Brevia Consulting is providing a weekly round-up and analysis of the UK headlines. This week, read about the Government’s U-turn on the abolition of the 45p tax rate, the Home Secretary’s recent comments regarding the Rwanda Asylum Plan, and the sharp increase in fixed mortgage rates following the Chancellor’s ‘mini-budget’.
TORY INFIGHTING AND A DRAMATIC U-TURN
It has been a tough week for the new Government. The Conservative Party Conference has been riddled with infighting and confusion. On Monday, the Chancellor of the Exchequer announced that the Government is abandoning its plan to abolish the top rate of income tax. In a statement, Kwasi Kwarteng MP said ‘it is clear that the abolition of the 45p tax rate has become a distraction from our overriding mission to tackle the challenges facing our country’.[1] Another Tory rebellion broke out after the Prime Minister refused to commit to increasing benefits in line with inflation next year; this is at odds with the promise made by former Prime Minister Boris Johnson.[2] There has also been confusion over the timing of the publication of the Government’s fiscal plan, as some sources confirmed it would be bought forward, while the Chancellor stated it would remain as 23 November.[3]
BRAVERMAN COMMITS TO IMPLEMETING RWANDA ASYLUM PLAN
Earlier this week, Home Secretary Suella Braverman MP set out her plans to the Conservative Party Conference to take control of migration into the UK, pledging to ‘make the Rwanda scheme work’.[4] The Rwanda Asylum plan, established by the Johnson Government, would deport refugees who arrive in the UK to Rwanda in order to claim asylum. The controversial policy was abandoned shortly before the first flight of asylum seekers left for Rwanda, following an intervention by the European Court of Human Rights. At a Spectator fringe event on Tuesday, Braverman stated her personal view that the UK should ultimately leave the European Convention on Human Rights.[5] At a separate fringe event, Braverman shared her ‘dream’ and ‘obsession’ to see the front page of The Telegraph show a flight taking off with refugees to Rwanda, comments which triggered significant backlash on social media.[6]
AVERAGE TWO-YEAR MORTGAGE RATES HIGHEST FOR 14 YEARS
The average rate on a two-year fixed mortgage has jumped to over 6 per cent, a level not seen since the global financial crisis in November 2008.[7] Mortgage rates underwent a steep rise in the immediate turmoil following the Chancellor’s ‘mini-budget’, with lenders withdrawing around 40 per cent of products. Around 100,000 people a month are coming to the end of the current deal and will face a significant rise in their monthly repayments.[8] There will be more difficulties for first-time buyers too as most 95 per cent mortgages are expected to disappear, with lenders fearing borrowers will fall into negative equity. The costs are also expected to flow into higher rents in time. The political ramifications of vastly increased outgoings for most people will be significant.
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Notes
[1] Twitter, 3 October 2022, Link
[2] Financial Times, ‘Liz Truss tries to rally MPs amid renewed Tory infighting’, 4 October 2022, Link
[3] BBC, ‘Kwasi Kwarteng’s fiscal plan really will be published early’, 5 October 2022, Link
[4] The Conservative Party, ‘Our plan for law & order’, 4 October 2022, Link
[5] The Independent, ‘Suella Braverman sparks new government row after calling for UK to quit ECHR’, 5 October 2022, Link
[6] The Independent, ‘Suella Braverman says it is her ‘dream’ and ‘obsession’ to see a flight take asylum seekers to Rwanda’, 5 October 2022, Link
[7] BBC, ‘Average two-year mortgage rate highest for 14 years’, 5 October 2022, Link
[8] Ibid.
