Show only key events Please enable JavaScript to use this feature Paul Johnson, director of the Institute for Fiscal Studies, told the Today program this morning that the tax cuts proposed by almost all Tory leadership candidates could be inflationary or lead to the Bank of England raising interest rates. He explained: Usually, when we talk about tax cuts and spending, we look at whether that’s fiscally feasible right now. Of course, we have inflation going up to 10% or 11% now. When inflation is this high, you usually don’t want to put significant additional amounts of money into the economy. So if you’re looking at big tax cuts financed by borrowing in the short term, then that might have some small effect in the wrong direction on inflation, or it might result in the Bank of England raising rates a little more and a little faster than what would they do differently Rishi Sunak, the chancellor, is still well ahead of other candidates in terms of public statements of support from MPs, the Mirror’s Dan Bloom reports. Candidates/supporters from 8.30 am. (including themselves) Rishi Sunak – 33 Penny Mordaunt – 20Liz Truss – 16Tom Tugendhat – 16Nadhim Zahawi – 14Jeremy Hunt – 13Kemi Badenoch – 13Suela Braverman – 11Sajid Javid – 11Grant Shapps – 8Rehman — Dan Bloom (@danbloom1) July 11, 2022
Summary of today’s announcements from the Tory leadership campaigns
Several Tory leadership candidates, or their proxies, gave interviews or made announcements this morning. Here is a summary of the key developments.
Liz Truss, the Foreign Secretary, has launched her campaign for the leadership. An article in the Daily Telegraph says it will reverse the rise in national insurance which came into effect in April. He said:
I would reverse the rise in national insurance that took place in April, make sure we keep corporation tax competitive so we can attract business and investment to Britain and put the Covid debt on a long-term footing. A campaign video has also been launched. Robert Peston, ITV’s political editor, believes Truss’ plan to refinance the government’s Covid debt is unrealistic. Liz Truss’s leadership manifesto in the @Telegraph says she wants to put £400bn of the government’s Covid-related debt on a “long-term basis”. It may have been practical at the time the money was borrowed. But if refinanced now, the interest rate would probably be horrible pic.twitter.com/vhdWq4pcV5 — Robert Peston (@Peston) July 11, 2022
Kwasi Kwarteng, the business secretary who is backing Truss for leader, told the Today program that “there needs to be spending cuts” to fund tax cuts – but declined to say which services would be affected.
Robert Jenrick, the former communities secretary who is backing Rishi Sunak’s leadership campaign, defended the fact that Sunak still had a US green card (meaning he was entitled to work in the US and expected to eventually settle there) when he became chancellor . Asked about the story, Jenrick said:
Regarding his green card, [Sunak] he was someone who lived and worked abroad and in a fairly normal way applied for a green card, and then when he came back to the UK he kept it for a while and then gave it up, I don’t begrudge him that. I really think it’s very refreshing that we can have a prime minister who has lived and worked around the world, is extremely knowledgeable about finance and technology, having lived in California and run businesses there, and will be a respected figure on the international stage for the fact that he has these connections and understanding. As I understand Nadhim Zahawi is NOT proposing a 20% cut in departmental spending as proposed here today. It proposes a 20% reduction in the number of civil servants. What is the current government position (Boris wants to shrink it by a fifth). — Ben Riley-Smith (@benrileysmith) July 11, 2022 I was clearly being smeared. I was told that the Serious Fraud Office, the National Crime Agency, HMRC, were looking at me. I don’t know that. I have always declared my taxes – I have paid my taxes in the UK.
Grant Shapps, the transport secretary, released a video saying he should be Prime Minister because he can plan, deliver, communicate, campaign – and help Tory candidates win their seats.
Jeremy Hunt, the former foreign secretary, has said he wants to “cut all taxes”. He also said half the cost of cutting company tax would be recovered from the Treasury because it would stimulate the economy by driving businesses to pay more tax. He told BBC Breakfast:
We need to have a lower tax environment to help businesses get off the ground … I want to reduce all taxes … The Treasury’s own figures say you will get back half the money you invest in reducing corporation tax through increased business activity.
Suella Braverman, the attorney general, said that, as prime minister, she would toughen up the Northern Ireland protocol bill. He said:
As Prime Minister, I would make the changes to the NIP Bill that I have been advocating for within government so that it is fully compatible with UK sovereignty. This means that from day one after the Bill becomes law, the EU will no longer have a say in VAT and excise duties in Northern Ireland and will have no say in our medicines laws. After my changes, UK law – and tax rates – will apply immediately.
Tom Tugenhdat, chairman of the Commons foreign affairs committee, has said he will cut taxes across society. He said on the Today show:
I certainly believe that we should seek to reduce taxes in every aspect of society. Updated at 10.07 BST
Tory leadership contest has turned into ‘an arms race of economic fantasy’, says Starmer
Good morning. After Boris Johnson there was an assumption that British politics could become conventional, logical, predictable – and perhaps boring (not necessarily a bad thing). Maybe eventually it will, but with the Conservative leadership contest now in full swing, we’re certainly not there yet. For three reasons, it’s all rather surreal. First, for the third time in six years, the Prime Minister of the United Kingdom is to be chosen by around 200,000 members of the Conservative party (mostly white men over 60 living in the south of England). This is more like what happened before the Great Reform Act of 1832 than one would expect in a modern democracy. Secondly, Conservative MPs produce the list for MPs, and currently the list of candidates includes absolutely no one. “Why, oh, why do these insignificant figures think so much of themselves?” Sir Alan Duncan, the former Foreign Secretary, wrote in his diaries in 2019 when 10 candidates entered the competition. This time, there are already 11 – of which the most recently declared, Rehman Chishti, is almost completely unknown. Both of these factors were true last time, but the third, and relatively new, feature of this contest is that it involves a series of cabinet ministers campaigning to reverse the tax increases they voted for and defended while in cabinet themselves. council that approved these measures in the first place. Leadership contests always involve debates about policy change. When Boris Johnson stood down in 2019, he called for a new approach to Brexit. But he had resigned from the cabinet because of the policy he wanted to overturn. Liz Truss, Sajid Javid, Nadhim Zahawi, Grant Shapps and Suella Braverman promise to abandon, or at least consider abandoning, the tax increases they championed. (Most ministers stay in their jobs even though they disagree with certain government policies because they feel that what matters is what the government does as a whole. But to suddenly declare that the entire fiscal policy of your cabinet is wrong is much more unusual.) Keir Starmer, the Labor leader, is giving a speech this morning and will say the Tory leadership contest has turned into “an arms race of the fantasy economy”. According to excerpts released in advance, he will say: I can’t believe what we are hearing from the candidates for the next Tory leader. The vast majority of them served in Boris Johnson’s government. They came out every day for months and years to defend his behavior. They supported every one of his 15 tax increases. They nodded in agreement and flocked to the voting lobbies to support them. Now, it turns out they were against them all along. Hypocrisy is nauseating… Over the weekend, candidates have made more than £200bn of unfunded spending pledges. This is more than the annual NHS budget, splashed across the pages of the Sunday papers, with no word on how it will be paid for. I can tell you now – you will never get that from me. When I say decency and honesty matter, that means being honest about how we finance every thing we promise you. Here is the agenda for the day. Morning: Boris Johnson visits London. 10.30am: Keir Starmer gives a speech in Newcastle. 11.30am: Downing Street briefs lobby. 1.30pm: Tory leadership candidates Nadhim Zahawi and Suella Braverman are due to speak at a Conservative Way Forward event. Steve Baker, the MP who relaunched the pressure group, is also due to speak. 3.15pm: Tory leadership candidate Sajid Javid holds a campaign launch event. After 4pm: The polls close to elect a new executive of the Conservative Committee of 1922. Once the votes are counted, Sir Graham Brady, the chairman is expected to hold an executive session immediately to set the rules for the parliamentary stage of leadership showdown. Then, at 6:30 p.m., the Board of the Conservative party is expected to meet to arrange the schedule of the ballot of the party members, who will choose between the two…
