Chancellor expected to give changed address after confirming plan to axe top rate of income tax has been scrapped
Q: Where does this leave your credibility?
Kwarteng says he has been in parliament for 12 years. He says ministers do sometimes change their minds.
I decided, along with the the prime minister, not to proceed [with the policy].
Continue reading...Tory MPs fear voters see them as the nasty party again after the prime minister refused to rethink tax cuts for the rich
Liz Truss has long channelled Margaret Thatcher – echoing her rhetoric, her free market instincts and even her clothes – but as the Tory conference kicked off in Birmingham on Sunday many in her party were hoping that she would relinquish ambitions to be the next Iron Lady and drop her mini-budget plans.
There were early glimmers of hope. In an article for the Sun, she admitted her proposals would cause “short term disruption” but that she had an “iron grip” on the country’s finances. Then she told the BBC she understood public concerns. “I do accept we should have laid the ground better,” she said.
Continue reading...Influential former minister hints he will not vote for mini-budget measures, in blow to PM
Michael Gove said Liz Truss’s programme of tax cuts was deeply concerning and “not Conservative”, and hinted he would not vote for them, in a major blow to the prime minister’s authority.
Gove, who was removed as levelling up secretary before Boris Johnson left No 10 but remains a hugely influential Tory MP, said he could not back Truss’s abolition of the top 45p rate of tax, or the removal of the cap on bankers’ bonuses.
Continue reading...Latest updates: PM vows to press ahead with mini-budget plans and dismisses objections to top rate of tax being axed
Q: Are you absolutely committed to getting rid of the 45% rate of tax?
Yes, says Truss.
Continue reading...PM says she accepts ‘we should have laid ground better’ after mini-budget sparked economic turmoil
Liz Truss has refused to rule out public spending cuts and a real-terms drop in benefits to help pay for the mini-budget, as she sought to quell fury over her handling of the economy by admitting she should have “laid the ground better”.
The prime minister offered a sliver of remorse for the way last Friday’s mini-budget was received. There was a temporary collapse in the value of sterling against the dollar, a rebuke from the International Monetary Fund and warnings that interest rates could be hiked again.
Continue reading...Prime minister is facing the same fate as Theresa May when the Commons returns and could even be removed as leader
Liz Truss is already facing the possibility of crippling parliamentary rebellions over welfare, planning and a new wave of austerity, as MPs warn that No 10 has become “disconnected from reality”.
With some Conservatives in talks with Labour over how to block elements of the prime minister’s sweeping plans, senior Tories believe that Truss is now heading into the bruising parliamentary warfare that characterised Theresa May’s beleaguered premiership.
Continue reading...£1bn scheme is latest to scramble to raise cash after chancellor’s tax-cutting mini-budget sparks turmoil
The pension scheme trustees at the government contractor Serco have been forced to tap the company for £60m of emergency support after the UK’s financial markets meltdown this week.
Serco’s £1bn pensions scheme is the latest to scramble to raise cash after a plunge in the pound and a meltdown in UK bond prices triggered calls on fund managers to provide collateral for niche financial products they had taken out to hedge against swings in the value of their investments.
Continue reading...Huge policy changes are needed to get UK back on track – so early publication would give an incomplete picture
The message the government wanted to get out was clear. After less than a month as prime minister, Liz Truss had converted from vocal scourge of Treasury orthodoxy to an active supporter.
Given the fallout in financial markets after the not-so-mini-budget, Truss and her chancellor, Kwasi Kwarteng, laid on a heavily stage-managed meeting on Friday with officials from the Office for Budget Responsibility, the Treasury’s independent economic forecaster, to try to smooth over the mess.
Continue reading...PM and chancellor say they will not publish projections until late November despite them being ready next week
Liz Truss and Kwasi Kwarteng will refuse to release forecasts from the Office for Budget Responsibility (OBR) until more than six weeks after receiving them, despite calls for them to be published as soon as possible.
The prime minister and chancellor said they would only publish the independent forecasts on 23 November alongside a fiscal statement, despite them being ready on 7 October.
Continue reading...Watchdog said it was ready to supply information, but was not asked to do so by Kwasi Kwarteng
Q: Can you reassure listeners that your judgment is better than that of people like the IMF and the Bank of England, who have criticised the mini-budget?
Truss says:
I have to do what I believe is right for the country and what is going to help move our country forward.
Continue reading...Finance minister announces €200bn fund to protect citizens from rising gas prices driven by Russia’s war in Ukraine
Germany’s finance minister has vowed that he will not follow the UK “down the path of an expansionary fiscal policy” as his government announced a €200bn (£177bn) fund designed to protect consumers and businesses from rising gas prices driven by Russia’s war in Ukraine.
Europe’s largest economy will reactivate an economic stabilising fund previously used during the global financial crisis and the coronavirus pandemic, said the chancellor, Olaf Scholz, at a joint press conference with the finance minister, Christian Lindner, and the economic minister, Robert Habeck, on Thursday afternoon.
Continue reading...Tory chair Mel Stride says watchdog needs to hear how chancellor will boost growth, and suggests one option might be via immigration
Kwasi Kwarteng will be called before parliament’s Treasury watchdog and asked to hand over independent growth forecasts, as its chairman said there is “not a very broad path” out of the current economic situation.
Mel Stride, a Conservative MP and chair of the Treasury committee, said Kwarteng was “very, very unlikely to reverse” the £45bn of unfunded permanent tax cuts he announced last Friday, even though that is an option. The alternative, he said, was to act quickly to “demonstrate to the markets that growth is realistic”. The third option would be deep cuts to public spending, but that would be difficult given the current pressure of inflation, Stride said.
Continue reading...Bank of England left with no action but to intervene after Kwasi Kwarteng’s mini-budget
The Bank of England has been forced into emergency action to halt a run on Britain’s pension funds after the impact of Kwasi Kwarteng’s ill-received mini budget prompted fears of a 2008-style financial crisis.
Threadneedle Street said the fallout from a dramatic rise in government borrowing costs since the chancellor’s statement had left it with no choice but to intervene to protect the UK’s financial system.
Continue reading...No 10 says PM has faith in chancellor, as Treasury minister says tax cuts are the ‘right plan’. This blog is now closed
Q: When would you get debt falling as a proprotion of GDP?
Starmer says Labour does want to get that down.
Continue reading...To make the sums work, some suggest Kwasi Kwarteng may include deep spending reductions in his medium-term fiscal plan
When Kwasi Kwarteng met City figures on Tuesday, the Treasury said he had “reiterated the government’s commitment to fiscal sustainability”: though the grim faces of attendees in the official photos suggested they may not have been terribly reassured.
Some analysts are now warning that with borrowing costs rising sharply, and the chancellor determined not to water down his radical tax plans, “fiscal sustainability” points to one thing: spending cuts.
Continue reading...Latest updates: Labour delegate says current electoral system allows Tories to get away with measures like ‘protecting bankers’ bonuses’
In June, as the RMT union launched what has become an ongoing series of strikes, Keir Starmer ordered Labour frontbenchers and shadow ministerial aides not to join picket lines. This infuriated leftwing Labour MPs and some union leaders, notably Sharon Graham, the general secretary of Unite.
At one point it looked as if there might be a huge row at conference about whether shadow ministers should or should not be allowed to join picket lines. But, in an interview with the Today programme this morning, Graham suggested that a truce of sorts has been agreed – even if the two sides do not entirely see eye to eye.
My issue about this … isn’t necessarily around one person on a picket line because, quite frankly, that isn’t the issue. The issue is the mood music [ordering shadow ministers not to join picket lines] suggests. It suggests a mood music that being on the picket line is somehow a bad thing. It’s a naughty step situation.
The party who is there to stick up for workers should not give the impression – that’s the problem, it gives the impression – that they are saying picket lines are not the place to be. And I think that it was unfortunate. I think it was a mistake. I think, to be honest with you, Labour knows it was a mistake. And I don’t actually think it’s holdable.
When people go on strike it is a last resort at the end of negotiations. And I can quite understand how people are driven to that … I support the right of individuals to go on strike, I support the trade unions doing the job that they are doing in representing their members.
I’m incredibly disappointed that as delegates we’ve been excluded from this key part of the conference’s democratic process.
This is an unprecedented move silencing members’ voices. Our CLP sent us here to Liverpool to promote our motion on public ownership and a Green New Deal, but we’ve been unfairly denied that right.
Continue reading...Sources at largest banks say the did not lobby for move nor expect it to result in major changes to pay packets
When City of London executives were summoned to No 11 Downing Street earlier this month, they were promised reforms that would boost growth, attract talented bankers and usher a new era of prosperity for financial services.
But what the chancellor, Kwasi Kwarteng, failed to mention to bank bosses was that their pay would become a lightning rod for controversy in the mini-budget that followed.
Continue reading...Labour leader attacks ‘casino economics’ in wake of £45bn package of tax cuts announced by chancellor
Sir Keir Starmer has accused the government of “gambling the mortgages and finances” of the British people with its “casino economics”.
Speaking before his party’s conference in Liverpool, the Labour leader tweeted: “Tory casino economics is gambling the mortgages and finances of every family in the country. Labour will secure growth for working people, that benefits all communities. My government will deliver a fairer, greener future.”
Continue reading...With an election two years away, any failure of her radical approach could shred the Tories’ credibility
When Liz Truss flew to the US this week on her first foreign trip as prime minister, she was unequivocal about how she would achieve her mission in office: “Lower taxes lead to economic growth, there is no doubt in my mind about that.”
There was not a quiver of self-doubt in her voice as she gave a round of television interviews at the top of the Empire State Building expanding on her plans for the economy and saying she was “willing to be unpopular” to push them through.
Continue reading...Tax cuts to cost Treasury around £37bn in 2023-24, official figures reveal
There are no urgent questions in the morning, and so Kwasi Kwarteng, the chancellor, will be delivering his statement soon after 9.30am.
The Commons starts sitting at 9.30am, but they always begin with prayers in private, and so Kwarteng will be up a few minutes later.
The last time they did it one third of the beneficiaries were people buying second homes or buy to let, so we are sceptical that this is the magic bullet to increase homeownership. What we really need to do is to build more houses and to help get people onto the property ladder by increasing the supply of housing.
When this has been done before, it has often fuelled an already hot market and many of the beneficiaries have been people buying a second or third home, rather than the first time buyers that we really want to help who are often trapped in private rented accommodation where they’re paying as much in rent every month as they would in a mortgage.
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