Kwarteng accused of reckless mini-budget for the rich as pound plummets

Strategy of sweeping tax cuts gets hostile reception from markets and economic thinktanks, leaving some Tory MPs aghast

Kwasi Kwarteng has been accused of delivering a reckless mini-budget for the rich after his £45bn tax-cutting package sent the pound crashing to its lowest level against the dollar in 37 years.

In a high-risk strategy designed to revive Britain’s stagnant economy, the new chancellor announced more than £400bn of extra borrowing over the coming years to fund the biggest giveaway since Tony Barber’s ill-fated 1972 budget.

Continue reading...

UK in recession and further interest rate hikes probable, Bank warns Kwarteng

Threadneedle Street makes clear on eve of tax-cutting mini-budget that plans risk triggering more rate rises

The Bank of England has warned Kwasi Kwarteng the economy is in recession and it will most probably need to push interest rates higher after Friday’s tax-cutting mini-budget.

On the eve of a major package of support from the chancellor designed to break what he called the economy’s “cycle of stagnation”, Threadneedle Street said the UK economy was heading for a second consecutive quarter of falling output, with gross domestic product set to shrink 0.1% in the three months to September.

Continue reading...

National insurance increase will be reversed from 6 November, says Kwasi Kwarteng – UK politics live

The chancellor says the move will save 28m people £330 on average next year

Catholics outnumber Protestants in Northern Ireland for the first time, a demographic milestone for a state that was designed a century ago to have a permanent Protestant majority, my colleague Rory Carroll reports.

Thérèse Coffey is deputy prime minister as well as health secretary. Speaking on ITV’s Good Morning Britain this morning, and responding to a question from the former Labour MP Ed Balls, who was presenting, she said that as deputy PM whould be would “chairing things like the home affairs committee and different elements like that”. But she rejected claims this meant she would be doing the health job part time. She said:

I’m conscious that in two weeks we’ve already pulled together our plan for patients and we will continue to develop that.

I don’t think it will be a case of being part-time ... We don’t have fixed working hours.

Continue reading...

‘Not every measure will be popular’: Truss says voters may not like all her pro-growth measures – UK politics live

Latest updates: prime minister says she is willing to implement unpopular policies to try to boost growth in the UK

Rosie Cooper has indicated that she intends to stand down as Labour MP for West Lancashire to take up a new job as chair of the Mersey Care NHS foundation trust. In her statement announcing the move Cooper says that events in recent years have “undoubtedly taken their toll” – a reference to Cooper being targeted by a neo-Nazi who was jailed for life in 2019 for plotting to kill her.

Cooper’s statement implies she will resign and trigger a byelection. At the last election she had a majority of more than 8,000 over the Conservatives, and in a byelection Labour would be expected to hold the seat very easily.

Continue reading...

Kwarteng plan to lift cap on bankers’ bonuses infuriates unions

Unite leader deplores prospect of post-Brexit deregulation drive ‘when millions are struggling’

Unions have reacted with fury to the prospect of the government scrapping a cap on bankers’ bonuses, as ministers geared up for a return to near-normal politics next week, topped by an emergency mini-budget on Friday.

Kwasi Kwarteng, the chancellor, who will set out plans for tax cuts and give more details about the government’s plans to limit rising energy bills, is also considering whether to shed the legacy of an EU-wide cap on bonuses of twice an employee’s salary, imposed after the 2008 financial crash.

Continue reading...

Kwarteng ‘tells Treasury to focus entirely on growth’ as Tory peer defends sacking of senior civil servant – as it happened

The new chancellor is reported to have told Treasury staff there was a need to ‘do things differently under fresh leadership’. This live blog is now closed

At the lobby briefing yesterday Downing Street admitted that Liz Truss had not completed her government reshuffle. New appointments were suspended following the death of the Queen.

According to an analysis by Arj Singh for the i, 55 posts remain unfilled. Singh says that, to fill all the posts that Boris Johnson had in his government, Truss will need to appoint 21 junior ministers in the Commons, nine Commons whips and 25 Lords ministers.

The removal of Sir Tom Scholar as the lead permanent secretary at the Treasury should be a cause for celebration.

Having worked in his department for nearly two years I saw at first hand the malign influence of the Treasury orthodoxy at play. Whether it was foot-dragging and passive resistance to creating a Treasury office in the north (in Darlington), which he fiercely resisted, or the botched arrangements in the construction of the bounceback loans during the pandemic, all roads led back to him.

I hope very much that our new prime minister will build on her excellent decision and remove responsibility from the Treasury for driving economic growth. It has no idea how to deliver this. The system obsesses about measuring inputs, counting out the money distributed to departments, but has little clue of how to measure outcomes. Departments are infantilised in their management of money, with savings being automatically clawed back to the centre. This of course removes any incentive to think innovatively, creatively or cost-effectively.

Continue reading...

Liz Truss under pressure to reveal details of energy crisis plan

Emergency budget of winter tax cuts expected next week once period of national mourning for Queen is over

An emergency budget to bring in winter tax cuts for millions of people and set out more detail on energy handouts is expected late next week once the country emerges from national mourning.

Though politics has been paralysed by the death of the Queen, Liz Truss is under pressure from Tory MPs to set out her plans potentially on Thursday or Friday next week, before the Commons breaks up for party conferences.

Continue reading...

Tory leadership hustings – Birmingham: Liz Truss confirms she will allow new grammar schools – as it happened

This live blog is now closed. You can read our latest story on the leadership contest here:

The cross-party Commons Treasury committee has expressed concerns about reports that Liz Truss, the frontrunner in the Tory leadership contest, may hold an emergency budget in September without asking the Office for Budget Responsibility to update its fiscal and economic forecast.

The OBR usually publishes a new forecast alongside a budget, and it provides an independent assessment of what impact the budget measures will have. The system was put in place by George Osborne to discourage the Treasury from making dubious claims about what its tax and spending announcements might be able to achieve.

OBR forecasts provide transparency and reassurance to the markets on the health of the nation’s finances. As a committee, we expect the Treasury to be supporting and enabling the OBR to publish an independent forecast at the time of any significant fiscal event, especially where, unlike other recent fiscal interventions, this might include significant permanent tax cuts.

Whether such an event is actually called a budget or not is immaterial. The reassurance of independent forecasting is vital in these economically turbulent times. To bring in significant tax cuts without a forecast would be ill advised. It is effectively ‘flying blind’.

Continue reading...

Labour surges as Tory fears grow over Truss’s tax cut agenda

Likely PM’s policies will mean ‘big trouble’, say critics, as Starmer’s energy price initiative boosts him in polls

Senior Tories have warned that their party will suffer dire electoral consequences under a Liz Truss premiership that fails to address the cost of living crisis, as Labour enjoys a poll bounce suggesting Keir Starmer could be on course for No 10.

Amid signs of mounting panic among high-ranking Conservatives about Truss’s economic policies, several former cabinet ministers told the Observer on Saturday the party would suffer devastating losses in blue and red wall seats unless Truss changes tack, if and when she enters No 10.

Continue reading...

UK energy bills – six ways to reduce the impact of soaring prices

Be it a loft insulation drive or a lower price cap, there are many ways to help – but action must be swift and extensive

The UK government has been urged to take further action to alleviate the impact of soaring energy prices, and there are a number of measures it could take.

Any rescue package would need to be swift and extensive to prevent households being plunged into poverty this winter as home energy prices surge. Ministers will also need to dig deep to prevent more businesses hit by rising energy costs from defaulting on loans and declaring themselves bankrupt.

Continue reading...

Liz Truss doubles down on tax cuts over support for energy bills

Foreign secretary had previously said she did not want to give ‘handouts’ to people struggling with the cost of living

Liz Truss has doubled down on her refusal to offer significant help to people with soaring energy bills this winter, despite a forecast that these could exceed £4,200 annually from January, and rise further during 2023.

Truss, the runaway favourite to succeed Boris Johnson as prime minister next month, has already said she does not want to give “handouts” to people struggling with bills, preferring to prioritise tax cuts.

Continue reading...

Truss and Sunak accused of ‘living in parallel universe’ on bills crisis – UK politics live

Latest updates: Lib Dem leader says Tory leadership hopefuls have no plan to help millions of families struggling with price rises

The Joseph Rowntree Foundation, a leading poverty charity, says, in the light of the latest forecast about how energy bills will rise (see 10.54am), the government needs to at least double the help already provided to help people through the cost of living crisis. This is from Peter Matejic, its chief analyst.

The latest projections of annual energy bills exceeding £4,200 from January is the latest in a series of terrifying warnings over the past week, from the Bank of England and others. Families on low incomes cannot afford these eye watering sums and as a nation we can’t afford to ignore an impending disaster.

Both candidates to be prime minister must now recognise the extraordinarily fast-changing situation and act to protect the hardest hit from the coming emergency.

Unite said the 4% increase for staff in middle pay bands announced by the government last month is a “massive pay cut” because of soaring inflation.

The union will now consult with its 100,000 health members across the NHS in both England and Wales on whether they accept the “imposed deal” or want to challenge it through industrial action, which could mean strikes this winter.

Continue reading...

Penny Mordaunt denies Liz Truss is ruling out more help for poor this winter

Truss said she would lower taxes not give ‘handouts’, but ally says future support is not off the table

A senior ally of Liz Truss has played down suggestions she ruled out more emergency support payments to help people struggling through the worsening cost of living crisis this winter.

Penny Mordaunt, who is backing the frontrunner in the Tory leadership race, said Truss’s comments had been misinterpreted and she wanted to prioritise tax cuts.

Continue reading...

Sunak scorns Truss’s claims that tax cuts can avert recession

Tory leadership rivals disagree on how to turn economy around and avoid predicted downturn in Sky news debate

Liz Truss has claimed her tax cut plans could avert the looming recession, after the Bank of England forecast 13% inflation and a downturn lasting more than a year.

In a televised leadership interview, the foreign secretary was challenged about gloomy projections made by the Bank on Thursday, as it increased interest rates by 0.5 percentage points.

Continue reading...

Thatcher ministers turn on Liz Truss over tax cut plans

Chris Patten, Norman Lamont and Malcolm Rifkind warn former PM would never have approved borrowing to fund £30bn cuts

Tory grandees who served in Margaret Thatcher’s final cabinet have warned that the former prime minister would never have approved of Liz Truss’s plan to slash £30bn off taxes funded by borrowing, as Rishi Sunak denounced his opponent’s plans as “immoral”.

With a bitter row over tax emerging as the defining issue in the race to succeed Boris Johnson, three members of Thatcher’s cabinet told the Observer that she would have taken a dim view of slashing taxes at a time of high inflation.This follows repeated claims that Truss has attempted to model herself on Thatcher in her attempt to win the leadership, which she has denied.

Continue reading...

Rishi Sunak says he is underdog in PM race as ‘forces that be’ want Truss

Former chancellor suggests Tory party powers hope leadership contest will be ‘a coronation’ for his rival

Rishi Sunak has positioned himself as the underdog in the Conservative leadership race, claiming the “forces that be” want Liz Truss to be the next prime minister.

Addressing a crowd in Grantham on Saturday, the Lincolnshire home town of Margaret Thatcher, Sunak declared “have no doubt, I am the underdog” and suggested that Conservative party powers want the race to be “a coronation” for Truss.

Continue reading...

Holidaymakers face delays as fuel price protesters block M5

Slow-driving convoy caused long delays to those heading to Devon and Cornwall on the first day of the school holidays

Protesters campaigning against high fuel prices have disrupted holiday getaways to the south-west of England by driving in convoy slowly up and down a motorway before blockading a petrol station.

The convoy drove at 30mph on three lanes of the M5 north and south in Somerset and the Bristol area on Friday morning as tens of thousands of people headed to Devon and Cornwall to begin summer breaks.

Continue reading...

Tory leadership race: Rishi Sunak calls himself ‘common sense’ Thatcherite – as it happened

Former chancellor says UK ‘needs to control borders’ and again references Margaret Thatcher

In an interview with GB News, Liz Truss was asked if she would keep the expensive wallpaper in the Downing Street flat, installed as part of Boris Johnson’s controversial refurbishment, if she became PM. In what is being seen by some as a dig at Johnson, she replied:

I’m not going to have the time to be thinking about the wallpaper in No 10, because we’ve only got two years until the general election – we need to hit the ground running.

Continue reading...

Rishi Sunak steps up attack on Truss tax cuts as poll puts his rival well ahead

Former chancellor says opponent’s economic policies risk stoking inflation and pushing up interest rates

Rishi Sunak has launched his strongest attack yet on his rival Liz Truss’s economic policies, claiming her £30bn plans for unfunded tax cuts risk stoking inflation and pushing up interest rates.

His attack came as a new poll of Tory party members gave Truss a commanding lead in the race to become prime minister.

Continue reading...

Liz Truss’s tax and spending plans sow consternation among economists

Analysis: experts are lining up to warn that her policies will increase inflation and leave the UK with higher debt

Liz Truss claims her economic agenda of tax cuts and public spending will revitalise the UK economy, but it is not just her rival prime ministerial candidate Rishi Sunak arguing that the measures will be self-defeating.

Economists have lined up to warn that her £30bn package – including the reversal of this year’s national insurance rise, the suspension of green levies on power bills, and the cancellation of a sharp rise in corporation tax in 2023 – will increase inflation and leave the government with higher debt bills.

Continue reading...