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.
Gove says government should abandon plan to scrap 45% top rate of tax
Michael Gove says people voted for one nation government in 2019
When fuel bills arrive, people can cut consumption or get better job, Tory chair Jake Berry says
Rees-Mogg’s former business partner given peerage and made international trade minister
Rees-Mogg claims extending definition of SMEs will allow thousands of firms to avoid ‘pointless paperwork’
Tory chair Jake Berry claims down significance of polls showing Labour lead soaring
Truss refuses to rule out public spending cuts as she defends substance, but not presentation, of mini-budget
Starmer urges Tory MPs to work with Labour to restore ‘some semblance of economic sanity’
Treasury committee chair Mel Stride says delaying OBR forecast could mean higher interest rates
Truss’s interview – verdict from Twitter commentariat
Truss stresses that decision to abolish 45% top rate of income tax taken by Kwasi Kwarteng
Liz Truss’s interview with Laura Kuenssberg – snap verdict
Gove calls for publication of fiscal plan to be brought forward, saying ‘course correction’ essential
Gove hints he would refuse to vote for mini-budget, saying cutting top rate of tax ‘display of wrong values’
Truss sidesteps questions about interest rates rising, saying they are matter for Bank of England
Truss dismisses objections to top rate of tax being axed, saying there has been ‘too much focus’ in politics on ‘how things look’
Cabinet as whole was not consulted about decision to cut 45% top rate of tax, Truss says
Truss refuses to commit to raising benefits in line with inflation
Truss refuses to commit to increasing departmental budgets in line with inflation
Truss refuses to deny that she will cut public spending
Truss accepts presentation of mini-budget was flawed, saying government should have ‘laid the ground better’
Tory chair Jake Berry defends party holding champagne reception with City financiers on day of mini-budget
Truss says she will extend number of firms qualifying as small businesses, allowing them to benefit from less regulation
Liz Truss says her critics are ‘declinist’ before Laura Kuenssberg interview at opening of Tory conference
Gove is now taking questions from the audience. A man says Gove said the party should come together after the leadership contest. Is is actually following his own advice?
Yes, says Gove.
He says he has two concerns about the mini-budget: the tax cuts being unfunded, and the abolition of the 45% top rate of tax. It would be “wise to reflect” on those policies, he says.
Q: You mean they should be dropped?
Gove says the abolition of the 45% is wrong. The government should drop the idea, he says.
This was implied by what he said on the BBC’S Sunday with Laura Kuenssberg, but he is being more explicit here.
Q: Are you in favour of a new royal yacht?
(Christopher Hope has led the Telegraph’s campaign for one.)
Gove says he is in favour of the idea in principle, but does not think it should be a priority for public spending at the moment.
Q: Are there parallels between Liz Truss and Jeremy Corbyn? Both of them did not get the support of a majority of their MPs.
No way, says Gove. He says Corbyn is “an eccentric, fringe figures with unsavoury friend and bonkerony views”. Truss is highly effective and very intelligent. People should not underestimate her, he says. She has ‘“formidable skills”.
He says he hopes she will correct course on one or two issues.
Q: Is the party imploding at the moment?
No, says Gove. Journalists have a tendancy to simply and exaggerate. The Tories have an opportunity to take stock and reflect, he says.
Gove says, despite all that has happened, he is still a Boris Johnson fan.
He says he is all in favour of growth. But so was George Osborne and Rishi Sunak.
He says one of Liz Truss’s strenghs is her ability to hone in on a truth, and focuse her intellectual strength on it.
Gove says he is “wary” of the decision to reverse the national insurance increase and scrap the planned corporation tax rise. But Liz Truss had a mandate for those decisions following the leadership contest.
But she did not have a mandate for abolishing the 45% top rate of tax, he says.
He says he welcomes the fact that Truss implied a “course correction” might be possible in her interview this morning. (That is not really what she implied.)
Q: How would you vote on that tax cut if the vote were tomorrow?
Gove says the vote is not tomorrow, so there is time for the situation to change.
Michael Gove, now seen by some as the leader of the Tory opposition to Liz Truss, is speaking at the Telegraph’s Chopper’s Politics Live fringe meeting. “Chopper” is Christopher Hope.
Gove talks about being “released of the obligations of public service by the prime minister” (ie, sacked by Boris Johnson). Asked why he is doing so many fringe meetings this year, he says he was invited before he left the cabinet.
Q: Are you alarmed by the rightwing lurch of your party?
Gove says words like that do not descibe what is going on.
The majority that Johnson won in 2019 was “one nation majority”, he says. The party won the support of people who were not wealthy. They wanted to see a compassionate, one nation government.
Q: So Liz Truss does not have a mandate?
Gove says any PM has to respond to new circumstances. It was right to respond to the fuel crisis, and look at what can be done to promote growth.
But the governmnent must also look after the most vulnerable.
It will be “very, very difficult” to argue for welfare cuts when taxes are being cut for the rich
In his interview with Sophy Ridge this morning on Sky, Jake Berry, the Conservative party chair, also said that, if people were having difficulty paying their fuel bills, they could either cut their consumption or get a better job. He was making a point about the need for the government to economise, and he said that was how households worked too. He said:
People know that when their bills arrive, they can either cut their consumption or they can get a higher salary, higher wages, go out there and get that new job.
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.
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.
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.
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.
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.
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.
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.
And this is what political journalists and commentators are saying about the Liz Truss interview on Twitter.
From my colleague Gaby Hinsliff
From Lucy Fisher from Times Radio
From ITV’s Paul Brand
From the Sunday Times’ Tim Shipman
From the Sun’s Harry Cole
From the i’s Paul Waugh
From the Spectator’s James Forsyth
From Jon Sopel from the News Agents podcast
From the broadcasting executive Rob Burley
From Andrew Marr of the New Statesman and LBC
From GB News’ Tom Harwood
From my colleague Zoe Williams
From Huffpost UK’s Kevin Schofield
From the Observer’s Sonia Sodha
From the journalist Ian Birrell
https://www.theguardian.com/politics/live/2022/oct/02/liz-truss-tory-conference-kwasi-kwarteng-economy-tory-conservative-conference-live-latest-updates 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