A summary of today's developments
Liz Truss met the US president, Joe Biden, in New York, ahead of talks. Biden said the Ukraine conflict, China, preventing Iran from obtaining nuclear weapons, energy prices and protecting the Good Friday agreement would be on the agenda. The UK’s prime minister said the UK would increase defence spending to 3% of GDP and “we want to work more closely with the US on energy security, economic security and reaching out to fellow democracies around the world” to protect freedoms.
Liz Truss said that any “sham referendums” in Ukraine would not be recognised, in a warning to Vladimir Putin. In a tweet, following a meeting with the European Commission president, Ursula von der Leyen, the prime minister said: “Putin’s calls for mobilisation are a sure sign his barbaric invasion is failing.”
Five British nationals held by Russian-backed forces including Aiden Aslin, who was sentenced to death alongside fellow British detainee Shaun Pinner in July, have been safely returned, the prime minister, Liz Truss, and Robert Jenrick MP said.
Gas and electricity costs for UK businesses, charities and public sector bodies are to be capped, the government announced. The BEIS department says that electricity prices are expected to be capped at £211 per megawatt hour, while gas prices will be capped at £75 per MW/h. Labour says the help has come too late.
Ursula von der Leyen, the president of the European Commission, says she had a good conversation with Liz Truss in New York today. Afterwards they issued a joint statement on Ukraine which “strongly condemned Russia’s actions in Ukraine and agreed that Putin’s recent calls to mobilise parts of the population were a sign that Russia’s invasion is failing. It is a statement of weakness.”
During Liz Truss’s speech to the business roundtable in New York, she said the UK-US free trade deal promised by Brexiters was not being negotiated now because Washington was not interested in one at the moment.
Scotland’s justice secretary, Keith Brown, confirmed that he would be discussing with the chief constable of Police Scotland the policing of events in Edinburgh last week following the death of the Queen, after questions from MSPs in Holyrood about the rights of protesters.
Labour has formally written to the head of the civil service to seek more information about what it called “incredibly alarming revelations” that Liz Truss’s chief of staff, Mark Fullbrook, was questioned as a witness as part of an FBI inquiry.
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The foreign secretary avoided answering a question on whether the government’s current policy is one of “trickle-down economics”.
Appearing on Channel 4 News, James Cleverly was asked about US president Joe Biden’s tweet criticising the economic theory, which raised eyebrows as it highlighted the political gulf between London and Washington.
“It’s an unprecedented set of circumstances and the UK government’s response will be directed at those who are struggling the most to pay their bills,” Cleverly said.
“We want to make sure that we help the people that need our help, but we also want to make sure - and I have no doubt that the chancellor will make this announcement - we want to put forward a set of measures which stimulate business and then allow those companies - large, medium and small - to employ people, to pay them and to stimulate the British economy.”
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MPs have raised concerns that the government’s energy bailout for businesses will result in corporate giants being handed huge discounts they do not need.
The government on Wednesday announced a package of support including a cap that will halve the unit price paid for energy from 1 October to help companies, charities and public sector organisations, including schools, get through the winter. One estimate puts the cost of the scheme at £25bn.
However, fears are growing in Westminster that the blanket nature of the bailout will mean huge businesses who could stomach the spike in energy costs this winter are handed discounts they do not need.
Darren Jones, the Labour MP who chairs the business, energy and industrial strategy select committee, said: “Capping the price for all businesses is a waste of taxpayers’ money, which should be targeted at those which need it the most. Why should British taxpayers collectively get into even more debt to hand over public funds to Amazon?”
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The foreign secretary, James Cleverly, said the release of five British nationals “brings to an end many months of uncertainty and suffering, including the threat of the death penalty, for them and their families, at the hands of Russia”.
“Tragically that was not the case for one of those detained and our thoughts remain with the family of Paul Urey.”
The British aid volunteer died earlier this year while being detained by Russian-backed separatists in Ukraine.
“I would like to express my gratitude to President Zelenskiy and his team for their efforts to secure their release, and to HRH Crown Prince of Saudi Arabia, Mohammed bin Salman and his team, for their assistance,” Cleverly said in a statement.
“I continue to call on Russia to comply with international humanitarian law and not exploit prisoners of war and civilian detainees for political purposes.”
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Robert Jenrick, the MP for Newark, said his constituent Aiden Aslin was among the British nationals released by pro-Russian forces.
A court in the self-proclaimed Dontesk Peoples Republic had sentenced Aslin to death alongside fellow British detainee Shaun Pinner in July.
The identities of those released are yet to be confirmed by the government.
Jenrick tweeted: “I am delighted that my constituent, Aiden Aslin, and the other British prisoners of war held captive by the Russian authorities have finally been released and are on their way back to the UK.”
He said he was “deeply grateful” to the Ukrainian government, as well as the Saudi crown prince and the Foreign Office, who said were involved in securing the release.
“Aiden’s return brings to an end months of agonising uncertainty for Aiden’s loving family in Newark who suffered every day of Aiden’s sham trial but never lost hope. As they are united as a family once more, they can finally be at peace.”
I am delighted that my constituent, Aiden Aslin, and the other British prisoners of war held captive by the Russian authorities have finally been released and are on their way back to the UK. 1/3
— Robert Jenrick (@RobertJenrick) September 21, 2022
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Liz Truss says any ‘sham referendums’ in Ukraine will not be recognised
Liz Truss said that any “sham referendums” in Ukraine will not be recognised, in a warning to Vladimir Putin.
In a tweet, following a meeting with the European Commission president, Ursula von der Leyen, the prime minister said: “Putin’s calls for mobilisation are a sure sign his barbaric invasion is failing.”
Putin's calls for mobilisation are a sure sign his barbaric invasion is failing.
— Liz Truss (@trussliz) September 21, 2022
Any sham referendums in Ukrainian territory will not be recognised. @vonderleyen and I are united in our commitment to supporting Ukraine for as long as it takes. pic.twitter.com/OYuSrNCxbU
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Truss reiterates she wants to discuss upholding and protecting the Good Friday agreement.
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She adds the UK will increase defence spending to 3% of GDP and “we want to work more closely with the US on energy security, economic security and reaching out to fellow democracies around the world” to protect freedoms.
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Truss thanks Biden and his wife for attending the Queen’s funeral.
On Ukraine, the PM says we “face huge challenges as autocrats seek to cement and increase their assertiveness around the world”.
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Biden said the Ukraine conflict, China. preventing Iran from obtaining nuclear weapons, energy prices and protecting the Good Friday agreement will be on the agenda.
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Liz Truss holds meeting with Joe Biden in New York
Liz Truss is currently meeting the US president, Joe Biden, in New York.
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Five British nationals held by Russian-backed forces have been safely returned, the prime minister, Liz Truss, has said.
Hugely welcome news that five British nationals held by Russian-backed proxies in eastern Ukraine are being safely returned, ending months of uncertainty and suffering for them and their families.
— Liz Truss (@trussliz) September 21, 2022
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Rising government debt 'would eventually prove unsustainable' under Truss's tax plans, says IFS
When Kwasi Kwarteng unveils his “emergency budget” on Friday, it won’t be accompanied by a new economic forecast from the independent Office for Budget Responsibility – because Kwarteng has decreed that he does not want one now. But he can’t stop economists analysing his plans, and this evening the Institute for Fiscal Studies has published its own analysis of his plans, based on what we know so far about what Kwarteng will announce (which is a lot).
And the IFS says that, under the plan so far announced (mostly by Liz Truss during the Tory leadership contest), rising debt would “eventually prove unsustainable”.
Here is an extract from the IFS analysis (bold type in original).
The combination of higher spending and substantial tax cuts leaves borrowing running at a much higher level than forecast in March. Importantly, even once the energy price guarantee is assumed to have expired in October 2024 our forecast has borrowing running at about £100bn a year, over £60bn a year higher than forecast in March. Almost half of this increase in borrowing would be due to the new tax cuts. At around 3.5% of national income this would be not far off double the 1.9% of national income that it averaged over the 60 years prior to the global financial crisis, when growth prospects were considerably higher. With investment spending running at about 2.5% of national income this would leave a persistent forecast current budget deficit of around 1% of national income. Without new tax cuts the current budget would have been forecast to remain in balance …
Allowing debt to rise temporarily to finance one-off packages of support, such as the energy price guarantee or the furlough scheme, in exceptional circumstances is justifiable and can be sustainable, but the same case cannot be made for allowing debt to rise indefinitely in order to enjoy lower taxes now.”
And this is from Carl Emmerson, deputy director at the IFS and another author of the research, which has been produced with the bank Citi and funded by the Nuffield Foundation.
Under the new prime minister’s plans, the fiscal targets legislated in January would be missed and while we would get to enjoy lower taxes now, ever-increasing debt would eventually prove unsustainable. The government is choosing to ramp up borrowing just as it becomes more expensive to do so, in a gamble on growth that may not pay off. The increase in annual growth required just to stabilise debt as a fraction of national income under our forecasts would be equivalent to the difference in the growth seen over the quarter of a century between 1983 and the financial crisis in 2008 and that seen over the 2010s. Getting that scale of increase in trend growth, while not impossible, would require either a great deal of luck over a long period or a concerted change in policy direction. One cannot simply assume oneself to fiscal sustainability.”
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The Liberal Democrats have accused the government of planning to give big banks an effective tax cut of more than £6bn over two years, as Liz Truss plans to axe the proposed increase in corporation tax.
The pledge to change course on the planned rise in corporation tax was a centrepiece of Truss’s campaign to become Conservative leader, with the change expected to form part of the Kwasi Kwarteng’s mini-budget on Friday.
But the Liberal Democrat leader, Sir Ed Davey, hit out at the plan, calling it “shameful” as he cited new research suggesting that big banks and finance companies would get tax cuts of £2.6bn in 2023/24, followed by another tax cut of £3.6bn the following year.
The research, by the House of Commons Library, was commissioned by the Lib Dems, and the party is calling on the prime minister and chancellor not to go ahead with the plan to freeze the tax.
The finance and insurance industry, the party said, would benefit more than any other sector from the plan.
Speaking in New York to bosses from firms including Google, Microsoft and JPMorgan Chase, the prime minister said her government wanted “lower, simpler taxes in the UK to incentivise investment, to get more businesses going in the UK, but also to encourage more people to go into work”.
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This is from Boris Johnson, one of many MPs swearing an oath of allegiance to the new King in parliament today.
I took the oath today in the House of Commons. God Save the King 🇬🇧 pic.twitter.com/3FMPMRtR0N
— Boris Johnson (@BorisJohnson) September 21, 2022
That is all from me for today. My colleague Nadeem Badshah is taking over now.
These are from Mujtaba Rahman, the Brexit specialist at the Eurasia Group consultancy, on the readout from the Truss/Von der Leyen meeting. (See 5.02pm.)
.@trussliz & @vonderleyen readout
— Mujtaba Rahman (@Mij_Europe) September 21, 2022
Quite cold pic.twitter.com/eavbYgJKsZ
Although: at least the Protocol was discussed, unlike the bilateral with @EmmanuelMacron
— Mujtaba Rahman (@Mij_Europe) September 21, 2022
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Truss and von der Leyen discuss NI protocol - but decline to say what was said in post-bilateral readout
Ursula von der Leyen, the president of the European Commission, says she had a good conversation with Liz Truss in New York today. Afterwards they issued a joint statement on Ukraine, on which they agree. It says:
[Truss and Von der Leyen] strongly condemned Russia’s actions in Ukraine and agreed that Putin’s recent calls to mobilise parts of the population were a sign that Russia’s invasion is failing. It is a statement of weakness.
They recognised the courage and bravery of the Ukrainian people and underscored their joint commitment to sustaining support for Ukraine in its struggle as long as it takes.
The statement also says the two leaders discussed “energy, food security and the Northern Ireland protocol”, but it does not disclose what was said about the protocol, or how much time was devoted to the topic. With the EU taking the UK to court for its non-implementation of the protocol, and a trade war over the dispute seen as a possibility, it was probably the most interesting part of the conversation.
Good discussion with Prime Minister @trussliz on EU-UK relations and Russia's invasion of Ukraine.
— Ursula von der Leyen (@vonderleyen) September 21, 2022
We condemn Putin’s actions and agree that his calls to mobilise parts of the population are a sign of weakness.
Russia's invasion is failing. pic.twitter.com/b1Q3oZVmMn
Photograph: Reuters
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Truss claims UK-US free trade deal not happening because Washington not interested
And here are some more lines from Liz Truss’s speech to the business roundtable in New York.
Truss said the UK-US free trade deal promised by Brexiters was not being negotiated now because Washington was not interested in one at the moment. She said:
On trade, we’re not currently negotiating a trade deal with the US – the US isn’t negotiating a trade deal with anyone at the moment – but we are open to negotiating a trade deal when the administration decide that’s what they want to do.
She stressed that she wanted taxation in the UK to be not just lower, but simpler too. She said:
This week the chancellor will be doing his fiscal statement. I can’t pre-empt what he’s going to say, but what I can say – and I outlined this during the leadership campaign – is that we want lower, simpler taxes in the UK to incentivise investment, to get more businesses going in the UK.
In a short speech, she referred to simplifying taxes three times in total.
She said the government wanted to get the large number of people who had left the labour market (normally in their 50s and 60s) to get back to work. She said:
We do, following Covid, have a significant number of people that are economically inactive. We want to encourage more of them to go into work with a tight labour market.
She presented her pro-growth economic agenda as a security policy, arguing that countries needed to be economically strong to remain safe. She said:
I think one of the things we’ve learned from the past few months is that when countries are dependent on authoritarian regimes, that can be used as a weapon against them. That is a position we should never find ourselves in again. That is why having a strong economy is so vital for the future of the United Kingdom.
She dismissed Vladimir Putin’s speech this morning, in which he announced partial mobilisation in Russia and threatened nuclear retaliation against the west, as “sabre-rattling”.
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Truss claims promoting interests of City bankers 'key part of levelling up agenda' – because they finance development
Liz Truss has been addressing executives at a business roundtable in New York and, in an opening speech that restated her determination to cut taxes, she claimed that promoting the City was “a key part of the levelling up agenda”.
On Friday Kwasi Kwarteng,, the chancellor, is expected to announce that the cap on bankers’ bonuses is being lifted. The government has not formally confirmed this will happen but no one is denying it either and yesterday, when asked about the proposal, Truss cited it as an example of the sort of unpopular decision she was willing to take to boost growth.
Critics argued that allowing bankers to get higher bonuses was the opposite of levelling up – the goal set by Boris Johnson when he was prime minister, which was interpreted as referring to measures that would help people in less prosperous areas.
But in her speech Truss argued that boosting the City – and, by implication, allowing bankers to get richer – would contribute to levelling up. She explained:
We want the City to be the most competitive place for financial services in the world, and we see that as a key part of the levelling up agenda, because when we unblock capital, that capital will be used across the UK to make every industry become more productive and competitive.
(In this context, “most competitive” means having low taxes and light regulation.)
Most prime ministers in recent years have taken the view that redistribution, and reducing inequality, should be one of the aims of government. Today’s speech is the latest example of how Truss thinks differently.
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James Cleverly, the foreign secretary, says the UK will never recognise the results of “sham referendums” organised by Russia in Ukrainian territory.
Putin's referendum playbook is a blatant sham designed to seize Ukraine’s land. Any votes held at the barrel of a gun cannot be free or fair.
— James Cleverly🇬🇧 (@JamesCleverly) September 21, 2022
We will never recognise the results of any sham referendums or attempts to annex Ukraine’s sovereign territory.
Sky’s Ed Conway says the eventual costs of the energy support schemes, for households and businesses, could eventually come to close to £250bn.
👀
— Ed Conway (@EdConwaySky) September 21, 2022
If gas prices stay high (possible) and govt has to extend its business support scheme for a full two years - as per the household energy guarantee (possible) then my back-of-envelope sums suggest the combined cost of these schemes could come to a quarter of a trillion pounds. pic.twitter.com/agSufBsxAr
In possibly not unconnected news, the pound has touched a near-four-decade low against the dollar. Getting close to $1.13 now. Partly a story of dollar strength. But also of pound weakness… pic.twitter.com/wAEKExU8IN
— Ed Conway (@EdConwaySky) September 21, 2022
Scotland’s justice secretary Keith Brown confirmed that he would be discussing the policing of events relating to the death of the Queen in Edinburgh last week with the chief constable of Police Scotland tomorrow, after questions from MSPs in Holyrood today about the rights of protesters.
The Scottish Labour MSP Katy Clark said that media reports suggested a “heavy handed” approach during the proclamation and later the funeral procession along the Royal Mile, among other events. There were four arrests for breach of the peace, a number of other people were detained and released without charge and a woman who was demonstrating about free speech was followed by the police afterwards.
Brown said that, while he could not comment on specific cases, it was “the fundamental right of people living in a democracy to peacefully protest”. But he also commended the force on its handling of Operation Unicorn, the codename for the ceremonial plans that came to pass because the Queen died in Scotland.
Update: This post has been changed to remove the suggestion there will be a specific review of the way the protests were handled.
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Senior representatives from London and Brussels will meet tomorrow to try to resolve the protracted dispute over the UK’s exclusion from the EU’s science funding programme Horizon Europe (HE).
The specialised committee on EU funding programmes will meet as part of a formal process triggered by the UK, which has accused Brussels to locking Britain out of the £80bn programme in retaliation over the row over the Northern Ireland protocol.
The UK has threatened to walk away from HE with plan B replacement financing if Europe continues to block membership of the programme, which was agreed as part of Lord Frost’s trade deal.
Science bodies have urged the government to continue talking. Tanya Sheridan, head of policy and evidence at the Royal Society of Chemistry, said:
Our community is concerned that while funding can be replaced, it will be very difficult to achieve the intangible collaboration, networking and mobility benefits that UK science has been able to benefit from through association to Horizon programmes.
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Number of households affected by benefit cap rose by 9% between February and May this year, DWP figures reveal
The number of households subject to the benefit cap increased by 9% between February and May this year, new figures from the Department for Work and Pensions reveal.
The benefit cap was introduced by the coalition government to limit the total amount that most working-age people can claim in benefits. It is currently £20,000 per household per year nationally, or £23,000 per household per year in London. The policy was introduced in response to claims that some benefit recipients were receiving more than the average income, and it has impacted particularly on large families and people living in places with high housing costs.
According to the new figures, around 130,000 households had their benefits capped in May 2022. That was an increase of around 10,000, or 9%, on the figure for February 2022.
The May figure accounts for 2.1% of all households claiming universal credit or housing benefit. In February the equivalent figure was 1.9%.
For those affected by it, the cap results in an average weekly loss of £52.
Kirsty Blackman, the SNP work and pensions spokesperson, highlighted the new figures in a news release. She said it showed how Tory policies were making the cost of living crisis worse for families. She said:
Ever since its introduction almost a decade ago, this cruel policy has done nothing but punish the most vulnerable and severely limit their ability to provide for themselves and their families. Now simply couldn’t be a worse time for the effects of the benefit cap to be felt and its limitations imposed on even more households.
As the Tory-made cost of living crisis ravages households across the country, the UK government must look at ways of supporting people financially, not constructing more barriers and taking money out of their pockets. Cruel policies like the benefit cap are instead directly exacerbating household’s financial fears.
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Shares in housebuilding companies have risen sharply on the back of today’s report (see 8.49am) saying the government will cut stamp duty in the “emergency budget” on Friday, Reuters reports.
At the Downing Street lobby briefing No 10 said estimates for the cost of the energy support package for businesses announced today would be included in the statement from the chancellor on Friday (the “mini budget”, although No 10 is not using that term).
Asked about President Putin’s announcement of a partial mobilisation in Russia, the spokesperson echoed what Ben Wallace, the defence secretary, said earlier (see 9.35am), saying this was “a clear admission that his invasion is failing”.
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Rees-Mogg hints that support for schools and hospitals with energy bills could continue for full year
Jacob Rees-Mogg, the business secretary, has been giving interviews about the energy support package announced his morning for businesses – or for non-domestic customers, to be more precise (charities, schools and hospitals are included too). The scheme will run for six months, but after March 2023 it will extended in a more targeted format, with help being available for “vulnerable” non-domestic customers.
Asked if schools would continue to get support after the initial six months is up, Rees-Mogg indicated that they would. He said:
We are going to have to support the state sector as well as the private sector. This is a fundamental increase in costs across the economy. Schools, hospitals and care homes are obviously going to need to be able to afford their energy in a year’s time as well as today.
School / hospital / care home help could continue in a year hints Jacob Rees Mogg 👇👇👇 https://t.co/GrXgMl5pP4
— Sam Coates Sky (@SamCoatesSky) September 21, 2022
Almost half candidates in council elections in May experienced abuse or intimidation, survey reveals
Almost half of the candidates in the local elections in Britain experienced abuse or intimidation, a report by the Electoral Commission says.
The situation was even worse in Northern Ireland, where 71% of candidates in the election to the assembly received received abuse or threats.
The Electoral Commission, the watchdog set up to police elections in the UK, said that urgent action was needed to protect candidates in future.
As part of one of the regular surveys it conducts after elections, the commission surveyed candidates who had stood in the elections in England, Scotland, Wales and Northern Ireland in May, and received around 1,000 responses.
People were asked to rate, on a scale of 1 to 5, how much of a problem they had with threats, abuse or intimdation, with 1 being no problem at all and 5 being a serious problem. Any response at 2 or higher was counted as a positive response.
In England and Wales 40% of candidates said they had a problem in this regard. In Scotland the figure was 44% and in Northern Ireland, where the elections were to the devolved assembly, not councils, and politics has historically been more aggressive than on the mainland, the figure was much higher.
Responding to the results Craig Westwood, the commision’s director of communications, policy and research, said:
Urgent action is needed to prevent the abuse and intimidation of candidates and campaigners at elections. It is vital that candidates can participate in elections without fear. The commission will work with governments and the wider electoral community to make sure we understand what is driving this issue, and address it as a matter of urgency.
Energy support plan for businesses too late to stop some firms closing, say opposition parties
Here is some opposition party reaction to the energy support package for business announced by Jacob Rees-Mogg, the business secretary, this morning.
Labour says the help has come too late. This is from Jonathan Reynolds, the shadow business secretary.
It is farcical that the Tories have been unable to tell businesses at the sharp end of the energy crisis what they plan to do to help them until now. Labour has been calling for support since the start of the year.
Businesses have been crying out for detail on these plans and, even now, there are still questions about how much this will cost and who will pay for it.
We have known a crisis of this scale has been coming for months and Conservative dither and delay has forced too many businesses to close, with the future still looking bleak.
The Liberal Democrats also think the initiative has come too late, describing it as a “temporary sticking plaster”. This is from Sarah Olney, the party’s Treasury spokesperson.
This temporary sticking plaster comes too late for the many small businesses that already closed their doors for the last time because they couldn’t afford soaring bills.
The Conservatives have sat on their hands for months while treasured pubs, cafes and high street shops went to the wall.
And the Green party says Rees-Mogg should have focused more on energy efficiency. This is from the Green MP Caroline Lucas.
No wonder Jacob Rees-Mogg clearly wished to avoid parliamentary scrutiny on this critical energy crisis support for businesses – there is an energy efficiency-shaped hole at the heart of this plan that needs to be exposed.
The cheapest and cleanest energy for businesses is the energy they don’t use – so why is Rees-Mogg’s plan utterly devoid of essential energy efficiency measures to help businesses reduce their dependence on costly fossil fuels, slashing bills and carbon emissions at the same time?
Businesses themselves know the importance of net zero, even if climate sceptic Rees-Mogg doesn’t – and on a day when over 100 of the UK’s top businesses have called specifically for energy efficiency, a roll-out of renewables and large-scale industrial decarbonisation, this plan strips out green levies and continues with fossil fuel business-as-usual.
My colleague Graeme Wearden has more coverage of reaction to the plan on his business live blog.
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This is from Paul Johnson, director of the Institute for Fiscal Studies, on the news that stamp duty may be cut in the “emergency budget” on Friday. (See 8.49am.)
Blimey. Did well to find that article from 2016!
— Paul Johnson (@PJTheEconomist) September 21, 2022
Yes, stamp duty is a terrible tax and abolishing it would be a good thing.
A good example of where Liz Truss is right. Just because a change benefits better off more than poor doesn't make it wrong. https://t.co/asaOtCxDfw
Labour sounds alarm over Fullbrook in letter to civil service head
Labour has formally written to the head of the civil service to seek more information about what it called “incredibly alarming revelations” that Liz Truss’s chief of staff, Mark Fullbrook, was questioned as a witness as part of an FBI inquiry, my colleague Peter Walker reports.
‘No way’ Truss’s policies are trickle down economics, says minister
Gillian Keegan, a Foreign Office minister, has rejected claims that Liz Truss is a supporter of “trickle-down economics”. She told BBC Breakfast that the label did not apply to what the Truss government is doing because it has announced an energy support package which will help everyone, not just the rich. She said:
You cannot say what we’ve done is trickle down economics. You know, we’ve just put a massive package in place, which the chancellor will outline the cost of that and how we’re going to deal with that.
But it is massive, the package we put in place to make sure that we support people at this time. So if you look at the definition of trickle down economics, that definitely does not fit it.
My colleague Rowena Mason has the full story here.
There is no precise definition of trickle-down economics, and the term is a perjorative one anyway, more commonly used by opponents of the idea than supporters. Keegan was keen to disown the concept because Joe Biden, the US president, denounced it in a tweet yesterday. But, as a general description of an approach to economic policy, the term is well understood, and it fits exactly what Truss says about the case for cutting taxation and regulation. My colleague Larry Elliott has a good explainer here.
Back to stamp duty, and these are from Ben Zaranko, an economist at the Institute for Fiscal Studies thinktank, on the Times story. (See 8.49am.) Like other economists, Zaranko is not opposed to cutting it in principle because he views it as an inefficient form of taxation.
Stamp duty is a bad, distortive tax. Not much to be said in its defence, apart from the fact that it raises quite a lot of revenue. This could be a positive move if - and it's admittedly a *huge* if - this is the start of a wider overhaul of how we tax housing in the UK. https://t.co/bvKrBDpIHk
— Ben Zaranko (@BenZaranko) September 21, 2022
Stamp duty has been around since 1694 - but maybe it's time for some reform to how we tax land and property. For a sense of what that might look like, look no further than this chapter of the IFS Mirrlees Reviewhttps://t.co/74APieMd3X
— Ben Zaranko (@BenZaranko) September 21, 2022
Putin's partial mobilisation 'admission his invasion is failing', says defence secretary
Ben Wallace, the defence secretary, says President Putin’s decision to announce a partial mobilisation in Russia is an admission that the invastion of Ukraine is failing. Wallace said:
President Putin’s breaking of his own promises not to mobilise parts of the population and the illegal annexation of parts of Ukraine are an admission that his invasion is failing.
He and his defence minister have sent tens of thousands of their own citizens to their deaths, ill-equipped and badly led.
No amount of threats and propaganda can hide the fact that Ukraine is winning this war, the international community are united and Russia is becoming a global pariah.
My colleague Martin Belam has more on this story on our Ukraine live blog.
Robert Peston, ITV’s political editor, is more sceptical about the plan to cut stamp duty. He explains why in these tweets.
The achilles heel of the British economy has for decades been the link between consumer confidence and house prices, and the associated link between a government's popularity and the health of the housing market. If @KwasiKwarteng and @trussliz announce plans...
— Robert Peston (@Peston) September 21, 2022
to slash stamp duty, as revealed in @thetimes, they'll have to explain how this does anything but reinforce the excessive concentration of UK households' wealth in the homes they occupy - which has been the limiting factor on so much important economic and social reform...
— Robert Peston (@Peston) September 21, 2022
for as long as I can remember. The simple question would be whether this is simply a crude way to partially offset the negative impact on the housing market of expected rises in interest rates, which could cost the Tories huge numbers of votes, rather than one of the...
— Robert Peston (@Peston) September 21, 2022
productivity-enhancing structural fiscal reforms that the new PM and chancellor have been promising.
— Robert Peston (@Peston) September 21, 2022
Here are tweets from two thinktank leaders responding to the report saying Kwasi Kwarteng will cut stamp duty in the “emergency budget” on Friday. One is on the left, and the other is on the right, but there is considerable overlap in what they are saying.
These are from Torsten Bell, chief executive at the Resolution Foundation. He was a policy adviser to Ed Miliband when Miliband was Labour leader.
The case for: There’s a strong case for reform. Stamp duty is a pretty bad tax - especially at high levels - that impedes mobility.
— Torsten Bell (@TorstenBell) September 21, 2022
The case against: a general stamp duty cut will raise house prices and principally benefit wealthier households in south east https://t.co/dyU6jGbuey
Ideally you’d cut stamp duty at the same time as reforming council tax, particularly to raise more from higher value properties. Then you’ve got a genuinely valuable tax reform - extra bonus that it’d be unpopular with many, which is all the rage
— Torsten Bell (@TorstenBell) September 21, 2022
And Robert Colvile has posted a long thread on Twitter about stamp duty. It starts here and is worth reading in full. Covile runs the Centre for Policy Studies, and helped to write the Conservative party’s 2019 manifesto.
Intriguing reports that the govt is going to cut stamp duty. Since @CPSThinkTank did a great big report on this, a quick thread on why it makes overwhelming sense - with one big proviso (1/?) https://t.co/IeqlA2GNX3
— Robert Colvile (@rcolvile) September 21, 2022
And here are his conclusions.
So yes, we need to cut stamp duty - we suggested 0 up to £500k, 4% from £500k-£1m, then 5% above that (with an extra surcharge for non-resident foreign buyers).
— Robert Colvile (@rcolvile) September 21, 2022
But we also need to at the very least maintain and ideally increase the supply of land for development, in order to ensure that any cut doesn't simply increase demand for the existing supply of houses.
— Robert Colvile (@rcolvile) September 21, 2022
PS If your response is that we still need to capture more of that unearned housing wealth, then a council tax revaluation to move away from 1991 valuations is a much fairer and less distortive way to do it (though not exactly popular either)
— Robert Colvile (@rcolvile) September 21, 2022
The Department for Business, Energy and Industrial has now published details of its energy support package for business. The department says:
Through a new government energy bill relief scheme, the government will provide a discount on wholesale gas and electricity prices for all non-domestic customers (including all UK businesses, the voluntary sector like charities and the public sector such as schools and hospitals) whose current gas and electricity prices have been significantly inflated in light of global energy prices. This support will be equivalent to the energy price guarantee put in place for households.
It will apply to fixed contracts agreed on or after 1 April 2022, as well as to deemed, variable and flexible tariffs and contracts. It will apply to energy usage from 1 October 2022 to 31 March 2023, running for an initial six-month period for all non-domestic energy users. The savings will be first seen in October bills, which are typically received in November.
As with the energy price guarantee for households, customers do not need to take action or apply to the scheme to access the support. Support (in the form of a p/kWh discount) will automatically be applied to bills.
To administer support, the government has set a supported wholesale price – expected to be £211 per MWh for electricity and £75 per MWh for gas, less than half the wholesale prices anticipated this winter – which is a discounted price per unit of gas and electricity. This is equivalent to the wholesale element of the energy price guarantee for households. It includes the removal of green levies paid by non-domestic customers who receive support under the scheme.
My colleague Graeme Wearden has more on this on his business live blog.
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Liz Truss reportedly set to include stamp duty cut in ‘emergency budget’
Good morning. Jacob Rees-Mogg, the business secretary, will this morning give details of the energy support package that will be available for businesses over the next six months. I will cover political reaction here, but my colleague Graeme Wearden will be leading on coverage of this on his business live blog.
In normal circumstances a government announcement of this kind, involving spending worth tens of billions, would be made to the House of Commons, where MPs would be able to quizz Rees-Mogg on the detail. The Commons is open today, but only for MPs to swear oaths to the new King. It is not having a proper sitting until tomorrow, and it is not clear why a full statement could not have been scheduled for today. This is the second time an energy support measure has been announced in a manner to minimise parliamentary scrutiny; when Liz Truss announced her energy price guarantee, she did it in the form of a speech at the opening of a debate, instead of a Commons statement, which would have allowed up to 100 or so MPs to ask a question about it.
But we are getting a Commons statement on Friday, when Kwasi Kwarteng, the chancellor, will unveil his “emergency budget” and this morning Steven Swinford and Henry Zeffman in the Times say that it will include a surprise cut to stamp duty, as well as the tax cuts already promised (the reversal of the national insurance increase, cancellation of planning corporation tax increases, and the temporary suspension of green levies on fuel bills). In their story – which is not being denied by No 10 – Swinford and Zeffman report:
Truss believes that cutting stamp duty will encourage economic growth by allowing more people to move and enabling first-time buyers to get on the property ladder …
Under the present system no stamp duty is paid on the first £125,000 of any property purchase. Between £125,001 and £250,000 stamp duty is levied at 2 per cent, £250,001 and £925,000 5 per cent, £925,001 and £1.5 million 10 per cent and anything above £1.5 million 12 per cent. For first-time buyers the threshold at which stamp duty is paid is £300,000.
During the pandemic the stamp duty threshold was increased temporarily to £500,000 to help to stimulate the property market. Truss has previously said that cutting stamp duty is “critical” to economic growth. As chief secretary to the Treasury she said that the highest rate of stamp duty, which was introduced by George Osborne, was “clogging up” the housing market and leading to fewer transactions.
Much later today Truss will give a speech to the United Nations general assembly. As Pippa Crerar reports in her preview, Truss will link her own low-tax economic philosophy to the cause of global freedom.
Here is the agenda for the day.
9am: Jacob Rees-Mogg, the business secretary, is due to announce details of the plan to cap energy prices for businesses.
From 10am: In the Commons MPs swear oaths of allegiance to the new King.
11.30am: Downing Street holds a lobby briefing.
Lunchtime (UK time): Liz Truss hosts a business roundtable meeting on economic growth in New York, where she is attending the United Nations general assembly.
Early evening (UK time): Truss holds various bilateral meetings in New York, including with Joe Biden, the US president, and Ursula von der Leyen, the European Commission president. She is also delivering a speech to the UN general assembly, but that will not happen until around 2am UK time.
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