Afternoon summary
- Sir Bernard Jenkin, the Conservative MP who chairs the Commons liaison committee, has urged the government to introduce a £13.5bn package to help people through the cost of living crisis. Speaking in the Queen’s speech debate, Jenkin said:
A summer package to rescue the most vulnerable households is needed to avoid real financial distress and personal anguish and to support economic demand of the most vulnerable households, or we are creating possibly a worse recession than is already expected.
Like after the unforeseen Covid crisis, the Treasury must adapt to this unexpected war in Europe and accept this new global energy and economic crisis also requires a very substantial policy response.
Jenkin suggested the package should include: the restoration of the £20 per week universal credit uplift; the abolition of VAT on domestic fuel; the abolition of green levies on energy bills, with the Treasury funding the initiatives they support directly; doubling the warm home discount; and trebling the winter fuel payment. He said these measures would cost £13.5bn in the current tax year if implemented from July – which he said was “less than the recent tax increases we’ve seen”. Explaining why this was necessary, he said:
Even before today’s shock rise in CPI to 9%, the Commons library had given me striking projections for the effect of this on households. The full year of cost of just energy and food prices will rise by well over £1,000 per year for the lowest 20% of households by income. And by £1,500 per year for pensioner households. The lower 40% of households will feel severe stress from energy and food costs alone.
This is it for today. Thanks for following along.
Updated
Sunak to tell CBI dinner that businesses will get tax cut in autumn
Rishi Sunak, the chancellor, will promise tax cuts for business in a speech to a CBI dinner tonight.
According to extracts released in advance, he will reassure business that “we are on your side” and urge them to help increase productivity and enterprise. And he will say:
We need you to invest more, train more and innovate more. In the autumn budget we will cut your taxes to encourage you to do all those things. That is the path to higher productivity, higher living standards and a more prosperous and secure future.
Sunak will also warn families that the next few months will be “tough”, because of rising prices, but he will say that the government is “ready to do more”. He will say:
Our role in government is to cut costs for families. I cannot pretend this will be easy. As I told the House of Commons yesterday: there is no measure any government could take, no law we could pass, that can make these global forces disappear overnight. The next few months will be tough.
But where we can act, we will. We have provided £22bn of direct support. With fuel duty – cut by 5p a litre. Council tax – cut by £150. The taper rate in universal credit – cut by £1,000 for the average household. The warm homes discount – increased to £150. The national living wage giving low-paid workers a pay rise of £1,000.
And we are going further. In October, we’re cutting energy bills by a further £200. And, in just a few weeks’ time, the national insurance threshold will increase to £12,500. That’s a £6bn tax cut for working people. And of course, as the situation evolves our response will evolve. I have always been clear, we stand ready to do more.
The Treasury has not said what the tax cuts for business might entail.
Updated
The Office for Statistics Regulation has questioned the “transparency, quality and replicability” of figures used by the Department for Education in a document defending its plans for all schools to join multi-academy trusts (MATs).
The paper, The Case for a Fully Trust-Led System, was published alongside the schools white paper in March.
But the National Education Union described the use of statistics in the document as a “scandal”. It highlighted various concerns, such as the fact that the paper emphasised the impressive performance of pupils in MATs without taking into account factors such as selective intake or proportion of pupils eligible for the pupil premium.
In an open letter to the Department for Education, Ed Humpherson, the director general for regulation at the Office for Statistics Regulation, says his team has reviewed the document and “identified issues regarding the transparency, quality and replicability of the statistics presented”. He says:
We recognise that this document was produced to accompany the white paper and is not a purely statistical document. This approach risks conflating the policy proposals with the statistical analysis presented. Care should be taken when producing these types of documents to ensure that the statistics are presented clearly and independently of the conclusions drawn from them.
Updated
Damian Green, the former Conservative first secretary of state, used his speech in the Queen’s speech debate to criticise Nadine Dorries, the culture secretary, over her plans to privatise Channel 4.
Accusing her of ignoring the views of production companies who contributed to a consultation on the company’s future, Green (who once worked for Channel 4 News) said:
If you care about a successful sector, and the creative sector is successful, and the many small businesses who make programmes for Channel 4 are particularly successful, you should listen to it when it tells you how best to strengthen it for the future.
As a Conservative I find it extraordinary that we have a Conservative government that is saying ‘the gentleman from Whitehall knows best’, that the government is deciding how best to run this particular part of this particular sector, ignoring in particular the small businesses that make it up.
I thought listening to small business was a core Conservative aim. We seem to be ignoring this.
Green also said that the consultation launched by Dorries into the future of the BBC licence fee was “a sham” because she has already said she thinks the licence fee has to go.
Rachel Reeves, the shadow chancellor, opened the final day of the debate on the Queen’s speech. Echoing the line of attack used by Keir Starmer at PMQs, she said the government was failing to help people through the cost of living crisis. She said:
We meet today when inflation has hit its highest level for 40 years. Every pound that people had last year can only purchase 91 pence worth of goods today. That’s what inflation of 9% means. Our country had a cost-of-living crisis and a growth crisis, prices rising, growth downgraded and no plan for the future.
None of this, though, is inevitable. It is a consequence of Conservative decisions and the direction that they have taken our economy in over the last 12 years. This government is increasingly a rudderless ship heading to the rocks, while it is willing to watch people financially drown in the process.
Where is the urgency? Where is the action? Because the time to change course is now. We need an emergency budget to deal with the inadequacy of the chancellor’s spring statement, with a windfall tax to help get bills down and help families and pensioners weather this storm.
On the day that inflation has reached a 40-year high, the chancellor is missing in action.
Updated
Sky has released pictures of Sir Kenneth Branagh playing Boris Johnson in This England, its drama about how Johnson responded to the Covid pandemic.
First look at Kenneth Brannagh as Boris Johnson in #ThisEnglandhttps://t.co/4NankSXUXA pic.twitter.com/OWPN7cLDvH
— Radio Times (@RadioTimes) May 18, 2022
There is a trailer here.
New legislation which aims to draw a line under the Troubles has been described as a “very bitter pill” for victims to swallow, PA Media reports. PA says:
The Northern Ireland Troubles (legacy and reconciliation) bill will see immunity from prosecution for Troubles-era crimes be offered to those who are deemed to have co-operated with an information retrieval body.
It will also close down future inquests and investigations, with a new Independent Commission for Reconciliation and Information Recovery (ICRIR) put in place.
Those deemed to have co-operated with the commission will be offered immunity from prosecution.
The commission is planned to be led by a senior judge for five years, with likely two teams of qualified investigators and funding of £30m per year.
Most political parties and victims groups as well as Amnesty International have expressed concern and opposition to the plans.
Northern Ireland’s commissioner for victims and survivors, Ian Jeffers, said it was a “very bitter pill to swallow” for victims. He told the BBC:
It does feel as if some of the last chances for what some victims would say is justice has been removed.
Everybody recognises it’s 40 years, it’s 50 years, the chances of a conviction are very slim.
But if you’ve lost your mother or your son are you going to genuinely give that up?
I think that’s the big issue we’ve got to talk through with victims and survivors over the coming weeks.
Updated
Robert Halfon, the Conservative chair of the Commons education committee, has restated his support for a windfall tax on energy companies on Radio 4’s World at One. The tax could be imposed on a “yearly basis, until the crisis is over”, he said, with the money being used to cut energy bills. He said:
I reckon there are arguments on both sides on this in terms of employment and investment, I get it. But I think desperate times call for desperate measures and we must do this, and we must do it quickly.
Updated
Priti Patel, the home secretary, visited a fire station in London today to mark the publication of the government’s fire reform white paper. It contains proposals to improve the professionalism of the service, by spreading modern workplace practices and potentially setting up a College of Fire and Rescue, and to overhaul governance arrangements for fire services.
Updated
Talk of trade war with EU over NI protocol 'deeply unhelpful', says environment secretary
George Eustice, the environment secretary, told MSPs this morning that talk of a trade war with Europe over the Northern Ireland protocol was “unhelpful”.
The European Commission hinted that the UK’s plan to legislate to ignore parts of the protocol could trigger a trade war when it said yesterday it would respond “with all measures at its disposal” if the bill went ahead.
Giving evidence to the rural affairs committee in the Scottish parliament, Eustice said:
All this speculation around trade wars, we think is deeply unhelpful. In fact, I think what we’re seeing is a more measured tone from the European Union and indeed from ministers in Ireland as well.
People recognise that there’s a challenge here we need to resolve and there’s nothing that we are proposing that breaches international law, it’s consistent with our obligations.
Eustice also described the use of the term “trade war” as “media hype”.
Updated
PMQs – snap verdict
Keir Starmer opened PMQs by asking if Boris Johnson was in favour of a windfall tax on energy companies, against the idea, or just sitting on the fence. By the end of the exchanges, we were no clearer than we were before they started. More than once, Johnson said that he would look at all measures that might help with the cost of living, implying the option is still very much on the table. But then he also stressed his ideological queasiness with the whole idea, telling Starmer:
Nothing could be more transparent from this exchange than their [Labour’s] lust to raise taxes. We don’t relish it, we don’t want to do it, of course we don’t want to do it, we believe in jobs and we believe in investment and we believe in growth. As it happens, the oil companies concerned are on track to invest about £70bn into our economy over the next few years, they’re already taxed at a rate of 40%.
If Johnson was trying to conceal his intentions, it was masterful.
But today wasn’t the day for concealing intentions, and bamboozling the press. (We’re not a week away from a budget.) It sounded much more as if Johnson was appearing hopelessly undecided because he is hopelessly undecided – buffeted between the Daily Telegraph telling him this morning that a windfall tax would be “wildly popular” and Liz Truss on the radio warning him that a windfall tax would be un-Tory. (See 9.11am.)
Starmer set out to show that the government’s response to the cost of living crisis was feeble and ineffective and he did so very effectively. He produced a useful soundbite when he claimed that, because a windfall tax U-turn was now “inevitable”, Johnson’s ongoing dithering meant “he’s choosing to let people struggle when they don’t need to”. (See 12.11am.) But Starmer’s best question was easily his final one, where he personalised the issue, and asked about a patient struggling with the bills to keep his dialysis machine running. The i’s Paul Waugh says it was a humbling moment for the Tories.
Commons listens in silence as @Keir_Starmer raises case of dialysis patient facing double energy costs.
— Paul Waugh (@paulwaugh) May 18, 2022
Haven't seen the Tory backbenches this subdued since height of Partygate.
Maybe they know a windfall tax U-turn is coming + defending the current line could blow up in weeks
Faced with criticism like this, the most effective response for a PM is to be able to say: “I hear you, and we’re going to do X.” That is not yet an option for Johnson because the decisions have not yet been taken, and instead he resorted to cataloguing the measures already adopted by the government, and claiming that these were only possibly because of the Conservative’s sound stewardship of the economy. Johnson sounded bullish, but not at all persuasive; the second point is highly tenuous, and the first amounted to pleading with voters to be grateful for measures already taken (which can be problematic, because the electorate tends to be more interested in the future than the past).
Johnson also resorted to two peculiar red herrings. At one point he said that sanctions on Russia were always going to cause problems, but that “giving in, not sticking the course” would be a bigger economic risk. This would make sense if Starmer were advocating abandoning sanctions - but he isn’t. And in his first response to Starmer, Johnson went studs up on the culture wars, accusing Starmer of not even being able to define a woman. (See 12.06pm.)
It is not the first time Johnson has sought to weaponise the trans issued at PMQs, and there are probably some in Tory HQ who believe that issues like this could sway an election. (Tony Blair seems to thinks so; in a paper published last week, he said Starmer should be “staking out a position on the ‘culture-wars’ issues that plants Labour’s feet clearly near the centre of gravity of the British people”.) But today, when Johnson raised the subject, it just sounded irrelevant. Politicians have to address the issues that matter to the public at any given moment and at the next election it seems certain that the essay question will be, ‘What do you do about the cost of living?’ Without an answer to that, wittering on about how you define a woman won’t be much use.
Updated
Hannah Bardell (SNP) asks how the PM is doing in terms of following the principles in the ministerial code.
Johnson says “10 out of 10”. He says the majority of MPs in the Commons are working hard, doing a good job and behaving properly.
Updated
Richard Thomson (SNP) says in February a flight was allowed to leave Inverness airport for Russia when sanctions were in force. The government knows it was due to leave, but did not stop it. Why was that?
Johnson says he does now know, but that he will look into it.
Updated
Alex Sobel (Lab) asks if Johnson agrees with the minister who said people who are hard up should get a second job. Or does he support an emergency budget?
Johnson says the government is taking steps to help people. It can do so becaause the fundamentals of the economy are strong, he says.
Tom Randall (Con) asks if everything is being done to ensure the rate at which driving licences are issued by the DVLA.
Johnson says processing times are speeding up.
Johnson says the government is committed to delivering the dementia moonshot. But Labour voted against £13bn a year extra for the NHS, he says.
Updated
Richard Holden (Con) asks about Durham, which should be more than a good place to come for a beer and curry, he says. (Holden led the drive to get Durham police to reopen its investigation into Beergate.)
Updated
Virendra Sharma (Lab) says the Home Office takes six months to reply to correspondence. But Jacob Rees-Mogg claims there are too many civil servants, and he objects to them working from home.
Johnson says he thinks people will be more productive if they get back to work.
Dominic Cummings, Johnson’s former chief adviser, had this to say on this subject earlier.
you can only understand the WFH farce if u understand this is an issue the 🛒 gets direct repeated calls from newspaper *proprietors* not just editors: 'It's killing us, tell us what you want in return but you must get commuters back' since April 2020
— Dominic Cummings (@Dominic2306) May 18, 2022
My colleague Jessica Elgot points out that Boris Johnson’s boasting about Crossrail was misplaced.
Just for the record Ken Livingstone got the green light for Crossrail from Gordon Brown (just shows how with long-term infrastructure projects it's always multiple people and parties who have a share of the credit) https://t.co/hWa6vKDsui
— Jessica Elgot (@jessicaelgot) May 18, 2022
Ed Davey, the Lib Dem leader, says farmers are facing extreme problems. Will the PM hold a meeting to discuss this.
Davey is MP for Kingston and Surbiton, where farmers are thin on the ground. But there are plenty of them in Tiveron and Honiton in Devon, where the Lib Dems hope to win a byelection.
Johnson says he would be happy to have a meeting on this.
Luke Evans (Con) asks Johnson to back his campaign to stop companies altering images they use to give a more favourable impression of body image because of the impact this can have on mental health.
Johnson commends Evans for this campaign.
Updated
Ian Blackford, the SNP leader at Westminster, says people did not need to see the figure to know that prices are going up so much. For months people have been crying out for support. Does the PM still support Rishi Sunak’s statement that acting now would be “silly”?
Johnson says he supports the moves the chancellor has taken, such as spending £22bn on helping people with the cost of living.
Blackford says, every day the PM remains out of touch, people are out of pocket. The PM did confirm he thought it would be “silly” to intervene, he claims. He says the Tories are suggesting things such as cooking lessons for people. He says people have been briefing against the chancellor. It is time for the PM to sack him, he says.
Johnson says the spike in energy prices has been exacerbated by the war in Ukraine. The government has taken many measures to help. But people know they are not through this yet. The government will do more, he says. And it can only do so because the economy is strong, which would not have happened had it listened to the opposition.
Updated
Katherine Fletcher (Con) says crime is a big issue for people. Lancashire has got more police officers.
Johnson says they want to drive neighbourhood crime down even further.
Starmer says the government is on the side of excess profits for gas and oil companies. Labour is on the side of working people. He says he spoke to Phoenix this week, who has to do dialysis for long hours at home. He cannot avoid that. They had to turn their central heating off, but their energy bill has still doubled. Phoenix “feels like he is being priced out of existence”. Other disabled people are in the same situation. He says the plans for this are in place. “Do it for people like Phoenix, who simply cannot afford to wait.”
Johnson asks Starmer to send him the details of Phoenix. He says the NHS already pays for dialysis. And he says Labour voted against extra money for the NHS. The government is focusing on skills and the economy.
It was fantastic to see the Queen open Crossrail, he says. It will create thousands of jobs. Who was the mayor of London who started it, and who was the PM who completed it?
Updated
Starmer says Johnson cannot make his mind up. The chairs of Tesco, John Lewis, and the education committee are among those in favour. Who is against it? Jacob Rees-Mogg, going round putting notes on people’s desks “like some overgrown prefect”.
Johnson says oil companies are already taxed at 40%. The UK needs investment. People are paying high energy prices because Labour did not invest in nuclear. Unemployment is at its lowest level for 50 years, he says.
Starmer says the government continually does nothing. People cannot afford to wait.
Johnson says the government is getting more people into work. That is how you fix the long-term problems with the economy. Labour wants to borrow another £30bn. That would put more pressure on people with interest rates.
Starmer says PM 'choosing to let people struggle' with cost of living
Starmer says Johnson does not get it. He does not understand what people are going through. Every day, energy companies rake in £32m in unexpected profits. Every day he is delaying his “inevitable U-turn”. “He is going to do it.” The delay is making it worse for people. He says:
Whilst he dithers British households are slapped with an extra 53 million on their energy bills every single day. Meanwhile every single day North Sea oil and gas giants rake in 32 million in unexpected profits. Doesn’t he see that every single day he delays his inevitable U-turn, he’s going to do it, he’s choosing to let people struggle when they don’t need to.
Johnson says the govenrment is already spending £22bn on helping people. It can do this because it took the tough decisions to get people out of lockdown. And taxes are being cut in July, he says.
He says he will look at all measures to support people.
Updated
Starmer says last week Johnson said he would look at the windfall tax. Last night the Tories voted against it. The papers say they are for it. And Johnson now says he is against it. They rule it in, and then rule it out. When will he stop the hokey cokey and back a windfall tax?
Johnson says Labour always wants to raise taxes for business. In 2019 Starmer backed a manifesto that would have raised business taxes to their highest levels ever. He says they always knew there would be a short-term cost to imposing sanctions on Russia. But giving in would be the greater economic risk.
He says of course the government will look at all the measures needed to get people through to the other side.
Updated
Keir Starmer says a windfall tax would raise billions of pounds to help people with energy bills. Is the PM for it, against it, or is he sitting on the fence like his chancellor.
Johnson says Starmer could not even define what a woman is. “Heaven help us.” He says Labour loves putting up taxes. He wants to “take a sensible approach, governed by the impact on investment and jobs”. He wants to have a strong economy. Unemployment is at its lowest level since 1974, when he was 10 years old.
Updated
Elliott Colburn (Con) asks what is being done to ensure children with special needs get the education they deserve.
Johnson says the government has a programme for this.
Steve McCabe (Lab) asks what the government is doing to stop people dying of cold in their homes next winter.
Johnson says the government has spent £9bn on a package to help people with heating.
Boris Johnson starts by giving his best wishes to Rangers in tonight’s match in Seville.
PMQs
PMQs is starting soon.
Here is the list of MPs down to ask a question.
Leo Varadkar, the Irish deputy prime minister, told RTE Radio this morning that the UK government’s plan to legislate to allow it to ignore parts of the Northern Ireland protocl was “not very respectful” to the British people. He explained:
This departure is not very respectful of the British people either because they voted for this in an election. They must understand what the consequences are for the union.
If they keep trying to impose on Northern Ireland things that Northern Ireland doesn’t want, that drives more people towards nationalism and away from support for the Union. And it just seems a bit puzzling.
He pointed out that 59 of the 90 MLAs (members of the legislative assembly) elected to Stormont last month did not want to disapply the protocol.
Union leaders back call for emergency budget
Other union leaders have backed Labour (see 9.33am) in calling for an emergency budget in the light of today’s inflation figures.
This is from Frances O’Grady, general secretary of the TUC.
Conservative MPs keep telling families there is no cost of living crisis – it’s their own fault for not working more hours or having the wrong diet. But with inflation so high, the crisis is cold, hard reality. And families are desperate for the government to help with an emergency budget.
The pandemic showed that the government can act to help business and workers if they want to. The chancellor must step up with an emergency budget that helps families with a boost to universal credit and the minimum wage. And we urgently need a windfall tax on oil and gas to fund energy grants for struggling households.
This is from Christina McAnea, general secretary of Unison, Britain’s biggest union.
Ministers can’t continue to sit on the sidelines and do nothing. Hard-up families on stretched budgets need emergency support. Boosting benefits and lifting public sector wages above rising costs are a must if families are to have any hope.
And this is from Mike Clancy, general secretary of the Prospect union.
It is just not good enough to suggest that workers must bear the cost of this, while pay inequality widens with the top 1% of earners seeing sharp increases in pay last month.
The government need to get real about the cost-of-living crisis, with an emergency budget to provide more support with energy bills and an end to real terms cuts in pay for public sector workers.
Unite says it will use strike action if necessary to protect workers' pay as inflation rises
Unite, Britain’s second largest union, has said that workers should not lose out on pay rises because of the inflation crisis. In a statement responding to today’s inflation figures, Sharon Graham, its general secretary, criticised Andrew Bailey, the Bank of England governor, for telling MPs on Monday that employers should show restrain when asking for pay rises. She said:
Earnings are being pummelled, the government is, shamefully, turning its back on those in need and employers are squeezing wages. So, we will absolutely take no more lectures on pay restraint from the millionaire governor of the Bank of England.
If Andrew Bailey wants to lecture anyone about belt-tightening, he should direct his attention to the CEOs of the UK’s top 100 companies who have seen their wages swell by an average of 34 per cent to an astonishing £4.1m a year. Ask them to pause to reflect about the scale of their corporate greed.
Graham also said that that the union would use strike action to protect workers’ wages.
Workers, on the other hand, are at least £70 worse off than this time last year and are being battered by spiralling food and energy costs. Telling them to pay for a crisis which is absolutely not of their making is obscene and totally unacceptable to Unite.
Unite’s answer to the current crisis is that employers who can pay decent wages but won’t will face industrial action. I can tell you that we don’t intend to shift from that.
Graham said that since she became head of the union last summer the union had been involved in more than 300 disputes and that it had won millions of pounds in pay uplifts. She posted about one case on Twitter this morning.
**WIN - Up to 9.1% backdated to January**
— Sharon Graham (@UniteSharon) May 18, 2022
This deal is a testament to our brilliant reps who have ensured that up to 200 workers at Glasgow Airport have secured better pay, terms and conditions by being a member of @unitetheunion. #JobsPayConditions https://t.co/P1ZRmBHOqt
Inflation likely to experience further 'bump' before prices stabilise, cabinet minister warns
Anne-Marie Trevelyan, the international trade secretary, has warned that inflation will experience a further “bump” before prices are likely to stabilise.
In a Q&A after delivering a speech on green trade at Bloomberg’s HQ in London, she said countries around the world were facing a “a global battle against inflation”. She went on:
This is something we have to tackle across the board.
And the worry we always have is that inflation tends to have two bumps to it.
You have the initial one that is caused by this energy spike and immediate global rise, but what can follow is the longer term impact and indeed through food production and particularly with disruption to Ukraine.
So we know that we will probably have a couple of bumps to get through before we will see, we hope, stabilisation and a reduction as the energy crisis settles.
Updated
Boris Johnson has welcomed the news that Finland and Sweden have formally applied to join Nato.
This is an historic day for our alliance & the world. Not long ago nobody would have predicted this step, but Putin’s appalling ambitions have transformed the geopolitical contours of our continent.
— Boris Johnson (@BorisJohnson) May 18, 2022
I look forward to welcoming Finland & Sweden into the @NATO family very soon. https://t.co/0IxmEpvky8
Temporary VAT cut among options being considered by government to help with cost of living crisis
In their overnight story, my colleagues Rowena Mason, Heather Stewart and Alex Lawson report that one of the options being considered by the government to help people with the cost of living crisis is a temporary cut in VAT. They write:
Rishi Sunak and Boris Johnson have been meeting in recent weeks to thrash out a package to help with the cost of living, but were initially insisting that any policies would not be allowed to cost money.
The chancellor has repeatedly ruled out bringing in an emergency budget that would be needed for fiscal measures such as tax cuts, but is facing a revolt on the Tory benches if he fails to take major action.
A source told the Guardian that officials have been examining a temporary cut to VAT similar to Alistair Darling’s action in 2008 of 2.5% or even as high as 5% but this was dismissed by Treasury sources as too expensive at around £7bn per percentage point cut and a “blunt instrument”.
Experts warn that while a VAT cut would have the effect of cutting prices in the short term, it would then push up inflation whenever it is reversed. “You’re basically moving inflation from this year into what may be an election year,” said one economist.
One person with knowledge of the Treasury’s thinking said: “The debate is, we’re going to have to do something for the poor; do we also need to do something for everyone?”
Aside from a VAT cut, other options that would offer help across the board would include increasing the generosity of the cut in energy bills due to come into effect in October; or bringing forward the income tax cut Sunak has planned for 2024.
The full story is here.
And this is what some other papers are saying about the options being considered by Sunak and Johnson.
- Ben Riley-Smith and Camilla Turner in the Daily Telegraph say ministers are increasingly open to the idea of a windfall tax on energy companies. They report:
It is understood some cabinet ministers are warming to the idea – pushed hard by Labour – given internal polling shows it is popular with voters.
There is also some surprise from ministers and officials involved in talks with oil and gas companies that there has not been more push back to the proposal.
The move could potentially generate billions of pounds at a time for the Treasury when public spending pressures remain high ahead of the autumn budget.
- Steven Swinford in the Times says Sunak is thinking of increasing the warm homes discount, and cutting taxes in the autumn. He says:
From October the warm home discount will give three million of the poorest households in England and Wales £150 off their bills. Treasury officials have drawn up a range of options, including a one-off increase of £300, £500 or even £600 to help households to cope with soaring energy prices ...
The warm home top-up, which could cost more than £1 billion, would be directly funded by the government rather than levied on energy bills as under the present system. The chancellor is said to be attracted to the approach in part because there is less risk of it becoming permanent compared with a significant increase in benefits. Kwasi Kwarteng, the business secretary, has proposed raising the discount to £500.
Sunak will follow the intervention on bills with a budget in the autumn. The Treasury is said to favour reducing income tax by 1p in the pound but other ministers believe that cutting VAT would provide a more significant boost to the economy.
As my colleague Graeme Wearden writes on his business live blog, the Resolution Foundation thinktank is urging the government to help poorer families now, after calculating that those on lowest incomes are now suffering double-digit inflation, while richer households are less badly hit.
This tweet, from Jack Leslie from the Resolution Foundation, helps to illustrate the point.
This inflation rate is significantly higher than the rate for high-income families - the gap between the highest and lowest income families is estimated to be at least around 1.5ppts. That's a huge additional hit to living standards for poorer families. pic.twitter.com/10g5WtEIxm
— Jack Leslie (@jackhleslie) May 18, 2022
Liz Truss, the foreign secretary, told Times Radio this morning that the UK was open to the idea of an international criminal tribunal trying Vladimir Putin and other Russian leaders over the war in Ukraine.
Asked by the Ukrainian MP Alexey Goncharenko if the UK would support the move, Truss replied:
Well, we are very clear that Putin and all of those who’ve been behind the appalling war crimes that are being committed in Ukraine need to be held to account, and we’re working very closely with the ICC [International Criminal Court].
We’ve sent support into Ukraine to help collect evidence, from witness statements to video evidence.
I’ve talked to the Ukrainian government about this idea of a tribunal. We are open to the idea of a tribunal, we’re currently considering it, but what we want is the most effective way of prosecuting those people who have committed these appalling war crimes including rape, sexual violence, the indiscriminate targeting of civilians.
If the tribunal will help to do that, then the UK is definitely considering supporting it.
Petrol and diesel prices reach record highs
Petrol and diesel prices have reached record highs, PA Media reports. PA says:
Statistics from data firm Experian Catalist show the average cost of a litre of petrol at UK forecourts on Tuesday was 167.6p.
The previous record of 167.3p was set on 22 March, the day before a 5p cut in fuel duty was implemented.
Diesel prices continue to climb to new highs, reaching an average of 180.9p per litre on Tuesday.
That was the same day Kwasi Kwarteng, the business secretary, wrote to fuel retailers “to remind them of their responsibilities” following claims retailers hiked profits following the reduction in duty.
EU being 'overzealous' with checks under Northern Ireland protocol, says Rachel Reeves
Rachel Reeves, the shadow chancellor, told Times Radio this morning that she thought the EU was being “overzealous” in the checks it wanted on goods entering Northern Ireland from Britain under the Northern Ireland protocol. But she said she wanted this resolved through negotiation, and not by the UK suspending parts of the protocol. She said:
I think the EU are being overzealous in the checks.
There are goods that are destined for market in Northern Ireland, never going to leave Northern Ireland, never going to get into the single market, which is what the EU say is their worry.
For those goods that are just moving into Northern Ireland then I just don’t think we need the level of checks the EU are pursuing.
But the way to resolve this is not through megaphone diplomacy, it’s not unilaterally ripping up the protocol, it’s by working in partnership to resolve these very real issues that do exist.
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Labour renews call for emergency budget
Labour has tabled an amendment to the Queen’s speech motion calling for an emergency budget. Rachel Reeves, the shadow chancellor, told BBC Breakfast that an emergency budget was needed because the government’s response to the cost of living crisis had been inadequate. She said:
Today in parliament, Labour will be calling another vote and urging the government to introduce an emergency budget because it is clear that the actions taken to date by the government did not meet the scale of the challenge.
Families and pensioners are really struggling right now and the government must urgently come forward with additional measures to help people with this incredible increase now.
Labour has been calling for an emergency budget for some time. It has said this should include: a windfall tax, with the proceeds used to cut energy bills; a cut in business rates for small and medium-sized enterprises; the abolition of the national insurance increase; a home insulation programme; and a National Crime Agency investigation into government spending lost to fraud.
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This is from Jill Rutter, a former Treasury civil servant who now works at the Institute for Government thinktank, on Liz Truss’s interviews this morning.
If @trussliz wants more business investment in the UK, she needs to create certainty. CX acknowledged that uncertainty had dampened investment 2016-2020. Govt now seems set on removing the certainty the TCA finally gave by threatening on NI protocol.
— Jill Rutter (@jillongovt) May 18, 2022
Liz Truss suggests Tory response to cost of living crisis should be tax cuts, not windfall levy on energy firms
Good morning. The most important political story around this morning is the news that inflation reached 9% in April, its highest level for 40 years. Phillip Inman has the detail here.
And my colleague Graeme Wearden is covering reaction on his business live blog.
The inflation figures are normally primarily a concern for economists, but a 9% inflation rate is also a cost of living crisis, and this is certain to dominate the first prime minister’s questions of this parliamentary session, at 12pm.
In the meantime Liz Truss, the foreign secretary, has been doing interviews this morning. Ministers are under intense pressure to unveil an emergency financial package to help people deal with rising costs, and in our overnight story we look at some of the options on the table. Truss told the Today programme that Rishi Sunak, the chancellor, was looking at this “very, very urgently”, but she would not say when any announcement might come.
There have been increasing hints from government that its response might include a windfall tax on energy companies that could be used to fund help for consumers. Sunak firmly opposed the idea when Labour first proposed it, but now he has accepted that it’s an option. The Daily Telegraph today says that internal government polling shows the idea is “wildly popular” with the public - which should be no surprise to anyone because that it was what external polling shows too.
Truss did not get into detail on what the government would, or should, do on the cost of living crisis. But in her interviews she did forcefully intervene in the internal Tory debate on this issue, signalling her disapproval of the windfall tax proposal and suggesting instead that tax cuts were needed. Asked about the windfall tax on Sky News, she said:
The problem with a windfall tax is it makes it difficult to attract future investment into our country. So there is a cost in imposing a tax like that. And my view is lower taxes are the best way to attract more investment, to get the businesses into this country that can create these high-paid jobs, which is what we need to face down these global headwinds.
When it was put to her that the head of BP had said that a windfall tax would not stop his company investing in the UK over the next decade, she replied:
Well, then he can do even more if he’s got more profits that have been raised during this period.
And, on the Today programme, when asked what the government should be doing, Truss again stressed the need for tax cuts – and the importance of investment.
The key response to the huge global inflation crisis we’re facing is to make sure our economy grows. That’s what’s going to help people, it’s going to help people in work, it’s going to help generate the income. To do that we need to attract business investment. We’ve been successful at attracting business investments so far. We need to do more. And what we know is a low-tax economy helps deliver that business investment, helps deliver those jobs.
Truss will almost certainly be a candidate in the next Conservative leadership contest, and for many in the party slashing taxation is a core article of faith. That does not mean Truss was making a leadership pitch today – she says these things because she believes them – but that’s the context within which she is making these arguments.
Here is the agenda for the day.
10.15am: Lord Burnett of Maldon, the lord chief justice, gives evidence to the Lords constitution committee.
12pm: Boris Johnson faces Keir Starmer at PMQs.
1.30pm: Dame Dr Jenny Harries, chief executive at the UK Health Security Agency, and Shona Dunn, second permanent secretary at the Department of Health and Social Care, give evidence to the Commons public accounts committee about contracts with Randox Laboratories.
2.30pm: Liz Truss, the foreign secretary, gives evidence to the Commons international development committee on international aid.
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