Paul Johnson, director of the Institute for Fiscal Studies thinktank, told the Today programme that Liz Truss’s economic policies would increase infla.
Referring to her argument that a new economic approach is needed because growth has been so weak over the last decade or more, he said:
She’s clearly absolutely right that we’ve had dreadful growth over the last 15 years. The but is that simply cutting taxes, cutting national insurance contributions, for example, is not a strategy for growth.
And it is clearly pumping a large amount of money into the economy on top of the £30bn we’ve already had to support energy bills, on top of the presumably many, many tens of billions additional that are going to come [on top of] that, and on top of what’s going to have to be more money for public services.
Now put all of that together and that will lead to not just extremely high borrowing in the short run, but also additional inflationary pressure.
Many of us felt that the Conservative party leadership contest went on for too long and Sir Geoffrey Clifton-Brown, a senior figure in the party machinery, told the Today programme this morning that he agreed. Clifton-Brown, treasurer of the backbench 1922 Committee, said there should be a “rethink” of the timetable before the next contest. He explained:
I would shorten the process of members in the country.
There was no reason why it couldn’t have been shortened. We could have had more than one hustings a day.
I think it’s just been too long.
Clifton-Brown also said that, despite being a member of the 1922 Committee’s executive, he did not yet know the result, which is being publicly announced at 12.30pm. He said:
I suspect Sir Graham [Brady, chairman of the 1922 Committee) knows, but as always he is completely inscrutable on these matters.
Good morning. Parties hold leadership contests so that candidates can set out their policies and members can choose which they like best. But the Conservative party ballot, which will end today with Liz Truss all but certain to be chosen as the new leader, to replace Boris Johnson as prime minister after an audience with the Queen tomorrow, has seen that process inverted. The cost of energy will pose the biggest crisis for the next PM, but Truss and her rival, Rishi Sunak, only spoke in general terms about how they would handle it and yesterday Truss, in her interview for the BBC’s Sunday with Laura Kuenssberg, even suggested it would be improper for her to say what she would do. Sounding like a chancellor before budget day, Truss said:
What I want to reassure people is I will act, if elected as prime minister, within one week. Now, what I can’t do, Laura, on this show, is tell you exactly what that announcement would be … It would be completely wrong.
Truss argued that her reticence was justified because she had not been confirmed as leader yet, and she suggested that she needed a briefing from No 10 before she could take final decisions.
Well, maybe. But perhaps Truss is also nervous about confirming that her first act as PM will be to announce a freeze on energy bills – a policy proposed by Labour last month, and also championed by Gordon Brown (who was regularly cited by Truss during the campaign as representing the sort of economic policy she rejected). Truss has not confirmed that she will introduce some sort of energy price freeze. But she did not deny that she was considering this in her BBC interview yesterday, and in the papers this morning there are multiple reports saying that this is what she is planning.
In their splash for the Daily Telegraph, Ben Riley-Smith and Tony Diver say “campaign sources familiar with discussions, and energy company insiders who have been consulted, have said that a freeze of some form is now expected”. They go on:
Scottish Power has proposed a £100 billion plan for a two-year energy bill freeze, financed by loans underwritten by the Treasury. The proposal is backed by other energy firms.
One energy company source said the idea has been “extremely actively explored” by Truss campaign figures and that Kwasi Kwarteng, the Business Secretary tipped to become chancellor if Ms Truss wins, appeared “very open” to options for a freeze.
A second industry source confirmed the proposal was being scrutinised by the Truss campaign.
Truss team insiders have told The Telegraph the same. One said: “I’m confident there will be a mechanism introduced that freezes bills.” Another said the idea had been discussed “quite a lot in the last fortnight”.
The specifics of such an energy bills freeze – exactly who would benefit, how long for, at what price level and the degree to which the taxpayer would cover the cost – remains a point of debate, according to sources.
And in the Times Geraldine Scott, Oliver Wright and Henry Zeffman report the same. They say:
Senior Tories lined up for appointments in Truss’s cabinet have been told “in no uncertain terms” not to scorn the idea that energy bills could be frozen.
Industry sources said that a price freeze for consumers was “the only conversation that anyone was having with the government”, including discussions involving Kwasi Kwarteng, who is expected to be Truss’s chancellor.
“The plan is to introduce some kind of artificial price cap for consumers combined with a mechanism for reimbursing suppliers,” one source said. “Plans are reasonably well advanced and involve not just civil servants but also ministers lined up for jobs by Truss.”
The Conservative party will announce the results of the leadership contest at 12.30pm at the QEII Centre in London. The winner will then deliver a short speech, but will not formally become prime minister until after Johnson tenders his resignation to the Queen at Balmoral tomorrow.
My colleague Archie Bland has used his First Edition briefing to explain how the first week, the first 100 days and the first year for Truss may unfold if, as expected, she is the victor.
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