Kwasi Kwarteng set to address Tory conference with authority on the line after 45% tax rate U-turn – UK politics live | Politics

Liz Truss packed her cabinet with “cronies off the backbenches” rather than competent ministers with a range of views, and appeared to have no coherent plan behind her mini-budget, Michael Heseltine has said. My colleague Peter Walker has the story here.

Micheál Martin, the taoiseach (Irish PM), has described the apology delivered by Steve Baker yesterday for the way some Brexiters ignored the concerns of the EU and Ireland about Brexit, as “very, very helfpul”. He said:

I welcomed not just [Baker’s] comments, but the tone of his comments. I think they were honest and very, very helpful.

And I look forward to continuing engagement with Minister Baker and others within the British government.

This morning Tory rebels achieved a significant win over the government when they persuaded Liz Truss and Kwasi Kwarteng to abandon plans to scrap the 45% top rate of income tax. The plan was in the mini-budget, announced 10 days ago, but yesterday was the first day since then when Tory MPs had been present in large numbers in the same place. It soon became obvious from what they were saying they would not support the 45% plan.

Truss’s critics are now expressing alarm about two other aspects of her plans: the very strong hints being given that benefits will not be uprated for 2023-24 in line with inflation, as was promised; and Kwarteng’s declaration that he will not top up departmental budgets to compensate for inflation (see 8.28am), implying real terms cuts.

But on these two issues the rebels will find it hard to force a rethink, for procedural reasons.

The abolition of the 45% top rate of tax is a matter that would have been included in a finance bill. MPs would have had to vote for it, and, with just 34 voting with the opposition, the government would face defeat.

MPs also have to vote on uprating benefits, but the process is different. The uprating is incorporated in a statutory instrument, not a government bill, and it cannot be amended. The opposition parties believe that, if MPs were to vote it down, there would be a risk of benefits not being uprated at all.

Similarly, MPs won’t get a clear vote on spending plans. Parliamentary control over government spending is limited and, although estimates have to be approved, it is not easy for MPs to orchestrate a vote for higher spending. Without the leverage provided by a vote the government may lose, government MPs have a lot less sway over the executive.

Schools minister confirms intention to lift ban on new grammar schools in England before election

Sally Weale

Schools minister Jonathan Gullis has told a fringe meeting at the Conservative party conference he is hoping that legislation to lift the current ban on new grammar schools in England will be brought forward before the next election.

Gullis, a former teacher who has campaigned to scrap the ban and allow more grammar schools in England, told an Education Policy Institute event there was no date set and he didn’t know if it would be in this parliamentary session. He added:

I would hope there will be, before the next election, legislation brought forward to lift that ban.

The new education secretary, Kit Malthouse, has confirmed that the prime minister has asked him to look into expanding the selection system. Grammar schools however are likely to prove another divisive issue for the Conservative party.

On Sunday former education secretary Michael Gove spoke for many when he came out firmly against creating more grammar schools. He said:

Grammar schools are only an answer – if they are an answer – for a minority of pupils.

If we want to improve education in this country we have to improve it for all students and the evidence is that grammar schools favour the already better off. Setting out to use the money that we have in education to create new grammar schools would not address the inequality in our system. It would not raise standards.

We should not be looking backwards to an educational situation where we were dividing children between those destined for success and those who were overlooked. We need to make sure that every child has an outstanding education.

Kwasi Kwarteng, the chancellor, will be delivering his speech to the Conservative party conference soon after formal proceedings in the hall commence at 4pm. CCHQ sent out embargoed extracts from his speech yesterday morning, but the email has not aged well. It is headlined – “Chancellor Kwasi Kwarteng: ‘We must stay the course. I am confident our plan is the right one.’”

I quoted the extract with that passage at 7.27am. Here is a second extract from the news release, in which Kwarteng will stress his “iron-clad commitment to fiscal discipline”. He will say:

With energy bills skyrocketing. A 70-year high tax burden. Slowing long-term growth rates. Painfully slow infrastructure delivery.

Should we really have just accepted that fate?

Think about the cost to livelihoods and the impact on our communities.

What Britain needs is economic growth. And a government wholly committed to economic growth.

That is why we will forge a new economic deal for Britain …

… backed by an iron-clad commitment to fiscal discipline.

More businesses. More jobs. Higher pay. More money for public services.

Because you cannot have a strong NHS without a strong economy.

You cannot have good schools without a strong economy.

You cannot have quality infrastructure without a strong economy.

With this plan, we are aiming for 2.5% annual trend growth.

We did it before. We can do it again.

This is the argument that Kwarteng and Liz Truss have been making for some time, but many economists and MPs are sceptical. Kwarteng seems to be arguing that it might be necessary to give less money to public services now so that they have more money in the future.

One challenge for him today will be to persuade his party that his growth strategy is credible.

But, of course, the broader challenge is to persuade people that he still has credibility, and that his authority has not been permanently banjaxed by today’s U-turn.

UK and EU to resume technical talks on Northern Ireland protocol this week

Jennifer Rankin

British and EU officials will resume “technical” talks this week on the Northern Ireland protocol, a European Commission spokesperson has said.

The exact details, including timing and topics for discussion, are still being worked out, the spokesperson said. The resumption of talks follows a phone call last Friday between the foreign secretary, James Cleverly, and the European Commission vice-president Maroš Šefčovič. This exchange was characterised as a “good conversation” by the EU executive, while Cleverly said they agreed they wanted “to look for solutions to protect the Belfast (Good Friday) agreement”.

Long-term Brexit watchers will remember there was an equally optimistic mood when the last foreign secretary took office. That was Liz Truss, who said in January there was “a deal to be done”. She later became more sceptical of negotiations with the EU and her controversial Northern Ireland bill, which threatens to rip up key parts of the Brexit agreement with the EU, remains on the table.

EU observers will be looking for whether her government takes forward the Northern Ireland bill. An apology to the EU and Ireland from the Northern Ireland minister and leading Brexiter Steve Baker suggests a climbdown could be on the cards. But there remains deep scepticism about the Truss government. One former Irish ambassador to the EU, Declan Kelleher, suggested it was too early to judge, tweeting: “EU including Ireland have to be able to repose trust in Liz Truss’s approach to the protocol. Let’s see how this develops.”

The Resolution Foundation thinktank says the decision to keep the 45% top rate of income tax means the richest 10% have lost more than half of the gains they were going to make from the mini-budget.

But, in an analysis, it says the package remains regressive. It says (bold from original):

Still a very regressive policy package. A quarter of the cash gains from the remaining tax cuts package are going to the richest 5 per cent of households – far more than the 16 per cent of cash gains spread across the entire bottom half of the income distribution.

Richest households will gain almost 40 times as much as poorer families. The top 5 per cent of households are still set to gain £3,500 on average next year from the remaining tax cuts, compared to just £90 on average for the poorest fifth of households.

The thinktank also says Kwasi Kwarteng still needs to make “significant spending cuts” in the the fiscal plan on 23 November to compensate for the unfunded tax cuts worth £43bn still left in the mini-budget package.

Rachel Reeves, the shadow chancellor, has said it would be “grotesque” not to increase benefits in line with inflation. She told Sky News:

The idea that the government can afford to give tax cuts to the wealthiest, but not uprate benefits in line with inflation, I think is grotesque. And there are many people who are saying that the government needs to rethink this one as well.

The prime minister yesterday refused to say whether people with disabilities, people on universal credit, will see their benefits go up in line with inflation next year.

That uncertainty for people who are already seeing huge increases in their energy prices in the weekly food shop, it’s a time of huge anxiety. And yet the government seem to be that cutting taxes for people who are already on big salaries or businesses already making big profits, that seems to be their priority.

Former DWP secretary Esther McVey says it would be ‘huge mistake’ not to raise benefits in line with cost of living

Lisa O’Carroll

Esther McVey, the former work and pensions secretary, has urged the government not to cut benefits when it swings the axe on public spending. She said it would be a “huge mistake” not to increase benefits in line with the cost of living.

The government has hinted that it will break with convention – and a promise made by Boris Johnson’s administration – and uprate benefits for 2023-24 by less than the inflation rate for September.

Calling for compassion, she said it would be a disaster to the Conservatives’ efforts to get vulnerable people back into work.

Speaking at a fringe meeting on the cost of living hosted by Centre for Social Justice thinktank, McVey, who is generally seen as being on the right of the party, said:

It would be a huge mistake not to give a cost of living increase in benefits. What we have to do is bring people back to work and that will not be done by slashing the benefits budget. We have got to be an enabler.

The benefits decision may turn out to be the next flashpoint for the government. Michael Gove, who led opposition to the abolition of the 45% tax rate yesterday, said this morning he would need “a lot of persuading” to approve not uprating benefits in line with inflation. (See 12.12pm.)

Opinium research unveiled at the fringe event showed “shocking” impact for those in “premium poverty” defined as people who have to pay extra to access goods and services.

Some 17% have turned to gambling to make more money while 11% said they were drinking more to “cope”.

Generally it is the opposition parties who have been saying that the replacement of Boris Johnson as PM by Liz Truss should have been followed by a general election. But Nadine Dorries, the former culture secretary, has come close to calling for one too. Dorries thought Johnson should have stayed in office, and she is unhappy that some of the decisions she took as culture secretary are being reviewed.

Truss claims she is implementing what people voted for in 2019.

Kwasi Kwarteng’s decision to cut income tax for the richest and subsequent U-turn has been given short shrift by senior Tory Ben Houchen, who has also called for the cap on bankers’ bonuses to be reinstated.

At a fringe event, the Tees Valley mayor said the chancellor had been “naive” and that while scrapping the top tax rate would generate more revenue for the exchequer, it was going down poorly with voters.

“Irrespective of the economics, it’s a little bit naive,” Houchen said. He claimed the row that has overshadowed the Conservatives’ conference was “so avoidable”. And he went on:

Even though we’ve rowed back the damage is already done – you’ve got all of the downsides of announcing that policy without actually implementing that policy.

He said despite the U-turn, the initial announcement would frame the public’s first impressions of the new government, adding it would be a “quite difficult” few weeks.

Houchen also urged Kwarteng to perform a second U-turn. Asked if the scrapping of the cap on bankers’ bonuses should be reversed, he said:

Yes I would. It’s just unnecessary, it doesn’t raise much money, it doesn’t save much money.

The economic argument is understandably a sound one but it’s the wrong time, in the wrong position given where most of the country currently sits. So, clear answer: yes I would.