Summary
As the debate on the bill to repeat the national insurance increase continues in a sparsely attended House of Commons, here’s a roundup of today’s news.
Labour’s Rachel Reeves has accused Kwasi Kwarteng of being in “dangerous state of denial” over the impact of the mini-budget, as mortgages could rise by £500 per month.
The International Monetary Fund has restated its criticism of the measures in the government’s mini-budget. It said his tax cuts and energy support package had made the Bank of England’s battle against inflation more difficult.
The chair of the Treasury select committee, Mel Stride, has said that rowing back on tax cuts “has to be on the table” for the chancellor in his fiscal statement on 31 October .
In the Commons, Stride told Kwarteng not to include measures in the fiscal update unless he is confident that he will be able to get them through parliament.
A parliamentary debate has begun on whether the government will reverse the 1.25% national insurance increase introduced by Boris Johnson. The chief secretary to the Treasury, Chris Philp, said it would make working more attractive.
People on benefits will find out at the end of October if their payments will rise in line with inflation or end up with a real-terms cut, Kwarteng has suggested.
Alex Salmond, the former Scottish first minister, has criticised the Scottish government’s decision to go to the supreme court today to seek permission to hold an independence referendum.
The government has not ruled out scrapping long-awaited reforms to protect private renters from so-called “no fault” evictions, a manifesto pledge, PA Media reports.
Conservative and Labour peers have called for a “pause” of the passage of the Northern Ireland protocol bill through the House of Lords while negotiations are under way to find a political settlement to the Brexit row.
Labour leader, Sir Keir Starmer, has begun a restructuring of his office within the Labour party, with his chief of staff, Sam White departing. The party will also be leaving its Southside offices.
That’s all for today. Thanks for following along.
Updated
Low-income households will have to wait until the end of October to find out if welfare payments will rise with inflation or be subject to a real-terms cut, the chancellor has suggested.
Kwasi Kwarteng sought to calm the markets by proclaiming that his Halloween growth plan would be “relentlessly upbeat”, but faced hostile questions from Tory MPs during the first Commons showdown over September’s mini-budget.
Amid a push by some cabinet ministers and Conservative backbenchers for welfare payments to rise in line with inflation, Treasury ministers sought to play down any suggestion they had made up their mind.
Kwarteng said that “no decisions have been made” and there was a “natural, usual statutory process that’s being taken”.
Eddie Izzard has launched a campaign to be elected as the Labour MP for a Sheffield constituency.
The comedian, 60, announced her intention to join the race to become the party’s candidate for Sheffield Central on Tuesday, PA Media reports. A campaign video was tweeted on Tuesday lunchtime.
It comes after the constituency’s incumbent Labour MP Paul Blomfield announced in February that he was standing down at the next general election.
Izzard has many connections to Sheffield as the city where she studied accounting, launched her creative career, ran through the city as part of her 43 marathons for Sport Relief and campaigned against the closure of the Leadmill music venue.
Labour ideals of fairness and equality have been at the core of my life. I’m standing to be the next Labour MP for Sheffield Central to support the city that has supported me.
— Eddie Izzard for Sheffield Central (@EddieIzzardLab) October 11, 2022
Please join me, in taking on this great challenge.https://t.co/aVjaLLga9L
For Sheffield. For Labour. pic.twitter.com/Mw6xK7cBXA
In a message on her campaign website, Izzard wrote that she wanted to “support the city that has supported me” as well as “take the fight to the Tories and get Keir Starmer into No 10”.
“When I’m faced with a challenge, I work my hardest to deliver,” she wrote.
“This next challenge is the most important of my life and I need your help.”
Izzard added that Sheffield was “being held back” after 12 years of the Conservatives in power.
“A Labour government will embolden Sheffield to achieve its true potential and I believe I am the right person to build on Paul Blomfield’s tireless work for this city,” she said.
Liz Truss must not surrender to the EU by giving the European court of justice a role in trade disputes in Northern Ireland, the former Brexit minister Lord Frost has said.
“The court of justice cannot have a jurisdictional or arbitrational role in the future arrangement I can’t see how they will be stable while that remained the case, I think we better if that was acknowledged sooner rather than later,” he told the House of Lords European relations committee on Tuesday.
Talks on the controversial issue of the Northern Ireland protocol were paused two months after Frost quit his role last December but resumed last week amid rising hopes of an end to dispute between the EU and the UK.
Updated
Conservative MP James Cartlidge has said it is “one of the most important issues in British politics, about how do we pay for healthcare”, saying that the government has to be fiscally responsible.
He said that the Office for Budget Responsibility had already had its verdict on the budget, and said a July report said the current spend on healthcare and adult social care would go from 10.3% of GDP to 17.5% in 50 years’ time.
“This is cutting the mustard and telling us the cost we have to face up to,” he said. He said that debt will go up to 257% of GDP because of the rise in healthcare and pensions.
“I have many reservations about what we are doing today. The former prime minister was determined we wouldn’t have another green paper or white paper on social care. He wanted to actually deliver something for the country. He introduced that cap that has been promised by successive governments.
“I sincerely hope that by removing the funding mechanism for that cap, that the Treasury resists the temptation to water the cap down.”
Updated
Tory Treasury committee chair says reversal of tax cuts 'has to be on the table' for Kwarteng
As the debate in the Commons continues, the chair of the Treasury select committee, Mel Stride, has told BBC Radio 4’s PM programme that rowing back on tax cuts “has to be on the table” for the chancellor Kwasi Kwarteng in his fiscal statement on 31 October.
The Conservative MP said the chancellor may need to be “brave” and “take that step backwards” if “the choice is between getting it wrong and trying to argue a case that just won’t work”.
Stride said: “I think this is an absolutely critical opportunity now for a reset moment with the markets and by extension politically with the party in parliament and with the electorate, and it’s something he’s absolutely got to get right.
“And if at the end of the day they run through all these numbers and they know, in their heart of hearts, that the choice is between getting it wrong and trying to argue a case that just won’t work, or rowing back on those tax cuts that they put forward, then he needs to be brave and he needs to take that step backwards. But let’s see where he ends up.”
He added: “Rowing back on tax cuts as a possibility has to be on the table because if you can’t make the rest of the equation work then the alternative is to go out with something that the markets are just not going to buy and that will be a very difficult place. However, I do think we need to give the chancellor the opportunity to work through all the options and present that plan.”
Updated
Shadow Treasury minister James Murray is now responding for the opposition saying they had warned the government to drop its plans for a national insurance increase, saying it was warned by other groups and bodies – including the CBI and TUC, as well as Tory backbenchers.
He repeats the tax information and impact notes, which said: “There may be an impact on family formation, stability or breakdown as individuals who are just about managing financially will see their disposable income reduce.”
In terms of businesses it said: “Behavioural effects are likely to be large, including business decisions around wage bills and recruitment.”
Murray encourages the government to U-turn again, not just on the national insurance increase, but on the broad Conservative party approach to the economy. Much of Murray’s other remarks are on the government’s economic policies, including lifting the cap on bankers’ bonuses and on “non dom” taxes.
Updated
Treasury minister Chris Philp says NHS and care will get 'not single penny less' despite repeal of health and care levy
Back in the Commons, Chris Philp, chief secretary to the Treasury, says reversing the national insurance rise will make working more attractive.
Steve Brine (Con), a former health minister, intervenes. He says one reason why people are not working is because they are ill. He says the national insurance increase was meant initially to enable the NHS to deal with the backlog build up during Covid. He asks Philp to assure him that, if he votes for this bill, funding for tackling that backlog won’t be affected.
Philp does give that assurance. He says:
Not a single penny less will go to social care, to the NHS, or to the elective programme [Brine] referred to [as as result of the bill].
Pressed on this point a second time, Philp says the entire health service budget will remain unchanged as a result of this bill.
Another MP says the government will be losing £17bn in revenue as a result. He asks how the health budget won’t be affected. Philp replies by saying this will addressed in the medium-term fiscal plan being published at the end of October.
That’s all from me for today. My colleague Harry Taylor is taking over now.
Updated
Alex Salmond, the former Scottish first minister, has criticised the Scottish government’s decision to go to the supreme court today to seek permission to hold an independence referendum. Salmond, who left the SNP over sexual misconduct claims and who now leads the nationalist Alba party, said:
They seem to be risking a great deal to gain comparatively little.
Let’s say that they win this case. They’re going to win it on a very narrow argument, that it’s within the competence of the Scottish parliament to have a referendum because it doesn’t matter, it’s not going to have any legal effect.
That would be the argument it was won on, in which case the opponent of independents would say, ‘it doesn’t matter, that’s what you said in court’.
Whereas if they lose it, in the words of the lord advocate, the matter is finally resolved. If we’re going to resolve the issue of Scottish independence, then the people who resolve it are the Scottish people, not the supreme court of the United Kingdom.
Nicola Sturgeon, Salmond’s successor as first minister, has said that if a referendum is not allowed, she will treat the next election as a de facto independence referendum. Salmond sounded sceptical about this too. He said:
If you’re going for the general election de facto referendum strategy then you have to make it special.
You can’t just roll up and fight as political parties because people will say it’s a normal election. You’d have to fight it on (a) Scotland United [ticket] or something like that.
You could fight an election with Scotland United SNP, Scotland United Greens and Scotland United Alba and then say: ‘This is clearly above political parties. This is just about the cause and case of Scottish independence.’
That might work. It would be difficult, but it might work.
Updated
MPs start debate on bill to repeal health and social care levy
In the Commons Chris Philp, the chief secretary to the Treasury, is opening the second reading debate on the health and social care levy (repeal) bill.
He says the government is focused on growth, and its growth plan is designed to achieve growth of 2.5% per year, he says.
He says this would benefit everyone – and not just in a supposed “trickle-down” way.
Updated
Labour is recording huge poll leads over the Conservatives on voting intention, but often the indicators that provide the best guide to electoral success are which party is best on the economy, and which party has the best leader.
On some measures, Labour is now well ahead on the economy. And new polling from YouGov suggests Keir Starmer is much better regarded than Liz Truss.
Public assessment of Keir Starmer's personal attributes has improved significantly
— YouGov (@YouGov) October 11, 2022
Competent: +9 net rating (up 11pts from Aug)
Trustworthy: +1 (up 10pts)
Likeable: -2 (up 13pts)
Decisive: -7 (up 16pts)
Strong leader: -9 (up 18pts)https://t.co/urkcUqSkDO pic.twitter.com/0YuzReFCzV
Our first tracker poll of public opinion on Liz Truss's personal attributes finds the public with a very negative view
— YouGov (@YouGov) October 11, 2022
Decisive: -32 net score
Strong leader: -40
Trustworthy: -52
Competent: -53
Likeable: -54https://t.co/urkcUqSkDO pic.twitter.com/6OZwx8C9HH
No 10 confirms proposed legislation banning 'no fault' evictions could be shelved
The government has not ruled out scrapping long-awaited reforms to protect private renters from so-called ‘no fault’ evictions, a manifesto pledge, PA Media reports. PA says:
Downing Street said that no decisions had been made on whether to pause a promised ban on section 21 notices, which allow landlords to evict a tenant without having to give a reason.
It comes amid reports the government could move to shelve the 2019 manifesto commitment.
The prime minister’s spokesperson said today that the government would ensure that renters’ rights were protected.
The spokesperson said “no decisions have been taken on any further policies” but the Department for Levelling Up, Housing and Communities (DLUHC) was looking at the issue.
Asked specifically whether Liz Truss thought it was right to scrap no-fault evictions, he added: “No decisions have been made. This is something the secretary of state is considering in terms of how to improve the rental market. Clearly, ensuring a fair deal for renters will always remain a priority for this government.”
Updated
Downing Street has confirmed that the government decision about whether or not to uprate benefits for 2023-24 in line with the inflation rate in September will be announced on 31 October, as part of the medium-term fiscal plan, as Kwasi Kwarteng implied in the Commons earlier. (See 3.20pm.)
Greg Clark has been elected unopposed as chair of the Commons science committee. He held the post until July, when he got a surprise reappointment to cabinet, as levelling up secretary, after Boris Johnson sacked Michael Gove in a fit of pique.
But tomorrow there will be an election to fill the vacant post of chair of the foreign affairs committee. Tom Tugendhat was chair, but is now security minister. Six Tories are standing: Liam Fox, Iain Duncan Smith, Alicia Kearns, Henry Smith, John Baron and Richard Graham.
Back to the Labour party internal reorganisation, and Gabriel Pogrund from the Sunday Times has revealed a new appointment.
Exc: Marianna McFadden — head of insight at the Tony Blair Institute for Global Change, Labour official under Blair, Brown, Miliband — is returning to the party as Keir Starmer's deputy campaign director.
— Gabriel Pogrund (@Gabriel_Pogrund) October 11, 2022
She'll work alongside Morgan McSweeney, Starmer's campaign director.
McFadden was at Labour's 25 Years since 1997 celebration earlier this year with husband Pat (Starmer's shadow chief secretary to the Treasury). She joined the party in '01, worked for it until 2015. Ally says New Labour veteran is "safest pair of hands I know".
— Gabriel Pogrund (@Gabriel_Pogrund) October 11, 2022
And these are from my colleague Jessica Elgot on who’s winning the internal Labour power struggle.
The bigger picture here is how much of the day-to-day operation will now been controlled from Labour HQ. Not many people talking about Morgan McSweeney being "marginalised" now. https://t.co/OU8Ru9I2xJ
— Jessica Elgot (@jessicaelgot) October 11, 2022
Anyone who has been following the Loto splits will conclude one side is now firmly in the ascendency
— Jessica Elgot (@jessicaelgot) October 11, 2022
Peers express concerns about Northern Ireland protocol bill as it begins passage through Lords
Conservative and Labour peers have called for a “pause” of the passage of the Northern Ireland protocol bill through the House of Lords while negotiations are under way to find a political settlement to the Brexit row.
But Lord Cormack (Con), a parliamentarian for more than 50 years, told the house neither he nor Lady Chapman (Labour) would be seeking a vote tonight but would working on further arguments to pause the bill before it returns to committee stage on 25 October.
Cormack and Chapman both tabled amendments to the second reading motion calling for the bill to be paused. But the amendments will not be pushed to a vote, and the second reading is expected to go through on the nod – which is normal practice in the Lords.
Cormack said:
I do not think it is helpful to have a bill which is indeed an implied threat on the statute books while we continue those negotiations. I believe there should be a pause.
Chapman said the bill was an “abomination” but she did not seek to stop the bill as it had the support of MPs. However she added:
Ministers should at least report to the house on whether a pause on the passage of this bill would be beneficial to these new negotiations.
Updated
Independence referendum would be 'entirely advisory' - summary of lord advocate's case to supreme court
Back in the supreme court Dorothy Bain KC, the lord advocate, finished presenting her case on behalf of the Scottish government about half an hour ago. She was arguing 1) that the court should hear the case, even though the Scottish parliament has not passed its referendum bill; and 2) that a referendum would be lawful, even though the Scotland Act says constitutional matters like independence are reserved to Westminster, because the referendum would only be advisory, and would not by itself alter the constitution.
Here are some of the main points she made in a bit more detail.
Bain rejected claims that the reference to the supreme court was premature. PA Media says:
Bain explained that it was necessary for a member of the Scottish government when introducing a bill to make a statement over whether it is within legislative competence, and that it was “natural and obvious” that law officers such as herself to provide advice on that issue.
She said that through the Scotland Act the UK parliament had intended the supreme court to be “capable of determining issues of law”, arguing that the lord advocate “should not be put in the position of ultimate arbiter”.
She said that holding a referendum was “not a reserved matter”. Nobody disputed that the Referendums (Scotland) Act 2020, which set out provisions for the conduct and regulation of referendums, was within Holyrood’s legislative competence, she said.
She said the referendum would not by itself have any constutional effect because it would be ‘entirely advisory’. She said:
No provision is made for the effect of any result of the referendum. That is, the referendum is not self-executing. It simply produces a result. So, no legal consequences automatically or necessarily flow from any result.
And she also said:
A non self-executing referendum invariably has political consequences, but in law, it has no effect. They are entirely advisory.
She said that the “political” effect of a referendum was irrelevant to the matter in hand. She said:
Ultimately, when it comes to determining the purpose of the provision [of legislation], and its legal effect, the political fallout of that is irrelevant for this court. Yes, we could say that it will have a political effect.
But Bain said the court was “deciding a question of law” in respect of which it did not “take account of the political effect of any vote that would arise from Scotland”.
She said the Scottish parliament has debated and passed motions on matters reserved to Westminster before.
Commenting on the responses of the supreme court judges to Bain’s speech, Adam Tomkins, a constitutional law professor and a former Tory MSP, said they seemed more interested in the debate about whether they should be hearing the case in the first place than in the argument about whether the bill was lawful under the Scotland Act.
Notably fewer interruptions and questions from the Bench on the Lord Advocate’s arguments of substance than on her earlier arguments re process. Is that because UKSC is going to rule this out on process and not get to substance?? 1/2
— Adam Tomkins (@ProfTomkins) October 11, 2022
Or is it because the arguments re substance are much more straightforward? Regardless, the justices seem disengaged from this aspect of the hearing. The Lord Adv is talking and talking without interruption…
— Adam Tomkins (@ProfTomkins) October 11, 2022
Updated
Boris Johnson has established a private company to support him as a former prime minister, PA Media reports. PA says:
The Office of Boris Johnson Limited was incorporated on Companies House on Monday, with the ex-Tory leader listed under his full name of Alexander Boris de Pfeffel Johnson.
A spokesperson for Johnson said: ‘The Office of Boris Johnson Limited will support Boris Johnson’s private office in line with similar structures established by former prime ministers.’
The private limited company will not undertake commercial activities and will solely support him as a private office in his function as a former prime minister, a source told PA.
Updated
Kwarteng says the levelling up secretary, Simon Clarke, will give a statement to MPs about how the investment zones plan will work.
And that’s it. Treasury questions is over.
The contributions from Tory MPs were a lot more sceptical than they normally are on these occasions, but none of them really monstered the chancellor. Given the circumstances, he may feel he got off relatively lightly.
Steve Brine (Con) asks for an assurance that the fiscal plan will contribute to market confidence.
“It will be relentlessly upbeat,” says Kwarteng. “There will be an absolutely iron commitment to fiscal responsibility.”
Updated
Sarah Olney (Lib Dem) says Kwarteng was warned that unfunded tax cuts would push up mortgage rates. What is he going to do about this? “It is not acceptable that his incompetence is risking people’s livelihoods,” she says.
Kwarteng says it was right to help people with energy costs.
Updated
Kwarteng dodges question when asked to explain if IFS wrong to say mini-budget requires cuts worth £60bn
Mark Harper, the former Tory chief whip, asks about the IFS report out this morning says the mini-budget plans would require cuts of £60bn. (See 9.10am.) He asks Kwarteng to say why he disagrees with this, assuming he does.
Kwarteng declines, saying it would be wrong to “pre-judge” what will be in the fiscal plan at the end of the month.
Labour's Rachel Reeves accuses Kwarteng of being in 'dangerous state of denial' over impact of mini-budget
Rachel Reeves, the shadow chancellor, asks if Kwarteng and his team are the last people on earth who think the growth plan is working.
Kwarteng says the IMF has said the tax cuts will boost growth. He accuses Labour of being part of the anti-growth coalition.
Reeves says Kwarteng is in a “dangerous state of denial”. Mortgages could go up by £500 per month. Will the chancellor reverse the budget?
Kwarteng challenges Labour to say which tax cuts it would reverse. And he says Reeves should get her facts right. The IMF says the tax cuts will help growth, he says.
Updated
Kwarteng implies decision on uprating benefits will be announced by end of October
The question session has now moved to topical questions. This is more of a free-for-all. Ministers do not have to address the questions on the order paper, which were tabled well in advance.
Kwasi Kwarteng starts by confirming that the fiscal plan will be published on 31 October, with an OBR forecast published alongside it.
Asked why the government would not honour the promise of the last government to uprate benefits in line with inflation, Kwarteng says the government is going through the process. But he says more information will be available at the time of the fiscal plan.
Julian Smith, the former Tory chief whip, asks for an assurance that the govenrment will not balance the books “on the backs of the poorest people in the country”.
Philp says the government wants to ensure that the economy is growing, helping all people get higher wages.
Updated
Richard Fuller, a Treasury minister, says he will look at the loan charge issue. He says all MPs who have met consituents affected will have been moved by their stories.
Kwarteng says the Office for Budget Responsibility is held in “wide respect” around the world. He says he views its independence as “sacrosanct”.
UPDATE: Steven Swinford from the Times says some of Kwarteng’s Tory colleagues think differently.
Kwasi Kwarteng says that the OBR commands 'wide respect', not only from him but around the World
— Steven Swinford (@Steven_Swinford) October 11, 2022
But his cabinet colleagues are privately derisive about it, saying it should not be treated as if it is God & that it is frequently wrong https://t.co/KKzYsARMt0
Updated
Kwarteng warned by senior Tory not to include measures in 'fiscal plan' unless he is confident MPs will pass them
Mel Stride, the Tory chair of the Commons Treasury committee, says Kwarteng should only announce measurse in his fiscal plan at the end of the month if he is confident that he will be able to get them through the house.
Kwarteng says Stride is doing a “brilliant job” and he says Stride has offered “wise counsel”. (He does not sound 100% sincere at this point – Stride has been one of his strongest Tory critics.) Kwarteng says he will consult on his plans.
Warning from Tory MP Mel Stride, who says the chancellor must get full support for medium-term growth plan, and any failure to win votes in parliament will "unsettle markets".
— Aubrey Allegretti (@breeallegretti) October 11, 2022
Kwarteng promises he "will canvass opinion widely ahead of the publication of the plan:
Updated
Steve Doughty (Lab) says the Bank of England has intervened three times in the markets now. His consituents are worried about their pensions, he says.
Kwasi Kwarteng says he speaks to the governor of the Bank frequently. The governor is managing a global situation “very effectively”.
Florence Eshalomi (Lab) says the suggestion that someone earning £30,000 a year can buy a home in London is insulting. She is referring to a Treasury tweet.
Griffith says he will write to Eshalomi about all the government is doing to help her constituents.
Andrew Griffith, a Treasury minister, says lifting the cap on banker’s bonuses is not about increasing their overall pay. The cap had the effect of lifting basic pay, he says.
Marsha de Cordova (Lab) says that is “nonsense'”.
Griffith says de Cordova has booked her place as a member of the anti-growth coalition.
He says in 1979 the top 1% of earners paid 10% of income tax. Now they pay 29%, he says.
Kevin Hollinrake (Con) asks for an assurance that infrastructure spending will not be cut.
Philp says the government wants to speed up spending on critical infrastructure.
Philp says the real risk comes not from having a growth plan, but from having no plan. And Labour has no plan for growth, he claims
Updated
Nick Smith (Lab) asks if the government will reconsider the case for a Swansea bay tidal barrage.
Chris Philp, the chief secretary to the Treasury, says when the government last looked at this, there were doubts about its value for money. But the government would look at a fresh proposal, he says.
Pat McFadden, the shadow chief secretary to the Treasury, says ministers will have wanted their mini-budget to be remembered, and studied in years to come. They have certainly achieved that, he says.
He says the Bank of England warned this morning of a “material risk” to financial stability. How much more will government borrowing costs as a result?
Griffith says the cost of borrowing is going up around the world. He says Labour should look at what is happening elsewhere, and abandon its “British exceptionalism”.
Alison Thewliss (SNP) asks what the governmnent is doing to tackle the chaos it has caused.
Griffith accuses the SNP of talking the country down.
Angela Eagle (Lab) says ministers should apologise for the chaos caused by the mini-budget. She claims there is a “Tory premium” on borrowing costs.
Andrew Griffith, a Treasury minister, says there is a division between the pro-growth an anti-growth parties in the Commons. He says Labour is on the side of workers going on strike, who also harm growth.
In response to a question from Alison Thewliss (SNP), Kwarteng says he will not take any lectures on growth from the SNP. He claims that from 2010 to 2019 growth was lower in Scotland than in the rest of the UK.
Chris Bryant (Lab) says the government has made borrowing harder for businesses. And the energy package for business will only last for six months. He says he has spoken to a business whose energy bill is going up from £100,000 to £450,000.
Kwarteng says the government is listening to business about what needs to happen next.
Updated
In the Commons, Treasury questions is starting.
Kwasi Kwarteng, the chancellor, is cheered as he rises to answer question number 1, which is about small and medium-sized enterprises. He says SMEs will benefit from his growth plan.
John Baron (Con) asks for more help for SMEs. Kwarteng says Baron should consider the help SMEs are already getting.
Updated
Kwasi Kwarteng to take questions from MPs as mini-budget turmoil continues
Kwasi Kwarteng is about to take questions from MPs for an hour. There are Treasury questions in the Commons roughly once a month and normally these are routine occasions that generate little news. But this is Kwarteng’s first Treasury questions as chancellor, and it takes place as he faces ongoing criticism over his mini-budget, which has done more immediate damage to the economy, in terms of its impact on borrowing costs and financial stability, than any intervention by a chancellor in living memory.
The session starts at 2.30pm, and there is a list of MPs down to ask a question on the order paper here. Kwarteng will be appearing with his junior ministers and he will leave some of the questions to them. But MPs will expect him to answer the main ones himself, such as question 3 (“What recent discussions he has had with the governor of the Bank of England on rising mortgage rates?”), or question 7 (about the OBR’s economic forecast).
Updated
IMF renews criticism of Kwarteng's mini-budget
The International Monetary Fund has restated its criticism of the measures in the government’s mini-budget, my colleague Larry Elliott reports. The IMF used its prestigious world economic outlook (WEO) to criticise the scale of the stimulus provided by the chancellor and the blanket nature of the price cap on gas and electricity bills, Larry says. He goes on:
It said the UK was on course for a sizeable slowdown in growth from 3.6% this year to 0.3% in 2023 but said its forecasts had been made before Kwarteng delivered his mini-budget on 23 September.
“The fiscal package is expected to lift growth somewhat above the forecast in the near term, while complicating the fight against inflation,” the IMF said. Financial markets expect Threadneedle Street to raise interest rates – currently at 2.25% – by at least 0.75 percentage points at its next meeting in early November …
The IMF said finance ministries should not be at cross-purposes with central banks as they sought to quell price pressures.
“Without fiscal contraction elsewhere, and with tight supply, unfunded government spending increases or tax cuts will only push inflation up further and make monetary policymakers’ jobs harder,” it said.
Larry’s full story is here.
The IMF also criticised the mini-budget two weeks ago. On that occasion it urged the government to reconsider the tax cuts for high earners. Subsequently Kwarteng did abandon his plan to cut the 45% top rate of income tax, although what was decisive was probably opposition to the measure from Tory MPs (influenced by the reaction of the public), not the critique from the IMF.
Kwarteng won't be able to calm financial markets unless he abandons unfunded tax cuts, says leading economist
A leading economist has said the government will need to abandon the unfunded tax cuts in the mini-budget if it wants to end the uncertainty in the financial markets that led to today’s emergency Bank of England intervention,
Mohamed El-Erian, president of Queen’s College, Cambridge, and chief economic adviser to Allianz, the German finance company, told the World at One that the financial system was currently on “very shaky ground”. He explained:
When the yields, the interest rates on government bonds, become disorderly, the mortgage market starts having problems, which is what we’ve experienced.
When the mortgage [market] starts having problems, people start worrying about their own economic future, so they start to change their behaviour.
And if you’re not careful, the average person will not just worry about whether their kids can be better off, they will worry about whether they can maintain their own standard of living. And then you can trigger a self-reinforcing economic decline that is very difficult to reverse.
Asked what the government should do, Erian said Kwasi Kwarteng should reverse the mini-budget. He said:
We need to go back to first principle. The major cause for this instability is the government announcing very large unfunded tax cuts. What they’ve gone back on only impacts about 5% of what they’ve announced. I see no alternative but the government saying we will not cut taxes now, we may cut them in future.
And the alternative that has been talked about, of spending cuts to compensate for tax cuts, that alternative actually would cause significant damage. And the markets will not swallow the alternative of spending cuts.
Erian said it was particularly important to reinstate the planned corporation tax increase, and abandon the plan for the early cut in the basis rate of income tax. When it was put to him that the chancellor could not survive such a big U-turn, he replied:
That’s a political judgment. What I can tell you is that [Kwarteng] will find it very difficult to operate in an environment in which he does not go back. Once you unleash what are called the bond vigilantes. Once you unleash the instability in the bond market, unless you contain it quickly, it creates damage.
Just look at what has happened for the last two weeks. The Bank of England intervened. It contradicted its own anti inflation policies in order to stabilise the market, and it didn’t take long for market disorder to return.
Asked about government claims that the tax cuts will stimulate growth, Erian said:
Very few people believe that the tax cuts in themselves will stimulate growth and they certainly will not stimulate growth in the midst of financial turmoil.
What will stimulate growth is the structural reforms that aim at higher productivity and aim at a more efficient economy, and those should stay. The government should not threaten them by pursuing something else that causes financial turmoil.
Asked what would happen if the government did not act before 31 October, when the medium-term fiscal plan is due to be published, he replied:
I say the markets will stay very nervous. Interest rates will remain high, mortgage markets will stay disrupted, and consumer and business confidence will work. And all that ultimately means not just lower actual growth, but lower potential growth. And that goes counter to what the government is trying to do.
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There will be two urgent questions in the Commons today. Tobias Ellwood, the chair of the defence committee, has tabled a UQ for the defence secretary on Ukraine, which will be heard at 3.30pm, and Theresa Villiers has tabled a UQ to the foreign secretary on the protests in Iran after the death of Mahsa Amini.
That means the debate on the health and social care levy (repeal) bill will not start until about 5pm.
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Back in the supreme court, Dorothy Bain KC, lord advocate, told the court on behalf of the Scottish government that, without a ruling from the court to resolve the issue of whether Holyrood has the legal power to bring forward an referendum bill, she would not be able to “clear” the introduction of such a bill herself. PA Media says:
Bain said there was a ‘genuine issue’ that was unresolved, adding: ‘The issue is one of exceptional importance to the people of Scotland and the UK.’
She also said there was a ‘risk’ that a referendum bill could be introduced by an individual member of the Scottish parliament and said this underlined the need for a ruling from the court on the legal issues.
Bain added: ‘I am seeking legal certainty at this stage ... In my assessment it is in the public interest.’
She also said the circumstances which had led to the reference being made to the court were ‘highly exceptional’.
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As my colleague Jessica Elgot reports, the prime minister’s official spokesperson (he is called Max Blain, but he prefers to be called the spokesperson because he’s a mouthpiece, not a public figure) has been briefing journalists about what happens at Liz Truss’s cabinet meetings without being in the room himself. This is not how it used to happen. Under previous prime ministers, the PM’s spokesperson did attend as an observer.
PM’s spokesman confirms today he will no longer be attending cabinet. Only ministers in the room, as per PM’s request. Under previous government, spokesman always attended in order to be able to answer questions on the discussion & for transparency.
— Jessica Elgot (@jessicaelgot) October 11, 2022
The spokesman, who was not in the room, says there was not discussion at cabinet of market turmoil in response to the mini budget but only a discussion about growth
— Jessica Elgot (@jessicaelgot) October 11, 2022
No 10 insists 'fundamentals of UK economy are strong' after cabinet meets without discussing emergency BoE intervention
Liz Truss told cabinet ministers at their meeting this morning the growth plan (the formal title for the mini-budget) was “a shared endeavour” that all departments would have to contribute to. In a read-out, Downing Street said:
The prime minister said the growth plan was a shared endeavour involving all departments with further work ahead of the medium-term fiscal plan at the end of the month.
Truss also told ministers that the government would “bring forward legislation on minimum service levels to reduce the impact of strike action and help reduce disruption to businesses and commuters”, No 10 said.
At the Downing Street lobby briefing the prime minister’s official spokesperson also insisted that the government was committed to the measures in the mini-budget, despite this morning’s emergency intervention by the Bank of England. The spokesperson said:
The prime minister is committed to the growth measures set out by the chancellor. The prime minister remains confident that the measures set out will deliver growth in the economy.
As the Telegraph’s Jack Maidment reports, the Bank’s intervention was not even discussed at the main cabinet meeting, according to the spokesperson.
Downing Street said Cabinet did not discuss the Bank of England's latest big economic intervention this morning.
— Jack Maidment (@jrmaidment) October 11, 2022
The Bank warned at 7am that a sell-off in the UK govt bond market posed a “material risk to UK financial stability”.
Was not brought up at main Cabinet meeting.
The spokesperson also claimed the fundamentals of the UK economy are strong, Adam Bienkov from Byline Times reports.
Asked if the Prime Minister is confident that the Bank of England can maintain the financial stability of the UK economy, after it made yet another intervention this morning to prevent a crash, Liz Truss' spokesman tells me that "the fundamentals of the UK economy are strong."
— Adam Bienkov (@AdamBienkov) October 11, 2022
At the lobby briefing the spokeperson was only briefing on what happened at the main cabinet meeting. There was a political cabinet beforehand, which as a neutral civil servant he was not involved in and would not comment on.
But Steven Swinford from the Times seems to have had a leak of what was said at political cabinet. See 11.28am.
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'Crestfallen’ Sam Tarry calls for vote audit after deselection as MP
The Labour MP Sam Tarry has issued a statement about the vote to deselect him taken by his local party last night. He does not commit to challenging the result legally, but he says he wants to take some time to consider what he does next, and he calls on Labour to give details of how votes were cast electronically.
— Sam Tarry MP (@SamTarry) October 11, 2022
My colleague Jessica Elgot has the full story here.
Liz Truss told her cabinet ministers this morning that they should be attacking Labour as part of the “anti-growth coalition”, Steven Swinford from the Times reports.
Liz Truss told Cabinet govt took right decisions in cutting taxes & capping price rises
— Steven Swinford (@Steven_Swinford) October 11, 2022
She said post-covid economic challenge is bigger than financial crisis
She told ministers to turn fire on Labour - she said it had no plan for economy and was part of 'anti-growth coalition'
There was a discussion over uprating benefits in line with wages rather than inflation
— Steven Swinford (@Steven_Swinford) October 11, 2022
Chloe Smith, work & pensions secretary, expected to say that she opposed as it would mean real-terms cuts
Other ministers opposed include Jacob Rees-Mogg, Penny Mordaunt and Robert Buckland
This is from Patrick Maguire from the Times with background which he says is relevant to the departure of Keir Starmer’s chief of staff, Sam White.
Departure of Sam White as Keir Starmer’s chief of staff exposes discontent and tension at the top of the Labour Party otherwise masked by the polls.
— Patrick Maguire (@patrickkmaguire) October 11, 2022
Wrote about this last month. @PippaCrerar reports no other jobs at risk — but some will want another…https://t.co/r0nq5D9jpr pic.twitter.com/A4iL62wuCd
Starmer says his chief of staff leaving because merger with party HQ has changed nature of his job
Keir Starmer has also paid tribute to Sam White, who is leaving his post as Starmer’s chief of staff. Starmer said:
Sam has played an incredible role taking our operation to the next level. Under his leadership the team has become better and stronger. He’s hired some outstanding people and leaves behind a powerful legacy. A great deal of what’s been achieved over the last year wouldn’t have happened without him. I want to thank him for his frank advice, unstinting loyalty and all his support to me during some challenging times.
With the merger, running the leader’s office becomes a smaller role than Sam signed up for and we both agree as we’re making this change, now is the right time to go. I hope we’ll work together again in the future.
And White said, in a statement released by the party:
It’s been a privilege to serve both as chief of staff and senior adviser to Keir. I’m proud of the work we’ve done and the progress we’ve made. The next phase of the campaign needs a different structure, but we part very much as friends with the intent to work together again in the future. You’ll find no greater champion for a Starmer government than me. Britain needs a Labour government and Keir will be the outstanding prime minister we deserve.
Starmer tells party that 'Tory collapse' meant Labour's internal reorganisation had to be brought forward
This is what the Labour party has said about the restructuring announced by Keir Starmer to staff earlier today. (See 10.17am.) In essence, key functions of the the leader’s office (LOTO in Labourspeak – the leader of the opposition’s office) and party HQ are being merged. Labour says:
Labour announces restructuring of key roles from the leader’s office into the party as they move to an election footing.
Keir Starmer today told Labour party staff that we are moving to a general election footing following our successful conference and in light of the Conservative implosion.
In an all-staff call alongside the general secretary, the Labour leader thanked party staff for their hard work this year with the successful elections in May, a busier than usual summer with Tory leadership, and a great party conference. He said he “truly appreciated the sacrifices and commitment of party staff”.
Keir Starmer said: “I can’t tell you how confident it makes me feel knowing that behind us we have such a brilliant team. The government’s collapse has given us a huge chance. The instability means they could fall at any time. Because of that we need to get on an election footing straight away.”
The Labour leader warned that “this is not time for complacency or caution” but that the party needed to “seize the opportunity we have and show the British people we are the party that can lead our country forward. These changes to the structures of the party that will move us on to that election footing. We’ve been planning this for a while but the scale of the Tory collapse has brought it forward.”
David Evans [Labour’s general secretary] made clear that no jobs are at risk as a result of this. The new structures will support the fact that we are on an election footing. That means policy and communications will move into Party HQ reporting to the general secretary.
Among the changes, Sam White appointed chief of staff last summer to build the operation leaves in the merger.
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Starmer tells Labour it must be on 'election footing straight away' as he unveils shake-up of campaign machinery
In his message to Labour staff announcing a restructuring of the campaign machinery (see 10.17am), Keir Starmer said the party had to “get on an election footing straight away”, my colleague Pippa Crerar reports.
Starmer told staff: "The government’s collapse has given us a huge chance. The instability means they could fall at any time. Because of that we need to get on an election footing straight away.”
— Pippa Crerar (@PippaCrerar) October 11, 2022
In the supreme court Dorothy Bain KC, the lord advocate, the Scottish government’s most senior law officer, is now setting out her case.
Here is the 50-page submission to the court setting our her case that was released in July.
Supreme court says it will take 'some months' before it rules on legality of Scottish independence referendum bill as case opens
The supreme court hearing into the Scottish government’s claim that it should be allowed to hold an independence referendum is starting. There is a live feed at the top of the blog.
The hearing is expected to run for two days.
Lord Reed, president of the supreme court, starts by explaining how the court will proceed.
He says the court will first have to consider whether it is proper for the court to consider this case in the first place. The UK government is arguing that the case should not even be heard, because it relates to legislation for a referendum that has not yet been passed by Holyrood.
If the court does decide it can hear the case, it will then have to decide whether the Scottish parliament has the power to legislate for an independence referendum, he says.
He stresses that the court will only address legal questions. He says:
Despite the political context of this reference, the questions the court has to decide are limited to technical questions of law. The court will decide them by applying legal principles.
In other words, he is saying it is not the court’s job to consider the rights and wrongs of independence per se.
Reed ends by saying it will take “some months” before the court delivers a judgment. He says:
The court will require time after the hearing to prepare its judgement. The hearing is the tip of the iceberg. We also have more than 8000 pages of written material to consider.
Therefore, as usual, is likely to be some months before we get our judgement.
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Starmer unveils restructuring of Labour's campaign operation, including departure of his chief of staff, Sam White
Keir Starmer has unveiled a shake-up of the Labour party’s campaign machinery, my colleague Pippa Crerar reports. She says this includes the departure of Sam White, his current chief of staff. White used to work as a special adviser to Alistair Darling when Darling was chancellor.
BREAKING: Keir Starmer unveils major restructuring of Labour Party machine including new HQ to help get party on war-footing ahead of next general election and capitalise on Tory woes.
— Pippa Crerar (@PippaCrerar) October 11, 2022
He told staff this morning: “This is not time for complacency or caution”.
I’m told that in an all-staff call, Starmer said changes would include departure of his current chief of staff, Sam White, as he seeks to bolster his core team amid some shadow cabinet concerns.
— Pippa Crerar (@PippaCrerar) October 11, 2022
Labour staff told no other jobs at risk.
The chef and food rights campaigner Jamie Oliver has said there is a need “now more than ever” for the number of children eligible for free school meals to be expanded. My colleague Jamie Grierson has the story here.
Coffey says nurses won’t get higher pay offer as strike vote looms
In her morning interview round Thérèse Coffey, the health secretary and deputy PM, also said nurses will not get a higher pay offer. My colleague Jessica Elgot has the story here.
Coffey fails to offer clear backing for government ambition to make England smokefree by 2030
Thérèse Coffey, the health secretary and deputy PM, also refused to deny reports that she intends to shelve the government’s proposed smoking action plan in her morning interview round.
The questions on this were prompted by a story by my colleague Denis Campbell saying ministers are expected to break a promise to publish a smoking action plan later this year. Denis reports:
The government had committed several times to publish a tobacco control plan “later this year”. However, the health secretary, Thérèse Coffey, does not intend to honour that promise, according to officials with knowledge of her intentions.
Coffey, who is also the deputy prime minister, smokes and has previously accepted hospitality from the tobacco industry. Since becoming an MP in 2010 she has voted in the Commons against an array of measures to restrict smoking, including the ban on smoking in enclosed public spaces, the outlawing of smoking in cars containing children and forcing cigarettes to be sold in plain packs.
When asked about the story, Coffey was evasive, but she did not deny it. She said she was “not aware” that the plan had been shelved. (The story says it will be shelved, not that it has been shelved already.) Asked to confirm that the plan would go ahead, she implied it was not a priority for her. She told LBC:
I’ll be looking in the next few months at all our different prevention programmes, seeing what’s potentially working, seeing how many things there. There’s quite a lot of things in draft at the moment and working that through. But my top priority is where the majority people interact with the health and social care today [she means ambulances, backlogs, care, and doctors and dentists – her “ABCD” priority list].
Asked if she was committed to the government ambition to make England “smoke-free” by 2030 (defined as getting the smoking rate down to 5% – it was 14% in 2019), she replied:
I’m the government minister, so if that’s government policy today, then that’s what I agree with.
Note the wording – “if that’s government policy today”; it sounded like a diplomatic way of saying, actually, no, she did not agree with it.
Updated
The number of working-age adults in Britain who are not in the jobs market because they are long-term sick has increased to a record high, official figures show. My colleague Richard Partington has the story here.
Bank of England expands bond buying to avoid ‘fire sale’
The IFS report is not the only fresh blow to the credibility of the mini-budget around this morning. As my colleague Richard Partington reports, the Bank of England has stepped in with another emergency intervention in the markets in an attempt to stave off a “fire sale” of UK government bonds by pension funds.
My colleague Graeme Wearden has further coverage on his business live blog.
Thérèse Coffey refuses to dispute IFS report saying spending cuts worth £60bn needed to compensate for mini-budget
Good morning. MPs return to the Commons after the party conference season today and, although Liz Truss has performed potentially quite a significant reset after the most disastrous first month in office of any prime minister in modern times, her problems still seem near impossible.
A report today from the Instute for Fiscal Studies highlights quite how dire the situation is. It says that the government will need to find £60bn of savings by 2026 to fill the gap left by the unfunded tax cuts in the mini-budget. My colleague Phillip Inman has the story here.
This morning Thérèse Coffey has been giving interviews. As well as health secretary and deputy prime minister, she seems to have been designated “minister for the Today programme” (No 10’s first choice for a broadcast round, when someone sounding calm and sensible is needed – previous holders of the post include Grant Shapps and Michael Fallon). On Sky News she was asked about the IFS report, and she responded as if it were a moderately interesting academic exercise. Crucially, though, she did not at any point try to suggest that what the IFS was saying was wrong.
When Kay Burley asked about the IFS’s claim that there is a £60bn black hole in the government’s accounts, Coffey replied:
The IFS obviously does its own modelling. The government works with the Bank of England and the OBR on these measures and that is what the Treasury has been working on …
But I think the IFS also pointed out, if we don’t grow, then this problem will get worse and worse. And that’s why, very clearly, the prime minister and chancellor set out a plan for growth.
Asked again how the government would fill this “black hole”, Coffey again said this was IFS modelling. Asked if it was right, she replied:
That’s not for me to say. That’s their forecasts. The chancellor will be speaking at the end of the month with the medium-term fiscal plan.
Burley tried again. She said the IFS said all government departments, except the NHS and defence, might have to face budget cuts of 15% to fill this “black hole”. Coffey replied:
I’m just not going to get into hypotheticals, Kay. The chancellor is working on that …
Later we will hear from Kwasi Kwarteng, the chancellor, himself on this. He is taking questions in the Commons.
Here is the agenda for the day.
8.45am: Liz Truss chairs a meeting of political cabinet, followed by a normal cabinet.
10.30am: The supreme court starts hearing the case brought by the Scottish government arguing that it has the right to hold an independence referendum.
11.30am: Downing Street holds a lobby briefing.
1pm: Truss takes part in a virtual G7 summit, which will also be addressed by Ukraine’s president, Volodymyr Zelenskiy.
2.30pm: Kwasi Kwarteng, the chancellor, takes questions in the Commons.
After 3pm: Peers begin debating the second reading of the Northern Ireland protocol bill.
After 3.45pm: MPs begin debating the health and social care levy (repeal) bill.
4pm: Lord Frost, the Tory former Brexit minister, and Lord Mandelson, the Labour former Northern Ireland secretary and former trade secretary, give evidence to the Lords European affairs committee about Brexit.
I try to monitor the comments below the line (BTL) but it is impossible to read them all. If you have a direct question, do include “Andrew” in it somewhere and I’m more likely to find it. I do try to answer questions, and if they are of general interest, I will post the question and reply above the line (ATL), although I can’t promise to do this for everyone.
If you want to attract my attention quickly, it is probably better to use Twitter. I’m on @AndrewSparrow.
Alternatively, you can email me at andrew.sparrow@theguardian.com
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