Liz Truss has for the first time acknowledged that “there has been disruption” to the UK economy following last week’s mini budget.
Since the chancellor’s announcement of £45bn in tax cuts the value of the pound has plummeted, nearly half of mortgages have been pulled and the Bank of England launched a £65bn bail-out to save pension funds from collapse.
Asked on Friday whether she accepted this is largely a crisis of her 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 – that help is coming this weekend.
“Because this is going to be a difficult winter and I’m determined to do all I can to help families and help the economy at this time.”
The government’s energy price guarantee comes into force on Saturday.
It means the average household shouldn’t have to pay more than £2,500 a year on their energy bills.
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Ms Truss defended the decision to present last week’s mini-budget without an accompanying forecast from the Office for Budget Responsibility (OBR) due to the need to respond rapidly to rising energy prices, amid concerns that average annual household bills could soon reach £6,000.
The lack of such a forecast is blamed by many – including Mel Stride MP, the Conservative chair of the treasury select committee – of contributing to the week’s turmoil on the markets.
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The OBR said a forecast had been offered to Chancellor Kwasi Kwarteng but was not commissioned.
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1:15
Truss: Right to ‘take decisive action’
On Friday morning, the prime minister and chancellor met the OBR’s budget responsibility committee and afterwards issued a statement saying they “made it clear they value its scrutiny”.
But Ms Truss did not accept that failing to commission a forecast last week had been a mistake.
“It was important we acted quickly, in that timescale there couldn’t be a full OBR forecast. But we are committed to the OBR forecast.
“We are working together with the OBR. There will be an event on 23 November where the policies are fully analysed by the OBR, but it was a real priority to me to make sure we’re working to help struggling families.”
On Thursday, the chancellor committed to maintaining the triple lock on state pensions, which means they would rise in line with inflation (the triple lock means following whichever is higher consumer price inflation, average wage growth or 2.5%).
But the prime minister declined to offer a guarantee that benefits would also rise in line with inflation, despite a pledge from Boris Johnson’s government to do so.
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7:53
‘People have no faith in govt’
Ms Truss said the issue is “something that the work and pensions secretary is looking at, and she will make an announcement in due course, as is the normal practice for the autumn”.
But the prime minister argued the reversal of the National Insurance hike and support for businesses’ energy bills will help families.
“I had real fears that businesses could go out of business this winter because they were facing unaffordable energy bills,” she added.
“We put in place a business scheme, we put in place support for households across the country. That has cost us money, but it was important we acted quickly.”
With the latest polls putting Labour more than 30 points ahead of the Conservatives, many backbenchers are concerned about the prospect of losing their seats at the next election.
Senior MP Charles Walker said on Friday the conversation is no longer about winning, but how much the party loses by.
But the prime minister declined to comment on whether her party is heading towards electoral defeat, responding that “100% of her focus” is on supporting “the British public and British businesses through this difficult winter”.
The boss of P&O Ferries – known for its fire-and-rehire of nearly 800 workers – has said he could not live on the less than £5-per-hour some of his staff are paid.
The ferry company is paying employees an average of£5.20 an hour, two years after making 786 people redundant, and rehiring cheaper workers, P&O Ferries chief executive Peter Hebblethwaite told the Commons’ Business and Trade Committee.
Some earn as little as £4.87 an hour, Mr Hebblethwaite added, as MPs on the committee presented him with evidence that some staff were paid as low as £2.90 an hour for their first eight hours of work.
During exchanges, committee chair Liam Byrne asked Mr Hebblethwaite: “Do you think you could live on £4.87 an hour?”
Mr Hebblethwaite replied: “No, I couldn’t,” before admitting he earned £508,000, including a bonus of £183,000 last year.
While he said he could not live on such pay, the CEO said the rates were “considerably ahead of international minimum standards”.
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“These are international seafarers who we are, or our crewing agent is, recruiting from an international field, and we pay substantially ahead of the international seafaring minimum wage,” he added.
But P&O Ferries uses maritime workers employed by an overseas agency, who work on ships which are foreign-registered in international waters, so the rates do not apply.
When he last appeared before the committee in March 2022, Mr Hebblethwaite said P&O Ferries workers would receive at least £5.15 every hour.
“People who could work anywhere in the world on any ship choose to come over to us and make a choice to come back,” he said on Tuesday.
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2:48
P&O chose to break the law by not consulting before sacking 800 staff because it knew
Fire-and-rehire fallout
Despite the move to get rid of the nearly 800 staff in March 2022, Mr Hebblethwaite said P&O Ferries has always complied with national and international law.
That decision is still under investigation by the government.
While a criminal investigation conducted by the insolvency service concluded in August 2022 that it would not commence criminal proceedings, a civil investigation by the government body is ongoing.
“I confirmed that this decision was legal,” Mr Hepplethwaite added. “That is not to say I don’t regret it, I regret it. I am deeply sorry for the impact it had on 786 seafarers and their families. I wish we’d never had to have made that decision.
Had it not been made, Mr Hebblethwaite said the operation of P&O Ferries would have been at risk.
“Without that difficult decision I would not be here today and we would not have been able to preserve the 2,000 jobs that we have been able to preserve.”
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Despite the widespread condemnation and political lens that zeroed in on the company, a seafarers’ rights charter has not yet been signed by P&O Ferries.
Mr Hebblethwaite couldn’t say whether workers were allowed to leave the ship during a 17-week working period and will write to the committee with an answer.
“I believe they are, but I believe there are some technicalities,” he answered.
Responding to the evidence, the head of the TUC (Trade Union Congress) Paul Nowak said: “It beggars belief that P&O Ferries has faced no sanctions for its misdeeds and that its parent company DP World has continued to be awarded government contracts.
“For too long, parts of our labour market have resembled the Wild West – with many seafarers particularly exposed to hyper-exploitation and a lack of enforceable rights.
“It’s time to drag our outdated employment laws into the 21st century. Without this, another P&O Ferries scandal is on the cards.”
The government is “gaslighting” the public about the state of the economy, the shadow chancellor will say on Tuesday.
Rachel Reeves is set to attack the Conservatives in a speech in the City of London, as the opposition takes the fight to the government on their own turf ahead of the general election.
Running a strong economy has long been the focus of Conservative election campaigns.
What is gaslighting?
The term gaslighting refers to a process of manipulating someone by questioning their memory and purposefully saying what they believe to be true is not – it also involves challenging someone’s perception of reality.
The phrase comes from the title of the 1940s film Gaslight, in which a woman is manipulated by her husband as he attempts to get her certified as insane.
And with a raft of economic data coming out this week, Ms Reeves will be looking to get ahead of the government’s messaging – saying Chancellor Jeremy Hunt and Prime Minister Rishi Sunak claiming the economy is improving is “deluded”.
Taking the front foot in the wake of the drubbing the Conservatives took in the local elections, Ms Reeves will say: “By the time of the next election, we can, and should, expect interest rates to be cut, Britain to be out of recession and inflation to have returned to the Bank of England’s target.
“Indeed, these things could happen this month.
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“I already know what the chancellor will say in response to one or all these events happening. He has been saying it for months now: ‘The economy is turning a corner,’ ‘our plan is working,’ ‘stick with us’.
“I want to take those arguments head on because they do not speak to the economic reality.”
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6:42
Local elections sent a ‘clear message’
She will add “During the local elections I travelled across the country. I spoke to hundreds of people. I listened to their stories.
“And when they hear government ministers telling them that they have never had it so good, that they should look out for the ‘feelgood factor,’ all they hear is a government that is deluded and completely out of touch with the realities on the ground.
“The Conservatives are gaslighting the British public.”
The shadow chancellor will say Labour will fight the election on the economy, point to previously announced policies such as a national wealth fund to deliver private and public investment, reform planning laws to build 1.5 million homes, and create 650,000 jobs in the UK’s industrial heartlands.
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Conservative Party chairman Richard Holden said: “The personnel may change but the Labour Party hasn’t. Rachel Reeves still hero-worships Gordon Brown, who sold off our gold reserves and whose hubris took Britain to the brink of financial collapse.
“Labour have no plan and would take us back to square one with higher taxes, higher unemployment, an illegal amnesty on immigration and a plot to betray pensioners, just like Gordon Brown did.”
An estate agency group backed by the private equity arm of Lloyds Banking Group is being put up for sale in the latest sign of corporate activity in the sector.
Sky News understands that LDC has hired bankers from Clearwater International to oversee a sale of Lomond Group.
A process is expected to kick off in the coming months, and should value Lomond at well over £100m, according to industry sources.
Lomond Group was created from the merger of Lomond Capital and Linley & Simpson in 2021, a deal which established a business with 22,000 properties under management.
The company has a particularly prominent presence in cities such as Aberdeen, Birmingham and Leeds.
It trades under brands such as Thornley Groves, Braemore and John Shepherd.
The prospective auction comes as speculation grows about a potential bid for Foxtons, the London-listed estate agent.
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Foxtons was recently reported to have added bankers at Rothschild as financial advisers in anticipation of a bid.
A number of other chains are also expected to change hands in the coming months.