Truss and Kwarteng to meet fiscal watchdog today after MPs demand full economic forecast
Liz Truss and Kwasi Kwarteng will meet the head of the UK’s independent fiscal watchdog today amid the fall-out from the government’s mini-budget.
The talks with the Office for Budget Responsibility (OBR) come after a week of economic turmoil following last Friday’s announcements, which saw the pound plunge, mortgages rocked and pension funds needing to be saved.
It is highly unusual for a PM to attend an OBR meeting – which is usually held between the independent watchdog and the chancellor to discuss upcoming economic forecasts – but the Treasury has denied that this is an emergency measure.
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The OBR was set up by the government in 2010 to provide independent analysis of the UK’s public finances.
Financial Secretary to the Treasury Andrew Griffith said it was “a very good idea” for the meeting to take place, but former Bank of England deputy governor Sir Charles Bean told Sky News “there is an element of closing the stable door after the horse has bolted”.
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Senior Tory blames mini-budget for turmoil
The news came hours after the Treasury Select Committee, made up of MPs from all parties, demanded that the chancellor release a full economic forecast from the OBR by the end of October.
He is also being urged to bring forward his medium-term budget from 23 November.
Mr Griffith hinted to Sky News that a report could come sooner, saying the independent OBR has “got to be given the freedom and ability to do that”.
But, he added: “That’s a decision for them. It’s not for me or anyone else to dictate that to them.”
Ms Truss and Mr Kwarteng have said they are still committed to their policies – and argue that a £45bn package of tax cuts is the “right plan” for the economy.
But Labour’s shadow business secretary Jonathan Reynolds said the mini-budget was “without question one of the biggest unforced errors in policymaking in this country’s history”.
He reiterated the demand of his and other opposition parties to recall parliament and reverse the fiscal measures.
No independent OBR forecast accompanied last week’s announcements – but the watchdog said it had prepared a draft for the new chancellor on his first day in office.
The absence of this forecast reportedly contributed to concerns in the City.
Mr Griffith insisted a forecast last Friday would not have been able to “reflect [the] economic growth in their numbers” that he claimed would come from government policies, as the measures would have been “finalised in the hours before the chancellor stood up”.
But Mel Stride, Conservative chair of the Treasury Select Committee, had said in his letter to the chancellor it is “hard to conclude other than that an absence of a forecast has in some part driven the lack of confidence in markets”.
He added: “Some have formed the unfortunate impression that the government may be seeking to avoid scrutiny, possibly on account of expecting the OBR forecast to be unsupportive of the achievement of the economic outcomes the government expects from the Growth Plan, including 2.5% trend growth in the medium term.”
Sir Charles agreed, saying the lack of forecast was “clearly one of the factors that is contributing to the market turmoil”.
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Chancellor ‘sticking with growth plan’
Mr Kwarteng had said the forecast would be released on 23 November – but after last Friday’s mini-budget caused economic turmoil, the committee discovered the chancellor will be getting an initial OBR forecast on 7 October.
They asked him to publish “without delay” the initial economic and fiscal forecast the OBR provided to him when he started the job a few weeks ago.
A reply from the chancellor has been requested for no later than Monday.
Mr Stride also expressed frustration in his letter at having pressed Mr Kwarteng and his predecessor Nadhim Zahawi to publish an OBR forecast before the mini-budget and said the OBR had assured him on 26 August that it could produce a forecast to that timescale and had already been working on it for a month.
“The OBR was standing by ready to provide a meaningful forecast alongside the 23 September statement had the Treasury requested it. No such request was received,” Mr Stride said.
Mr Stride said he was pleased to see the OBR meeting happening.
“The PM and the chancellor must use this meeting as a reset moment – an opportunity to urgently bring forward the OBR forecast incorporating credible new fiscal rules and a plan which the OBR assesses as having a good chance of meeting them.
“Then we can all take a deep breath and start to move forward with greater confidence.”
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The senior Tory told Sky News’ Daily Podcast earlier on Thursday: “Many colleagues are very concerned, and I think that’s totally unsurprising.
“I mean, I can speak for myself. I’m on the record as saying that I think if we’re not very careful, then our position as being the party of sound money and economic responsibility, fiscal responsibility, may be in jeopardy.”
Mr Stride added that he did not think it was incompetence that caused the current problems and suspects “some of those involved have been taken slightly by surprise how quickly the markets turned” but he thinks publishing an OBR forecast would be central to calming the markets by “demonstrating credibility”.
A YouGov poll for The Times shows Labour has opened up a massive 33-point lead over the Conservatives.
Tory MP Sir Charles Walker admitted his party would be “wiped out” if an election was called tomorrow – and “would cease to exist as a functioning political party”.
Mr Griffith tried to urge calm within his party, telling Sky News: “This is a difficult time for all developed economies and for all governments. This is a government that’s taken decisive steps to deal with the immediate energy crisis.”
But former Bank of England top brass Sir Charles took issue with the government’s focus on energy bills and the war in Ukraine, saying: “If all the government had announced last Friday was the energy price guarantee… I don’t think there would have been a problem with there not being an accompanying forecast because those support measures are intended to be temporary and will be self-terminating when wholesale energy prices fall back.
“The thing that created the problem, in my view, was the fact alongside that the chancellor chose to announce the rolling back of National Insurance increases and the slated increase in corporate taxes… and those are intended to be permanent, so they potentially have implications for the sustainability of the public finances.”
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‘No evidence’ malign activity caused Wednesday’s air traffic disruption, says transport secretary
There is no evidence that malign activity was responsible for yesterday’s outage of air traffic control systems, the transport secretary has said.
Heidi Alexander said she has spoken with the chief executive of National Air Traffic Service (NATS), Martin Rolfe, and added that what happened was an isolated incident.
NATS has apologised for the IT problems after thousands of passengers suffered extensive travel disruption during one of the busiest times of the year.
The technical glitch led to more than 150 flight cancellations, leaving airlines reacting furiously.
Transport Secretary Heidi Alexander
Ms Alexander wrote on X: “I have spoken with NATS CEO Martin Rolfe who provided further detail on yesterday’s technical fault.
“This was an isolated event and there is no evidence of malign activity.
“I know that any disruption is frustrating for passengers.
“Flights are now resumed and I am grateful to airlines who are working hard to get people to where they need to be.
“I will continue to receive regular updates. Passengers should check with airlines before travelling.”
Read more: Flight delayed or cancelled? These are your rights
Officials said a “radar-related issue” caused the air traffic control failure.
A spokesperson for NATS said: “This was a radar-related issue which was resolved by quickly switching to the back-up system during which time we reduced traffic to ensure safety.
“There is no evidence that this was cyber related.”
The problem occurred at NATS’ control centre in Swanwick, Hampshire, and affected the vast majority of England and Wales.
Aviation analytics company Cirium said 84 departures and 71 arrivals were cancelled to or from UK airports up to 10pm on Wednesday, with several flights diverted to other European airports.
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Travel expert Paul Charles: This is a major outage
There was limited disruption on Thursday, with a handful of British Airways flights cancelled because aircraft and crew were out of position.
Heathrow and Gatwick airports said they had resumed normal operations.
Affected passengers are unlikely to be entitled to compensation as the disruption was outside of airlines’ control, but they will be able to claim expenses for a reasonable amount of food and drink, a means to communicate and overnight accommodation if required.
Martin Rolfe in 2023. Pic: PA
Ryanair has called on Mr Rolfe to resign, claiming “no lessons have been learnt” since a similar systems outage in August 2023.
The airline’s chief operating officer Neal McMahon said: “It is outrageous that passengers are once again being hit with delays and disruption due to Martin Rolfe’s continued mismanagement of Nats.”
Airlines have reacted furiously after a technical glitch in air traffic control systems led to more than 150 flight cancellations.
The National Air Traffic Service (NATS) has apologised for the IT problems – and said systems were back up and running 20 minutes after the “radar-related issue” was detected at 4.05pm.
But with thousands of passengers suffering extensive travel disruption, during one of the busiest times of the year, airline executives have warned this isn’t good enough.
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Departures resume after ATC problem
Ryanair’s chief operating officer Neal McMahon has called for NATS chief executive Martin Rolfe to resign – and claimed Wednesday’s incident was “utterly unacceptable”.
He said: “It is outrageous that passengers are once again being hit with delays and disruption due to Martin Rolfe’s continued mismanagement of NATS.
“It is clear that no lessons have been learnt since the August 2023 NATS system outage, and passengers continue to suffer as a result of Martin Rolfe’s incompetence.”
Mr McMahon was referring to a glitch that affected more than 700,000 passengers two years ago – and said that, if Mr Rolfe refuses to step down, the government should intervene.
“Heidi Alexander must act without delay to remove Martin Rolfe and deliver urgent reform of NATS’ shambolic ATC service, so that airlines and passengers are no longer forced to endure these preventable delays caused by persistent NATS failures,” he added.
The Department for Transport says Ms Alexander does not have any direct control over NATS – and no powers over staffing decisions at the service.
Martin Rolfe in 2023. Pic: PA
EasyJet’s chief operating officer David Morgan added: “It’s extremely disappointing to see an ATC failure once again causing disruption to our customers at this busy and important time of year for travel.
“While our priority today is supporting our customers, we will want to understand from NATS what steps they are taking to ensure issues don’t continue.”
NATS is yet to comment on the calls for Mr Rolfe’s resignation – but has stressed that the glitch is not believed to be “cyber related”.
“This was a radar-related issue which was resolved by quickly switching to the back-up system during which time we reduced traffic to ensure safety,” a spokesperson had said.
Departures at airports across the country have now resumed – but passengers are being urged to check with their airline before heading to terminals.
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Travel expert: This is a major outage
John Carr, from Stourbridge, was on his way from Heathrow to Norway to help arrange his brother’s wedding when he discovered his flight was cancelled after checking in.
“I’m pretty gutted,” he said. “We’ve got loads of stuff in the suitcases to set up the venue, because we’re obviously flying to Norway. We’ve got the wedding rehearsal to do. It’s quite stressful.”
Liberal Democrat leader Sir Ed Davey called for an urgent investigation and also referred to the “utterly unacceptable” disruption two years earlier.
“With thousands of families preparing to go on a well-earned break, this just isn’t good enough. The public deserve to have full confidence in such a vital piece of national infrastructure.”
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Flights departing or arriving at a UK airport, or aircraft operated by a UK airline arriving in the EU, are subject to rules concerning delays or cancellations.
Airlines may have to provide compensation, although there are exemptions for “extraordinary circumstances”, according to the UK’s Civil Aviation Authority.
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