Labor tabled an amendment to the Queen’s Speech motion calling for an emergency budget. Rachel Reeves, the shadow chancellor, told BBC Breakfast that an emergency budget was needed because the government’s response to the cost of living crisis had been inadequate. She says:
Today in parliament, Labor will call for another vote and urge the government to introduce an emergency budget as it is clear that the government’s actions to date have not been up to the challenge.
Families and pensioners are really struggling right now and the government urgently needs to come up with additional measures to help people with this incredible increase now.
Labor has been calling for an emergency budget for some time. He said this should include: a windfall tax, the proceeds of which would be used to reduce energy bills; lower business rates for small and medium-sized businesses; the removal of the National Insurance increase; a home insulation program; a National Crime Agency investigation into government spending lost to fraud.
It’s from Jill Rutter, a former Treasury official who now works at the Institute for Government think tank, on Liz Truss’ interviews this morning.
Hello. The most important political news this morning is the news that inflation hit 9% in April, its highest level in 40 years. Philippe Inman has the detail here.
And my colleague Graeme values covers the reaction on his company live blog.
Inflation figures are normally of primary concern to economists, but a 9% inflation rate is also a cost of living crisis, and it will certainly dominate the First Prime Minister’s Questions of this parliamentary session, at 12 p.m. .
Waiting Liz Truss, the Minister of Foreign Affairs, did interviews this morning. Ministers are under intense pressure to unveil an emergency financial package to help people cope with rising costs, and in our overnight story we look at some of the options on the table. Truss told the Today program that Rishi Sunak, the Chancellor, was looking into this “very, very urgently”, but she would not say when an announcement might take place.
The government has increasingly hinted that its response could include a windfall tax on energy companies that could be used to fund consumer relief. Sunak strongly opposed the idea when Labor first proposed it, but has now accepted it is an option. The Daily Telegraph today claims that internal government polls show the idea is ‘hugely popular’ with the public – which should come as no surprise, as external polls also show.
Truss did not go into detail about what the government would or should do in the face of the cost of living crisis. But in her interviews, she came forcefully into the internal Tory debate on the issue, signaling her disapproval of the proposed windfall tax and suggesting instead that tax cuts were needed. Asked about the exceptional tax on Sky News, she said:
The problem with a windfall tax is that it is difficult to attract future investment to our country. There is therefore a cost to imposing such a tax. And I think lowering taxes is the best way to attract more investment, to attract the companies to this country that can create those good-paying jobs, which we need to weather these global headwinds.
When told that the BP chief had said a windfall tax would not prevent his company from investing in the UK over the next decade, she replied:
Well, he can do even more if he has more profits that have been collected during that time.
And, on the Today show, when asked what the government should do, Truss again stressed the need for tax cuts — and the importance of investment.
The main response to the huge global inflation crisis we are facing is to grow our economy. That’s what’s going to help people, it’s going to help working people, it’s going to help generate income. To do this, we need to attract business investment. So far, we have been successful in attracting business investment. We need to do more. And what we do know is that a low-tax economy helps make that business investment, helps create those jobs.
Truss will almost certainly be a candidate in the next Conservative leadership race, and for many in the party, cutting taxes is a fundamental article of faith. That doesn’t mean Truss was giving a leadership speech today — she says those things because she believes them — but that’s the context in which she makes those arguments.
Here is the program for the day.
10:15 a.m.: Lord Burnett of Maldon, Lord Chief Justice, gives evidence to the Lords Constitution Committee.
12 p.m.: Boris Johnson takes on Keir Starmer in PMQ.
1:30 p.m.: Dame Dr Jenny Harries, Chief Executive of the UK Health Security Agency, and Shona Dunn, Second Permanent Secretary to the Department of Health and Social Care, give evidence to the Commons Public Accounts Committee about contracts with Randox Laboratories.
2:30 p.m.: Liz Truss, the Foreign Secretary, testifies before the House of Commons Foreign Affairs Committee on international aid.
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