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Kwasi Kwarteng doubles down on mini-budget, saying ‘we’re sticking to growth plan’ – UK politics live

Kwarteng rejects calls for mini-budget to be shelved, saying ‘we’re sticking to growth plan’

Kwasi Kwarteng, the chancellor, has rejected calls from the opposition for the mini-budget to be shelved. Speaking on a visit in Darlington, asked if he had message for the financial markets, he replied:

Absolutely. We are sticking to the growth plan and we are going to help people with energy bills. That’s my two top priorities.

The growth plan was the Treasury title for the mini-budget.

Kwasi Kwarteng arriving at Darlington station. Photograph: Owen Humphreys/PA

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Union leaders say they fear ‘new era of austerity’

Ben Quinn

Ben Quinn

Ministers “need to be honest with the public” that services will stop or be scaled back, the head of the union representing senior civil servants has said, amid fears a “new era of austerity” is about to be unleashed.

Concern was expressed by trade unions representing public sector workers today in response to reports that departments are being asked to draw up plans for cuts as a result of the crisis sparked by the mini-budget.

Civil service departments were already delivering an average of 5% efficiency savings agreed as part of a review last year, yet it now appeared the government was asking for those plans to be ripped up “in a state of panic”, said Dave Penman, the general secretary of the FDA union, which represents senior civil servants. He went on:

If the government refuses to compensate public services for soaring inflation, or even cut their budgets back further, they need to be honest with the public. Services are going to stop or be scaled back and the government needs to be accountable for those decisions.

Calling for a general election, Unison’s general secretary, Christina McAnea, said:

Ministers must listen to the world’s economic experts urging them to junk this disastrous financial experiment. Suggestions that benefits won’t rise with soaring inflation and beleaguered public services are to be squeezed is a terrifying prospect. The government seems to have no idea of the damage its foolhardy approach is wreaking.

Geoff Barton, general secretary of the Association of School and College Leaders, said the ASCL was extremely concerned about the “bleak prospects” for the UK economy after the mini-budget. “There are many implications but one of the most worrying is that this will lead to a new era of austerity for public services, including education,” he said.

Mini-budget will have ‘almost negligible’ impact on growth, creating extra tax revenue of just £6bn, says thinktank

The note for Tory MPs about the mini-budget obtained by Adam Payne (see 2.10pm) says it will “put the UK on a path to higher growth”. It even quotes figures from the growth plan document suggesting the measures could increase tax revenues by £47bn a year after five years (although it does not quote the small print in the document saying the £47bn figure is “purely illustrative” and does “not provide an assessment of what effect the policy package will have”.)

But today the Tony Blair Institute for Global Change has published a report saying that the impact of the measures in the mini-budget on growth will be “almost negligible”. It is based on an analysis of the proposal carried out by the thinktank in conjunction with Oxford Economics, economic forecasting specialists. The report says:

While support for household and business energy bills makes a material difference to economic growth in the short term, we find that the growth plan tax cuts have an almost negligible impact on the size of the economy by the end of the forecast period, with output only around 0.4 per cent higher by 2027–28 than it would have been without the tax cuts. The growth plan’s tax measures therefore look set to fall well short of the chancellor’s stated aim of boosting GDP growth back to 2.5 per cent from the OBR’s previous assessment of trend growth settling at around 1.7 per cent per year.

The report also says that the extra tax revenue generated by this extra growth will be just £6bn – a fraction the amount being spent by the government on the tax cuts. It says:

With the economy ending the forecast period 0.4 per cent bigger than it would be without the growth plan, additional tax revenue from this higher economic output pushes in the other direction. However, we estimate that this revenue boost is likely to be only around £6 billion by 2027–28 – a small fraction of the fiscal cost of the measures themselves.

Kwarteng rejects calls for mini-budget to be shelved, saying ‘we’re sticking to growth plan’

Kwasi Kwarteng, the chancellor, has rejected calls from the opposition for the mini-budget to be shelved. Speaking on a visit in Darlington, asked if he had message for the financial markets, he replied:

Absolutely. We are sticking to the growth plan and we are going to help people with energy bills. That’s my two top priorities.

The growth plan was the Treasury title for the mini-budget.

Kwasi Kwarteng arriving at Darlington station.
Kwasi Kwarteng arriving at Darlington station. Photograph: Owen Humphreys/PA

Unite and Unison accept improved pay deal for council workers in Scotland

Severin Carrell

Severin Carrell

Scotland’s public sector unions have accepted an increased pay offer brokered by Nicola Sturgeon, the first minister, which led them to suspend strikes in schools and refuse collections next week.

In an escalating protest against a 3.5% national pay offer that saw mountains of refuse in Edinburgh last month, Unison, Unite and the GMB were due to strike for three days in schools in 11 council areas, with refuse workers following suit. That action was suspended after the offer was tabled earlier this month.

Unite and Unison said today its members have accepted a deal equivalent to a 10% pay increase for the lowest paid. The GMB had already backed it. Those under £20,500 will get a flat rate rise of £2,000; those earning up to £39,000 a rise of £1,925, with a 5% increase for those earning up to £60,000, with a maximum of £3,000 for those over £60,000.

Other public services under Scottish government control, including the nationalised rail operator ScotRail, midwives, schools and universities, still face industrial action as unions battle against low pay offers from employers, putting Sturgeon under even greater pressure over public spending.

The EIS, Scotland’s largest teachers’ union, has recommended strike action in schools over a 5% pay offer. It announced today it has started balloting for strike action by its university members, urging them to reject a 3% offer. Unite began balloting members at 11 universities on Tuesday.

Non-teaching staff at Dundee university have been striking over pension cuts for up to four weeks. RMT members in ScotRail will strike on 1, 8 and 10 October – the last day of this year’s Scottish National party annual conference in Aberdeen. The Royal College of Midwives opened a ballot on industrial action on Thursday.

41% of mortgage products taken off market since mini-budget, latest figures show

And here is more from Julia Kollewe on the business blog on mortgage products being taken off the market since Friday. She says:

Forty-one per cent of mortgage products have been taken off the market since Kwasi Kwarteng’s mini-budget last Friday, which sparked panic in financial markets, and expectations of a jump in the Bank of England’s base rate to 6% by next summer.

A further 321 products were withdrawn overnight, on top of the record 935 pulled the day before, according to Moneyfacts.

Between Friday and today a total of 1,621 residential mortgage products have been withdrawn leaving 2,340 on sale today.

According to Defaqto, more than 20 providers have withdrawn their entire fixed rate mortgage range.

Katie Brain of Defaqto says: “What products are left are changing at a rapid pace, lenders seem to be really unsure of what to offer and what price with so many changes in the money markets at the moment.”

There is more on the business live blog here.

Adam Payne from Politics Home has obtained a copy of the briefing note prepared by CCHQ for Tory MPs with lines to take that defend the government’s handling of the economy.

Like the comments made by Liz Truss in her morning interviews (see 9.26am), the notes do not address the point that it was the nature of the mini-budget on Friday that triggered the current shock to borrowing. As Julia Kollewe reports on her business live blog, 41% of mortgage products now have been taken off the market since the mini-budget was delivered.

The CCHQ document also has nothing to say that might help Tory MPs asked to explain why it was justified introducing tax cuts that predominantly benefit the richest 5%.

Exc: Here are the CCHQ lines for Tory MPs amid ongoing financial turmoil

They’re told to insist government plans are “responsible” and stress that other counties face disruption

One subheading says gov is “committed to responsible economic management” https://t.co/EFHyBoxI80 pic.twitter.com/C8N1P3n2CP

— Adam Payne (@adampayne26) September 29, 2022

Union leaders demand ‘cast-iron assurance’ from Truss that she rule out real-terms cuts to public services

Union leaders are demanding a “cast-iron assurance” from Liz Truss and Kwasi Kwarteng, the chancellor, that there will be no real-terms cuts to public services.

They have asked for a meeting with Truss and Kwarteng in an open letter, prompted by reports saying cabinet ministers are being told that they must manage within existing budgets, even though inflation means they may be going down in real terms. As Chris Philp, chief secretary to the Treasury, confirmed this morning (see 8am), ministers are also being asked to make “efficiency savings”.

In the letter, Frances O’Grady, general secretary of the TUC, and the leaders of 18 individuals unions say:

Strong public services are vital to this nation’s health and the economy.

But since 2010 our hospitals, schools, councils, care homes, prisons and other essential services have been forced to absorb savage spending cuts. And every month the bills they face are rising, leaving much less for actual services …

Prime Minister – you promised in your leadership election campaign that there would be no reduction in public spending.

But according to reports, another wave of crippling austerity could be on its way in November in order to fund tax cuts for the super-rich.

This would be an act of national vandalism and a huge betrayal of the British people.

We therefore seek an urgent meeting with you and the chancellor, and a cast-iron assurance that you will not make further real-terms cuts to public services – now or in the future.

Frontline services are already at breaking point. They must not be sacrificed to make the top 1% even richer.

Unions will not sit by and allow the government to impoverish public services and the amazing staff who deliver them.

We won’t allow the social fabric of this country to be destroyed.

Apart from O’Grady, the other signatories are: Christina McAnea (Unison), Sharon Graham (Unite), Gary Smith (GMB), Kevin Courtney and Mary Bousted (NEU), Patrick Roach (NASUWT), Paul Whiteman (NAHT), Gill Walton (RCM), Matt Wrack (FBU), Mark Serwotka (PCS), Mike Clancy (Prospect), Dave Penman (FDA), Steve Gillan (POA), Iain Lawrence (NAPO), Roy Rickhuss (Community), Karen Middleton (CSP), Mark Sargeant (RCP), Annette Mansell-Green (BDA) and Paul Donaldson (HCSA).

Frances O’Grady.
Frances O’Grady. Photograph: Peter Nicholls/Reuters

SNP says ‘reckless, clueless’ Truss failed to provide reassurance with ‘car crash interviews’

The SNP also says Liz Truss’s morning interviews have made the case for a recall of parliament even stronger. In a statement Ian Blackford, the SNP leader at Westminster, said:

Liz Truss has shown she is reckless, clueless and completely out of touch with people in Scotland – who are increasingly worried about the impact of the disastrous Tory budget on their mortgages, pensions, and household budgets.

Parliament must be recalled immediately and an emergency statement must be brought forward to reverse the damage of the Tory budget and prevent a catastrophic economic crash.

If this tin-eared prime minister refuses to act – then she should step aside and let someone else do the right thing before millions of people suffer.

No one will feel reassured after the prime minister’s car crash radio interviews this morning – and the longer she refuses to act the more damage she will do.

Ian Blackford
Ian Blackford. Photograph: James Manning/PA

Labour urges Tory MPs to join calls for recall of parliament, saying Truss’s interviews ‘made disastrous situation worse’

Labour has claimed that Liz Truss “made this disastrous situation even worse” with her BBC local radio interview round this morning.

In a statement Rachel Reeves, the shadow chancellor, also urged Tory MPs to join Labour and other opposition parties in calling for parliament to be recalled. She said:

The prime minister’s interviews this morning have made this disastrous situation even worse. Her failure to answer questions about what will happen with people’s pensions and mortgages will leave families across the country facing huge worry.

It is disgraceful that the family finances of people across the country are being put on the line simply so the government can give huge unfunded tax cuts to the richest companies and those earning hundreds of thousands of pounds a year.

This is a serious situation made in Downing Street and is the direct result of the Conservative government’s reckless actions.

If the prime minister continues to prioritise saving her face over saving people’s homes, Tory MPs must join Labour in calling for parliament to be recalled so this kamikaze budget can be reversed.

Failure to do so will make them complicit in this reckless bout of economic self-harm.

Rachel Reeves.
Rachel Reeves. Photograph: Ian Forsyth/Getty Images

Here is a clip from Liz Truss’s interview with Radio Norfolk earlier.

‘I have to do what I believe is right’: Liz Truss defends mini-budget on BBC Radio Norfolk – audio

Lib Dem leader Ed Davey renews call for parliament to be recalled

Ed Davey, the Lib Dem leader, has renewed his call for the Conservative party conference to be cancelled so that parliament can be recalled. He said:

There is no way the Conservative party can hold their conference whilst the British economy nosedives. The arrogance of Liz Truss and Conservative ministers is frankly an insult to millions who now face higher bills as a direct result of last week’s budget. From this weekend they will abandon their posts in Downing Street, leaving a mess behind them and heading for the cocktail parties and mutual back-patting of the classic conference season.

In one fell swoop, Liz Truss and Kwasi Kwarteng crashed the economy, trashed the pound and paved the way for record interest rate rises.

Innocent mortgage borrowers will be left to pick up the bill of this gross incompetence. It is time parliament is recalled and new measures passed to save families and pensioners unable to cope with this mortgage crisis. This botched budget cannot survive any longer.

Ken Clarke urges government to make statement soon to reassure markets

Ken Clarke, the former Conservative chancellor, has told Times Radio that the government needs to make a statement soon to calm the markets in the light of the crisis generated by the mini-budget. He said:

Ideally, that statement should come in the next two or three days. But we don’t want [to rush] into something else more stupid.

Basically, we can’t have both the government and the Bank [of England] saying that they’re not able to do anything more till November, that would be very, very worrying.

If the pound sinks any further, then they will have to perhaps retract some of the measures.

This morning Chris Philp, the chief secretary to the Treasury, seemed to rule out the publication of the medium-term fiscal plan being brought forward to provide early reassurance. (See 11.36am.)

Clarke, who has been caustic in his criticism of the mini-budget in recent days, also said no other Conservative government in his lifetime would have made a mistake like this. He said:

I still hope in two years’ time, they might look like a normal, competent, Conservative government because no Conservative government in my lifetime would ever have made a mistake of this kind.

Fiscal discipline or good housekeeping, as Margaret [Thatcher] always used to say, was one of the very strong cards that the government had because it was regarded as good at running the economy by the public.

Scotland’s deputy first minister says Truss’s stance on mini-budget unsustainable

John Swinney, Scotland’s deputy first minister and a former finance secretary, told MSPs this morning that he thought the UK’s defence of the mini-budget was unsustainable. Giving evidence to the Covid-19 committee at Holyrood, he said:

If the UK financial system is going to collapse, they will have to change it. It is a mess this morning, an absolute mess, a total mess. I’ve never seen anything like it in my life.

So how that will prevail I have no idea.

Why is that happening? It’s because the markets don’t believe the UK any longer believes in fiscal sustainability.

If the UK government wants to prove to the markets that the UK government still believes in fiscal sustainability, and it wants to protect that tax position it set out last Friday, it’s only got one place to go – reducing spending.

Swinney also said he did not see the mini-budget as Conservative. He told another committee of MSPs:

I actually wouldn’t accuse [the plans] of being Conservative, there’s certain protections of core values that are associated with Conservatism and I don’t recognise that in the financial statement from last Friday.

John Swinney.
John Swinney. Photograph: Jeff J Mitchell/Getty Images

Treasury minister seems to rule out bringing forward publication of medium-term fiscal plan

Kwasi Kwarteng, the chancellor, is under pressure to bring forward the publication of his medium-term fiscal plan. This week he said the plan, which will explain how the government intends to meet its fiscal rules, and bring debt down in the medium term, and which will coincide with the publication of an economic forecast from the Office for Budget Responsibility, would be set out on 23 November. Some Tories say that is too long to wait for an announcement that could settle the market.

But in his interview with the Today programme this morning Chris Philp, the chief secretary to the Treasury, appeared to rule out the date changing. Asked if there were any circumstances in which it might be brought forward, he replied: “The statement is fixed for 23rd.”

Labour has restated its call for the government to reconsider its mini-budget. Pat McFadden, the shadow chief secretary to the Treasury, told BBC News:

This was a reckless act of choice which has wreaked havoc in financial markets. We had the extraordinary intervention by the Bank of England to stop major pension funds going off a cliff.

It is really important now that we try to get some stability back into those markets and in the longer term restore the economic credibility of the country.

This is from Sky’s Scott Beasley, underline why Liz Truss’s refusal to accept that the mini-budget was linked to turmoil in the mortgage market was misguided.

🏡 Mortgage market – fully 40% of products now taken off the market since the ‘mini budget’

📉 Further 321 products withdrawn overnight

📉 On top of a record 935 withdrawn day before

So in just 6 days since Chancellor spoke:

📉 1,621 products withdrawn-leaving 2,340 on sale

— Scott Beasley (@SkyScottBeasley) September 29, 2022

Truss criticised for wrongly saying no household will pay more than £2,500 under energy price guarantee

In her interview round this morning Liz Truss sometimes gave the impression that her energy price guarantee will mean that no household will face a fuel bill of more than £2,500 a year.

That is not correct. Under the plan, unit prices are capped at a rate that means that the average household will pay no more than £2,500. But if you use more gas and electricity than average homes do, you will pay more. By the laws of maths, half of people will pay more than the average. [See footnote for update]

Some of the reporting on this probably has not been as clear as it should have been because headlines resist subtlety and making the point that average bills are notionally capped at £2,500 a year probably means more to people than explaining that unit prices are actually capped at 34.0p/kWh for electricity and 10.3p/kWh for gas.

In her interviews, when talking about the £2,500 figures, Truss mostly said it applied to a “typical” bill. (Typical is not the same as average, but never mind.)

But sometimes she said all bills would be capped at £2,500. She told Radio Leeds that people in West Yorkshire would not face energy bills of £6,000. She went on: “Through the energy price guarantee, the maximum will be £2,500.” And she told Radio Lancashire: “This is why we’ve taken action to make sure people’s bills are no more than £2,500.”

The fact checking organisation Full Fact has criticised Truss for misleading voters. Will Moy, the organisation’s chief executive, said:

We wrote to the prime minister about getting this wrong only yesterday. The government’s energy plans will affect every household in Britain this winter. And yet Liz Truss has repeatedly misled listeners this morning.

She must now publicly correct her mistake to make sure people are not misled about their energy prices and hit with unexpected and unaffordable energy bills this winter.

£2500 is *not* the maximum any family will pay on their energy bills this year.
We wrote to the PM about getting this wrong yesterday.

This morning, she’s repeated the false claim again in local BBC interviews.

The public deserves better.https://t.co/zphIoe0PwL

— Full Fact (@FullFact) September 29, 2022

UPDATE: Thank you to all the readers who queried the statement: “By the laws of maths, half of people will pay more than the average.” You are right to say that that is not accurate if you take average to mean mean (the total of all payments, divided by the number of people who pay). It is only technically accurate if you take average to mean median (the payment exactly at mid point between the highest and the lowest). I’m afraid I was using the word in a general sense, to try to make a point with some force and clarity.

Truss’s interview round – verdict from Twitter commentariat

And this is what journalists and commentators are saying on Twitter about Liz Truss’s morning interview round. The verdict is harsh.

From the Observer’s Toby Helm

Hearing Liz Truss speaking on local radio saying the mini budget is going according to plan in the face of terrifying evidence is unsustainable. Blind to reality, which was the problem in the first place

— Toby Helm (@tobyhelm) September 29, 2022

From the Mail on Sunday’s Dan Hodges

Liz Truss currently sounds like a pre-recorded message telling you she’s sorry the Government is out, but please call back later.

— (((Dan Hodges))) (@DPJHodges) September 29, 2022

This is a terrible media round from Liz Truss. Robotic. Totally lacking in empathy. But it’s also revealing the fundamental problem. The policy itself is utterly, completely and totally indefensible.

— (((Dan Hodges))) (@DPJHodges) September 29, 2022

If you’re just waking up, Liz Truss is a doing her regional broadcast round, and that sound you can hear is the Red Wall collapsing…

— (((Dan Hodges))) (@DPJHodges) September 29, 2022

That was an utter disaster for Liz Truss. But there was no way it couldn’t have been a disaster. There is nothing left to debate now. She either reverses course, or she gets wiped out politically. Those are the choices she faces.

— (((Dan Hodges))) (@DPJHodges) September 29, 2022

From my colleague Pippa Crerar

Tough time on @BBCBristol – Truss asked about making bad situation worse & BoE stepping in to “clear up the mess”.

PM blames Putin & says it’s “right that govt takes action” but @jhansonradio points out market jitters were result of mini budget.

She even laughs at one point.

— Pippa Crerar (@PippaCrerar) September 29, 2022

From Politics Home’s Alan White

Truss really needs to spell out the long-term benefits of her plans in detail and show how people will be protected from e.g. home repossessions. She did neither this morning and the markets reacted accordingly

— Alan White (@aljwhite) September 29, 2022

From the Telegraph’s Jack Maidment

Liz Truss insisted economic chaos is not confined to the UK and there are “stormy times” across the world.

She refused to accept the mini-Budget had played any sort of role in the instability we have seen domestically since last Friday.

Safe to say a lot of people disagree.

— Jack Maidment (@jrmaidment) September 29, 2022

Not sure why No 10 thought a regional radio round was a good idea.

It was eight five-minute interviews in a row of Liz Truss being asked the same bruising questions over and over again.

One of the more brutal morning rounds I can remember.

— Jack Maidment (@jrmaidment) September 29, 2022

From ITV’s Paul Brand

I had the great job of doing these regional interviews with PMs ahead of conferences for years and I can’t remember a more brutal round for a Prime Minister. But Liz Truss is utterly doubling down.

— Paul Brand (@PaulBrandITV) September 29, 2022

From the Observer’s Sonia Sodha

My god this is gaslighting on a humongous scale.

— Sonia Sodha (@soniasodha) September 29, 2022

Her strategy just seems to be to pretend she’s living in an alternate reality. And to blame it all on the international situation.

— Sonia Sodha (@soniasodha) September 29, 2022

From the Times’ Steven Swinford

Liz Truss broadcast round:

* £45bn tax-cutting budget was ‘right thing to do’

* Hits back at unfairness criticism. ‘It’s not fair to have a recession’

* Pitch based on counterfactual – bills would be higher, growth would be worse

* Says you can’t rule out fracking in Lancs

— Steven Swinford (@Steven_Swinford) September 29, 2022

From the i’s Paul Waugh

This silence spoke volumes.
Truss: “Too often, tax policy has just been seen as being about redistribution. It’s not. It’s also about how we grow the size of the pie so that everyone can benefit “@johnacres48: “By borrowing more and putting our mortgages up.”
Truss:..long pause

— Paul Waugh (@paulwaugh) September 29, 2022

From my colleague John Crace

There’s a job waiting for Liz Truss in an automated call centre

— John Crace (@JohnJCrace) September 29, 2022

From City AM’s Jack Mendel

It’s actually astonishing that Liz Truss is trying to claim this is a ‘global problem’, when her party spent five years of coalition blaming an actual global financial crash on the Labour Party [when Gordon Brown actually *saved* banks by bringing them into public ownership]

— Jack Mendel 🗞️ (@Mendelpol) September 29, 2022

From Byline Times’ Adam Bienkov

That has to be the most brutal round of local radio interviews I’ve ever heard a Prime Minister face.

Not a single note of contrition from Liz Truss, or even the slightest indication she plans to change course in any way.

— Adam Bienkov (@AdamBienkov) September 29, 2022

From the New Statesman’s Adrian Bradley

genuinely believe Liz Truss would have been smarter to have done the Today programme this morning. It’s much easier to waffle one 15 minute interview than 10 individually specialist ones with presenters that know their area way better than you do.

— Adrian Bradley (@adebradley) September 29, 2022




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