Devolved nations demand urgent meeting with chancellor as Tory top team doubles down on plan to cut spending
The devolved governments of the UK want an urgent meeting with Chancellor Kwasi Kwarteng to discuss immediate action to reverse the damaging effects of the mini-budget.
In a joint letter, the finance ministers of Wales, Scotland and Northern Ireland are warning that the government’s spending plans are a “huge gamble” that will mean another decade of austerity.
It comes as one of Liz Truss‘s closest political allies doubled down on the government’s economic policy, with warnings that major cuts in public spending are to come.
Levelling Up Secretary Simon Clarke, who is among the prime minister’s inner circle, told The Times that the British people need to expect significant cuts in public spending, because for too long the West has been living in a “fool’s paradise”.
Following on from Chancellor Kwasi Kwarteng‘s tax-cutting mini-budget, he said the government needs to make sure the “extremely large” state is in “full alignment with a lower tax economy”.
It has led to fears another period of austerity is just around the corner, with the hardest hit likely to be those reliant on welfare.
In their letter to Mr Kwarteng, Welsh Finance Minister Rebecca Evans joined finance ministers from Scotland and Northern Ireland in highlighting the profound impact of “the largest set of unfunded tax cuts for the rich in over 50 years” stating it was “a huge gamble on public finances and the health of our economy”
They warned against being condemned to another decade of austerity and expressed deep concern over reports that UK government departments would be asked to make spending cuts to balance the budget, which may have profound consequences for devolved budget settlements already eroded by inflation.
But Mr Clarke told The Times: “Western Europe is just living in a fool’s paradise whereby we can be ever less productive relative to our peers, and yet still enjoy a very large welfare state and persist in thinking that the two are somehow compatible over the medium to long term.
“They’re not. We need to address that… if we want those strong public services then we are going to have to pay for them.
“It is important that we look at a state which is extremely large, and look at how we can make sure that it is in full alignment with a lower tax economy.”
It comes on the eve of the Conservative Party conference and the chancellor defending his mini-budget by saying the government “had no other choice” than to do “something different” to spark the economy.
The mini-budget resulted in a tumultuous week which saw the pound fall to an all-time low against the dollar and the Bank of England being forced to spend billions to prevent a collapse of the pensions industry.
‘What the Thatcher government was doing in the 1980s’
Mr Clarke admitted it had been an “uncomfortable week” and defended Ms Truss, but said she would not be deflected from policies they predicted would be unpopular, and suggested her task was analogous to that faced by Margaret Thatcher in the 1980s.
“If I was to describe one word for Liz… it is purposeful,” he said. “She knew – and this was certainly something we discussed during the summer – that this would not be a comfortable process.
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PM acknowledges ‘some disruption’ to UK economy following mini-budget
“[She knew] particularly early on, there would be real potential unpopularity to be courted in seeking to say things and do things which weren’t going to be easy or quick wins. Frankly, she is doing what she believes is right.
“In some ways, there is an analogy with the 1980s and what the Thatcher government was seeking to do in terms of a reset moment where you fundamentally revisit how not just the previous government but multiple governments.”
‘We intend to be extremely rigorous’
Wales Secretary Sir Robert Buckland told Sky News that, while the government would work within its existing three-year spending review package, families could expect to find out what ministers are planning in the next few weeks.
Mr Buckland said he hopes the government’s upcoming announcements will be seen by the market as displaying “fiscal discipline”.
He appeared to confirm what Mr Clarke was suggesting when he said: “We intend to be extremely rigorous when it comes to bearing down on public expenditure.
“That will be developed in the weeks ahead. We’ve got a whole range of announcements coming out on not just spending, but supply-side reforms.
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Chair of OBR Richard Hughes says chancellor will be updated on Friday
“Whether it’s childcare… or… broadband connectivity, all these things add up to an overall package that is designed to, first of all, facilitate growth in the economy, but secondly to emphasise that the government is responsible.”
‘We had to do something different’
Overnight, Mr Kwarteng said the public expected public spending to be tightly controlled.
He wrote in The Daily Telegraph: “The British taxpayer expects their government to work as efficiently and effectively as possible, and we will deliver on that expectation.
“Not all the measures we announced last week will be universally popular. But we had to do something different. We had no other choice.”
The chancellor insisted he would produce a “credible plan” to get public finances on track with a “commitment to spending discipline”.
On Friday night, Ms Truss acknowledged for the first time that “there has been disruption” to the UK economy following last week’s mini-budget.
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‘Liz Truss is a danger to the economy’ says Starmer
Asked on Friday whether she accepted this was a crisis of the government’s own making, the prime minister said: “It was very, very important that we took urgent steps to deal with the costs that families are facing this winter, putting in place the energy price guarantee for which we’ve had to borrow to cover the cost… but also making sure that we are not raising taxes at a time where there are global economic forces caused by the war in Ukraine that we need to deal with.
“I recognise there has been disruption. But it was really, really important that we were able to get help to families as soon as possible.”
Nick Thomas-Symonds, shadow international trade secretary, told Sky News on Saturday: “This is a Tory crisis, made in Downing Street… They’ve crashed the economy by handing out enormous unfunded tax cuts to the very wealthiest people, and it’s going to be working people across the country that pay the price for this.
“They’ve also trashed our international reputation… and… what the government has done is going to lead to economic pain for people that they have chosen… What the government needs to do is recall Parliament and withdraw this budget.”
Truss and Kwarteng met top officials from Britain’s Office for Budget Responsibility (OBR) on Friday.
Mr Kwarteng intends to publish an updated set of economic forecasts from the Office for Budget Responsibility (OBR) and a medium-term fiscal plan setting out how he plans to bring down government debt on 23 November.
UK
No 10 backs Chancellor Rachel Reeves and says she ‘is going nowhere’ after tearful appearance in Commons
Rachel Reeves has not offered her resignation and is “going nowhere”, Downing Street has said, following her tearful appearance in the House of Commons.
A Number 10 spokesperson said the chancellor had the “full backing” of Sir Keir Starmer, despite Ms Reeves looking visibly upset during Prime Minister’s Questions.
Politics latest: ‘A moment of intense peril’ for PM
A spokesperson for the chancellor later clarified that Ms Reeves had been affected by a “personal matter” and would be working out of Downing Street this afternoon.
Politics latest: Reeves looks visibly upset in Commons
UK government bond prices fell by the most since October 2022, and the pound tumbled after Ms Reeves’s Commons appearance, while the yield on the 10-year government bond, or gilt, rose as much as 22 basis points at one point to around 4.68%.
Downing Street’s insistence came despite Sir Keir refusing to guarantee that Ms Reeves would stay as chancellor until the next election following the fallout from the government’s recent welfare U-turn.
Tory leader Kemi Badenoch branded the chancellor the “human shield” for the prime minister’s “incompetence” just hours after he was forced to perform a humiliating U-turn over his controversial welfare bill.
Speaking at Prime Minister’s Questions, Ms Badenoch said: “This man has forgotten that his welfare bill was there to plug a black hole created by the chancellor. Instead they’re creating new ones.”
Turning to the chancellor, the Tory leader added: “[She] is pointing at me – she looks absolutely miserable.
“Labour MPs are going on the record saying that the chancellor is toast, and the reality is that she is a human shield for his incompetence. In January, he said that she would be in post until the next election. Will she really?”
Not fully answering the question, the prime minister replied: “[Ms Badenoch] certainly won’t.
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Welfare vote ‘a blow to the prime minister’
“I have to say, I’m always cheered up when she asks me questions or responds to a statement because she always makes a complete mess of it and shows just how unserious and irrelevant they are.”
Mrs Badenoch interjected: “How awful for the chancellor that he couldn’t confirm that she would stay in place.”
The prime minister’s watered-down Universal Credit and Personal Independent Payment Bill, aimed at saving £5bn, was backed by a majority of 75 in a tense vote on Tuesday evening.
A total of 49 Labour MPs voted against the bill – the largest rebellion in a prime minister’s first year in office since 47 MPs voted against Tony Blair’s Lone Parent benefit in 1997, according to Professor Phil Cowley from Queen Mary University.
After multiple concessions made due to threats of a Labour rebellion, many MPs questioned what they were voting for as the bill had been severely stripped down.
They ended up voting for only one part of the plan: a cut to Universal Credit (UC) sickness benefits for new claimants from £97 a week to £50 from 2026/7.
Ms Badenoch said the climbdown was proof that Sir Keir was “too weak to get anything done”.
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Ms Reeves has also borne a lot of the criticism over the handling of the vote, with some MPs believing that her strict approach to fiscal rules has meant she has approached the ballooning welfare bill from the standpoint of trying to make savings, rather than getting people into work.
Experts have now warned that the welfare U-turn, on top of reversing the cut to winter fuel, means that tax rises in the autumn are more likely – with Ms Reeves now needing to find £5bn to make up for the policy U-turns.
Asked by Ms Badenoch whether he could rule out further tax rises – something Labour promised it would not do on working people in its manifesto – Sir Keir said: “She knows that no prime minister or chancellor ever stands at the despatch box and writes budgets in the future.
“But she talks about growth, for 14 years we had stagnation, and that is what caused the problem.”
Prosecutors are considering whether to bring further criminal charges against Lucy Letby over the deaths of babies at two hospitals where she worked
The Crown Prosecution Service said it had received “a full file of evidence from Cheshire Constabulary asking us to consider further allegations in relation to deaths and non-fatal collapses of babies at the Countess of Chester Hospital and Liverpool Women’s Hospital”.
“We will now carefully consider the evidence to determine whether any further criminal charges should be brought,” it added.
“As always, we will make that decision independently, based on the evidence and in line with our legal test.”
Letby, 35, was found guilty of murdering seven children and attempting to murder seven more between June 2015 and June 2016 while working in the neonatal unit of the Countess of Chester Hospital and is currently serving 15 whole-life orders.
Letby worked at the Countess of Chester Hospital and Liverpool Women’s Hospital
She is understood to have carried out two work placements at Liverpool Women’s Hospital, where she trained as a student, between October and December 2012, and January and February 2015.
Police said in December that Letby was interviewed in prison as part of an investigation into more baby deaths and non-fatal collapses.
A Cheshire Constabulary spokesperson said: “We can confirm that Cheshire Constabulary has submitted a full file of evidence to the CPS for charging advice regarding the ongoing investigation into deaths and non-fatal collapses of babies at the neo-natal units of both the Countess of Chester Hospital and the Liverpool Women’s Hospital as part of Operation Hummingbird.”
Detectives previously said the investigation was looking into the full period of time that Letby worked as a nurse, covering the period from 2012 to 2016 and including a review of 4,000 admissions of babies.
Letby’s lawyer Mark McDonald said: “The evidence of the innocence of Lucy Letby is overwhelming,” adding: “We will cross every bridge when we get to it but if Lucy is charged I know we have a whole army of internationally renowned medical experts who will totally undermine the prosecution’s unfounded allegations.”
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Three managers at the hospital where Lucy Letby worked have been arrested on suspicion of gross negligence manslaughter.
On Tuesday, it was confirmed that three managers at the Countess of Chester hospital had been arrested on suspicion of gross negligence manslaughter in a separate investigation.
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Police said the suspects, who occupied senior positions at the hospital between 2015 and 2016, have all been bailed pending further inquiries.
There is also an investigation into corporate manslaughter at the hospital, which began in October 2023.
A public inquiry has also been examining the hospital’s response to concerns raised about Letby before her arrest.
In May, it was announced the inquiry’s final report into how the former nurse was able to commit her crimes will now be published early next year.
Earlier this year, Letby’s lawyers called for the suspension of the inquiry, claiming there was “overwhelming and compelling evidence” that her convictions were unsafe.
In February, an international panel of neonatologists and paediatric specialists told reporters that poor medical care and natural causes were the reasons for the collapses and deaths.
Their evidence has been passed to the Criminal Cases Review Commission (CCRC), which investigates potential miscarriages of justice, and Letby’s legal team hopes her case will be referred back to the Court of Appeal.
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