Politics latest: Chancellor and Hunt in spiky Commons clash - as she's quizzed over tax plans (2024)

By Alix Culbertson, political reporter

The government's "black hole" could be bigger than the £22bn it has claimed as cabinet ministers are being pressured to scrap projects immediately to fill it, Sky News understands.

After Labour won the election in July, Chancellor Rachel Reeves accused the previous government ofleaving a £22bn shortfallin public finances they had not disclosed.

She promptly cancelled several projects, including 40 new hospitals, reforms to adult social care charges, a new Advanced British Standard qualification, and several road and train projects - and reduced the number of pensioners who will get the winter fuel allowance.

But because the black hole is for this year alone, it has to be filled quickly - which poses the question of how…

A little earlier we reported on a major rescue operation in the English Channel after a boat with at least 100 migrants onboard capsized.

At least 13 people are now said to have died.

That's according to the mayor of Le Portel, a French town being used in a rescue operation, who said "the bottom of the boat ripped open".

Small boat crossings have continued at pace since Labour entered government in the UK - last week the total number of people to have crossed this year reached 20,000.

You can read more on this developing story below:

We have been reporting plenty on the tax rises that could be coming in October's budget.

One of the levies that could be in line for changes is council tax, so we thought we'd have a look at how it works now and how the Labour government might tweak it.

Earlier today, Deputy Prime Minister Angela Rayner did not rule out changes to the single person discount on council tax.

The current system

Council tax is paid on domestic properties and collected by local councils.

Some people don't have to pay it or get discounts, for example those living alone, but most people over 18 who aren't students living with other students are charged.

There are valuation bands which dictate how much tax needs to be paid, based on the value of properties as they were in 1991.

New build properties developed after that date are estimated by the Valuations Office Agency and banded accordingly.

Different local councils charge different rates for each of the bands, with rates in central London often some of the cheapest, and those in more rural areas usually higher.

Current laws stipulate that any local authority wanting to raise council tax by 5% or more has to hold a referendum first.

Is it fit for purpose?

The current system was introduced in 1993.

Property values have changed significantly in the last three decades, with some London house prices having risen by more than 800%, whereas in places like Hartlepool, in County Durham, they have barely tripled.

The Institute for Fiscal Studies has labelled use of the current system as "absurd" while the Institute for Government has called it "incredibly poorly designed".

What has Labour said before?

Chancellor Rachel Reeves is among those to have previously called for a council tax revaluation.

A leaked recording from March revealed chief secretary to the Treasury, Darren Jones, saying he was frustrated by the "out of date" system and hinted those with homes worth over £1m may have to pay more.

In Wales, the Labour Party has promised to introduce new council tax bands and tax band rates, but that has been pushed back to 2028.

Sir Keir Starmer previously described the Welsh Labour government as a "blueprint for what Labour can do across the UK," but later told Sky News council tax was "too high for too many people".

What could the government change?

There have been reports the government could replace the banding system in favour of a 0.5% tax on the value of a property per year.

This would mean that someone in a property worth £350,000, for example, would pay £1,750 a year.

However, the move could particularly impact those living in London, where the average one-bedroom flat peaked at £327,000 in 2020.

The prime minister has warned of a "painful" budget in October.

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:

After a long Saturday for millions of Oasis fans in online queues, the culture secretary says surge pricing will be part of the government's review of the ticket market.

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Niall speaks to secondary ticketing site Viagogo on this episode. While it wasn’t part of dynamic pricing, it has offered resale tickets for thousands of pounds since Saturday.

Matt Drew from the company accepts the industry needs a full review while Adam Webb, from the campaign group FanFair Alliance, explains the changes it would like to see.

Later, our data and forensics correspondent Tom Cheshire tells Niall about how a rise in online propaganda has helped the Afghan branch of Islamic State become "the greatest external terror threat".

It’s been linked to the concert hall attack in Moscow and the plot to disrupt Taylor Swift gigs in Austria.

A major rescue operation is under way after a boat with at least 100 migrants onboard capsized in the English Channel, according to French media.

The French coastguard said 10 people were in critical condition after the boat got into difficulty off the coast of France, Reuters reported.

France 3 quoted Le Portel mayor Olivier Barbarin as saying "around 10 people in cardio-respiratory arrest".

More from the Commons, where the chancellor has been facing questions from MPs this lunchtime.

As you'd expect, there's been a lot on tax and her decision to start means testing the winter fuel payment.

But it's not just the Tories giving her a hard time - a Labour MP representing the "snowiest village" in England has asked how the chancellor will make sure his elderly constituents don't suffer this winter.

"The village of Copley in my constituency (Bishop Auckland) is the snowiest in England, and we have many pensioners in receipt of the basic state pension who are nonetheless in fuel poverty," he points out.

Many of them "live in cold, stone-built houses", he adds.

Chancellor Rachel Reeves references the government's plan to insulate five million more homes during this parliament, which will make properties warmer and keep energy bills down.

Chancellor Rachel Reeves just accused Jeremy Hunt of having "a bit of brass neck" for criticising cronyism under Labour during Treasury Questions.

The shadow chancellor had asked Ms Reeves why cronyism - that is, the appointment of friends and associates to positions of authority - is "wrong under the Conservatives but acceptable under Labour".

'We will treat taxpayers' money with respect'

Responding, Ms Reeves says Mr Hunt has "a bit of brass neck criticising this government after the appointments and the partying at Downing Street" under the Tories.

She says there were "billions of pounds of contracts handed out to friends and donors of the Conservative Party".

"That's why this government is appointing a COVID corruption officer to get that money back... because unlike the last government, we are determined that taxpayers' money is treated with respect."

Chancellor Rachel Reeves has confirmed corporation tax will be capped at 25% as part of a "tax roadmap for business" that she will set out in the October budget.

During Treasury questions, Ms Reeves told the Commons this would "give business the confidence to grow".

She said "investment is at the heart" of the government's mission to grow the economy and capping corporation tax would "offer the certainty that encourages investment".

The cap will remain for the duration of this parliament.