Liz Truss says she will ‘absolutely’ not cut public spending despite warning of £62bn shortfall
Liz Truss has pledged not to cut public spending to balance the books in her first PMQs since the chancellor’s contentious mini-budget – despite a leading economics-focused think tank warning the government is billions short of the sums needed.
The prime minister insisted she was “absolutely” not planning public spending reductions, but vowed that taxpayers’ money would be used well.
Her pledge comes as the government continues to be under pressure for the market turmoil that erupted after the government announced its £45bn package of unfunded tax cuts last month.
Speaking to Sky News after PMQs, Mel Stride, the Chair of the Treasury Select Committee, said that Chancellor Kwasi Kwarteng should not take the reversal of some of his tax cuts “off the table”.
He said that “holding the line” on the measures announced in his mini-budget will be even more difficult following Ms Truss’ comments on public spending, and that 31 October – the date of the chancellor’s debt-cutting plan being published – is a moment for a “reset”.
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Tories ‘must get back to being fiscally responsible’
He told political editor Beth Rigby: “(Chancellor Kwarteng) has to be so careful that he doesn’t take any chances, he has to be sure the markets are going to like what they hear, that’s why I think rowing back on the tax cuts have to remain on the table.
“It’s extraordinarily important that whatever the chancellor comes forward with on the 31st, that it cuts it with the market.
“If there is any doubt in his mind about anything he is doing, he would do well to think again, he has got to play it ultra safe.”
Truss says last thing country needs is a general election – politics latest
Economists have suggested that to gain a grip on the national finances, the government will have to make spending cuts or tax rises worth tens of billions of pounds.
The “Green Budget”, from the Institute for Fiscal Studies and Citi, the investment bank, warned this week that the chancellor would have to cut spending or raise taxes by £62bn if he is to stabilise or reduce the national debt, as he has repeatedly promised in recent weeks.
That shortfall is a direct consequence of the measures announced since the Truss government took office, which include its reversal of various tax increases such as corporation tax and national insurance and its energy price guarantee.
Chancellor Kwasi Kwarteng would instead have to carry out dramatic cuts, the think tank said, potentially reducing government investment and slashing public spending on departments that have already been squeezed during the austerity years.
The cost of government spending increased on Wednesday, with the pound falling against the dollar.
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‘Will she reverse “kamikaze budget”?’
‘Kamikaze budget’
At PMQs, Sir Keir Starmer reminded Ms Truss that during her leadership campaign over the summer she had pledged: “I’m not planning public spending reductions.”
Asked if she was going to stick to that, the prime minister replied: “Absolutely… We are spending almost £1tn of public spending. We were spending £700bn back in 2010.
“What we will make sure is that over the medium term the debt is falling. But we will do that not by cutting public spending but by making sure we spend public money well.”
The Labour leader once again called for the government to reverse their “kamikaze budget”, warning Conservative MPs that voters will not forgive their party if they “defend” it.
‘Ducking responsibility’
Sir Keir also accused the prime minister of “ducking responsibility” for the consequences of her government’s economic policies and of being “lost in denial”.
“Who voted for this?” he questioned.
Ms Truss responded: “The way that we will get our country growing is through more jobs, more growth, more opportunities, not through higher taxes, higher spending and his friends in the union stopping hard-working people getting to work.”
‘No-fault’ evictions pledge
Also during PMQs, Ms Truss committed to honouring a 2019 Tory manifesto pledge to scrap “no-fault” evictions of private renters in England.
There had been reports earlier this week that the government could try and shelve the commitment.
On Tuesday, Downing Street said no decisions had been made on whether to pause a promised ban on Section 21 notices, which allow landlords to evict a tenant without giving a reason.
Labour MP Graham Stringer asked Ms Truss: “Can the PM reassure the 11 million private renters in this country that she will carry out her commitment to get rid of no-fault evictions?”
Ms Truss replied: “I can.”
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‘PM ignoring mini-budget damage’
Energy help
The prime minister also announced that Jacob Rees-Mogg, the business secretary, is working on a scheme to help households and businesses bring down their energy costs.
Last Friday, Ms Truss ruled out launching an energy-saving public information campaign after warnings from the National Grid Electricity System Operator that planned three-hour power blackouts could be imposed in some areas.
Only two days ago Downing Street had defended Ms Truss’s decision not to launch a “bespoke” energy-saving public information campaign during the energy crisis, saying it is down to individuals to decide what is right for them.
Mr Kwarteng has already dropped plans to abolish the 45% tax rate on earnings over £150,000 after internal criticism of the policy, though he has insisted he remains committed to the rest of his mini-budget.
Asked what happens after the Bank stops buying bonds on Friday, the chancellor said: “Well, it’s a matter for the governor.”
They rose to their feet in ecstatic surprise, shouting “heydar, heydar” – a Shia victory chant.
This was the first public appearance of their supreme leader since Israel began attacking their country.
He emerged during evening prayers in his private compound. He said nothing but looked stern and resolute as he waved to the crowd.
He has spent the last weeks sequestered in a bunker, it is assumed, for his safety following numerous death threats from Israel and the US.
His re-emergence suggests a return to normality and a sense of defiance that we have witnessed here on the streets of Tehran too.
Earlier, we had filmed as men in black marched through the streets of the capital to the sound of mournful chants and the slow beat of drums, whipping their backs with metal flails.
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Defiance on streets of Tehran
This weekend they mark the Shia festival of Ashura as they have for 14 centuries. But this year has poignant significance for Iranians far more than most.
The devout remember the betrayal and death of Imam Hussein as if it happened yesterday. We filmed men and women weeping as they worshipped at the Imamzadeh Saleh Shrine in northern Tehran.
The armies of the Caliph Yazid killed the grandson of the Prophet Muhammad in the seventh-century Battle of Karbala.
Shiite Muslims mark the anniversary every year and reflect on the virtue it celebrates, of resistance against oppression and injustice.
But more so than ever in the wake of Israel and America’s attacks on their country.
The story is one of prevailing over adversity and deception. A sense of betrayal is keenly felt here among people and officials.
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Many Iranians believe they were lured into pursuing diplomacy as part of a ruse by the US.
Iran believed it was making diplomatic progress in talks with America it hoped could lead to a deal. Then Israel launched its attacks and, instead of condemning them, the US joined in.
Death to Israel chants resounded outside the mosque in skies which were filled for 12 days with the sounds of Israeli jets. There is a renewed sense of defiance here.
One man told us: “The lesson to be learned from Hussein is not to give in to oppression even if it is the most powerful force in the world.”
A woman was dismissive about the US president. “I don’t think about Trump, nobody likes him. He always wants to attack too many countries.”
Pictures on billboards nearby draw a line between Imam Hussein’s story and current events. The seventh-century imam on horseback alongside images of modern missiles and drones from the present day.
Other huge signs remember the dead. Iran says almost 1,000 people were killed in the strikes, many of them women and children.
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Officially Iran is projecting defiance but not closing the door to diplomacy.
Government spokeswoman Dr Fatemeh Mohajerani told Sky News that Israel should not even think about attacking again.
“We are very strong in defence and as state officials have announced, this time Israel will receive an even stronger response compared to previous times,” she said.
“We hope that Israel will not make such a mistake.”
But there is also a hint of conciliation: Senior Iranian officials have told Sky News that back-channel efforts are under way to explore new talks with the US.
Israel had hoped its attacks could topple the Iranian leadership. That proved unfounded, the government is in control here.
For many Iranians, it seems quite the opposite happened – the 12-day war has brought them closer together.
To the sound of mournful chants and the slow beat of drums, they march, whipping their backs with metal flails.
It is an ancient ceremony going back almost 14 centuries – the Shia commemoration of Ashura.
But this year in particular has poignant significance for Iranians.
The devout remember the betrayal and death of the Imam Hussein as if it happened yesterday.
Iranians gather ahead of Ashura
We filmed men and women weep as they worshipped at the Imamzadeh Saleh Shrine in northern Tehran.
The grandson of the Prophet Muhammad was killed by the armies of the Caliph Yazid in the seventh century Battle of Karbala.
Shia Muslims mark the anniversary every year and reflect on the virtue it celebrates – of resistance against oppression and injustice. But more so than ever this year, in the wake of Israel and America’s attacks on their country.
The story is one of prevailing over adversity and deception. A sense of betrayal is keenly felt here by people and officials.
Men and women weeped as they worshipped at the Imamzadeh Saleh Shrine
Many Iranians believe they were lured into pursuing diplomacy as part of a ruse by the US.
Iran believed it was making diplomatic progress in talks with America, which it hoped could lead to a deal. Then Israel launched its attacks and, instead of condemning them, the US joined in.
“Death to Israel” chants resounded outside the mosque in skies that for 12 days were filled with the sounds of Israeli jets.
There is a renewed sense of defiance here.
One man told us: “The lesson to be learned from Hussein is not to give in to oppression, even if it is the most powerful force in the world.”
‘I don’t think about Trump. Nobody likes him,’ one woman tells Sky News
A woman was dismissive about the US president.
“I don’t think about Trump. Nobody likes him. He always wants to attack too many countries.”
Pictures on billboards nearby link Imam Hussein’s story and current events. They show the seventh century imam on horseback alongside images of modern missiles and drones from the present day.
Other huge signs remember the dead. Iran says almost 1,000 people were killed in the strikes, many of them women and children.
Officially Iran is projecting defiance, but not closing the door to diplomacy.
Government spokeswoman Dr Fatemeh Mohajerani told Sky News that Israel should not even think about attacking again.
“We are very strong in defence, and as state officials have announced, this time Israel will receive an even stronger response compared to previous times. We hope that Israel will not make such a mistake.”
Dr Fatemeh Mohajerani said it would be a mistake for Israel to attack again
But there is also a hint of conciliation. Senior Iranian officials have told Sky News back-channel efforts are under way to explore new talks with the US.
Israel had hoped its attacks could topple the Iranian leadership. Those hopes proved unfounded. The government is in control here.
For many Iranians it seems quite the opposite happened – the 12-day war has brought them closer together.
World
Two security workers injured after grenades thrown at aid site, Gaza Humanitarian Foundation says
Two American security workers in Gaza were injured after grenades were thrown during food distribution in Khan Younis, the Gaza Humanitarian Foundation (GHF) has said.
In a statement, the US and Israeli-backed aid group said a targeted terrorist attack was carried out at one of its sites in southern Gaza on Saturday morning.
The two Americans injured “are receiving medical treatment and are in stable condition,” it said, adding that the delivery of aid was “otherwise successful” and that “no local aid workers or civilians were harmed”.
GHF didn’t say exactly when the incident happened but claimed Hamas was behind the attack, adding: “GHF has repeatedly warned of credible threats from Hamas, including explicit plans to target American personnel, Palestinian aid workers, and the civilians who rely on our sites for food.
“Today’s attack tragically affirms those warnings.”
Later, the aid group posted a picture on social media, which it said showed “fragments of a grenade packed with ball bearings” that was used in the attack.
Asked by Sky’s US partner network, NBC News, whether the two injured individuals were responsible for handing out aid or were responsible for providing security, GHF said they were “American security workers” and “two American veterans.”
The aid group did not provide specific evidence that Hamas was behind the attack.
The US and Israeli-backed group has been primarily responsible for aid distribution since Israel lifted its 11-week blockade of the Gaza Strip in May.
Read more:
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94 killed in Israeli strikes in Gaza, health staff say
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It comes after Sky News analysis showed GHF aid distributions are associated with a significant increase in deaths in Gaza.
According to Gaza’s health ministry, 600 Palestinians have been killed while seeking aid from GHF sites as of 3 July, which charities and the UN have branded “death traps”.
Meanwhile, the Associated Press has reported that Israeli-backed American contractors guarding GHF aid centres in Gaza are using live ammunition and stun grenades.
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Contractors allege colleagues ‘fired on Palestinians’
GHF has vehemently denied the accusations, adding that it investigated AP’s allegations and found them to be “categorically false”.
Israel’s military added that it fires only warning shots and is investigating reports of civilian harm.
It denies deliberately shooting at any innocent civilians and says it’s examining how to reduce “friction with the population” in the areas surrounding the distribution centres.
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