Liz Truss refuses to commit to raising benefits in line with inflation despite growing pressure
Liz Truss has refused to commit to raising benefits in line with inflation, despite growing pressure from a cabinet minister and senior Tory MPs.
Speaking to broadcasters in Birmingham, where the Tory party conference is underway, the prime minister said she had “not made a decision” on whether to stick to the benefit uprate promised by her predecessor Boris Johnson.
She added: “Of course, there will be discussions about the way forward on commitments like benefits, on how we deal with future budgets.
“I’m very clear that going into this winter, we do need to help the most vulnerable.”
While Ms Truss has not ruled out a real-terms cuts to benefits, she has said she is “fully committed” to raising pensions in line with inflation.
Politics Hub: Truss and cabinet minister take different lines on benefits
Please use Chrome browser for a more accessible video player
PM Liz Truss interview in full
When asked about the difference in approach for people on pensions compared to benefits, Ms Truss told LBC’s Nick Ferrari that “people are in a different situation, depending on which stage of life they’re in”.
She added: “When people are on a fixed income, when they are pensioners, it is quite hard to adjust. I think it’s a different situation for people who are in the position to be able to work.”
Asked if she will rule out austerity, she said she has committed to reducing debt as a proportion of national income over the medium term.
“Well, I wouldn’t use the term you describe. What I’m talking about is fiscal responsibility,” she added.
Ministers hint at cabinet split
Ms Truss is facing a fresh battle with Conservative MPs over a potential benefits squeeze and cuts to public spending, after already being forced into making a policy U-turn on her tax cuts yesterday.
It is understood that Downing Street is considering increasing Universal Credit using a lower metric, such as the increase in average earnings, instead of inflation.
Penny Mordaunt became the first cabinet minister to openly oppose the idea of not uprating benefits with inflation, telling Times Radio: “I’ve always supported – whether it’s pensions, whether it’s our welfare system – keeping pace with inflation. It makes sense to do so. That’s what I voted for before.”
The Leader of the House of Commons added: “We want to make sure that people are looked after and that people can pay their bills. We are not about trying to help people with one hand and take away with another.”
Ms Truss refused to be drawn on whether she welcomed those views, telling reporters: “As I’ve said, no decision has been made yet on that issue. And I look forward to having those discussions.”
Ms Mordaunt appears to have taken a different line to Brandon Lewis, the justice secretary – hinting at a cabinet split on the matter.
He refused to give his position when asked about the government’s plans to uprate benefits on Sky News, telling Kay Burley: “There is a process around this that the Department for Work and Pensions, Chloe Smith, the secretary of state, works through.”
He said announcements will be made “over the autumn”, adding: “I’m not going to pre-judge what that will be.”
Read more:
First part of Truss’ reign is over – is there any way back?
Please use Chrome browser for a more accessible video player
Should benefits rise with inflation?
The comments come after a slew of senior Tories called on the PM to row back on cutting public spending in the middle of the cost of living crisis.
On Monday, senior Conservative MP Damian Green told Sky News: “The government should uprate in line with inflation. The previous government said it was going to, so people are expecting this.”
Former transport secretary Grant Shapps has also stepped up the pressure. Asked if he would want to see benefits increased in line with inflation, he said: “Of course, every politician would want to see that.”
Benefits are usually uprated in line with the consumer price index (CPI) rate of inflation from September, with the rise coming into effect the following April.
The Institute for Fiscal Studies estimates that each percentage point rise in CPI adds £1.6 billion to welfare spending.
The latest row comes as the government dramatically dropped its plans to abolish the 45% tax rate on earnings over £150,000 following widespread criticism, including from Tory MPs.
Ms Truss defended the U-turn on Tuesday, saying the government “listens” and the tax cut “wasn’t a core part” of the growth plan.
But she repeatedly refused to say if she trusts her chancellor, Kwasi Kwarteng, when challenged, instead saying the two work “very closely”.
Business
Chancellor’s Mansion House speech vows to rip up red tape – saying post-financial crash rules went ‘too far’
Chancellor Rachel Reeves has criticised post-financial crash regulation, saying it has “gone too far” – setting a course for cutting red tape in her first speech to Britain’s most important gathering of financiers and business leaders.
Increased rules on lenders that followed the 2008 crisis have had “unintended consequences”, Ms Reeves will say in her Mansion House address to industry and the City of London’s lord mayor.
“The UK has been regulating for risk, but not regulating for growth,” she will say.
It cannot be taken for granted that the UK will remain a global financial centre, she is expected to add.
Money blog: Britain’s most affordable town revealed
It’s anticipated Ms Reeves will on Thursday announce “growth-focused remits” for financial regulators and next year publish the first strategy for financial services growth and competitiveness.
Rachel Reeves
Bank governor to point out ‘consequences’ of Brexit
Also at the Mansion House dinner the governor of the Bank of England Andrew Bailey will say the UK economy is bigger than we think because we’re not measuring it properly.
A new measure to be used by the Office for National Statistics (ONS) – which will include the value of data – will probably be “worth a per cent or two on GDP”. GDP is a key way of tracking economic growth and counts the value of everything produced.
Brexit has reduced the level of goods coming into the UK, Mr Bailey will also say, and the government must be alert to and welcome opportunities to rebuild relations.
Mr Bailey will caveat he takes no position on “Brexit per se” but does have to point out its consequences.
Please use Chrome browser for a more accessible video player
Bailey: Inflation expected to rise
In what appears to be a reference to the debate around UK immigration policy, Mr Bailey will also say the UK’s ageing population means there are fewer workers, which should be included in the discussion.
The greying labour force “makes the productivity and investment issue all the more important”.
“I will also say this: when we think about broad policy on labour supply, the economic arguments must feature in the debate,” he’s due to add.
Keep up with all the latest news from the UK and around the world by following Sky News
The exact numbers of people at work are unknown in part due to fewer people answering the phone when the ONS call.
Mr Bailey described this as “a substantial problem”.
He will say: “I do struggle to explain when my fellow [central bank] governors ask me why the British are particularly bad at this. The Bank, alongside other users, including the Treasury, continue to engage with the ONS on efforts to tackle these problems and improve the quality of UK labour market data.”
Business
Reeves has welcome support from Bank’s governor as she goes for growth and seeks to woo City
When Gordon Brown delivered his first Mansion House speech as chancellor he caused a stir by doing so in a lounge suit, rather than the white tie and tails demanded by convention.
Some 27 years later Rachel Reeves is the first chancellor who would have not drawn a second glance had they addressed the City establishment in a dress.
As the first woman in the 800-year history of her office, Ms Reeves’s tenure will be littered with reminders of her significance, but few will be as symbolic as a dinner that is a fixture of the financial calendar.
Money latest: UK gas prices spike
Her host at Mansion House, asset manager Alastair King, is the 694th man out of 696 Lord Mayors of London. The other guest speaker, Bank of England governor Andrew Bailey, leads an institution that is yet to be entrusted to a woman.
Ms Reeves’s speech indicates she wants to lean away from convention in policy as well as in person.
By committing to tilting financial regulation in favour of growth rather than risk aversion, she is going against the grain of the post-financial crash environment.
“This sector is the crown jewel in our economy,” she will tell her audience – many of whom will have been central players in the 2007-08 collapse.
Sending a message that they will be less tightly bound in future is not natural territory for a Labour chancellor.
Her motivation may be more practical than political. A tax-and-spend budget that hit business harder than forewarned has put her economic program on notice and she badly needs the growth elements to deliver.
Rachel Reeves on budget day. Pic: PA
Her plans to consolidate local authority pension schemes so they might match the investing power of their Canadian and Australian counterparts is part of the same theme.
Infrastructure investment is central to Reeves’s plan and these steps, universally welcomed, could unlock the private sector funding required to make it happen.
Bank governor frank on Brexit and growth
If the jury is out in a business financial community absorbing £25bn in tax rises, she has welcome support from Mr Bailey.
He is expected to deliver some home truths about the economic inheritance in plainer language than central bankers sometimes manage.
Britain’s growth potential, he says, “is not a good story”. He describes the labour market as “running against us” in the face of an ageing population.
With investment levels “particularly weak by G7 standards”, he will thank the chancellor for the pension reforms intended to unlock capital investment.
Please use Chrome browser for a more accessible video player
Governor warns inflation expected to rise
He is frank about Brexit too, more so than the chancellor has dared.
While studiously offering no view on the central issue, Mr Bailey says leaving the EU had slowed the UK’s potential for growth, and that the government should “welcome opportunities to rebuild relations”.
There is a more coded warning too about the risks of protectionism, which is perhaps more likely with Donald Trump in the White House.
“Amid threats to economic security, let’s please remember the importance of openness,” the Bank governor will say.
Keep up with all the latest news from the UK and around the world by following Sky News
All that is welcome for Ms Reeves.
Already a groundbreaking chancellor, she is aiming for a political and economic legacy that extends beyond her gender and the dress code.
Water company United Utilities has reported hundreds of millions in profit as it seeks to further increase customer bills.
The utility serving seven million customers in the northwest of England recorded £335.7m in underlying operating profits for the first half of this year, up nearly 23% from £271.1m a year ago.
It comes as the firm has requested bills rise 32% to make them among the most expensive in England and Wales.
Money blog: The massive winter fuel payment ‘cut’ no one talks about
The proposed average annual bill would increase to £584 by 2030 from the £443 typical yearly charge in the 2023/2024 financial year. Since April 2023 bills have been upped 6.4% and then 7.9%.
Bills hikes were behind the rise in revenue to more than £1.08bn from £975.4m in 2023.
Other ways of assessing profit were lower than the underlying operating sum. Profit before tax reached £140.6m while after tax profit topped £103.1m for the six months to the end of September 2024, both lower than a year earlier.
Boss’s pay
Bonus and benefits payments worth £1.416m were paid to two executives on top of £1.128m in base pay, according to analysis of company filings done by the Liberal Democrats.
It’s down compared with 2022/2023 when three executives were given £1.6m in base pay and £2.456m in bonuses and benefits.
Read more:
Water giant United Utilities strikes £1.8bn pension deal
Keep up with all the latest news from the UK and around the world by following Sky News
The environment
In a year of record sewage outflows into waterways the company was one of just three firms that met the Environment Agency’s top four-star performance ranking.
United Utilities in July came under investigation by water regulator Ofwat for not meeting its obligation to minimise pollution.
In response the company said at the time: “We understand and share people’s concerns about the health of the environment and the operation of wastewater systems, including combined sewer overflows.”
-
Sports2 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports7 months agoStory injured on diving stop, exits Red Sox game
-
Sports2 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports1 year agoGame 1 of WS least-watched in recorded history
-
Environment1 year agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Sports3 years ago
Team Europe easily wins 4th straight Laver Cup
-
Environment2 years agoGame-changing Lectric XPedition launched as affordable electric cargo bike
-
Business2 years agoBank of England’s extraordinary response to government policy is almost unthinkable | Ed Conway