the potential of artificial intelligence for growth, putting the rail service into public ownership and producing clean energy.
Labour has done more in seven weeks than Tory government did in seven years, Starmer says
Starmer says that his new Labour government have “done more in seven weeks than the last government did in seven years”.
“These are just the first steps towards the change that people voted for, the change that I’m determined to deliver,” the prime minister said.
He adds that change will not happen “overnight” and issues need to be tackled at the “root”.
“A garden and a building that were once used for lockdown parties,” Starmer later said during his speech in the rose garden, adding his government is “now back in your service”.
Things will get worse before they get better, Starmer says
Keir Starmer has said that “things will get worse before they get better”. He said that he didn’t want to release some prisoners early (to avoid overcrowding), especially given his history as the CPS’ chief prosecutor, but that it was necessary.
“It goes against the grain of everything I’ve ever done,” the prime minister said in his speech.
“But to be blunt, if we hadn’t taken that difficult decision immediately, we wouldn’t have been able to respond to the riots as we did, and if we don’t take tough action across the board, we won’t be able to fix the foundations of the country as we need.”
“I didn’t want to means test the winter fuel payment but it was a choice that we had to make,” Starmer continued.
The chancellor, Rachel Reeves, revealed plans last month to introduce a means test for the winter fuel payment, where only those on pensions benefits would qualify, as part of a push to plug what she said was a £22bn black hole in the public finances left by the previous Conservative administration.
Starmer says riots exposed the state of a ‘deeply unhealthy society’
Keir Starmer said the riots this summer exposed the state of a “deeply unhealthy society”, adding that a “mindless minority of thugs” thought hey could get away with criminality because of the broken justice system.
He said:
A mindless minority of thugs who thought that they could get away with causing chaos, smashing up communities and terrifying minorities, vandalizing and destroying people’s property, even trying to set fire to a building with human beings inside it, and as if that wasn’t despicable enough, people displaying swastika tattoos, shouting racist slurs on our streets…
Now they’re learning that crime has consequences, that I won’t tolerate a breakdown in law and order under any circumstances, and I will not listen to those who exploit grieving families and disrespect local communities. But these riots, didn’t happen in a vacuum. They exposed, the state of our country, revealed a deeply unhealthy society. The cracks in our foundations laid bare.
He said the rioters exploited the cracks in the society left by the Conservative government.
“They saw the cracks in our society after 14 years of failure, and they exploited them. That’s what we’ve inherited, not just an economic black hole, a societal black hole, and that’s why we have to take action and do things differently,” Starmer said.
Starmer gives first major speech since becoming PM in July
Keir Starmer has begun his first major speech as prime minister. He is expected to outline the government’s plans and priorities moving into the autumn. Starmer is due to warn that change will take a decade – not a parliamentary term – to implement, given that the damage that the Conservatives did to the country was so great.
You will be able to watch Keir Starmer’s speech at 10am on the livestream we will put at the top of the blog shortly.
The prime minister is due to make a speech in the Downing Street rose garden with a vow to “root out 14 years of rot” and “reverse decades of decline”.
SNP ministers considering limiting universal benefits amid spending cuts in Scotland
Severin Carrell
Severin Carrell is the Guardian’s Scotland editor
Scottish National party ministers are considering cutting or limiting universal benefits on which its electoral successes were built, including free prescriptions, free bus travel and free school meals, in a concerted drive to cut public spending.
With some of these measures seen as middle-class subsidies, ministers have already ordered cuts to flood defence spending, the Scottish arts budget, council spending on nature restoration and, it has emerged, free iPads for some school children.
The Times reports that Caroline Lamb, the director general for health and social care in the devolved government, has told civil servants there is a £1.1bn spending gap in her department, driven in large part by public sector pay deals recently agreed by ministers.
She told her staff they needed to save £750m this financial year, and prepare for the additional cost pressures of £357m more next year to cover pay increases. The Times reports that free tuition for Scottish university and college students is also under scrutiny.
Shona Robison, the Scottish finance secretary, issued an order to all her department heads earlier this month to implement “emergency controls” on spending driven by the warning from Rachel Reeves, the Chancellor, that the UK government had a £22bn spending gap to bridge.
The chancellor’s cuts to spending for English or pan-UK departments will directly affect Scotland’s grant from the Treasury.
Robison’s instructions have led to officials cancelling some projects, curtailing others or cutting heavily on in-year spending. She is preparing for an emergency spending statement when Holyrood resumes in early September.
These cuts raise significant political risks for the SNP: much of their popularity has been based on the higher per capita spending for Scottish public services than the UK average, and the SNP’s willingness to fund universal benefits, including free bus travel for all over-60s and under 22s; a council tax freeze; abolishing bridge tolls and hospital parking fees; a temporary suspension of peak rail fares and subsidised ferry fares.
Lamb, also the chief executive of NHS Scotland, told her officials “we have been experiencing a worsening, overall, underlying, financial deficit over a number of years”.
“[We’ve] managed to almost limp over the line over the last year or two but we’ve now got to the point where it’s actually a bit of a tipping point,” she told civil servants.
Senior officials at the Foreign Office repeatedly warned No 10 that Rishi Sunak should not leave June’s D-day commemoration in Normandy early, according to new revelations in a book about the Tories’ 14 years in power.
The department passed on two messages to Downing Street in the weeks leading up to the event, which were then ignored in what has gone down as the worst election campaign blunder of the last 14 years.
The claim is contained in the paperback version of Blue Murder, by the Daily Telegraph’s political editor, Ben Riley-Smith.
The Guardian has also spoken to multiple sources about the events of that day, giving the fullest picture yet of the mistake that came to define Sunak’s campaign and taint his entire premiership.
According to the book, the Foreign Office provided written advice on two occasions before the event telling Downing Street that the prime minister should attend.
The first came a few weeks before the event and the second just a few days before, once it became clear that Keir Starmer would be attending, as would the Ukrainian president, Volodymyr Zelenskiy.
You can read the full story by Kiran Stacey, a political correspondent for the Guardian, here:
Labour party chairman, Ellie Reeves, has been on LBC this morning. She said Labour will tackle the prisons crisis, which has seen the judiciary ask magistrates’ courts to delay sending some criminals to prison in the coming weeks because of unprecedented overcrowding.
Speaking to LBC radio, Reeves said:
The prime minister will be speaking later today about the inheritance from 14 years of Conservative government, the black hole in the country’s finances, but also the societal black hole that we’re facing.
For example, the fact that the prison estate has been operating at 99% capacity with no plan from the previous government to fix that, so he’ll be talking about fixing the foundations.
Under the previous government, we saw the sticking plaster politics papering over the cracks, hoping that something would come up, whereas Keir Starmer, the prime minister, wants to fix the foundations of the country so that people’s lives can be better.
Up to 2,000 prisoners are expected to be released in the second week of September as part of an early release scheme, called SDS40, which will allow many prisoners to walk from prison after serving 40% of their sentences. A second tranche of up to 1,700 prisoners, all jailed for more than five years, are expected to be freed in late October.
A senior official from Napo, the probation officers’ union, said its members were trying to prepare for the early release scheme in September, but the government was unable to maintain staffing levels, let alone recruit more, as required.
Simon Goodley
Simon Goodley is a Guardian business reporter
The UK government has awarded KPMG a £223m contract to train civil servants despite pledging to slash state spending on external consultants.
Under the 15-month deal with the Cabinet Office, which is reportedly the second-largest public sector contract ever won by KPMG, the firm will manage training and development services across the civil service.
This includes overseeing courses on policymaking, communications and career development, as well as training for assessed or accredited qualifications run by universities, business schools and specialist providers.
News of the contract, which was first reported by the Financial Times, comes after the new Labour government announced last month it would take immediate action to stop all non-essential government consultancy spending in 2024-25 as part of a move to halve the government consultancy bill in future years.
The cost-saving initiative will save £550m in 2024-25 and £680m in 2025-26, according to Treasury estimates. The government said the civil service headcount cap would be lifted to help departments achieve the target.
The KPMG contract was awarded just days before the government set out its cost-saving proposals, the official record of the contract award sets out. Its maximum value represents nearly 8% of KPMG’s annual UK revenues, making it the second-biggest public sector contract awarded to the firm, according to the data provider Tussell.
The Conservatives accused Labour of “cronyism” after the Sunday Times reported that major Labour donor Lord Waheed Alli was able to access Downing Street, despite not having an official government role.
Alli, a television executive who was given a peerage by Tony Blair in 1998, is a crucial figure in the Labour party, having personally donated £500,000 since 2020. He worked as the party’s chief fundraiser for the general election, having been hired by Keir Starmer in 2022, as the Guardian’s political correspondent, Kiran Stacey, explains in this report.
Ellie Reeves, the Labour party chair, was asked about the reports today. She insisted that the “proper processes” were followed when questioned on why Lord Alli was given a pass to Number 10.
Reeves, who also holds the government post of minister without portfolio, told Sky News:
Well, there’s no rules that prevent someone who has made a donation or had a political job in the past being, having a role.
There are rules that have to be followed, there are processes that have to be followed, and it’s important that those rules are respected.
Lord Alli had a pass for a few weeks. I don’t know all the details of that, but I’m sure the proper processes were followed.
He had a pass for a few weeks, as I understand it, he hasn’t got a pass now. He’s a well respected figure, a Labour peer.
Minister denies cabinet split over cuts to winter fuel payments
Cabinet Office minister Ellie Reeves has been speaking on Sky News. She has been asked about the decision to start means-testing pensioner’s winter fuel allowance, which would limit payments to people who receive pension credits or other means-tested benefits (here is a useful explainer on pension credit eligibility). Labour MPs have warned that the decision could lead to a “cruel winter” for the most vulnerable people in the country.
Reeves blamed the Tories’ “economic mess” for the restrictions on winter fuel payments and denied claims that Cabinet members are split on the policy.
Speaking to Sky News, she said:
This is an incredibly tough decision, and not one that the Chancellor wanted to be taking, but it’s because of the economic mess that we’ve inherited from the previous government.
The Cabinet are behind the chancellor on this. This is a decision that’s been taken by the chancellor, with the support of the Cabinet, there aren’t splits on this.
It’s a decision that no one wanted to be in the position to have to make, it’s not something that we wanted to do, but it’s something that is the responsible thing to do because of that £22 billion black hole in the country’s finances.
Opening summary
Good morning and welcome back to our rolling coverage of UK politics.
Keir Starmer will deliver a heavily briefed speech in the gardens of Downing Street ahead of parliament’s return next week. The prime minister will vow to “reverse a decade of decline” and to “fix the foundations” of the UK economy.
The prime minister will promise that his government will do the “hard work” to “root out 14 years of rot” under the Conservatives.
Ministers have already been heavily criticised for ending winter fuel payments for millions of pensioners. Starmer is also under pressure to end the two-child benefit cap and extend the £1bn household support fund, which is due to end in September.
The prime minister will use his speech – due to be delivered at 10am – to warn that “frankly – things will get worse before we get better” as the Labour administration tries to deal with “not just an economic black hole but a societal black hole”.
Two months ago, I stood on the steps of Downing Street and promised you a government of public service.
Today, I will set out the hard work we need to do in the months ahead to fix the foundations of our country.
Watch my speech live here, from 10am.
— Keir Starmer (@Keir_Starmer) August 27, 2024
He is expected to say:
The riots didn’t just betray the sickness, they revealed the cure, found not in the cynical conflict of populism but in the coming together of a country the morning after and cleared up their community.
Because that is who we are, that is what we stand for. People who cared for their neighbour.
Communities who stood fast against hatred and division. Emergency services who did their duty – even when they were in danger. And a government that put the people of this country first.
Writing in The Times, Starmer said that “once trust is broken, it is difficult to get back”, saying he stood on the steps of Downing Street after the general election and promised to lead a government that would “return politics to public service, to rebuild that hope and trust”.
Reacting to details of the prime minister’s speech, Tory party chairman Richard Fuller said:
This is nothing but a performative speech to distract the public from the promises Starmer made that he never had any intention of keeping.
In fewer than 100 days, the Labour Party has dumped its ambition of public service and become engulfed in sleaze, handed out bumper payouts to its union paymasters with ‘no strings’ attached and laid the groundwork to harm pensioners and tax working people.
In other news:
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A £40m VIP helicopter contract used extensively by the former prime minister Rishi Sunak is to be cancelled. Starmer and his defence secretary, John Healey, have decided not to renew a contract for helicopter transport which is due to expire at the end of the year after it was extended in 2023 at Sunak’s personal insistence.
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The Scottish government has been told to “take responsibility” for fixing the country’s economic issues. Scottish Labour leader Anas Sarwar has sought to capitalise on dire financial news in recent months by releasing what the party is calling a dossier laying out the extent of Scotland’s “economic decline and financial mismanagement” that can be laid at the foot of ministers.
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Rachel Reeves could raise at least £10bn a year through a radical shake-up of pensions that would make tax relief less generous to better-off earners, a leading left-of-centre thinktank has said. The report by the Fabian Society says tax breaks for pensions have become markedly more expensive for the government and its proposed changes would fill half the £22bn shortfall the chancellor has identified in the public finances. You can read more on this story here.
It is Yohannes Lowe here with you today. Please do email me on yohannes.lowe@theguardian.com if you spot any typos or omissions.