And in other news? Attention is beginning to focus on what Liz Truss will announce in the emergency ‘budget’ to be written at the end of next week, as my colleagues Pippa Crerar and Rowena Mason report. Kwasi Kwarteng, the new chancellor, will deliver what the government calls a “fiscal statement”, not a full budget, and in the Financial Times today George Parker and Chris Giles say he has told the Treasury it must focus “entirely on in development”. The mood among Treasury staff was described by one insider as “gloomy” after Kwarteng last week sacked Tom Scholar, the popular and highly experienced permanent secretary, on his first day as chancellor. Kwarteng, addressing all staff on a conference call, praised Scholar’s track record and said the Treasury Department was an “excellent Treasury Department,” a reference to the department’s long-standing adherence to fiscal discipline. He said Scholar’s departure did not herald more big changes at the top. But he said he now needs to focus “entirely on growth,” said one person on the call, who added: “He said there was a need to do things differently under new leadership.” Kwarteng also argued that if Britain could return growth to 2.5%, its long-term pace before the 2008-09 financial crisis, reducing the deficit would be easier in the long run, the FT reports. This is entirely consistent with what Truss suggested during the Tory leadership contest. But Kwarteng is not the first chancellor to think that promoting growth might be a good idea, and his predecessors have found that easier said than done. And there’s a reason the Treasury has never been “totally” focused on growth. As Edward Heath’s government discovered in the 1970s, a wrong move on growth can have disastrous effects on inflation. Some Tories have warned that Truss could make the same mistake. I’m trying to follow the comments below the line (BTL) but it’s impossible to read them all. If you have a direct question, include “Andrew” somewhere and I’m more likely to find it. I try to answer questions and if they’re of general interest I’ll post the question and answer above the line (ATL), though I can’t promise I’ll do it for everyone. If you want to get my attention quickly, it’s probably best to use Twitter. I’m on @AndrewSparrow. Alternatively you can email me at [email protected] Updated at 09.41 BST Important events BETA filters Key Events (4) Liz Truss (3)
Truss plans to increase energy supply likely to have no impact on cutting bills before price guarantee ends, thinktank says
In her speech to MPs last week, Liz Truss said that, as well as capping price rises this winter, she would “intensify [energy] Supply”. However, in its report today the Resolution Foundation says there is “very little” chance that the supply measures announced by Truss will have any impact on bills before the end of the energy price guarantee (EGP) in October 2024. It says: The EPG is rightly accompanied by measures to reduce costs and increase energy supply. However, there is very little chance that new North Sea oil and gas licences, the lifting of the moratorium on fracking and the continued focus on new offshore wind and nuclear capacity will have an impact on the bills until the end of the EPG. There was no mention of onshore wind and solar power, which can be built quickly and are not affected by the global price of hydrocarbons.
Truss energy and tax plan ‘will double support for wealthiest families’
Last week, when Liz Truss announced the energy price guarantee, the two leading thinktanks that analyze government spending – the Institute for Fiscal Studies ( here ) and the Resolution Foundation ( here ) – gave a mixed reception. While both stressed it was expensive and misguided, they said it would at least prevent millions of households facing disaster this winter. As they’ve had more time to consider the plans (though the word “plans” may be a bit of an exaggeration – there are no clear details of how the policy will be delivered and the business package is little more than a bullet-point wishlist); the two thinktanks are starting to sound more skeptical. Yesterday Paul Johnson, director of the IFS, said the proposals were “incredibly expensive” and “totally misguided”. And today the Resolution Foundation published a 28-page analysis of the announcement. As my colleague Richard Partington reports, the RF report says that the wealthiest families will gain twice as much as the poorest from the Truss approach. This analysis refers to the 2023-24 financial year, when the energy support measures announced by Rishi Sunak may collapse (Truss has not committed to extending them), but national insurance will be cut. RF says: Under current plans, the only part of the government’s cost of living measures to continue in 2023-24 is the EPG [energy price guarantee], and the higher National Insurance (NI) limit. It is also clear that the new chancellor plans to reverse the rise in NI rates (previously due to be renamed the health and social care levy in April). If this comes into force next year, as the right-hand panel in figure 6 shows, then the ‘support’ overall will shift more towards the wealthiest households, with the highest income benefiting by £4,700 on average, while the poorest tenth receives £2,200. Here is figure 6. Distributional implications of energy measures and NI cuts Photo: Resolution Foundation The full RF report follows and here is its summary.
UK wage growth lags inflation as cost-of-living crisis bites
Wage growth failed to keep up with price growth in July despite a rise in average wages, according to official data that showed the cost-of-living crisis continued to affect millions of households throughout the summer, my colleague Phillip Inman reports.
Kwasi Kwarteng ‘tells Treasury to focus solely on growth’ ahead of expected emergency budget next week
Good morning. National public life and news (not always the same things) continue to be dominated by the events taking place to mourn and celebrate Queen Elizabeth, and there is full coverage on our separate live blog. I’ll cover some of the political aspects of these developments here, but mostly today’s blog will be in the “and other news” area. And in other news? Attention is beginning to focus on what Liz Truss will announce in the emergency ‘budget’ to be written at the end of next week, as my colleagues Pippa Crerar and Rowena Mason report. Kwasi Kwarteng, the new chancellor, will deliver what the government calls a “fiscal statement”, not a full budget, and in the Financial Times today George Parker and Chris Giles say he has told the Treasury it must focus “entirely on in development”. The mood among Treasury staff was described by one insider as “gloomy” after Kwarteng last week sacked Tom Scholar, the popular and highly experienced permanent secretary, on his first day as chancellor. Kwarteng, addressing all staff on a conference call, praised Scholar’s track record and said the Treasury Department was an “excellent Treasury Department,” a reference to the department’s long-standing adherence to fiscal discipline. He said Scholar’s departure did not herald more big changes at the top. But he said he now needs to focus “entirely on growth,” said one person on the call, who added: “He said there was a need to do things differently under new leadership.” Kwarteng also argued that if Britain could return growth to 2.5%, its long-term pace before the 2008-09 financial crisis, reducing the deficit would be easier in the long run, the FT reports. This is entirely consistent with what Truss suggested during the Tory leadership contest. But Kwarteng is not the first chancellor to think that promoting growth might be a good idea, and his predecessors have found that easier said than done. And there’s a reason the Treasury has never been “totally” focused on growth. As Edward Heath’s government discovered in the 1970s, a wrong move on growth can have disastrous effects on inflation. Some Tories have warned that Truss could make the same mistake. I’m trying to follow the comments below the line (BTL) but it’s impossible to read them all. If you have a direct question, include “Andrew” somewhere and I’m more likely to find it. I try to answer questions and if they’re of general interest I’ll post the question and answer above the line (ATL), though I can’t promise I’ll do it for everyone. If you want to get my attention quickly, it’s probably best to use Twitter. I’m on @AndrewSparrow. Alternatively you can email me at [email protected] Updated at 09.41 BST
