Thursday, December 8

Liz Truss admits she should have ‘laid ground better’ before mini-budget and says cabinet not consulted about 45% top rate tax cut – live | Politics

Truss accepts presentation of mini-budget was flawed, saying government should have ‘laid the ground better’

Liz Truss says interest rates are going up around the world.

She understands people’s worries about that. And she says she would have prepared people for what would be in the mini-budget more effectively.

I do accept we should have laid the ground better. I have learnt from that. I will make sure in future we do a better job of laying the ground.

Key events

Filters BETA

Rees-Mogg’s former business partner given peerage and made international trade minister

And, talking of Jacob Rees-Mogg, Steven Swinford from the Times has spotted this; according to an update on the government’s website, Rees-Mogg’s former business partner, Dominic Johnson, has been made an international trade minister. He is not an MP so, to allow him to do the job, he has been given a peerage too.

Rees-Mogg claims extending definition of SMEs will allow thousands of firms to avoid ‘pointless paperwork’

The Conservative party has released more details of the plan announced by Liz Truss in her Sunday Telegraph interview (see 8.29am) to extend the definition of a small firm.

It says that when the government develops policy, it works on the basis that SMEs (small and medium-sized enterprises), defined as firms with fewer than 250 employees, are exempt from some regulations. From tomorrow it will treat firms with fewer than 500 employees in this category, it says.

In a press release explaining the move, the party said:

The exemption will be applied in a proportionate way to ensure workers’ rights and other standards will be protected, while at the same time reducing the burden for growing businesses.

Regulatory exemptions are often granted for SMEs, which the EU defines at below 250 employees. However, we are free to take our own approach and exempt more businesses to those with under 500 employees. We will also be able to apply this to retained EU law currently under review, which we would not have been able to do without our exit from the EU.

The changed threshold will apply from tomorrow to all new regulations under development as well as those under current and future review, including retained EU laws. The government will also look at plans to consult in the future on potentially extending the threshold to businesses with 1,000 employees, once the impact on the current extension is known.

This is the first step in a package of reforms to ensure UK business regulation works for the UK economy. The reforms will harness the freedoms the UK has since leaving the EU to remove bureaucratic and burdensome regulations on businesses, while streamlining and making it easier for them to comply with existing rules, ultimately saving them valuable time and money.

The Tories says 40,000 companies will benefit from the move.

Jacob Rees-Mogg, the business secretary, said in a statement:

Our enterprising medium-sized businesses are being buried in pointless paperwork, preventing them from reaching their world-leading potential.

That is why we are cutting red tape, starting with preventing unnecessary future regulations for these companies. We are harnessing the freedoms the UK has since leaving the EU, removing bureaucratic and burdensome regulations on businesses, and taking steps to create a dynamic, growth-led economy.

Tory chair Jake Berry claims down significance of polls showing Labour lead soaring

And here are the main points from Sophy Ridge’s interview on Sky with Jake Berry, the Conservative party chairman.

  • Berry said that he thought Conservative MPs who vote against the mini-budget should lose the whip. He said it was a decision for the chief whip, but as far as he was concerned they should lose the whip, he said.

  • He defended the party’s decision to hold a champagne reception for supporters, included hedge fund managers, on the day of the mini-budget. (See 8.38am.)

I don’t think it’s unreasonable to say that the public sector should look at its expenses in the same way that every single household is doing in this country.

What we’ve heard from the government is there’s going to be a drive to trim fat in terms of government expenditure.

Every single working person in this country is going to see a cut in their national insurance this month and we also know that the lower paid in this country, as a percentage of their income, pay more in national insurance than higher earners. So in fact as a percentage of income it is giving a bigger tax cut to those lower earners than it is to the top earners.

When shown a graph from the Resolution Foundation suggesting higher earners benefited most from the government’s plans, Berry said he could not see the image.

  • He played down the significance of recent polls showing Labour’s lead soaring, pointing out that the Conservatives won two recent council byelections in his constituency. He said:

The difference between that poll and those by-elections last week is it’s a forced decision where people have to make a choice.

And I know and believe that when we get to that general election and when we have delivered that growing economy, when we have ensured that the benefit is felt by every household in this country, that it will be a very different result than shown in that snap poll a few days after the government has done a mini-fiscal event.

Jake Berry (right) welcoming Liz Truss to the Tory conference last night, as Truss arrived with her husband, Hugh O’Leary. Photograph: Oli Scarff/AFP/Getty Images

Truss refuses to rule out public spending cuts as she defends substance, but not presentation, of mini-budget

Here are the main points from the Liz Truss interview with Laura Kuenssberg.

  • Truss defended the government’s controversial mini-budget in its entirety, accepting that the presentation could have been improved, but giving no indication that she wants to change the substance of it. Asked if she was committed to getting rid of the 45% top rate of tax (the most controversial element), she said she was.

  • She refused to deny that she might cut public spending. It is clear that, without reversing the tax cuts, the government will only be able to get borrowing under control by cutting spending and at least four times she refused to deny that she might cut public spending. She also refused to commit to increasing departmental budgets (which were set when inflation was lower) in line with the current rate of inflation. When it was put to her that Simon Clarke, the levelling up secretary, hinted strongly that the government will cut the size of the state in a Times interview on Saturday (“I do think it’s very hard to cut taxes if you don’t have the commensurate profile of spending and the supply side reform … There is always something you can do to trim the fat,” Clarke said), Truss did not dispute what he said. She wanted “value for money for the taxpayer”, she said.

  • She refused to commit to increasing benefits next year in line with the level of inflation in September, as Boris Johnson’s government promised. But she said pensions would increase in line with inflation, because she was keeping the triple lock.

I do stand by the package we announced and I stand by the fact we announced it quickly, because we had to act.

But I do accept we should have laid the ground better … I have learnt from that and I will make sure that in future we do a better job of laying the ground.

  • She said the decision to abolish the 45% top rate of income tax was taken by the chancellor, Kwasi Kwarteng. (See 9.53am.)

It does take a while to produce those forecasts … We simply didn’t have time to go through that process because it was a very urgent situation.

In fact, the OBR said a slimmed-down version of the forecast could have been published then. Asked if she will publish a forecast before 23 November, when the medium-term fiscal plan is being published, Truss replied: “Well, no, for the following reason, Laura, that it’s not yet ready.”

What people voted for in 2019, when they voted Conservative, sometimes for the first time in many years, they voted for a different future. They voted for investment into their towns and cities, they voted for higher wages, they voted for economic growth. And that is what our plan will deliver. I’m confident it will deliver.

  • She implied that global issues, and not the specific measures in her mini-budget, were partly behind the financial turmoil on the markets over the past week. When it was put to her that this was not just a global issue, and that it was announcing unfunded tax cuts that triggered a fall in the pound and a rise in government borrowing costs, she said interest rates were going up around the world. But she also said that she also had to take action to stimulate growth quickly, and that the presentation could have been better.

Liz Truss being interviewed by Laura Kuenssberg.
Liz Truss being interviewed by Laura Kuenssberg. Photograph: Jeff Overs/BBC/AFP/Getty Images

Rachel Reeves, the shadow chancellor, was also interviewed on Sunday with Laura Kuenssberg after Liz Truss. She said Truss did not understand the alarm she was causing with her “mad experiment” with the economy. Reeves said:

The prime minister just doesn’t seem to understand the anxiety and fear. This is a crisis made in Downing Street but it is ordinary working people who are paying the price.

The idea that trickle-down economics is somehow going to deliver the 2.5% growth we all want to see is for the birds.

The prime minister and the chancellor are doing some sort of mad experiment with the UK economy and trickle down economics. It has failed before and it will fail again.

Liz Truss being interviewed by Laura Kuenssberg, with a panel watching (left to right): Sharon White, chair of the John Lewis Partnership, Guardian political editor Pippa Crerar and Michael Gove
Liz Truss being interviewed by Laura Kuenssberg, with a panel watching (left to right): Sharon White, chair of the John Lewis Partnership, Guardian political editor Pippa Crerar and Michael Gove Photograph: Stefan Rousseau/PA

Starmer urges Tory MPs to work with Labour to restore ‘some semblance of economic sanity’

Keir Starmer has used an article in the Sunday Telegraph to encourage Conservative MPs to work with Labour to overturn aspects of the mini-budget. He says:

For the vast majority of those who still live in the reality-based community – tethered to gravity and maths – it is clear what has happened. The markets do not believe in the fantasy economics of untrammelled borrowing and unfunded tax cuts any more than the average person on the street does.

They do not believe in the myth of trickle-down economics, where making the richest richer magically benefits everyone else.

Eroding our tax base just as there are pressures for spending is not just bad economics or childlike delusion – it is a real and present danger to economic health. It is the gambler chasing good money with bad, the smoker puffing away outside the hospital doors. It is unsustainable …

If the prime minister continues to bury her head in the sand, it will fall on others to act.

Neither the country nor parliament has had any say on these measures. That is unacceptable. The economy is not a laboratory experiment for the maddest scientists of the Conservative party.

Mortgages, pensions and family finances are not casino chips for a government intoxicated by dogma. There are many decent Conservative MPs who know this. My message to them is that Labour will work with anyone to ensure some semblance of economic sanity is restored.

Treasury committee chair Mel Stride says delaying OBR forecast could mean higher interest rates

Mel Stride, the Conservative chair of the Commons Treasury committee, told Sky News that if the governmement publishes the new forecast from the Office for Budget Responsibility before 3 November, when the Bank of England’s monetary policy committee (MPC) is due to make its next interest rate decision, that might lead to the interest rate rise being lower than it otherwise would be. He said:

If [the MPC] has a satisfactory OBR report before that meeting on November 3, I would imagine and expect that the interest rate rise will probably not be as high as it otherwise would be.

That OBR report, the fiscal targets, would have reassured the markets, there would be less concern about the inflationary impacts of the government’s policy and therefore the MPC would be putting interest rates up by potentially a little bit less.

At the moment the government is not due to publish the new OBR forecast until the medium-term fiscal plan comes out, on 23 November.

Truss’s interview – verdict from Twitter commentariat

And this is what political journalists and commentators are saying about the Liz Truss interview on Twitter.

From my colleague Gaby Hinsliff

Lots in that @bbclaurak interview but what stuck with me is Truss confirming she really doesn’t care about optics/how things look This is basically a politics that doesn’t care about public opinion which is to say the least..bold

— gabyhinsliff (@gabyhinsliff) October 2, 2022

From Lucy Fisher from Times Radio

Surely Truss can’t hold the line this week on refusing to talk about spending cuts to public services, since that’s THE key factor likely to calm markets and clearly what govt is planning (as Simon Clarke tee-ed up in Times interview yday)… https://t.co/9o5PYKXTNz

— Lucy Fisher (@LOS_Fisher) October 2, 2022

From ITV’s Paul Brand

Think despite the difficulties that was at least a better interview performance by Truss than Friday’s local media. PM doubling down and focusing on trying to communicate her plans better. Question is whether narrative has already set in and too difficult to reverse. #BBCLauraK

— Paul Brand (@PaulBrandITV) October 2, 2022

From the Sunday Times’ Tim Shipman

Too much focus on the optics in politics says Liz Truss. Weird from her, who only got the job of PM because she was good at the optics and is only in this mess because she catastrophically failed to over the last week

— Tim Shipman (@ShippersUnbound) October 2, 2022

From the Sun’s Harry Cole

Not unusual for a budget to be presented fait accompli to Cabinet at all.. but not sure the idea that Truss was not entirely linked to Sept 23 is not going to wash.

— Harry Cole (@MrHarryCole) October 2, 2022

From the i’s Paul Waugh

Truss repeats the lie that ‘we have had two decades of low growth’.
Growth in 2002 was strong.
In fact growth under Labour was strong until the global financial crisis in 2008.
Amazed she’s allowed to repeat that in so many interview.

— Paul Waugh (@paulwaugh) October 2, 2022

Another misleading statement? Asked by @bbclaurak whether she will publish the OBR assessment handed to Govt on Oct 7 – well before Nov 23 as planned by govt. “There’s no point in publishing something that’s not ready.”
Surely the OBR assessment will be ‘ready’ NEXT FRIDAY?

— Paul Waugh (@paulwaugh) October 2, 2022

From the Spectator’s James Forsyth

The refusal to rule out public spending cuts is the story out of this Truss interview

— James Forsyth (@JGForsyth) October 2, 2022

From Jon Sopel from the News Agents podcast

I think if you’re @trussliz you’re going to be pretty pleased with the way that interview went

— Jon Sopel (@jonsopel) October 2, 2022

From the broadcasting executive Rob Burley

Don’t agree. Think she’s no better off and possibly a little worse off after it. Think Michael Gove – in an intelligent booking on the panel that suggests lessons learned – was also dynamite. In a Liz-Truss-please-hold-this-stick-of-dynamite sort of way – positive for @bbclaurak https://t.co/MAz2l7JZE6

— Rob Burley (@RobBurl) October 2, 2022

From Andrew Marr of the New Statesman and LBC

Ok. Rather amazingly I think the story is now Gove not Truss

— Andrew Marr (@AndrewMarr9) October 2, 2022

From GB News’ Tom Harwood

Objectively that Truss Laura K interview was assured.

Strongest points on how interest rates in the States are rising by more than they are here, and how UK borrowing is lower than France, the US, Canada, and Japan.

Think she could have been more explicit on market reaction.

— Tom Harwood (@tomhfh) October 2, 2022

From my colleague Zoe Williams

Weird moment towards the end of the Truss interview where she looks down, searching something, & I think what she was looking for was a clock. How many more minutes of this?
That’s why she’s toast, I think. She thinks when she’s not actually under the grill, problem solved

— Zoe Williams (@zoesqwilliams) October 2, 2022

She doesn’t realise the conversation carries on whether she’s in it or not. She doesn’t realise ‘optics’ means, ‘what other people think and feel, based on their experiences and analysis’. And doesn’t realise that matters.

— Zoe Williams (@zoesqwilliams) October 2, 2022

From Huffpost UK’s Kevin Schofield

Truss in summary: Can guarantee a massive tax cut for the richest in the country, but won’t guarantee that she’ll stick to Boris Johnson’s promise to raise benefits by inflation.

— Kevin Schofield (@KevinASchofield) October 2, 2022

From the Observer’s Sonia Sodha

“I accept I should have laid the ground better” – Truss. What does that even mean?!

— Sonia Sodha (@soniasodha) October 2, 2022

From the journalist Ian Birrell

Three things we have learned from #BBCLauraK

1) Liz Truss is pinning the 45p tax cut firmly on Kwasi Kwarteng
2) Spending cuts are coming but the Tories have no idea where they will fall
3) Michael Gove is leading Tory opposition to the government

— Ian Birrell (@ianbirrell) October 2, 2022

Truss stresses that decision to abolish 45% top rate of income tax taken by Kwasi Kwarteng

Liz Truss told the Sunday Telegraph that Kwasi Kwarteng was doing an “excellent job” as chancellor.

But in her interview with Laura Kuenssberg, when asked about the decision to cut the top rate of income tax, Truss described it has Kwarteng’s decision, not hers. Asked if the whole cabinet had discuss this, she replied:

No, no we didn’t. It was a decision the chancellor made.

This is being interpreted as a hint that Kwarteng is being lined up to take the blame. It would be hard for Truss to sack Kwarteng over the 45% top rate decision when she appointed him and approved it herself, but she would not be the first prime minister to sack a chancellor for implementing a policy favoured by No 10. Ask Norman Lamont.

In what may or may not be relevant, Tim Shipman reports in the Sunday Times today that it was Chris Philp, the chief secretary to the Treasury and Kwarteng’s deputy, who “during the leadership election wrote a paper for Truss recommending the abolition of the 45p tax rate”.

From the Labour MP Chris Bryant

I take from Michael Gove’s comments this morning that a burning sense of fury is raging under the surface of the Conservative Party – along with a quiet determination to prevent Truss from getting her budget through.

— Chris Bryant (@RhonddaBryant) October 2, 2022

Liz Truss’s interview with Laura Kuenssberg – snap verdict

When politicians make mistakes, their natural inclination is to refuse to admit it, but the smart PR advice is almost always to offer some sort of apology, or admission of error. This is useful mainly because it is what voters want to hear. But it can also draw a line under the controversy, it stops the media banging on about “When are you going to admit that you made a mistake?” and it allows you to move on.

Liz Truss arrived for her interview this morning with a play of this kind up her sleeve. It was not an apology, but it was an admission of error. Talking about the disastrous impact the mini-budget had on the financial markets, she said:

I do stand by the package we announced and I stand by the fact we announced it quickly, because we had to act.

But I do accept we should have laid the ground better … I have learnt from that and I will make sure that in future we do a better job of laying the ground.

This went further than what she has said before about the mini-budget. But it was about the feeblest form of “admission of error” conceivable, for three reasons. First, she was using a term that does not mean much to many people anyway (‘“laid the ground better” – what David Cameron used to call “pitch-rolling”). Second, later in the interview she came close to contradicting herself, implying that it did not really matter what people thought anyway. She said:

What I care about is making our country successful, making our economy successful. And I do think that there has been too much focus in politics about the optics or how things look, as opposed to the impact they have on our economy.

But the third and most important point of all is that Truss was not making any concessions on substance. At no point did she accept that any of the decisions in her mini-budget were wrong. She implied it was just a matter of presentation.

The problem with this is that, as Michael Gove rather brutally pointed out immediately afterwards, that Tory MPs think otherwise. We cannot know for sure, but it seems likely that Gove was talking for a majority of Conservative MPs – perhaps even the vast majority? – when he said that abolishing the top rate of income tax now was indefensible.

And that is why this was an interview that does not really help, and that still leaves her struggling at this conference to convince her party that she is not finished for good. (See 8.29am.) This interview was not a car crash in the way the local radio interview round was on Thursday. But equally it was not one that will help her much, if at all.

Gove calls for publication of fiscal plan to be brought forward, saying ‘course correction’ essential

Gove says he is sure Liz Truss will be PM this time next year.

But there does need to be a “course correction”, he says. He says “reality bites”.

He says the medium-term fiscal plan, scheduled for late November, will have to be brought forward.

Q: You are being quite critical this week. Are you trying to be helpful?

Yes, he says.

Laura Kuenssberg also asks Michael Gove what he thought of her admission that the cabinet was not consulted on the abolition of the 45% top rate of tax.

Gove says it is normal for a budget decision like that to be taken by the PM and the chancellor, and not by the cabinet as a whole.

Gove hints he would refuse to vote for mini-budget, saying cutting top rate of tax ‘display of wrong values’

Michael Gove, the former levelling up secretary, is still in the studio. Laura Kuenssberg asks him for his reaction. And it is brutal.

He starts by saying he was glad to hear Truss acknowledge that the events of the mini-budget need to be revisited. (She did not quite say that.)

But he says there is an “inadequate realisation” at the top of government of the scale of the problem.

There is an inadequate realisation at the top of government of the scale of change required.

He says 35% of the borrowing in the mini-budget was for unfunded tax cuts.

That is not conservative, he says.

And it is wrong to cut the top rate of income tax when people are suffering. He says cutting tax for the wealthiest “is a display of the wrong values”.

Ultimately, at a time when people are suffering … when you have additional billions of pounds in play, to have as your principal decision cutting taxes for the wealthiest, that is a display of wrong values.

Q: It sounds like you won’t be able to vote for this?

Gove says he does not believe the move is right.

UPDATE: Gove said:

The first [problem with the mini-budget] is the sheer risk of using borrowed money to fund tax cuts. That’s not conservative.

The second thing is the decision to cut the 45p rate and indeed at the same time to change the law which governs how bankers are paid in the City of London.

Ultimately, at a time when people are suffering, and you are quite right to point out the concerns people have not just over mortgages but over benefits, when you have additional billions of pounds in play, to have as your principle decision, the headline tax move, cutting tax for the wealthiest, that is a display of the wrong values.

Michael Gove watching Liz Truss being interviewed by Laura Kuenssberg.
Michael Gove watching Liz Truss being interviewed by Laura Kuenssberg. Photograph: Stefan Rousseau/PA

Q: How many people voted for your plan?

Truss says in 2019 people voted for a successful country.

She says any government has to deal with changing circumstances.

Q: Do you fear you have put the country on a path it did not ask for?

Truss says in 2019 people voted for “a different future”. They voted for investment and higher wages and more growth. That is what her plan will deliver. She is confident about that, she says. She says she is not saying it won’t be difficult. We face “a turbulent and stormy time”, she says.

That is the end of the interview.

Truss sidesteps questions about interest rates rising, saying they are matter for Bank of England

Q: What is the logic of helping people with their energy bills if their mortgage costs go up more?

Truss says interest rates are set by the Bank of England.

Q: But do you accept some people will be worse off?

Truss says the government is helping homeowners, with things like the stamp duty cut. She says interest rates are set by the Bank of England. They are dependent on the global situation.

Interest rates are rising around the world, she suggests.

Q: Why did you not publish an OBR forecast?

Truss says they did not have time to consider all the measures.

Q: But the OBR has said it could have published a forecast.

Truss says it would not have had time to consider all the plans.

Truss dismisses objections to top rate of tax being axed, saying there has been ‘too much focus’ in politics on ‘how things look’

Q: How do you think people will feel about the top rate of tax being cut while spending for poorer people?

Truss says she thinks there has been “too much focus” in politics on “how things look”, and not on whether decisions are right.

It is important to reverse two decades of low growth, she says.

Q: How do you think it looks for Kwasi Kwarteng to be having drinks on the day of the mini-budget with hedge fund managers?

Truss says Kwarteng meets business people the whole time. She does not manage his diary.





Source link