Liz Truss admits ‘disruption’ to UK economy but stands by forecast-free mini-budget

Published

2 years ago

October 1, 2022

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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.

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.

The OBR said a forecast had been offered to Chancellor Kwasi Kwarteng but was not commissioned.

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.

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.”

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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”.

World

Israel’s Benjamin Netanyahu rejects ceasefire deal that would ‘leave Hamas intact’

Published

15 hours ago

May 5, 2024

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Israel's Benjamin Netanyahu rejects ceasefire deal that would 'leave Hamas intact'

Israeli Prime Minister Benjamin Netanyahu has rejected ceasefire proposals because he says Hamas’s call for a withdrawal of all troops from Gaza and an end to the war is unacceptable.

Mr Netanyahu said agreeing to such proposals would “leave Hamas intact” and leave the possibility of another attack in future.

“Surrendering to the demands of Hamas would be a terrible defeat for the State of Israel,” he said in a video statement.

Mediated negotiations for a pause in the fighting in return for the release of hostages held by Hamas have been going on in Egypt, but a deal still appears some way off.

Hamas said in a statement on Sunday it’s “still keen to reach a comprehensive, interconnected agreement that ends the aggression, guarantees withdrawal, and achieves a serious prisoner exchange deal”.

The impasse comes after Egyptian media reported “noticeable progress” in ceasefire talks on Saturday.

The proposal mediators had put to Hamas set out a three-stage process for an immediate, six-week ceasefire and partial release of Israeli hostages, with some sort of Israeli pull-out in exchange.

More than 34,600 Palestinians have been killed and more than 77,000 have been wounded in Israel’s military operation, according to Gaza’s health ministry.

Israel has said it remains committed to a ground offensive in the southern city of Rafah, where more than a million have fled in search of safety, as it tries to wipe out Hamas.

The UN and others have warned of catastrophe if it goes ahead.

The war began in October after Hamas killed about 1,200 people, according to Israeli figures, when it launched a surprise attack.

More than 200 were abducted and many remain as hostages, while others are thought to have died.

World

Health warning issued as heatwave grips South and Southeast Asia

Published

2 days ago

May 4, 2024

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Health warning issued as heatwave grips South and Southeast Asia

Countries in South and Southeast Asia have been coping with a weeks-long heatwave which has seen record temperatures sweep parts of the region.

Pupils in the Philippines, India and Bangladesh have been told to stay at home and learn remotely due to a severe health risk.

Schools in Cambodia have also cut back on their hours.

Cambodia faces its hottest temperature in 170 years, according to meteorologists – as high as 43C (109F).

Bangkok in Thailand has reached 40C (104 F), but the heat index is said to have topped 50 C (122 F) due to the heat being trapped among the mass of buildings.

The United Nations Children’s Fund warned in April that the heat could put the lives of millions of children at risk and asked people who care for them to take extra precautions.

A spokesperson for UNICEF said around 243 million children were exposed to hotter and longer heatwaves.

They said the increased heat was “putting them at risk of a multitude of heat-related illnesses, and even death”.

Thirty people in Thailand have died from heatstroke in the past month, according to data from the country’s health ministry.

People are being advised to avoid outdoor activities and to stay hydrated.

Several towns in Myanmar were included on lists of the hottest spots globally last month, with temperatures reaching 48.2C (118F) in at least one case.

Parts of eastern India also experienced their hottest April on record.

Kerala, on India’s west coast, this week instructed all schools and colleges to close until Monday, while influencers in Bangladesh have encouraging people to plant trees in response to the record heat.

Benjamin Horton, director of the Earth Observatory of Singapore, said there were three factors for heatwaves: a naturally-occurring climate phenomenon known as El Nino, an increase in global temperatures, and human-induced climate change.

Brazil is currently experiencing another climate phenomenon – La Nina – with 39 dead and 68 missing in floods across the country.

More than 24,000 people have been forced to leave their homes due to the flooding.

Scientists believe the naturally-occurring phenomenon has intensified due to the impact of climate change.

World

Philippine coastguard hits out at China’s ‘brute force’ after water cannon attack

Published

2 days ago

May 4, 2024

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Philippine coastguard hits out at China's 'brute force' after water cannon attack

China has been branded “a bully” and an international lawbreaker after its ships blasted Philippine vessels with water cannon in the South China Sea.

Sky News was on board the BRP Bagacay when a Chinese vessel fired water at it, causing significant damage.

Philippine coastguard spokesman Jay Tarriela told Sky News that this week’s confrontation was the first time China had used “such aggression” against their ships.

“The metal parts and the railing were bent. The canopy was also destroyed. So this came as a surprise for us that China never hesitated to use brute force,” he said.

“It completely justifies us calling The People’s Republic of China a bully country.”

The Philippine coastguard was on a resupply mission to the Scarborough Shoal to deliver food and fuel to Philippine fishermen when they were struck.

The submerged reef lies in disputed waters. China claims sovereignty over the reef but it is much closer to the Philippines and lies within its legally recognised exclusive economic zone.

The vessel Sky News was on board was the closest the coastguard had ever been to the shoal – just 600 metres away from it.

Asked if the mission to the shoal was a provocative move by the Philippine coastguard, Commodore Tarriela denied they were “poking the bear” but rather “driving the bear out of our own territory”.

The Philippines has been stepping up its patrols in the area under the instruction of President Bongbong Marcos, and reasserting its claim to the shoal in recent months.

It has raised the spectre of open conflict. While neither side currently wants that, there is now a greater threat of open conflict.

Asked what the end game was for the Philippines, Commodore Tarriela said their priority was to “tell the world” about China’s aggression.

He said their secondary goal was to ensure “like-minded states” also made China “fall in line and respect international law”.

“Otherwise, it’s everybody’s loss,” he added.

Philippine government policy is not to resist using water cannon against Chinese vessels – and Commodore Tarriela insisted that policy remains in place after the confrontation.

The government also remains intensely determined to protect the waters it believes it has every right to operate in.

“We’re not going to yield and we’re not going to surrender a square inch of our territory,” Commodore Tarriela insisted.

Beijing has called the action its own coastguard took as “necessary”.

Speaking at the Chinese foreign ministry’s daily news conference, spokesperson Lin Jian described the coastguard’s conduct as “professional, proper, and lawful”.