Here is a summary of today’s events:
- The Bank of England raised interest rates by 0.5 percentage points to 1.75% and warned the economy is heading toward a recession.
- Labour said the interest rise was “further proof” that the Conservative party has lost control of the economy.
- In light of the rise, Rishi Sunak said he would “prioritise gripping inflation, growing the economy and then cutting taxes” while Liz Truss said there was a need “for the bold economic plan that I am advocating. We need to take immediate action to deal with the cost-of-living crisis, grow the economy and delivering as much support to people as possible.”
- Labour has called on the government to scrap tax breaks for oil and gas producers as more families are pushed into financial difficulty.
- NHS leaders have accused Liz Truss and Rishi Sunak of offering “glib soundbites, gimmicks and political rhetoric” on the health service rather than proper solutions to its growing crisis.
- Chancellor Nadhim Zahawi, said he was aware that the forecasts “will be concerning for many people” adding that “addressing the cost of living is a top priority”.
- The Conservative former chancellor Ken Clarke has suggested that Liz Truss’s plan for immediate tax cuts could make inflation “worse” and risks “contributing to the problem”.
- Michelle O’Neill, Sinn Féin’s first minister designate, has sparked a backlash in Northern Ireland for saying there was “no alternative” to the IRA’s armed campaign during the Troubles.
- Labour has called for an investigation into claims Liz Truss broke strict spending rules by failing to declare thousands of pounds spent on a champagne dinner attended by Conservative MPs.
- A poll by Ipsos found more than half of the British public believe the Conservatives do not deserve to be re-elected, but that many remain unconvinced that Labour is ready to take over.
- The shadow treasury minister Abena Oppong-Asare has accused Boris Johnson and the chancellor, Nadhim Zahawi, of being “missing in action” as it emerged they are both on holiday despite warnings of inflation soaring further and the economy entering the longest recession since the 2008 financial crisis.
- Sir Keir Starmer has been found to have breached the MPs’ code of conduct by failing to register on time eight interests, including gifts from football teams and the sale of a plot of land.
- Liz Truss and Rishi Sunak took part in a television debate for Sky News tonight. In a (very unscientific) show of hands from the live studio audience, Sunak came out as the choice for leader.
- During the Sky News debate Truss said the forecast of a recession was “very worrying...but not inevitable”.
Also during the debate, Truss was asked whether integrity has been lost in the Westminster bubble?
Truss said: “I would make sure we had zero tolerance for bad behaviour and also offer support to MPs.”
She said she would look at the role of the ethics advisor.
“I slightly worry about outsourcing ethics to somebody else,” she added.
During the debate, there was a question on trust. Nadine Dorries says you cannot be trusted, Burley directed to Sunak.
“Boris Johnson deserves enormous credit for what he achieved at the time,” he replied. “It got to a point when it got too difficult for me to stay. It is simply impossible for a chancellor and PM not to be on the same page on economic policy.”
He added that the government was on the wrong side of an ethical problem and “enough was enough”.
Sunak referred to the Chris Pincher scandal.
“It wasn’t OK to defend it because it was wrong. We need to bring trust and integrity and decency back into politics.”
George Parker, political editor of the Financial Times, has picked up on Truss’ response to the windfall tax.
Watching Sky debate, trying to work out how @trussliz - at her first Budget - explains why she can’t afford more help for households facing spiralling energy bills after she cancels a £17bn tax rise on profitable big companies and refuses to impose a new windfall tax on Big Oil
— George Parker (@GeorgeWParker) August 4, 2022
Updated
Ian Birrell has criticised Sunak for playing the “populist” card during the debate.
Embarrassing to hear Rishi Sunak play the populist card and talk about 'leftie lawyers' frustrating the asylum process https://t.co/b1U5QtkSfc
— Ian Birrell (@ianbirrell) August 4, 2022
The i’s Paul Waugh on Kay Burley’s question: “Will the real Liz Truss please stand up?” It will be revisited, and often, he says.
.@trussliz and @RishiSunak are now avoiding 'blue on blue' TV debates where they face off against each other, because they felt they were too damaging.
— Paul Waugh (@paulwaugh) August 4, 2022
But this @KayBurley exchange will surely be replayed again and again and again.#redonred https://t.co/nx9wfxsslq
Full Fact has posted on Twitter regarding Liz Truss’ comments tonight about going to fight in Ukraine.
Liz Truss claimed that she’d “always been clear that the travel advice is that British people should not go to Ukraine.”
— Full Fact (@FullFact) August 4, 2022
This isn’t true. In Feb, when asked whether she'd support Britons going to fight in Ukraine, she said she did and that people could make their own decisions.
After technology to measure who the studio audience would vote for between the two candidates “crashed”, Burley resorts to a show of hands. The vast majority would vote for Sunak.
Woah - Rishi Sunak wins a big majority of the Sky audience of Tory members. Wasn’t expecting that…
— Jessica Elgot (@jessicaelgot) August 4, 2022
Updated
Some more from tonight’s debate, Burley asked Sunak why so many people have come out in support of Liz Truss and not him?
“Plenty of people who sat around the cabinet table are supporting me,” he said.
He said the Conservative party are “all one team, all one family and will come together after the leadership election.”
Updated
Burley asks if he is too rich to be prime minister?
“I think the British public judge people by their character and actions, not by their bank account,” he says.
Conservative leadership candidate @RishiSunak tells @KayBurley "the British people judge people by their character and by their actions, not by their bank account"#BattleForNo10 #KayBurley pic.twitter.com/By8ms4g3jz
— Kay Burley (@KayBurley) August 4, 2022
Updated
He didn’t benefit from offshore companies.
“No. I paid all my taxes when I lived in America and in the UK.”
Does he agree with the current 24-week limit on abortion?
He believes in it. He says he believes in a woman’s right to choose.
Onshore wind?
He said no.
He says we can get to net zero by 2050 by “innovation”.
Asked about his comment that he didn’t have working-class friends.
“I was a kid and I said something silly.”
Is £120m spent on sending people to Rwanda good value for money, Burley asks Sunak?
He says: “I believe in the policy.”
Updated
Is he in favour of fracking?
He says yes “if it has the support of local communities”.
During the debate, there was also a question on energy for Sunak.
He said: “One thing we can improve is our energy storage...we can do that relatively quickly.
He also said we needed to “improve insulation”.
He added: “We need to turbocharge that programme.”
Updated
A further question from Burley on the cost of living crisis.
He says the key is to get to grips with inflation. He won’t go on a “borrowing spree”.
“I’m not promising tens of billions of pounds of tax cuts.”
He says he is “confident” he can deliver his longer-term plan of reducing income tax “over time”.
Question on the cost of living crisis.
He says this is the most important crisis facing the country.
“We need to get real and fast ... the lights are flashing red ... I’m worried Liz Truss’s plans will make things worse.”
“I want to help people with the cost of living crisis. I am focused on gripping inflation first.”
Updated
A question on border control and cutting channel crossings?
“It is absolutely right we have control of our borders,” he says. “I am prepared to be bold and radical to stop them.”
He refers to his 10-point plan.
These include the definition of asylum that has been “exploited by lefty lawyers”. He is calling for a tighter definition.
“We have to get smarter about our foreign policy.”
Updated
A question on protecting NHS dentists.
“We have to be bolder about reforming the NHS,” Sunak says.
He says he created a new funding stream, not just for the NHS but for social care.
He refers to tackling missed appointments and that there are 10 million missed appointments every year at GPsurgeries and hospitals.
“We need to be tougher on missed appointments,” he says.
How is the £10 fine for a missed appointment workable? Burley asks.
He says the £10 could be enforced on the second missed appointment. You can be compassionate on the first missed appointment, he adds.
The NHS is “free at the point of use but not free at the point of misuse”.
Updated
A question on the “eat out to help out” scheme and the cost of it.
Sunak defends the scheme.
“As a matter of social justice, I wanted to protect those jobs,” he says.
Updated
Question on security.
Sunak says he will invest “whatever it takes” to keep people safe.
Question on how to bring the party together. It is less than two years from a general election and what can he do to reunite the party?
“Getting on with the job as quickly as possible. From day one. No more factions. We have to put all this aside as soon as the competition ends.
There will be a “ brand new team united in purpose and I think that will galvanise minds”.
“I will build a team that reflects the talent of the party.”
The real opposition is Keir Starmer, he says.
Updated
First question: is there a point where Sunak would stand aside in the campaign given that opinion polls are pointing to a Truss win and the “big guns” are supporting her?
Sunak says: “The quick answer is ‘no’ ... That’s because I’m fighting for something I really believe in.”
He says he has big guns backing him including Nigel Lawson and William Hague.
Updated
Rishi Sunak is now to be questioned by the audience.
Kay Burley lists things that Truss has said and then backtracked on. “Will the real Liz Truss please stand up?” she asks.
“Yes, my views on issues have developed over time,” Truss says.
Updated
Question: how important is it to balance the books? The questioner doesn’t want to see her children and grandchildren encumbered with huge debt.
“We have lower levels of debt than US, Canada and Japan,” says Truss.
I know that families across the county are struggling to pay their bills.
Questioners ask will we have 15% interest rates again?
Truss says Britain has got less competitive under corporation tax.
A question on standing by Boris Johnson.
“Yes he made mistakes, he said sorry for the mistakes he made,” she says.
Updated
Truss says she was wrong to say the monarchy should be abolished but would not apologise to the Queen for the comment.
She said she would not apologise to Nicola Sturgeon after previous comments she made about her being an “attention seeker”.
Updated
A question on Truss’s comment on Brits going to Ukraine to fight.
“What I was saying was I supported the cause in Ukraine,” she says.
Updated
Should Taiwan be armed?
“We already licence equipment to go to Taiwan,” Truss says.
“That is as far as we will go at this stage.
“We need to work collectively, for the G8 to work together, making sure democracies like Taiwan are protected.”
She said she would not visit Taiwan.
Updated
On Shell’s £9.3b profit: why don’t we have another windfall tax?
Truss says it puts off businesses investing in Britain.
She says she would “incentivise” Shell to release more resources from the North Sea.
She calls the tax a “surprise tax”.
Updated
Now Truss is being interviewed by Kay Burley.
She is asking further on the £8.8bn savings press release and the subsequent U-turn.
“When something is wrong. I deal with it. I took the immediate decision to not pursue this policy.”
She’s asked if she was misrepresented. How did she get that figure?
Truss says she doesn’t have the details.
Does she accept she made a mistake, Burley asks?
“I accept that it wasn’t the right policy to deal with this situation and therefore I withdrew the policy immediately. I have dealt with it straight away.”
She would not say it was a mistake.
I am not blaming anybody else. I am saying the policy is being misrepresented by various people.
Updated
A single mother on £10,000 salary asks how will she be helped?
“I will do all I can for those who are struggling with the cost of living.”
The cost of living crisis “will cost lives” the questioner says.
“It is so important to keep corporation tax ... as low as poss and get infrastructure done quicker.”
Updated
On the U-turn on the £8.8bn savings linked to lower civil service salaries outside of London, Truss says: “It was being misinterpreted. It wasn’t about teachers and doctors.”
She adds: “I was very honest about the situation. I would rather be upfront and, if there is a problem, make a decision straight away. I think I have demonstrated that in all the jobs I have held.”
Truss was asked if she would apologise for the mistake.
She did not address that question directly.
Updated
A housing question comes from a commercial lawyer moving to London. How will she solve the housing crisis and help young people own their own home?
She says it’s a problem that this generation is buying their first home much later than previous generations.
She advocates a “localised system of planning”.
The one-size-fits-all planning system doesn’t work, she says.
“Renters should be able to use their rental history to get on the housing ladder,” she says.
She says she has changed the view she once held about building on the green belt. She would not want to do that now, she says.
Updated
A question on Ukraine.
“We know what Putin’s plans are,” Truss says.
She adds: “We need to toughen up the sanctions on Russia.”
We need to find alternative sources of gas rather than rely on Russia’s supply, she says.
Updated
A medical consultant who works in a hospital asks about understaffing in hospitals and how she will solve this.
Truss praises the work of the NHS during Covid but talks of the backlog.
She says she would put £13bn into social care.
She would have fewer layers of management in the NHS and says we need more of the decisions to be made by people on the front line.
There is talk of doctors’ pensions and Truss says she needs to “sort that out”.
Doctors came out of retirement during Covid – she says she wants to look at how she can encourage those people to come back into the profession.
Updated
Question on how to rebuild the reputation of the Conservative party.
Truss says delivering on promises is key.
She adds: “We need a new generation of party members.”
A question on the Bank of England’s announcement today regarding a recession.
Truss says it is “extremely worrying ... but not inevitable”.
She adds: “Now is the time to be bold.”
She talks about keeping taxes low, encouraging people to set up businesses and help people who work hard.
“You can’t tax your way to growth,” she says.
Updated
Liz Truss has won the toss to go first. More than 60 Conservative party members are in the audience, some undecided, on who should be the new Tory leader.
Updated
Sir Keir Starmer has been found to have breached the MPs’ code of conduct by failing to register on time eight interests, including gifts from football teams and the sale of a plot of land, PA Media reports.
An inquiry into the Labour leader was opened in June by the parliamentary standards commissioner, relating to claims about late declaration of earnings and gifts, benefits or hospitality from UK sources.
Speaking at the time, Sir Keir said he was “absolutely confident” he had not broken the MPs’ code of conduct.
The commissioner has now found that the leader of the opposition failed to register eight interests – five more than the ones alleged in the original complaint.
However, she noted the “breaches were minor and/or inadvertent, and that there was no deliberate attempt to mislead”.
Therefore, the watchdog decided the inquiry could be concluded by way of the “rectification” procedure, without a referral to the committee on standards, which happens in the more serious cases.
The rectification procedure entails publishing the details and an apology on the commons website.
A Labour spokesperson said:
Keir Starmer takes his responsibilities to the register very seriously and has apologised to the commissioner for this inadvertent error.
He has assured the commissioner that his office processes have been reviewed to ensure this doesn’t happen again.
Updated
Truss and Sunak face Sky grilling
Liz Truss and Rishi Sunak will take part in a live televised debate tonight at 8pm.
Sky News’ The Battle for Number 10 will see the two leadership hopefuls field questions from a studio audience comprising Conservative party members.
Truss and Sunak will then be interviewed by Kay Burley.
The 90-minute live broadcast can be watched on among others Sky News and viewed on Sky News’ YouTube channel and here.
Updated
The shadow treasury minister Abena Oppong-Asare has accused Boris Johnson and the chancellor, Nadhim Zahawi, of being “missing in action” as it emerged they are both on holiday despite warnings of inflation soaring further and the economy entering the longest recession since the 2008 financial crisis.
Zahawi was said to be still working and had a call with the Bank of England governor, Andrew Bailey, after interest rates were increased from 1.25% to 1.75% on Thursday, the biggest increase for 27 years.
PA Media reports that Oppong-Asare said:
Families and pensioners are worried sick about how they’ll pay their bills, but the prime minister and chancellor are missing in action.
The fact they’re both on holiday on the day the Bank of England forecasts the longest recession in 30 years speaks volumes about the Tories’ warped priorities.
The Liberal Democrat foreign affairs spokesperson, Layla Moran, added:
At a time of national crisis we deserve better than these shirkers. Time and again they have been absent in the country’s time of need.
The very least the British people can ask for is a chancellor and prime minister who will explain how they got us into this mess and what the plan is to solve it.
I know today's news will have been concerning for many people across the UK.
— Nadhim Zahawi (@nadhimzahawi) August 4, 2022
I've spoken to Andrew Bailey, @bankofengland Governor to discuss the challenging global context and our continued focus to tackling inflation and supporting people with rising prices.
This is a worldwide problem, but the UK's economy is fundamentally very strong, and we have the skills in both Government and in businesses across the country to weather this storm and come out of it together.
— Nadhim Zahawi (@nadhimzahawi) August 4, 2022
Updated
More reaction to Michelle O’Neill’s comments (see 13.23) that there was no alternative to IRA violence during the Northern Ireland’s Troubles.
Naomi Long, the leader of the centre-ground Alliance party, said:
Michelle O’Neill is wrong to say there was no alternative to the PIRA campaign of violence.
Thousands of people, including a majority of nationalists, who did not pursue violence to achieve their political aims are testament to that.
Indeed, one could argue the use of violence delayed the reaching of political accommodation until 1998, and its devastating impacts are still felt personally and politically to this day.
Throughout the 1970s, 80s and 90s there were democratic and peaceful alternatives, as proven by Alliance and others at the time.
Whilst those in positions of leadership are entitled to their own perspectives, they are not entitled to their own truth.
Neither should they ignore the devastating legacy of violent conflict in our community, or the impact their words of justification for past violence may have on people still engaged in such violence today.
The SDLP leader, Colum Eastwood, also disagreed with O’Neill, tweeting:
There was an alternative to IRA violence. John Hume led that alternative & the Nationalist people backed it. The IRA murdered thousands of its own people, destroyed businesses, ruined young people’s lives by selling them a twisted ideology & put the cause of Irish unity back decades.
There was an alternative to IRA violence. John Hume led that alternative & the Nationalist people backed it. The IRA murdered 1000s of its own people, destroyed businesses, ruined young people's lives by selling them a twisted ideology & put the cause of Irish unity back decades.
— Colum Eastwood 🇺🇦 (@columeastwood) August 4, 2022
Updated
A new poll by Ipsos has found that more than half of the British public believe the Conservatives do not deserve to be re-elected, but that many remain unconvinced that Labour is ready to take over.
Only 31% of the public think the Tories deserve to continue in power, compared with 52% who believe they do not, according to the poll. However, the survey found just 37% of people believed the Labour party was ready to take over.
Keiran Pedley, director of politics at Ipsos UK, said:
We have plenty of evidence that the public are not happy with how the Conservatives are running the country in several important areas.
However, it is also true that the public are not 100% sold on Labour as an alternative either.
My colleagues Heather Stewart, Aubrey Allegretti and Jessica Elgot have the full write-up of the political response to the Bank of England’s forecasts:
Rishi Sunak has seized on the Bank of England’s historic half-point rate rise to claim that Liz Truss’s plan for unfunded tax cuts would “make everyone poorer”.
The Bank’s gloomy forecasts, published alongside the rate decision, underline the scale of the challenge facing the next prime minister, with the economy projected to plunge into a prolonged recession by the end of the year.
Despite the dire economic outlook, the Guardian has learned the chancellor, Nadhim Zahawi, is away from Westminster, as the caretaker government takes a back seat while the leadership contest rages.
Zahawi was said to be working remotely from a family holiday.
In a statement, the chancellor said:
There is no such thing as a holiday and not working. I never had that in the private sector, nor in government. Ask any entrepreneur and they can tell you that.
He added:
Millions of us dream about getting away with our families, but the privilege and responsibility of public service means that you never get to switch off, that’s why I have had calls and briefings every day and continue to do so.
The prime minister is currently on holiday. Zahawi put out a written statement on the Bank’s announcement and is holding meetings with its governor, Andrew Bailey, later on Thursday and the Treasury’s chief economist.
Sunak, the underdog in the leadership race, has repeatedly said throughout the contest that he would wait until inflation was under control, before embarking on a tax-cutting spree.
By contrast, Truss has promised £30bn worth of tax cuts, which Sunak has claimed would push up borrowing and boost inflation.
Updated
Labour calls for investigation into claims Truss failed to declare donations
Labour has called for an investigation into claims Liz Truss broke strict spending rules by failing to declare thousands of pounds spent on a champagne dinner attended by Conservative MPs.
The Tory leadership frontrunner is under pressure to answer questions over a “Fizz with Liz” event held last October at a private members’ club in Mayfair, London, reportedly paid for by the millionaire businessman Robin Birley.
According to the Independent, about a dozen Tory MPs are said to have attended the function – reportedly worth £3,000. It said Truss’s office sent an invitation to MPs.
Truss is now facing questions about why she did not declare the thousands of pounds worth of hospitality spent on the event. MPs are required to declare to parliament’s register of interests any gifts worth more than £300, including hospitality. Truss’s team told the paper that it was “not organised for her, on her behalf or by her”.
Truss has “serious questions” to answer about the event, according to the Labour deputy leader, Angela Rayner, and the shadow Commons leader, Thangam Debbonaire.
The pair wrote in a letter to the cabinet secretary, Simon Case:
There are questions about whether the foreign secretary was acting in her ministerial capacity, or her capacity as a member of parliament – however she failed in her duty on both counts.
They added:
As foreign secretary, it is likely Conservative members attended this event in order to be in the company of the foreign secretary, and it would therefore be expected that she would make ministerial declarations in the usual way.
There are serious questions for the foreign secretary to answer about why she failed to declare this large sum of hospitality funding, and why she now claims she had ‘nothing to do’ with the event’s organisation, despite sending out personal invitations to all attendees.
They also said:
We ask that you do the necessary investigation into the numerous questions raised by these allegations. The public has a right to know why such a significant donation for hospitality was not properly declared by the foreign secretary.
A spokesperson for Truss told the Independent:
It was not organised for her, on her behalf or by her. She was invited by Robin Birley with loads of MPs. It was put on by Mr Birley to discuss low tax and deregulation.
Updated
Labour has called on the government to scrap tax breaks for oil and gas producers as more families are pushed into financial difficulty.
Responding to the Bank of England’s forecast, the shadow Treasury minister Pat McFadden said:
The Bank of England’s forecasts show us how hard this crisis is hitting families, how much is left to come and how vulnerable 12 years of economic mismanagement by the Conservatives has left us.
Not only is this the highest rate increase in 25 years, but inflation could hit 13% while real wages fall, pushing more and more families into financial difficulty.
The government must act fast if we are going to avoid one of the worst recessions since the 1990s, by scrapping tax breaks on oil and gas producers and providing more help to people who are struggling to pay their energy bills.
Updated
Amid the Bank of England’s worst outlook for the economy since the 2008 banking crash, it seems that the chancellor, Nadhim Zahawi, is not available for interviews as he is with his family while they are on holiday.
My colleague, Aubrey Allegretti, reports:
Dire economic forecasts for the year ahead, so where is the chancellor?
— Aubrey Allegretti (@breeallegretti) August 4, 2022
I'm told Nadhim Zahawi is working remotely with his family while they are on holiday.
Broadcasters have bid for an interview with him but been told he’s not available.
Zahawi says: "There is no such thing as a holiday and not working... The privilege and responsibility of public service means that you never get to switch off, that’s why I have had calls and briefings every day and continue to do so."
— Aubrey Allegretti (@breeallegretti) August 4, 2022
Zahawi has meetings with the Bank’s governor and HM Treasury’s chief economist later today, Allegretti adds.
Updated
The Guardian’s Josh Halliday has been looking at the effect of the cost of living crisis in Rishi Sunak’s constituency.
You can read his report here:
Tory leadership hopeful Liz Truss said:
Today’s news underlines the need for the bold economic plan that I am advocating.
We need to take immediate action to deal with the cost-of-living crisis, grow the economy and delivering as much support to people as possible.
As prime minister, I’d use an emergency budget to kickstart my plan to get our economy growing and offer immediate help to people struggling with their bills.
Through supply-side reforms, dealing with burdensome business regulation and cutting taxes, I will get our economy back on track. My tax cuts are necessary, affordable and not inflationary.
You cannot tax your way to growth. Business as usual will not do. Instead, we need a new approach on the economy, we need to challenge the failing economic orthodoxy and we need to deliver the necessary reform to tackle inflation and achieve sustainable growth.
Updated
The Conservative former chancellor Ken Clarke has suggested that Liz Truss’s plan for immediate tax cuts could make inflation “worse” and risks “contributing to the problem”.
Speaking to BBC Radio 4’s World at One, he warned of a “very unpleasant” winter for many households in the country following news that the Bank of England has pushed interest rates up 0.5 percentage points.
He said:
Nothing is certain, but I’ve thought for some time we faced the risk of an extremely serious recession. This winter is certainly going to be very unpleasant for many households in the country and I think it’s absolutely inevitable the Bank of England acted as it did.
He also said:
I very much hope we don’t see an increase in the number of people destitute in this country. We already have too many people in abject poverty and the number is likely to rise, and I think the government should be looking at things that help the very poorest and the very low-paid, and things like universal credit.
What we don’t want is immediate tax cuts which cheer up the better off and are particularly valuable to the very wealthy.
An immediate tax cut could make inflation worse, he said, adding:
It’d really run the risk of contributing to the problem so I don’t think tax cuts are terribly relevant at the moment.
I think targeted help for the poorest and less well-paid is justified - they’ve done some of that already and I think they may have to do more.
Updated
BoE forecasts 'concerning for many people', says chancellor
The chancellor, Nadhim Zahawi, has published a statement following news that the Bank of England has pushed interest rates up 0.5 percentage points.
Zahawi said he was aware that the forecasts “will be concerning for many people”. He went on to say:
Addressing the cost of living is a top priority and we have been taking action to support people through these tough times with our 37 billion package of help for households, which includes direct payments of 1,200 to the most vulnerable families and a 400 discount on energy bills for everyone.
He added:
We are also taking important steps to get inflation under control through strong, independent monetary policy, responsible tax and spending decisions, and reforms to boost our productivity and growth.
The economy recovered strongly from the pandemic, with the fastest growth in the G7 last year, and I’m confident that the action we are taking means we can also overcome these global challenges.
Updated
Michelle O’Neill, Sinn Féin’s first minister designate, has sparked a backlash in Northern Ireland for saying there was “no alternative” to the IRA’s armed campaign during the Troubles.
O’Neill suggested the Irish Republican Army, which killed about half of the 3,600 people killed during the 30-year conflict, had no choice but to shoot and bomb until the 1998 Good Friday agreement.
“I don’t think any Irish person ever woke up one morning and thought that conflict was a good idea, but the war came to Ireland,” she told the BBC in an interview broadcast this week. “I think at the time there was no alternative, but now, thankfully, we have an alternative to conflict and that’s the Good Friday agreement.”
Unionist politicians and victims’ rights groups accused O’Neill of ignoring historical reality and justifying mass murder.
“There was never a justification for violence,” said Jeffrey Donaldson, leader of the Democratic Unionist party.
Even in Northern Ireland’s darkest days the overwhelming majority of our people respected democracy, the rule of law and – where they felt passionately about a particular cause – took part in peaceful protest. Sinn Féin can pretend there was no alternative but they are condemned by the facts.
Updated
NHS leaders have accused Liz Truss and Rishi Sunak of offering “glib soundbites, gimmicks and political rhetoric” on the health service rather than proper solutions to its growing crisis.
The NHS Confederation levelled that criticism today when it published letters it had sent to the two contenders in the Conservative leadership race to become the UK’s next prime minister.
It urged the foreign secretary and ex-chancellor to be much more honest about the depth of the problems affecting the NHS and the scale and cost of the policies needed to address that.
Its intervention comes after Sunak was ridiculed for proposing £10 fines for people who fail to attend GP appointments. Truss faced questions over how her commitment to scrapping the national insurance rise and reducing taxes generally would affect NHS funding.
Danny Mortimer, the confederation’s deputy chief executive, said that as the Conservative party leadership race entered its final weeks “healthcare leaders are approaching winter with a real sense of foreboding”.
Mortimer said:
They are urging both the remaining candidates to inject their public debate with a sense of urgency and show a real understanding about the huge pressures the NHS and social care are under.
Now is not the time for glib soundbites, gimmicks and political rhetoric. The NHS needs the new head of government to set out a realistic reset on health and social care.
He added:
We need both Mr Sunak and Ms Truss to demonstrate a heavy dose of realism about the state of the NHS and the promise of an open, frank and honest conversation about what this means.
The confederation is an important NHS body because it represents hospitals and other NHS providers of care in England, Wales and Northern Ireland.
In a plea to the contenders, Mortimer urged them to disavow Boris Johnson’s repeated insistence – which is not backed by evidence – that the crumbling social care system has been “fixed”.
He added:
To truly level with the public they must acknowledge that this means crumbling buildings and ill-equipped outdated estate, 105,000 NHS staff and 165,000 social care vacancies at the last count, and a social care system in desperate need of repair and very far from being fixed, as the current prime minister would have us believe.
NHS bosses want the next prime minister to bring forward three major policies to help relieve the huge pressure it is under: a capital investment programme to upgrade and replace outdated facilities; a detailed plan to address the service’s chronic workforce shortages; and emergency help for social care.
Updated
In response to the Bank of England’s interest hike, Rishi Sunak said he would “prioritise gripping inflation, growing the economy and then cutting taxes”.
The former chancellor said it was “imperative that any future government grips inflation, not exacerbates it”.
Sunak added:
Increasing borrowing will put upward pressure on interest rates, which will mean increased payments on people’s mortgages. It will also make high inflation and high prices last for longer, making everyone poorer.
My response to today's Bank of England report👇 pic.twitter.com/JvF9CVXtMg
— Rishi Sunak (@RishiSunak) August 4, 2022
Labour says interest rates hikes ‘further proof that Tories have lost control of economy’
The Bank of England’s decision to raise interest rates by 0.5 percentage points is “further proof” the Conservative party has lost control of the economy, Labour has said.
The shadow chancellor, Rachel Reeves, said:
As families and pensioners worry about how they’re going to pay their bills, the Tory leadership candidates are touring the country announcing unworkable policies that will do nothing to help people get through this crisis.
Labour would help households right now by removing the tax breaks that are subsidising oil and gas producers and using that money to help people now, including by cutting VAT on energy bills. (3/4)
— Rachel Reeves (@RachelReevesMP) August 4, 2022
Updated
The Bank of England has raised interest rates by 0.5 percentage points to tackle the soaring cost of living, despite concerns that the economy is heading for a recession.
In the biggest increase in rates in 27 years, policymakers at the central bank voted to raise the base rate for a sixth time in succession to 1.75%, in line with the expectations of City economists. The decision takes UK rates to the highest level since the end of 2008.
The Bank’s monetary policy committee (MPC) has been increasing the cost of borrowing since December in response to increasing rates of inflation, made worse by the Russian invasion of Ukraine, which has sent the cost of gas rising to record highs.
Inflation increased to 9.4% in the year to June and is expected to rise further over the coming months.
Updated
The NHS has been “absent” from the Conservative leadership contest, the former health secretary, Jeremy Hunt, said at a time when “staff shortages and morale have never been worse” in the health service.
Hunt, who is backing Sunak in the race, warned that “after energy bills the biggest issue facing the new prime minister will be a looming winter crisis”.
This winter “will be the toughest ever” judging by the state of the ambulance and A&E services over the summer, he wrote in a series of tweets.
He said:
If the NHS continues this spiral of decline with ambulances, A&Es & GP surgeries all in serious crisis, we’ll see avoidable deaths mount up this winter. Staff know there’s no silver bullet, but they need to know there’s a plan.
These are my suggestions.1/ A mass overseas recruitment drive for doctors & nurses as a temporary, short-term lever - allowing drs from countries with good medical education systems like Canada and Germany to be green listed so they don't have to resit pointless additional exams
— Jeremy Hunt (@Jeremy_Hunt) August 4, 2022
Hunt also called on an immediate exemption for doctors to public sector pension rules “which are currently forcing them to retire in their fifties in alarming numbers”.
He added:
Make flexible working automatic across the NHS so we don’t drive staff with young families to become locums or agency nurses, which is often the only way they can juggle work and home life.
4/ Ditch the Stalinist centralism that has given the NHS more targets than any healthcare system in the world: replace national targets with easily accessible data that allows everyone to compare performance (CQC Ofsted style ratings work well).
— Jeremy Hunt (@Jeremy_Hunt) August 4, 2022
Hunt added:
Move back to the system where everyone has their own GP rather than just being attached to a surgery. A study showed a 25% cut in mortality & 30% drop in hospital visits for people who saw the same GP (keeping our promise to recruit 6000 more GPs will help achieve this).
6/ Hospitals are full of people who can’t be discharged due to social care issues, mainly staff shortages. Local authorities need help now to boost pay rates for care workers, as they’re currently losing them in droves to the retail and hospitality sectors.
— Jeremy Hunt (@Jeremy_Hunt) August 4, 2022
Updated
Liz Truss would review Bank of England mandate, says Tory ally
Liz Truss would review whether the Bank of England’s mandate is “fit for purpose”, a cabinet backer has said, suggesting she would examine its “exclusionary independence on interest rates”, as the Bank prepares for a crunch rates decision.
The attorney general, Suella Braverman, told Sky News the Tory leadership frontrunner would look again at the Bank’s powers. “Interest rates should have been raised a long time ago and the Bank of England has been too slow in this regard,” she said.
She added:
Liz Truss has made clear that she wants to review the mandate that the Bank of England has, so that’s going to be looking in detail at exactly what the Bank of England does and see whether it’s actually fit for purpose in terms of its entire exclusionary independence over interest rates.
It came hours before the Bank was expected to raise interest rates by half a percentage point – the biggest increase since 1995. The energy price cap will also be changed quarterly instead of every six months, Ofgem announced on Thursday.
Truss told a Conservative hustings on Wednesday night she would alter the Bank’s mandate because of the changing economic picture.
The best way of dealing with inflation is monetary policy, and what I have said is I want to change the Bank of England’s mandate to make sure in the future it matches some of the most effective central banks in the world at controlling inflation.
The last time the mandate was looked at was in 1997 under Gordon Brown. Things are very, very different now.
The attorney general, Suella Braverman, has backed Liz Truss’s plan to scrap diversity and inclusion roles in the civil service, claiming they are “patronising” and “divisive”.
Braverman, who ran for the leadership role herself before supporting Truss, said she was “horrified” to discover that hundreds of government lawyers were sent on 2,000 hours of taxpayer-funded courses last year where they were lectured on “white privilege”.
Writing for The Mail+, she said:
The experts on white privilege who shared their insights were cited as authoritative, but they all subscribed to the left-wing view on race, gender and sexuality which permeated their training materials.
She went on to describe diversity training “zealots” as behaving “like the witchfinders of the Middle Ages, they don the outfit of the inquisitor and never tire of rooting out unbelievers”.
She said she had told her officials to scrap diversity training schemes for government lawyers, and encouraged government ministers to do the same.
Braverman told Sky News that diversity and inclusion training within government departments came at “a huge cost to the tax payer”.
She said:
It’s been divisive, not inclusive. It’s been patronising, not empowering.
She added:
Civil servants are taught about micro-aggressions. They’re taught about white fragility. They’re taught about how to be a straight ally. I don’t think those are objectively impartial when it comes to politics.
And I don’t think they are good value for money. And I don’t think ultimately that’s what taxpayers want their civil servants or their government lawyers to be spending their time on.
Truss has promised to “tackle left-wing groupthink in government” and to scrap diversity and inclusion jobs, saying they “distract from delivering on the British people’s priorities”.
Rishi Sunak has not responded to an appeal from MPs to combat Islamophobia amid a row over his proposals on extremism, the Independent reports.
Sunak and his rival, Liz Truss, were sent letters by the All-Party Parliamentary Group on British Muslims calling for action after a series of delays and broken promises under Boris Johnson’s government.
The letter, which was sent out last week and was seen by the paper, called on the leadership contenders to commit to completing and publishing the investigation into allegations that Tory MP, Nusrat Ghani, had been sacked as a minister because of her “Muslimness”.
APPG vice-chair Afzal Khan wrote:
When a Muslim woman raises a direct experience of Islamophobic discrimination at the heart of government and her party, those allegations should be treated with the seriousness it deserves.
He added:
It is a depressing reality that Islamophobia has permeated into mainstream politics.
Khan said he hoped whoever became leader will take “tangible steps in rooting out this insidious hatred which threatens our British values”.
He also warned that a separative review published by the Conservative party was a “damning indictment of the prevalence of Islamophobia” and questioned what steps Truss or Sunak would taken “to reassure British Muslims of your commitment to tackling hatred and racism”.
Neither Truss nor Sunak has reportedly replied to the letters, and Sunak’s representatives did not respond to repeated requests for comment by the Independent.
A representative for Truss’s campaign said:
As prime minister, Liz Truss will take a zero tolerance approach to Islamophobia.
Javid denies Truss tax cuts plan will lead to increased borrowing
My colleague, Aubrey Allegretti, has the full story on Sajid Javid denying that Liz Truss’s tax cuts plan will lead to increased borrowing:
Swingeing tax cuts pledged by Liz Truss will not lead to dramatically increased government borrowing or fuel inflation, her latest high-profile supporter, Sajid Javid, has claimed, in response to accusations the Conservative leadership frontrunner’s “dangerous” plans would exacerbate the cost of living crisis.
Taking aim at Rishi Sunak, his former Treasury protege, Javid hit out at the “business-as-usual” approach from the former chancellor and added: “We can’t rely on increasing taxes again and again.”
Nearly a month to the day since the pair’s sensational resignation led to the downfall of Boris Johnson, Javid declined to endorse Sunak and instead backed Truss to become prime minister.
He admitted that her immediate tax cut pledges were “risky”, but told Times Radio:
Not cutting taxes now is also risky and I think it’s the riskier option.
There’s no risk-free option here and any leader has to grip this and come up with the right policy and I think that’s what Liz is offering.
Updated
Mel Stride, the chair of the Commons Treasury committee and supporter of Rishi Sunak, has warned that Liz Truss’s plans for the economy and public finances are “dangerous”.
He told BBC Radio 4’s Today programme:
What we must do now is avoid stoking the inflation and making the problem even worse. One of the ways you can make the problem very significantly worse is by coming forward with large-scale, tens of billions of pounds’ worth, of unfunded tax cuts.
He added:
The big decision, fiscally, here is around tax. You have to do it in a measured way and at the right time but not start coming forward with tens of billions of unfunded tax cuts right now. I think that would be really quite dangerous.
Updated
Liz Truss brushes off concerns about £8.8bn black hole in her budget
Liz Truss has said an £8.8bn black hole in her savings budget caused by her abandoning a policy to cut public sector wages was not part of her “central costings” for funding a range of spending pledges, as she suggested the policy had been a “mistake”.
She also defended her stance on Brexit as a former remain supporter, claiming that the disruption she was concerned about prior to the referendum did not happen, despite the long queues recently seen at Channel crossings at the start of the school holidays.
Quizzed for the first time in front of Conservative members on a controversial policy that she was forced to U-turn on earlier this week, the frontrunner in the Tory leadership race said she never intended to slash the pay of teachers and nurses.
She made the comments despite her campaign having announced on Monday night a policy designed to reduce expenditure on civil service staff outside London.
“It was misinterpreted … by the media,” Truss told a crowd of Tory members in Cardiff, for the third hustings of the campaign.
It was never intended to apply to nurses, doctors and teachers. So I wanted to clear the matter up straight away. And I have been very clear. We’re now not going ahead with that policy.
It wasn’t a central part of my policy platform. And I’ve been clear that it is not happening.
Updated
Senior Tory and Rishi Sunak supporter, Mel Stride, said the polls giving Liz Truss a comfortable lead were “out of touch with the reality” of the Conservative leadership contest.
Stride, who heads the Treasury Select Committee, said Sunak’s economic plans were similar to those adopted by Margaret Thatcher in the early years of her premiership to combat high inflation.
He told LBC Radio:
The last thing Margaret Thatcher and Nigel Lawson would have done was what Liz is suggesting, ie. coming forward with all these unfunded tax cuts to stoke up inflation.
They got control of inflation and then Lawson went on to be one of the greatest tax cutting chancellors in our history. And that’s what Rishi can provide.
I think he’s just being honest. It’s very easy to stand up and promise tax cuts left, right and centre. He’s being honest about how we can get through but he does have a plan and I’m absolutely confident that he can deliver and, critically, win the next general election.
Some more lines from Sajid Javid, who last night threw his support behind Liz Truss to become the next Conservative leader. Speaking to Times Radio this morning, the former chancellor insisted Truss’s plans would not necessarily fuel inflation or ramp up borrowing.
Office for Budget Responsibility forecasts had around £31bn of “fiscal headroom” by 2024/25 “so that’s the first thing you can use to make tax cuts now”, he claimed.
Not going ahead with the planned increase in corporation tax from 19% to 25% in April would not have an impact on the inflation figures, he added.
Javid said:
It is not inflationary to not go ahead with a tax increase.
I don’t buy this argument that the things Liz is proposing, somehow they are all going to lead to higher inflation.
In the long-term they are going to help to fix the economy and that is the most important thing.
Sajid Javid says Liz Truss ‘best placed to unite the party’ in blow to Rishi Sunak
Good morning. Sajid Javid has endorsed Liz Truss as the next Conservative Party leader in a damaging blow to Rishi Sunak’s campaign, claiming that Truss is “best placed to unite the party” at a time when the Tories have “been in not a very good place”.
Javid told LBC this morning:
We need to fix things and to get a new leader in place as quickly as possible. But most importantly, that leader needs to be the right person to deal with the challenges that we have.
He said he had “huge respect” for both Truss and Sunak, who he described as both “incredibly capable and talented”. He added:
Like all Conservative party members, I have to make a choice. My choice is Truss. The reason I’ve made that decision is for three reasons: I think she’s best placed to unite the party and she’s already showing that with the broad support that she’s getting from MPs.
I think she’s got a better plan for fixing the economy. I think that is going to be absolutely crucial.
And thirdly, I think that she’s best placed to beat the labour Lib Dems and the SNP at the next election.
Javid’s endorsement of Truss came last night after a difficult day for Sunak, after a poll from the Conservatives put the foreign secretary 32 points ahead with party members, a day after YouGov showed similar results.
Javid, who worked with Sunak in the Treasury and resigned on the same day, triggering the downfall of Boris Johnson, said Truss was best placed to “reunite the party” and said a new approach to the economy was needed – a direct attack on Sunak.
In an article for the Times, Javid wrote:
I fought for strong fiscal rules in our last manifesto. But the circumstances we are in require a new approach. Over the long term, we are more likely to be fiscally sustainable by improving trend growth.
Only by getting growth back to pre-financial crisis levels can we hope to support the high-quality public services people rightly expect.
Sunak and Javid were once considered close allies though came into conflict once Javid returned to the cabinet and clashed over health spending.
Javid’s article directly challenged Sunak’s claim that tax cuts would be inflationary.
He wrote:
Some claim that tax cuts can only come once we have growth. I believe the exact opposite – tax cuts are a prerequisite for growth.
Speaking on Times Radio this morning, Javid rejected criticism of Truss’s policies - warning it would be “riskier” not to cut taxes. There was “no risk-free option” and any leader her to come to terms with this, he said.
He said:
Fixing the economy is absolutely central, not just to deal with the cost-of-living challenges but to pay for all the public services, in the long-term, that we all rely on.
I think the only way we can do that is to improve our long-term growth rate. We need to get it back to where we were pre-financial crisis, we’re a long way off.
To do that, it can’t be business as usual and it does mean, when it comes to our fiscal position - balancing the books and things - we’ve got to take a long-term view.
Here’s the agenda for the day.
9.30am: Office for National Statistics publishes earnings gaps for free school meals recipients in England.
12pm: Bank of England interest rate decision.
8pm: Sky Tory leadership debate with Sunak and Liz Truss.
I’ll be covering for Andrew Sparrow today. Do drop me a line if you have any questions or think I’ve missed anything. My email is leonie.chao-fong@theguardian.com or you can reach me on Twitter.
