A summary of today's developments
- During the latest Conservative hustings in Eastbourne, Liz Truss was interrupted on two occasions by protesters highlighting climate change and the cost of living crisis. Truss told the audience: “I take it as a compliment that I’m so popular with Extinction Rebellion.” The activists from the Green New Deal Rising group were escorted out of the venue by security staff.
- Nusrat Ghani announced she is supporting Liz Truss at the hustings. The MP for Wealden praised Truss’s “bold and conservative” plan, insisting she will “defend the unity of our nation and protect the peace in Northern Ireland”.
- Rishi Sunak defended his comments after a video, shared with The New Statesman magazine, shows him telling grassroots Tories in Kent that he had been working to divert funding from “deprived urban areas” towards prosperous towns. Foreign Office minister Zac Goldsmith said the video was “one of the weirdest - and dumbest - things I’ve ever heard from a politician”. The former chancellor said today that it is not solely “big urban areas that require that extra investment”. He told Sky News: “It’s right that those funding formulas are accurate, that they actually look at the need in different areas, measure that properly and reflect how things have changed from the past. “And I think that’s an entirely sensible thing to be doing, because it’s not just big urban areas that require that extra investment.”
- Lisa Nandy, the shadow secretary of state for levelling up, has written to Greg Clark, the levelling up secretary and Tunbridge Wells MP, about Rishi Sunak’s “scandalous” admission that he “funnelled public money away from deprived areas and gave it to affluent Tory shires”.
- The UK business secretary, Kwasi Kwarteng, admitted it will be more than a month before ministers can introduce any measures to tackle the rising cost of living.
- Tony Danker, the CBI director general, said he fears a power vacuum amid the Tory leadership contest, warning that the economic crisis “cannot wait until 5 September for action”.
And that brings tonight’s hustings in Eastbourne to a close.
Sunak calls for the net zero environmental target to be met in a “measured way” and not in the context of a race against another country.
“The way we’re going to solve the problem is not about making people give up the things they love or putting up all their bills, it’s about innovation”.
Sunak is then asked whether the UK should leave the European Court of Human Rights.
He replies: “We may have to, and no option should be off the table.”
Sunak added the UK needs to move away from the ECHR “definition of asylum” and use a definition that is “narrower and tighter”.
Sunak is asked what legislation he will put in place to ensure councils and local housing associations have the best quality of social housing possible.
The former chancellor says he does not have an immediate answer and thought we were already in the process of implementing the decent homes standard.
Sunak insists there “shouldn’t be top-down targets imposed” on places like Wealden in Sussex with areas of natural beauty.
He added: “And the planning inspector needs to be told that that needs to be taken into account. Under my leadership and the plans I want to put in place it will be protected. “Because I want to protect your green spaces and trust you with getting on with the job of delivering houses for your community in the way you think best.” He says developers are currently “sitting on the land” where planning permission has been approved: “Those are the plans I have outlined today, and they’re going to help you.”
Sunak says Britons today are “much more interested in changing jobs much more frequently and that’s something we should encourage and support”.
He says if he was aged 22 in 2022, he would want to “do something different” and become involved with new technology and ways of doing things.
Sunak says productivity will be key to growing the economy “and focussing on corporation tax hasn’t achieved that ... because it’s not the right tax to focus on”.
He said instead, business taxes must be cut “on the things that make a difference”.
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Sunak is now facing questions. Asked how he will win a fifth term for the Tories, he said the “first thing” is to “have got through this inflation problem by then”.
The former chancellor added: “That’s why I’m particularly worried about policies that risk making it get worse and last longer. “This is a problem that isn’t just for this winter, it’s for next winter as well – and beyond.”
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On demonstrations, Truss says she is “fine with peaceful protest” but people camping out in Parliament Square for weeks on end is “not the same” and it must hinge on not “harming others”.
“There is deliberately disruptive activity which isn’t just about peaceful protest, it’s about trying to disrupt democracy, it’s about trying to disrupt everyday life.
“One person’s freedom should not mean other people suffer misery.”
Truss pledges to help children deal with mental health issues resulting from Covid “when they should have been with their friends, they should have been at schools”.
She calls for more mental health support in schools to help teachers and says she would support them to offer more wraparound care for children to benefit working parents. Truss added: “One of the big problems parents face is social media and kids contacting each other and winding each other up on WhatsApp ... I’m not sure teenage girls are as bad as Tory MPs [on WhatsApp].”
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This is the moment Truss was interrupted by the protesters at the start of the hustings.
Truss interrupted again by protester
Truss has been interrupted again by “somebody who shouldn’t have a microphone” the audience is told.
It is unclear whether this was a member of the same protest group as earlier.
She said: “I take it as a compliment that I’m so popular with Extinction Rebellion.”
An audience member asks Truss if she she knows what Personal Independence Payments (PIP) are and how the government “will ensure we get meaningful employment”.
Truss says while she does not know the current PIP level, “what I want is to make it much easier for people in your position to get into jobs and also have the opportunity to set up your own businesses”. “I know the Department of Work and Pensions is working on how to make this better. And what I want to do is talk to you about how can we help deal with the issues you face in getting employment, how can we make it better in terms of the available opportunities – including being able to start up your own business, and I would want to help do that as prime minister.”
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The climate activists who earlier disrupted Liz Truss’ speech at the Conservative leadership hustings have released a statement.
Green New Deal Rising said five members “stood up and interrupted” the leadership hopeful’s opening remarks to “protest the rising cost of energy bills and the climate crisis”.
Truss is now facing questions and reiterates that people should be able to use their rental history to get a mortgage and pledged to look at the student loan situation.
“To ensure students and ex-students are getting a fair deal,” she said. “Fundamentally, what we need to do is show people there is hope.”
Only around a third of tonight’s audience raise their hands when asked if they are “more than 90% sure” who they are supporting in the leadership race with one month to go.
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Sunak continues to try and repair the damage from the video footage which showed him saying he diverted funding from deprived urban areas towards prosperous towns.
He said: “I want to level up everywhere. And as you may have seen from a video clip that’s online, I don’t believe that’s just about our very large urban cities.
“I believe that’s about investing and levelling up in small towns, in rural towns, in coastal communities like those here in the south-east.”
Sunak takes aim at Truss’s fiscal policies, which he says would make the inflationary spiral worse.
“We’re going to [act] responsibly by being disciplined on financial services and our economy.”
Dominic Raab introduces Rishi Sunak on stage.
On the Covid support he offered, the justice secretary says: “When you needed him, Rishi was there for you.
“And I know as we face another global challenge, the fight against inflation, Rishi is the credible candidate with a credible plan to get inflation down, and to cut taxes, but when it will help, not hurt people. “Because the alternative choice in this contest is unfunded tax cuts to the tune of £50billion which will just put more debt on our children’s shoulders. That’s not fair, that’s not Conservative.”
On the issue of migrants crossing the Channel, Truss says she spoke to her French counterpart last week “to make it very clear that we expect French border guards to be working all hours in Dover to make sure that our border is protected”.
The interruption prompts Truss to give her view on what she says are “the militant people who try and disrupt our country and try and disrupt our democratic processes and our essential services”.
“I would legislate immediately to make sure that we stand up to Extinction Rebellion... and I will never, ever, ever allow our democracy to be disrupted by militant activists.”
Truss interrupted by environmental activists
Liz Truss is first on stage and is interrupted by a heckler holding a placard, who is booed by the audience and escorted out the venue by security staff.
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Former government minister Nusrat Ghani backs Liz Truss
Nusrat Ghani has announced she is supporting Liz Truss at the hustings.
The MP for Wealden praises Truss’s “bold and conservative” plan, insisting she will “defend the unity of our nation and protect the peace in Northern Ireland”.
Because of her role within the 1922 Committee, Ghani could not back a candidate until this stage of the contest.
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Tory MPs Jacob Young and Jake Berry clash on Twitter over that Sunak video. Expect this to be one of the key issues raised in the hustings.
— Jacob Young MP (@JacobYoungMP) August 5, 2022
Truss and Sunak to go head-to-head again at hustings at 7pm
The latest Conservative Party leadership hustings is taking place at 7pm in Eastbourne, you can follow all the action here.
Liz Truss has been accused by Labour of being “deeply irresponsible” for threatening to tinker with the Bank of England’s mandate on the brink of a recession.
The shadow chancellor, Rachel Reeves, attacked the Tory leadership frontrunner after Truss and her allies repeatedly questioned the performance of the Bank’s governor, Andrew Bailey, and said she would review the institution’s remit.
“This is deeply irresponsible from a Conservative leadership candidate. It creates huge uncertainty that will hold back vital investment in our economy,” Reeves said.
Rishi Sunak defends saying he took funds away from deprived urban areas
Rishi Sunak has defended his comments after a video, shared with The New Statesman magazine, shows him telling grassroots Tories in Kent that he had been working to divert funding from “deprived urban areas” towards prosperous towns.
The former chancellor said today that it is not solely “big urban areas that require that extra investment”. He told Sky News: “It’s right that those funding formulas are accurate, that they actually look at the need in different areas, measure that properly and reflect how things have changed from the past.
“And I think that’s an entirely sensible thing to be doing, because it’s not just big urban areas that require that extra investment.
“It’s also people in rural communities, it’s also people in towns and that’s what we’ve done, both as a Government in the past, what I want to do as prime minister in the future.
“Level up across the country so that no matter where people live, they feel incredible opportunities and pride in the place that they call home.”
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Conservative former minister Philip Dunne believes Rishi Sunak is the candidate able to “attract people to come back to the Conservatives”.
The MP for Ludlow announced he is a Sunak supporter on BBC Radio 4’s PM programme, saying: “I have done a survey of my constituents. I’ve had 1,250 people respond and of the Conservative members about 250 replied, and they were 35% for Liz Truss and 33% for Rishi Sunak.
“But importantly, 32% undecided. So I think this is all to play for. I think that what we need for the next prime minister is somebody who is going to be able to unite the party and attract people to come back to the Conservatives, who we’ve lost in recent months.
“And I think that from the evidence of my survey, where it’s four and a half to one for those who didn’t vote Conservative in favour of Rishi Sunak, I’m going to support Rishi Sunak for prime minister.”
A majority of Britons believe Rishi Sunak would be the best candidate to end a recession, according to the latest YouGov poll.
When asked which of the leadership candidates would be best able to end a recession, 19% of respondents chose Sunak compared to 12% who said Liz Truss. However, almost half, 46%, said “neither”.
Councils across England have written to the health secretary, Steve Barclay, warning that social care reforms could push some local authorities “over the financial edge” and force others to cut back on “vital council services”, ITV News reports.
The Local Government Association (LGA) has written a letter to Barclay calling for key reforms - such as an £86,000 cap on the costs of care and a new means-tested system - to be delayed by six months to urgently ease pressure on councils.
The letter, written on behalf of the LGA by David Fothergill, leader of the Conservative group on Somerset Council, and with the backing of many other Tory council leaders, says:
The serious and precarious nature of our existing adult social care system, and the very real consequences of current pressures on people who draw on care and support, is unquestionable.
It adds that much of the immediate challenge “can be traced back to historic under-funding, which continues to this day on a significant level.”
The letter lists concerns about unpaid carers, providers closing down or handing back contracts, and reductions in quality and choice.
Fothergill writes:
Social care’s lack of capacity to deliver the care that people need has been evidenced time and time again and the government needs to step in.
If it doesn’t, we can expect one of the most challenging winters in recent times, with knock-on effects that will continue to impact on people and their loved ones.
According to ITV News, government sources said that while they wanted to work constructively with the sector, they did not accept any need to lengthen the timetable.
Managers employed by Network Rail have voted to accept a 4% pay offer in a move seized on by the government as a breakthrough in the wider rail strikes dispute.
The Transport Salaried Staffs’ Association (TSSA) confirmed its management-grade members had accepted the deal, which should ensure a skeleton service will continue to run during planned strikes in August.
The decision was announced the day after 2,500 other TSSA members at Network Rail confirmed they would take action alongside 40,000 Rail, Maritime and Transport workers’ union (RMT) members, including signallers and train operating staff, on Thursday 18 and Saturday 20 August.
The transport secretary, Grant Shapps, said it was “fantastic news”, adding:
This acceptance by these TSSA members will mean that we have a strong, reliable contingency staff for any future strikes and will be able to run services for passengers and minimise disruption to lives of everyday people.
Unions working with industry instead of against is the only way forward out of this dispute and a necessary step to end these destructive strikes and to put our railways on a secure footing for the future.
Rishi Sunak looks to have an uphill battle ahead of him to become the UK’s next prime minister. As he vies with Liz Truss for Conservative members’ votes in the contest to replace Boris Johnson, my colleague Martin Belam lists 10 things you might not know about the former chancellor.
Keir Starmer is facing a leadership crisis over his decision to ban Labour frontbenchers from appearing on trade union picket lines, HuffPost UK is reporting.
The Labour leader is being urged to clarify his approach to frontbenchers attending picket lines, after an embarrassing standoff with Lisa Nandy, the shadow levelling up secretary, who was pictured chatting with striking CWU workers in her Wigan constituency on Monday.
Nandy’s team has said she informed Starmer’s office beforehand of her intention to attend the CWU picket in her constituency.
But one senior Labour MP told the news website:
She says she rang Sam White [Starmer’s chief of staff], who told her she could go to the picket line. The big question for him is why did he not say don’t do it?
A Labour source said:
Nobody forced Keir to choose this issue as the big test of his authority, but he did and his authority has been tested by junior frontbenchers and his opponent in the last leadership election and he is not doing anything about it.
His office was floundering in terms of its response. It was a total shit show.
Another MP said the issue has severely damaged Starmer’s authority and it was a “dangerous moment” for the Labour leader ahead of the party conference next month.
They added:
The whole thing is just a mess and I don’t see it being resolved. It will cast a very long shadow and has the potential to derail conference.
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No emergency cost of living help for at least a month, says minister
The UK business secretary, Kwasi Kwarteng, has admitted it will be more than a month before ministers can introduce any measures to tackle the rising cost of living.
Kwarteng, who is backing the foreign secretary, Liz Truss, to become the next leader of the Conservative party, said he was expecting a new prime minister to introduce a “support package” in an emergency budget but it could not happen until after they start work next month.
Both Boris Johnson and the chancellor, Nadhim Zahawi, are on holiday as the Bank of England warns the economy will enter the longest recession since the 2008 financial crisis. The UK is forecast to suffer an economic downturn lasting more than a year.
Kwarteng said: “I don’t know where Boris is,” but claimed the public would not begrudge the outgoing prime minister taking a honeymoon. He went on to say he was in “regular contact” with Johnson.
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CBI warns economic crisis 'cannot wait' until the Tory leadership contest's conclusion for action
Tony Danker, the CBI director general, has said he fears a power vacuum amid the Tory leadership contest, warning that the economic crisis “cannot wait until 5 September for action”.
His comments came as both Boris Johnson and Nadhim Zahawi are both on holiday as the country braces for a looming economic crisis.
He told BBC Radio 4’s World at One:
I have no problem with people having short holidays. My fear is much more profound, which is that there will be a vacuum from now until 5 September. We need the current prime minister and the current chancellor to fill that vacuum. We need them to make decisions. We need them to make plans. We need them to reassure firms, markets and households that we are gripping this.
We cannot wait until 5 September for action. We cannot wait until 5 September for plans and we cannot wait until 5 September for reassurance.
He added:
I think they need to be developing these interventions that are going to help people with the cost of living in the autumn. They need to be signalling on 26 August when Ofgem signal what the price rise is going to be.
They need to be signalling that the government has a response and an answer. And they need to be setting out growth plans and growth intentions now.
Industry bosses have accused Liz Truss and Rishi Sunak of “cherrypicking” between inflation and growth.
Tony Danker, the director general of the Confederation of British Industry, said the Tory leadership candidates must tackle both.
He told BBC Radio 4’s World at One:
I think the candidates are having a debate about stagflation actually. Each candidate is sort of picking their worse evil to focus on first. But the trouble with stagflation is you don’t get to choose between tackling inflation or tackling recession, you have to tackle both.
So, that’s challenge number one to the candidates, to not pick which one of inflation or recession they care about more, but to come up with a plan that tackles both.
He added:
We need a genuine plan about growth, that when it comes to tax we need to talk about the whole tax regime, not cherrypicking the ones that are most totemic.
We also need to think way beyond tax, we need to think about regulation that’s pro-growth, we need to think about boosting growth markets, and above all, given where most people are in business today, is we need to think about a plan to tackle labour and skills shortages.
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Lisa Nandy writes to Tunbridge Wells MP over Sunak's 'scandalous' funding claims
Lisa Nandy, the shadow secretary of state for levelling up, has written to Greg Clark, the levelling up secretary and Tunbridge Wells MP, about Rishi Sunak’s “scandalous” admission that he “funnelled public money away from deprived areas and gave it to affluent Tory shires”.
The Labour MP for Wigan called on Clark to “urgently investigate” what changes were made to funding and what justified them.
It’s scandalous that Rishi Sunak funnelled public money away from deprived areas and gave it to affluent Tory shires.
— Lisa Nandy (@lisanandy) August 5, 2022
The Levelling Up Secretary needs to urgently investigate what changes were made to funding formulas and what justified the changes.
✍️ My letter to @GregClarkMP pic.twitter.com/wQHV7ESHPi
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Richard Holden, the Conservative MP for North West Durham, has defended Rishi Sunak over the Tunbridge Wells video in which he said that as chancellor he tried to divert funding from deprived urban areas (see also 10:59).
He told Sky News:
This is exactly the sort of policy that he’d be speaking about whether he’s in Tunbridge Wells or is in places like Consett and County Durham where I represent.
He added:
We can’t just see money constantly funnelled as it has been over the last few years into those same urban areas. thats why he tore up those green book plans ... that’s why Ben Houchen [the Tees Valley mayor] has come out today and welcomed exactly what Rishi Sunak said.
He claimed that the “formulas that have been there to date” have “left behind” constituencies across the country.
Richard Holden MP defends Rishi Sunak after a video emerged of the Tory leadership candidate telling party members that he diverted funds from deprived areas to wealthier towns when he was Chancellorhttps://t.co/RcCUwmZJbZ
— Sky News (@SkyNews) August 5, 2022
📺 Sky 501 and YouTube pic.twitter.com/LFQT0ZUs9U
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My colleagues Jessica Elgot and Heather Stewart have written a profile on Kwasi Kwarteng: the low-tax Tory frontrunner to be the next chancellor.
There are few ministers who clashed more with Rishi Sunak during his time in office than Kwasi Kwarteng, from windfall taxes to net zero. Now the business secretary is among those touted to have a turn in Number 11.
Kwarteng has been a longtime loyal supporter of Liz Truss, making discreet inquiries with MPs about support for her potential leadership bid for many months. That dedication and his relative seniority has placed him as a frontrunner alongside Thérèse Coffey, the work and pensions secretary, and Sajid Javid – who briefly held the job before.
But it is quickly becoming a poisoned chalice. The next chancellor has an in-tray which contains the worst outlook for the economy since the 2008 banking crash, a lengthy recession, eye-watering inflation and rising interest rates, potential mass defaults on energy bills and an NHS going into a winter crisis.
Sunak began his own political career with an entrenched small state ideology, which was steamrollered in his first weeks in the job by the pandemic and the need to introduce the unprecedented furlough scheme.
Kwarteng would enter the Treasury if appointed as a free marketeer and is likely to find his beliefs will face extraordinary challenges from the economic headwinds.
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The Tory former cabinet minister Liam Fox was speaking earlier to Sky News where he said it was “a bit surprising that we’re not hearing more from the chancellor” following the Bank of England’s forecast.
Fox, who is supporting Rishi Sunak in the leadership race, said he believes a recession is “inevitable” despite Liz Truss suggesting that is not the case.
He added:
What Liz seems to be saying is, at a time when we are already spending 85 billion on debt interest, twice as much as we’re spending on defence during a conflict in Europe, we should be borrowing even more money.
That’s been tried before. If there was an easy way to get out of the inflationary problem and growth, don’t you think it would have been done here or the United States or in Europe?
He went on to say:
There is a global inflation element to deal with here. The question is how do we do that? My view is you deal with inflation first. Get control of borrowing. Then you take the measures to help grow the economy. And then you start to think about reducing taxes.
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Sunak comment one of the dumbest things I've ever heard from a politician, says Tory minister
Conservative politicians have been responding to Rishi Sunak’s remarks that he had been working to divert funding from “deprived urban areas” towards more prosperous towns.
Foreign Office minister Zac Goldsmith said the leaked video was “one of the weirdest - and dumbest - things I’ve ever heard from a politician”.
This is one of the weirdest - and dumbest - things I’ve ever heard from a politician https://t.co/lxFzrHGeYY
— Zac Goldsmith (@ZacGoldsmith) August 5, 2022
Jake Berry, the chairman of the Northern Research Group of Tory MPs, said that in public Sunak “claims he wants to level up the North, but here, he boasts about trying to funnel vital investment away from deprived areas”.
In public @RishiSunak claims he wants to level up the North, but here, he boasts about trying to funnel vital investment away from deprived areas?
— Jake Berry MP (@JakeBerry) August 5, 2022
He says one thing and does another – from putting up taxes to trying to block funding for our armed forces and now levelling up… https://t.co/Hwwn9fWffe
But supporters of Sunak rallied around him, with Conservative Tees Valley mayor Ben Houchen arguing Boris Johnson led the party to electoral victory on a pledge to invest in areas “that have been ignored at the expense of urban cities”.
Strangely enough,most red wall areas that voted Conservative for the first time in 2019 -who have been left behind for decades -aren’t urban/city areas.Exactly the whole point of levelling up. Like the Green Book favouring London and Birmingham over Boro and tunbridge wells
— Ben Houchen (@BenHouchen) August 5, 2022
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The former housing secretary Robert Jenrick has said the government’s “overwhelming priority” should be inflation.
Jenrick, who is backing Rishi Sunak in the leadership race, told BBC Radio 4’s Today programme:
The dashboard is flashing red on the British economy and we shouldn’t fool ourselves into believing that all is going to be fine.
I think it’s very clear this morning that our overwhelming priority must be inflation. That’s what many people have been saying for a long time. It’s what Rishi Sunak has been saying throughout this leadership contest and tax cuts, unfunded tax cuts, in the immediate - always attractive though that might be to those of us who want to reduce the burden of taxation - seem less relevant in these circumstances.
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Liz Truss has acknowledged there will be a “tough winter” ahead but argued there is a need to move away from the “business-as-usual” policies to help “reform the economy”.
The foreign secretary has spent the morning meeting with key investors in the City of London. She told reporters:
The reality is we’re facing a recession if we carry on with our business-as-usual policies. People are struggling – whether it’s to pay food bills or fuel bills – that’s why it’s very important we reverse the national insurance increase, we have a temporary moratorium on the green energy levy to help people with their fuel bills.
The most important thing is getting the economy going so we avoid a recession and the business-as-usual policies aren’t working, we need to do more, and that’s why I am determined to reform the economy and keep taxes low.
She added:
I know it’s going to be a tough winter, I want to do all I can to make sure we’re releasing the reserves in the North Sea of gas, I want to get on with things like fracking in areas that support it, and I also want to make sure that we’re moving ahead with nuclear power and more renewables.
Of course, it will take time but the best time to start is today in moving that forward, as well as giving people all the help we can by keeping their taxes low and getting the economy going.
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Rishi Sunak’s campaign has defended the former chancellor’s remarks that he had been working to divert funding from “deprived urban areas” towards prosperous towns.
In the video, Sunak is seen bragging that he had started changing public funding formulas to ensure more prosperous towns receive “the funding they deserve”.
Sunak’s campaign did not dispute the video, instead arguing the Treasury’s green book setting the rules for government spending to help towns and rural areas also in need of investment.
A source said:
Levelling up isn’t just about city centres, it’s also about towns and rural areas all over the country that need help too. That’s what he changed in the green book and he will follow though as prime minister.
They added:
Travelling around the country, he’s seen non-metropolitan areas that need better bus services, faster broadband or high quality schools. That’s what he’ll deliver as prime minister.
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The Home Office has been accused of wasting taxpayers’ money after paying out £70m in compensation and associated legal costs, official figures show.
Departmental accounts for 2021-22 show that a total of £41.1m was handed out in compensation, which includes £25.1m to 768 victims of the Windrush scandal and £12.7m to 572 people who were wrongfully detained in immigration centres.
The payouts, highlighted by the Liberal Democrats, are believed to be the highest amount for compensation and legal costs in a single year for at least a decade.
They also show that the Home Office was required to pay £28.8m last year in adverse legal costs for 2,106 cases it lost.
Compensation payments have trebled since Priti Patel became home secretary, from £13.6m in 2019-20 to £25.4m in 2020-21 and £41.1m last year.
The disclosure comes as the government prepares to spend an undisclosed amount on sending asylum seekers to Rwanda, after a £120m upfront payment for the deal. The Home Office’s most senior civil servant, Matthew Rycroft, said the department was “uncertain” whether the scheme offered “value for money”.
Rishi Sunak boasts of taking money from 'deprived urban areas' in video
A leaked video shows Rishi Sunak boasting to Conservative party members that he was prepared to take public money out of “deprived urban areas” to help wealthy towns, the New Statesman reports.
The former chancellor was recorded on 29 July telling party members in Tunbridge Wells, Kent:
I managed to start changing the funding formulas, to make sure areas like this are getting the funding they deserve because we inherited a bunch of formulas from Labour that shoved all the funding into deprived urban areas and that needed to be undone. I started the work of undoing that.
EXCLUSIVE: In a leaked video, Rishi Sunak boasted to Conservative Party members that he was prepared to take public money out of “deprived urban areas” to help wealthy towns.@REWearmouth reports: https://t.co/uZMpjKm6rG pic.twitter.com/07sSzDksMT
— The New Statesman (@NewStatesman) August 5, 2022
Labour expressed anger at the video, telling the magazine that it was “scandalous that Rishi Sunak is openly boasting that he fixed the rules to funnel taxpayers’ money to prosperous Tory shires”.
The shadow levelling up secretary, Lisa Nandy, added:
This is our money. It should be distributed fairly and spent where it’s most needed – not used as a bribe to Tory members.
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Here’s more from the business secretary, Kwasi Kwarteng, who said carrying on with the current economic policy “is not going to cut it” and that raising taxes is “adding insult to injury”.
Kwarteng, who is backing Liz Truss to be leader, told Sky News:
I think the problem we have is very simple. I think we’ve got inflation which is, as you say, squeezing people’s incomes, but we’ve also got a rising tax burden.
I’ve never understood why if we’re going to help people, how are we going to help people by putting up their taxes? Especially when their daily shop, their costs, are going up.
Asked if the Bank of England is fit for purpose, he said:
I think it’s a good institution. I think it’s worked well. But we need to look again at what the mandate is and how best they can actually fulfil that mandate. I think it’s a good institution. I think it’s worked well. But we need to look again at what the mandate is and how best they can actually fulfil that mandate.
He claimed there is a “strong argument” that interest rates should have been raised “slightly sooner”, adding:
The job of the Bank was to deal with the inflation. They have got a 2% inflation target. That’s actually their mandate. And now inflation is hitting double digits. So, clearly something has gone wrong and I think there is an argument to suggest that rates should have probably gone up slightly sooner.
'Stop in momentum' for Truss after debate, Tory pollster says
Robert Hayward, a Conservative peer and elections analyst, said Rishi Sunak’s performance in last night’s debate caused “a stop in terms of the momentum in one direction” of the leadership campaign.
Last night marked the first time Sunak had “clearly led” in a debate, Lord Hayward told Sky News this morning, adding that Truss had struggled when asked about her policy U-turn on public sector pay.
He said:
There’s no question in my mind and the vote of the audience, it was the first time that he had clearly led in a debate.
He added:
Liz has had the best of the last few days, no question about it, with the series of endorsements from different major personalities. I think what happened last night was there was a stop in terms of the momentum in one direction.
It won’t necessarily have reversed it, but there will be this morning a different sense of messaging that is around.
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The business secretary, Kwasi Kwarteng, has criticised the the Bank of England’s control of inflation, saying “something had clearly gone wrong” at the institution as prices are predicted to rise by 13% and the UK is forecast to suffer an economic downturn lasting more than a year.
As a key supporter of the foreign secretary, Liz Truss, the frontrunner to be the next Tory leader and prime minister, Kwarteng’s comments suggest the Bank’s independent mandate to keep inflation at 2% may be re-examined if she takes over at No 10.
Kwarteng told Sky News:
The job of the Bank was to deal with inflation. They’ve got a 2% inflation target, that’s actually their mandate. And now inflation is getting double digits. So clearly, something’s gone wrong.
He added:
I think there is an issue about how the Bank is operating because clearly if I say to you 2% is your target, and you say to me, ‘Well, actually it’s going to hit 13%,’ I would quite rightly say something’s gone wrong. We’ve got to look at how you’re performing.
Kwarteng also said the Bank should have acted quicker to increase interest rates in an effort to control inflation. He said:
I think there is an argument to suggest the rate should have probably gone up slightly sooner.
Liz Truss and Rishi Sunak “need to stop” talking about tax in the Tory leadership contest and focus on tackling inflation, the head of the Institute for Fiscal Studies has warned.
During a set of televised leadership interviews with both contenders last night, Truss claimed her tax cut plans could avert the looming recession, claiming that it was “we can change the outcome, and we can make it more likely that the economy grows.”
Sunak claimed £30bn plan would lead to “misery for millions” and that he was “worried” her proposals would lead to “misery for millions”.
Paul Johnson, director of the Institute for Fiscal Studies, said the reason why Truss and Sunak are so focused on tax “remains a mystery”.
He told BBC Radio 4’s Today programme this morning:
I think candidates need to stop talking about the fiscal headroom that was announced, that was sort of supposed to be there back in March.
What they’re talking about is that the Office for Budget Responsibility at the time said that we’d be borrowing about 30 billion less than we absolutely could to meet the fiscal target of a balanced current budget in a few years’ time.
Those numbers are now “massively out of date” now that the economy has changed and inflation is much higher than expected, Johnson said.
He added:
What they need to be talking about is how they think they’re going to be tackling inflation, how they think they’re going to be responding to the increased needs of households and how they’re going to be responding to what this means for public services, and it remains a mystery to me why they’re so focused on tax.
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PM and chancellor ‘completely on top’ of economy despite being on holiday
Good morning
The business secretary, Kwasi Kwarteng, who is backing Liz Truss in the Conservative leadership contest, has admitted that “I don’t know where Boris is” but insisted the prime minister is in “constant contact” with him.
Johnson and his chancellor, Nadhim Zahawi, have been criticised for being on holiday on the day the Bank of England announced the biggest interest rate rise in 27 years and forecast an economic downturn lasting more than a year.
The PM has been on holiday since Wednesday and Zahawi is away with his family and was not available for interviews in the wake of the BoE’s grim predictions.
When asked if the PM is on holiday, Kwarteng told Times Radio:
I don’t know where Boris is, but I’m in constant contact with him. He’s just had a wedding, I think he’s on a honeymoon and ... I don’t think many people will begrudge him that.
Speaking to LBC radio, Kwarteng said he believed the chancellor was “completely on top of the situation”. He added:
He’s completely aware of what’s going on and his officials and he are working very hard to see how best we can generally be we can deal with this.
I think I think he’s on top of the situation. I think his arrangements are up to him.
He said it is “completely false” to say the government is doing nothing over the summer, adding on Times Radio:
I said we’re going to have to wait four weeks for an emergency budget because that’s how we help people – it’ll be through the new chancellor, new prime minister, whoever they are, to come up with the measures. But the idea we’re doing nothing in the meantime is false.
Meanwhile, Liz Truss and Rishi Sunak each took part in a televised leadership interview where the foreign secretary was challenged about the Bank’s projections as it increased interest rates by 0.5 percentage points.
Truss claimed her tax cut plans could avert the looming recession, while Sunak stepped up his criticisms of her £30bn plan for unfunded tax cuts, claiming it would lead to “misery for millions”.
Kwarteng, who is backing Truss to be leader, argued that carrying on with the current economic policy “is not going to cut it” and that raising taxes is “adding insult to injury”.
He defended the foreign secretary’s tax cuts plan, arguing that taking more of people’s money through tax when their real income is being squeezed by inflation “doesn’t make any sense”.
He told BBC Radio 4’s Today programme:
There is pressure on public finances but the immediate problem, as Liz always said, is one of growth.
She talked about recession very early on, a few weeks ago, at the beginning of the leadership contest, and the risk of recession means that you can’t have rising interest rates, which we saw yesterday, and also have tighter fiscal policy. No economist in the world is going to say that the way to deal with a looming recession is to tighten monetary policy and to tighten fiscal policy at the same time.
Here’s the agenda of the day.
9.30am: The Office for National Statistics publishes the results of its latest survey of the social impacts of the cost of living, goods shortages and Covid-19.
7pm: Truss and Sunak will meet in Eastbourne tonight for hustings with party members in the southeast.
I’ll be covering for Andrew Sparrow today. Do drop me a line if you have any questions or think I’ve missed anything. My email is leonie.chao-fong@theguardian.com or you can reach me on Twitter.
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