Conservative leadership candidate Liz Truss’s campaign is airing details of a possible cut in VAT to address the cost-of-living crisis as she also pushes for increases in defence spending.
Ms Truss is the favourite to win the vote of Conservative party members in the race with Rishi Sunak to become party leader and prime minister.
Mr Sunak's team, who has said he will provide additional support for the most vulnerable, attacked Ms Truss's plans to cut value added tax, saying it would be “regressive” and cost tens of billions of pounds
As the UK reels from runaway inflation, the departing prime minister Boris Johnson said that the winner of the leadership race would announce “another huge package of financial support”.
Mr Johnson acknowledged the next few months will be difficult — “perhaps very tough” — as “eye-watering energy bills take their toll”.
“Next month — whoever takes over from me — the government will announce another huge package of financial support,” he said.
A 5 per cent reduction in VAT across the board is being considered by Ms Truss as one of a series of possible strategies to ease the cost-of-living crisis if she wins the race, according to The Sunday Telegraph.
Her leadership campaign says the plan is a “nuclear” option, the Telegraph quoted an unnamed source as saying, with other options including a 2.5 per cent cut in VAT, from the current standard rate of 20 per cent.
A source in Mr Sunak's team called the plan “flawed on many levels” and “regressive”, claiming it would benefit richer households with “very little to no benefit for lower income households who will need the most help this winter”.
The source dismissed the idea as “yet another addition to Liz’s spending black hole” — adding to the “existing £60 billion of other unfunded permanent tax cuts … all paid for through borrowing money we don’t have, and risking stoking inflation further”.
The Sunday Times also reported that Ms Truss is considering cutting VAT.
Another option being weighed up by the foreign secretary is a cut to income tax, the paper said, with proposals from allies including increasing the level above which people start paying the levy.
A 5 per cent cut on VAT would save the average household more than £1,300 ($1,527) a year, and cost taxpayers £3.2bn a month, according to analysis by the Institute for Fiscal Studies think tank.
Others supporters of Ms Truss suggested raising the tipping point for the higher rate of 40 per cent and cutting the basic rate below 20 per cent, the paper said.
A Treasury spokesman said the department is making the “necessary preparations” to ensure the next government has options to deliver extra help “as quickly as possible”.
The British government has been facing growing calls to provide immediate financial support to households, with energy bills set to jump to an average of £3,549 a year from October — the latest in a line of above inflation increases.
Soaring energy bills, made worse by the decision to boycott Russian energy imports in response to the conflict in Ukraine, have driven British inflation to 40-year-highs but the government's response has been hampered by the race to replace Mr Johnson that runs until September 5.
Mr Sunak, in an article for The Times on Saturday, said efforts should be focused on low-income households and pensioners, with help delivered through the welfare system, winter fuel and cold weather payments.
He said it is “right to caution against providing definitive answers before getting into Downing Street”, as it is “responsible” to first have “full command of the fiscal situation”.
However, he also acknowledged that providing “meaningful support” would be a “multibillion-pound undertaking”.
On Sunday, Mr Sunak supporter and former Cabinet minister Simon Hart acknowledged the current situation is “frustrating” for people.
But he told Sky News: “To speculate now about what the extent of the challenge would be and then come up with a solution is, I think, slightly unreasonable.
“Is there going to be a specific number? Are we going to say ‘We are going to give you this amount of money on September 7’? No, I think that would be irresponsible to do that.
“What we can say is — like the prime minister has — there is a package on its way.”
Mr Hart later said he would not commit to backing Ms Truss’s planned fiscal event if she wins the keys to No 10.
The government has said it is preparing options on a cost-of-living support package for the next prime minister to consider.
Ms Truss has also vowed to bolster Britain's defences if she is made prime minister, including by pushing ahead with renewing the Trident nuclear weapons system, as she warned “the era of complacency is over”.
She said her “number one priority” as PM would be to keep the nation safe.
“We thought that peace and stability were inevitable — but they aren't,” she said. “The era of complacency is over. We are living in an increasingly dangerous world and our security is under more threat than it has been in decades.
“We need to make sure that Britain has the deterrents it needs to lead the global efforts to tackle aggression from the likes of Russia and other authoritarian regimes.”
Mr Sunak has said he views the Nato defence spending target of 2 per cent of GDP as a “floor and not a ceiling” and noted that spending is set to rise to 2.5 per cent “over time”, but has refused to set “arbitrary” goals.
Speaking at the penultimate leadership hustings in Norwich, eastern England, on Thursday, he said: “If Liz is here, as she probably said in her speech, she will invest 3 per cent of GDP.
“Now, I'm not going to say that, not because I don't believe in investing in our armed forces, of course I do, and my record demonstrates that.
“It's just I don't believe in arbitrary targets when it comes to something as serious as the security of our realm.”
UAE currency: the story behind the money in your pockets
Why are asylum seekers being housed in hotels?
The number of asylum applications in the UK has reached a new record high, driven by those illegally entering the country in small boats crossing the English Channel.
A total of 111,084 people applied for asylum in the UK in the year to June 2025, the highest number for any 12-month period since current records began in 2001.
Asylum seekers and their families can be housed in temporary accommodation while their claim is assessed.
The Home Office provides the accommodation, meaning asylum seekers cannot choose where they live.
When there is not enough housing, the Home Office can move people to hotels or large sites like former military bases.
THE BIO
Born: Mukalla, Yemen, 1979
Education: UAE University, Al Ain
Family: Married with two daughters: Asayel, 7, and Sara, 6
Favourite piece of music: Horse Dance by Naseer Shamma
Favourite book: Science and geology
Favourite place to travel to: Washington DC
Best advice you’ve ever been given: If you have a dream, you have to believe it, then you will see it.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Ways to control drones
Countries have been coming up with ways to restrict and monitor the use of non-commercial drones to keep them from trespassing on controlled areas such as airports.
"Drones vary in size and some can be as big as a small city car - so imagine the impact of one hitting an airplane. It's a huge risk, especially when commercial airliners are not designed to make or take sudden evasive manoeuvres like drones can" says Saj Ahmed, chief analyst at London-based StrategicAero Research.
New measures have now been taken to monitor drone activity, Geo-fencing technology is one.
It's a method designed to prevent drones from drifting into banned areas. The technology uses GPS location signals to stop its machines flying close to airports and other restricted zones.
The European commission has recently announced a blueprint to make drone use in low-level airspace safe, secure and environmentally friendly. This process is called “U-Space” – it covers altitudes of up to 150 metres. It is also noteworthy that that UK Civil Aviation Authority recommends drones to be flown at no higher than 400ft. “U-Space” technology will be governed by a system similar to air traffic control management, which will be automated using tools like geo-fencing.
The UAE has drawn serious measures to ensure users register their devices under strict new laws. Authorities have urged that users must obtain approval in advance before flying the drones, non registered drone use in Dubai will result in a fine of up to twenty thousand dirhams under a new resolution approved by Sheikh Hamdan bin Mohammed, Crown Prince of Dubai.
Mr Ahmad suggest that "Hefty fines running into hundreds of thousands of dollars need to compensate for the cost of airport disruption and flight diversions to lengthy jail spells, confiscation of travel rights and use of drones for a lengthy period" must be enforced in order to reduce airport intrusion.
