The Joseph Rowntree Foundation, a leading poverty charity, says, in the light of the latest forecast about how energy bills will rise (see 10.54am), the government needs to at least double the help already provided to help people through the cost of living crisis. This is from Peter Matejic, its chief analyst.
The latest projections of annual energy bills exceeding £4,200 from January is the latest in a series of terrifying warnings over the past week, from the Bank of England and others. Families on low incomes cannot afford these eye watering sums and as a nation we can’t afford to ignore an impending disaster.
Both candidates to be prime minister must now recognise the extraordinarily fast-changing situation and act to protect the hardest hit from the coming emergency.
Every day action is delayed is increasing anxiety for low-income families who do not know how they will get by this winter. The payments promised by the government earlier in the year offer some help but their scale has been overtaken by events, and they must now be at least doubled if they are to protect people from serious hardship on a massive scale.
The foundation has also published a briefing saying the plans announced by Rishi Sunak and Liz Truss to help people with the cost of living won’t help those most in need.
Sunak has proposed a temporary cut in VAT on fuel bills, but the JRF says “this would help those who use more energy rather than those who need most help with their bills” and only save a typical consumer around £154 a year.
Truss wants to reverse the national insurance contributions (NICs) increase and remove green levies from energy bills. But for every £7 spent cancelling the NICs rise, £6 would go to people in the top half of income distribution, JRF says. And it says suspending green levies would only cut bills by around £150 a year – when costs will rise by more than £2,500 a year.
Around 100,000 NHS workers in England and Wales are being balloted for industrial action in protest at a “miserable” pay offer, PA Media reports. PA says:
Unite said the 4% increase for staff in middle pay bands announced by the government last month is a “massive pay cut” because of soaring inflation.
The union will now consult with its 100,000 health members across the NHS in both England and Wales on whether they accept the “imposed deal” or want to challenge it through industrial action, which could mean strikes this winter.
Unite is recommending its members, including health visitors and speech therapists, vote yes to industrial action.
The union’s general secretary, Sharon Graham, said: “This offer is nothing other than a massive national pay cut for NHS staff. After everything they have been through with the Covid pandemic and the service this workforce gives this country day in, day out, this is a kick in the teeth from the government and an insult to staff and patients alike.
“This ballot is a chance for our members to have their say, and, whatever they decide, they will have the full backing of their union, Unite.”
In England, the ballot closes on Sunday 11 September, and in Wales the ballot closes on Friday 15 September.
The Royal College of Nursing is also balloting its members for strikes over pay.
Tony Danker, director general of the CBI, has urged Liz Truss and Rishi Sunak to agree a joint plan now for helping people with rising energy bills in the autumn, at a meeting convened by Boris Johnson. But, in an interview this morning, Mark Harper, the former Tory chief whip and a leading Sunak supporter, said he did not think this proposal was realistic because the two candidates disagreed too much. He told Sky News:
There’s a fundamental difference of opinion between the two leadership candidates. Rishi thinks we are going to need to give direct support to people because, if you’re going to help the poorest and most vulnerable, you can’t just cut their taxes because they don’t pay a lot of tax.
Liz Truss thinks that you can simply cut national insurance. But that gives a big boost to people on the biggest incomes, doesn’t help pensioners at all and gives very little help to people on the national living wage who are working full time.
Harper also said he expected civil servants to be working on both options so that, when the new PM takes over in early September, the government can implement a new policy quickly.
Liz Truss and Rishi Sunak must set out emergency water plans to tackle “immoral” wastage, the president of the National Farmers’ Union has said. My colleague Helena Horton has the story here.
Ed Davey, the Lib Dem leader, wants the government to spend around £36bn halting any further rise in the energy price cap. My colleague Jessica Elgot has filed a story on this overnight.
The latest forecast from Cornwall Insight (see 10.54am) will make this proposal even more electorally compelling – as well as even more expensive.
In an interview on the Today programme this morning, Davey said a policy like this was needed to avoid a social catastrophe. He also accused the Tory leadership candidates of failing to address the crisis and “living in a parallel universe”. He told the programme:
We all know that energy prices are going to go up dramatically in October, but we’ve heard nothing from either candidate of the Conservatives for prime minister. They’ve got no plan, it’s almost as if they’re living in a parallel universe.
Liberal Democrats are now publishing our plan and what we’re saying is the Government should cancel the October energy price rise. If it does, it will avoid a social catastrophe. Millions of families and pensioners will go hungry and cold this winter unless bold measures like Liberal Democrats are proposing is put in place. They’ve got to act now.
Last night the Davey plan won a semi-endorsement from Momentum, the Labour group set up to promote Jeremy Corbyn’s policy agenda.
The energy price cap is now forecast to reach £4,266 a year in the first three months of next year, according to the consultancy Cornwall Insight. My colleague Alex Lawson has the full story here.
These are from Bloomberg’s energy specialist Javier Blas.
In his statement issued overnight about his plans for dealing with the cost of living crisis (see 9.13am), Rishi Sunak said he would fund a new energy bills support package through efficiency savings. He said:
It’s important for people to know how this extra support will be paid for. In order to keep any one-off borrowing to an absolute minimum I will first seek efficiency savings across Whitehall to provide direct support for families to help with the unprecedented situation we face.
This is not really plausible. The last energy support package Sunak announced as chancellor, which is the one he seems to want to replicate this time around, cost £15bn and it would be impossible to find “efficiency savings”, in the conventional meaning of the term, that would raise this sort of money. If “efficiency savings” are a euphemism for massive public spending cuts, then the proposal would be more credible. Alternatively, Sunak would have to raise taxes somewhere, or borrow.
According to Politico, the Liz Truss camp are describing this as “another big U-turn”. One Truss source said:
How is [Sunak] going to fund these new promises? Three weeks ago he was saying more borrowing was irresponsible and inflationary. Has he changed his mind? Intellectually it’s as watertight as a sieve.
Of course, Truss herself is not a great advert for consistency. Famously, she is now an evangelist for Brexit having voted remain in 2016. But the campaign has also seen her abandon other policies she was championing more recently. She has completely dropped her 2019 proposal to build 1m homes on the green belt, she is now backing calls for civil servants to return to the office, despite only last year saying she was “ a passionate supporter of results over presenteeism in every possible area”, and only last week she dropped a plan for regional pay for public sector workers only hours after it was press released by her team.
Paul Scully, the business minister, has been giving interviews this morning on behalf of the Liz Truss campaign. Referring to the Dominic Raab article in the Times (see 9.13am), Scully criticised the Rishi Sunak campaign for negative campaigning. He told Times Radio:
It’s a shame that we’re hearing that sort of language. That sort of blue-on-blue, as it’s always known, language doesn’t really help. People looking from the outside must be tearing their hair out because all we want to do is do the best for the country, for people.
Scully also defended Truss’s cost of living proposals (described by Raab as a potential “electoral suicide note” for the Tories). He said:
What Liz has said is the right thing to do, the Conservative thing to do, is don’t take the money from people in the first place, rather than just taking money to give it back to them …
Ofgem will be deciding the price cap in the next few weeks. And at that point, we can make a quick decision … We clearly need to support people as best we can.
Liz is far more bold, ambitious, she’s more optimistic for the economy. And the combination of targeted tax cuts, and targeted support can help both the short term and grow the economy for the medium-term solutions.
As Annabelle Dickson reports in her London Playbook briefing for Politico, in private the Truss camp response to the “electoral suicide” article is much stronger. “The suicide note here is Rishi’s high taxes and his failed economic policy that he’s peddled for the past two and a half years when he was chancellor,” they are saying.
Good morning. At 7pm this evening Liz Truss and Rishi Sunak will speak at the fifth official Conservative party hustings. Tom Newton Dunn from TalkTV is in the chair, and the event may give some insight into how both candidates appeal in “red wall” territory. The Tories won Darlington in 2019, but until then it had been a Labour seat since 1992. It is a key target seat for the opposition.
Truss and Sunak will also come under pressure to clarify exactly what they would do to help people cope with crippling energy bills later this year. A column in the Sun yesterday said Britain was “on the brink of a full-blown calamity of wartime proportions”. In a statement released overnight Sunak went further than he has gone before in saying that essentially he would replicate the support package he announced earlier this year as chancellor. He said:
People need proven methods that will deliver for them quickly. So I will use the framework I created to provide further support and give millions of people the peace of mind they desperately need ahead of the winter.
In fact, Sunak announced three energy support packages in the first half of this year, but the briefing note from his campaign only refers to the £15bn May package, implying that this will be the model. Economists praised these measures as “highly progressive”, saying they would help the poor the most.
Truss has been less clear about what she would do. Her team has said that an interview she gave to the Financial Times at the end of last week, in which she said that she wanted to “do things is in a Conservative way of lowering the tax burden, not giving out handouts”, did not mean that she was ruling out providing people with Sunak-style one-off payments. But she insists that her primary focus remains on helping people via tax cuts.
This morning the Guardian has splashed on a story by my colleague Rowena Mason about the criticism “Trussonomics” is getting from economists and others who say that her plans might cost £50bn a year, while failing to protect those most at risk from the cost of living crisis.
You can read Rowena’s story here.
And it turns out the Rishi Sunak camp largely agree with the experts quoted by Rowena. Dominic Raab, the justice secretary, deputy PM and a leading Sunak supporter, has written an article for the Times today and in it he claims that Truss’s policies would amount to an “electoral suicide note” for the Tories because voters would not forgive the party for not helping the most vulnerable. He says:
Deep down, we know that the aftereffects of a global pandemic, compounded by a war on our near shores, are having a palpable impact on people up and down the country. That is why, in addition to bearing ruthlessly down on inflation, it is wrong to rule out further direct support for families worried and unsure how they will make ends meet in the coming months. It is why it is right that we consider carefully how we step in and shield them from the full force of the global economic headwinds we now face. We must tackle these problems in a way that doesn’t drive up borrowing, and therefore inflation – and with our medium-term focus constantly fixed on that goal of reducing taxes and making taxpayers’ money go further. That is the economic tightrope we must walk, and there’s no avoiding it …
As Conservative party members decide which way to cast their vote over the coming weeks, I urge them to consider this point carefully. If we go to the country in September with an emergency budget that fails to measure up to the task, voters will not forgive us as they see their living standards eroded and the financial security they cherish disappear before their eyes. Such a failure will read unmistakenly to the public like an electoral suicide note and see our great party cast into the impotent oblivion of opposition.
I’ll be here all day, reporting on this debate as it unfolds, and I will be covering the hustings in Darlington tonight.
Otherwise the diary is relatively empty, although Jeremy Corbyn, the former Labour leader, is speaking at an event at the Edinburgh Festival Fringe at 12pm, which may provide some news.
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