Truss cabinet shows ‘breadth of talent’, says No 10, as Coffey denies claim PM put loyalty before competence

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Liz Truss is about to go up against Keir Starmer at PMQs for the first time. Many people find PMQs a shallow, noisy spectacle which is largely irrelevant to the political problems facing the country, but to MPs it is important because they want to see their leaders put on an authoritative performance (or “win”, ideally).

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Truss is bound to get loud cheering when she arrives, because MPs are a tribal species and that’s what they do with new leaders (especially Tories). But Truss is the first Tory leader to be elected by a ballot of members who was not the first choice of her MPs, and by the end of August more than half of her MPs had still not pubicly endorsed her for leader. Much of the support she has will be conditional.

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Liz Truss is expected to announce some sort of freeze for energy bills tomorrow. In doing so, she will be playing catch-up with the main opposition parties. Keir Starmer published a plan in August showing how Labour would fund a price freeze which he said would mean consumers not having to pay “a penny more” this winter. But Ed Davey, the Lib Dem leader, published his own proposals for a price freeze a week earlier, and Gordon Brown, the former Labour prime minister, released his own blueprint, which included the option of energy companies being nationalised. The SNP has also called for prices to be frozen.

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But another former Labour prime minister, Tony Blair, has come out against a price freeze. His thinktank, the Tony Blair Institute for Global Change, has this morning published its own plan for addressing the energy bills crisis and it proposes using rebates to help people with bills, not a price cap, with households on benefits getting the most support.

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The report says:

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It now appears that government is also considering some form of price freeze. Such an approach could meet the scale of the challenge facing householders head-on and would deal with the crisis this winter. But it is now clear that the crisis will last into next year and probably beyond, and over time the costs of such a freeze, if kept in place, would be fiscally alarming.

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A longer-term price freeze would also dampen incentives for households – especially the better-off ones – to cut their consumption where they reasonably can. While we all hope that price pressures will abate, it is conceivable that they won’t fall sufficiently to make government support unnecessary beyond this winter or beyond next year. If a price freeze is pursued, this makes coupling it with a large programme of demand reduction essential.

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But we favour a more strategic approach to this crisis that offers long-term certainty to households while strengthening incentives on them and government to accelerate steps towards the only real solution, which is a reduction in demand and in reliance on unpredictable energy imports.

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For these reasons, whatever the merits of a short-term freeze on prices, we propose instead a long-term system of rebating households the difference between a £2,000 threshold (roughly the level of today’s price cap for a typical household), and the future price cap for the typical household. Paying support as a lump-sum rebate ensures that people continue to have the full incentive to cut their bills; calculating it using the price cap means that households do not receive more support the more energy they use. For households on benefits, the rebate should be 100 per cent of the difference. For all other households the rebate could be discounted to, for example, 75 per cent of the difference.

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The thinktank says its plan could cost £92bn over a full year, while a price cap could cost around £110bn.

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According to a report by Jason Groves in the Daily Mail, Liz Truss may announce an end to the ban on fracking this week. During the leadership campaign she said she wanted to allow fracking, but only in areas where there was a clear public consensus in favour.

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On the Today programme this morning Lord Deben, the Tory peer who chairs the Committee for Climate Change, said fracking was not a solution to the UK’s energy problems. He explained:

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The price of gas is not affected by the relatively small amount that we can get, in addition to the North Sea or indeed from fracking.

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This is an international price and we would be paying the same price we got out of the fracked gas as we are for the gas we’re using now.

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There is no sliver of cigarette paper between the fact that if you want a deal with climate change and you want a deal with the cost of living crisis and oil and gas prices, you have to do the same thing.

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Renewable energy and energy efficiency, they are the answers.

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Angela Eagle (Labour) is asking the questions now. Referring to the pledge from Liz Truss during the Tory leadership contest to review the mandate of the Bank of England, she asks Andrew Bailey if he thinks it is outdated.

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Bailey says the inflation target is very important. He says over the last 25 years, since the Bank was made independent, on average inflation has been on target. The current situation is different, he says, because the country is facing such a big shock. He says that “does not suggest that the regime has failed”. But he says the regime must respond to the current shock.

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He says it is “good practice from time to time to have reviews”. But he goes on:

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This is not a recognition of the fact the regime is in some sense failing.

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At the Treasury committee Mel Stride asks Andrew Bailey if he is worried about sterling.

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Bailey says it is not for him to comment on what fiscal policy will be. But he says he welcomes the fact that there will be announcements this week. That will frame policy, he says. It is important for markets to understand what is happening.

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Q: Why are markets getting worried about UK debt, and wobbly about the pound?

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Bailey says a number of things are going on.

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On the exchange rate, other factors are at work. The dollar is strong against all currencies, he says. The Federal Reserve are not in the same situation as the Bank of England and the ECB. They are responding to a demand shock.

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But there are UK factors, he says.

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The UK is “heavily exposed to gas prices”, he says.

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Q: Are the markets worried about the magnititude of what might be done? That is might be inflationary?

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Bailey says it is important to have policy laid out clearly. That will happen. He welcomes that, he says.

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(It sounds like he is avoiding the question.)

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This is what Liz Truss’s press secretary told reporters late last night about the composition of the cabinet. Like Thérèse Coffey (see 9.12am), he also dismissed claims that it was just a cabinet of cronies. He said:

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The prime minister has appointed a cabinet which represents the depth and breadth of talent in the Conservative party. Containing no fewer than five other candidates from the recent leadership election, this is a cabinet which will unify the party, get our economy growing and deliver for the British people.

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The cabinet ministers who stood as leadership candidates are: Penny Mordaunt (leader of the Commons), Kemi Badenoch (international trade), Suella Braverman (home secretary), Tom Tugendhat (security minister – attending cabinet, but not a full member) and Nadhim Zahawi (Cabinet Office).

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The only candidates who aren’t included are Jeremy Hunt and, of course, Rishi Sunak. Sunak had made it clear that he disagreed so much with Truss’s economic policies that he would not be able to serve under her, so his exclusion is understandable. But Truss could have decided to keep some of his most prominent supporters, and instead most of them were sacked last night.

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Freezing energy bills would help richer people the most, Paul Johnson, director of the Institute for Fiscal Studies, told the Today programme this morning.

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Liz Truss is expected to announce a price freeze when she publishes her energy bills plan, probably tomorrow. It will reportedly cost in the region of £100bn.

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Johnson said a price freeze on its own would be poorly targeted. He explained:

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If this is a straightforward bill freeze then the majority of the money will go to better-off people who use more energy.

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So this is very poorly targeted. Not only is it poorly targeted, but it also means that we don’t see the full price signal, that across the world people need to see.

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The reason that gas prices are so high is because there’s less gas around and if the world doesn’t use more gas over the net year then we’re going to run out.

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Finding a way of targeting it to the many millions that really need it, without giving it to the many millions who don’t, appears to be something that has stumped the Treasury and the government for finding a mechanism of achieving that.

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Johnson also said the government could afford to borrow £100bn. He told the programme:

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We can afford to borrow that amount. We’re still managing to borrow relatively straightforward on the international markets.

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But he warned that freezing energy bills could cost even more in the long term.

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The big question here is: ‘Is it going to be 100bn? What is the exit strategy from supporting bills?’

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My guess is it might end up being an awful lot more than that unless we react quite quickly to make it a better system.

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Is it the best way of spending the money? I rather suspect it is an inevitable way in the short run if everybody needs help is to get that help.

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But I do think it’s incredibly important that the government thinks through and gets to a better or more targeted way of supporting (people) as we get through to next winter. Otherwise, we’re going to be on the hook, potentially, for an awful lot more money, for an awful lot longer.

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BST","blockLastUpdated":1662540533000,"blockLastUpdatedDisplay":"09.48 BST","blockFirstPublished":1662540533000,"blockFirstPublishedDisplay":"09.48 BST","blockFirstPublishedDisplayNoTimezone":"09.48","title":"Freezing energy bills helps richer people most, says IFS director Paul Johnson","contributors":[],"primaryDateLine":"Wed 7 Sep 2022 12.06 BST","secondaryDateLine":"First published on Wed 7 Sep 2022 09.12 BST"},{"id":"6318580e8f0875e2818bcc13","elements":[{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"

Over a million more people will slide into poverty this winter – even if the government freezes energy prices at current levels, a conservative think tank has estimated.

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The Legatum Institute, headed by Tory peer and former government advisor Lady Stroud, calculated a price freeze would still push 1.3m people below the poverty line – though it would also shield 1.45m people from a “once-in-a-generation” rise in poverty.

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The analysis suggests that even if action is taken to blunt the impact on consumers of soaring energy prices, many will still struggle with rising costs in other areas such as food, clothing and transport, partly as a result of below-inflation benefit increases.

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Stroud said:

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\n

It is good to see that Liz Truss is taking this seriously and looking at energy price freezes. This will shield nearly a million and a half from poverty this winter. But if Liz Truss wants to stabilise poverty at pre-pandemic levels, she will need to go further and introduce a 10% uprating of universal credit as existing inflation will still hit the poorest hardest.

\n

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The institute used methodology developed by the respected Social Metrics Commission. Earlier this year Stroud set up an independent cross-party poverty strategy commission and criticised the government for lacking the will and ambition to tackle rising hardship and destitution.

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And here are some more line from Thérèse Coffey’s morning interview round.

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Coffey, the new health secretary and deputy prime minister, confirmed Liz Truss would set out a plan to deal with the energy bills crisis later this week.

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Coffey claimed that spending on health and social care would remain “exactly the same” despite Truss’s pledge to scrap the health and social care levy (the national insurance increase), that was introduced to raise money for the NHS, and then social care. She said:

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Instead of having in effect a ring-fenced levy, we will be funding that out of general taxation, so the investment going into health and social care will stay exactly the same.

\n

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She said the government would not charge people to see a GP. In 2009, before she became an MP, Truss was deputy director of a thinktank that proposed charging to see a GP in a report she co-authored.

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Coffey said she accepted the NHS needed to improve quickly. A Catholic, Coffey voted against same-sex marriage in 2013 and extending abortion rights in Northern Ireland. Asked about her stance on abortion on Sky News, she said:

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\n

I’m conscious I have voted against abortion laws. What I will say is I’m the complete democrat and that is done, so it’s not that I’m seeking to undo any aspects of abortion laws.

\n

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BST","blockLastUpdated":1662539677000,"blockLastUpdatedDisplay":"09.34 BST","blockFirstPublished":1662539678000,"blockFirstPublishedDisplay":"09.34 BST","blockFirstPublishedDisplayNoTimezone":"09.34","title":"Spending on health and social care will stay ‘exactly the same’ despite health and social care levy being scrapped, says Coffey","contributors":[],"primaryDateLine":"Wed 7 Sep 2022 12.06 BST","secondaryDateLine":"First published on Wed 7 Sep 2022 09.12 BST"},{"id":"631847218f084018564174b4","elements":[{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"

Good morning. Liz Truss is chairing a meeting of her new cabinet this morning at the start of what will be an intense 48-hours for her government. Today she has to finish her government reshuffle, face Keir Starmer for the first time at PMQs and – most important of all – finalise her plan to tackle the energy bills crisis. And tomorrow that plan is expected to be unveiled to MPs in a statement to the Commons. If it crashes – if the public, and the media/expert voices who influence what they think, judge that it won’t work – then it is hard to see how her premiership will recover. But if it is ambitious and clear and comprehensive enough to persuade people it will work (like furlough, a textbook example of a successful “big bazooka” government intervention), then Truss and the Tories could be on the road to recovery.

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Here is a full list of the new cabinet. And here is our overnight story about it.

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Thérèse Coffey, the new health secretary and deputy prime minister, has been giving interviews this morning and she has rejected claims that, in picking her top team, Truss focused too much on rewarding her friends. Asked on the Today programme about claims that this was a “cabinet of chums”, where loyalty, not competence, was being rewarded, Coffey said:

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\n

I think a lot of the people taking up roles will show that they’ve been considered, that they’ve been competent and compassionate, in how they’ve approached politics.

\n

I know that Liz is very keen … to make sure that we have really focused delivery.

\n

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And on Sky News Coffey said:

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\n

This is, I think, a government of all the talents that we have in this party. Liz has appointed a cabinet of a mixture, whether it’s … her proactive supporters [and] people who did not support her as well.

\n

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I will post more from the Coffey interviews soon.

","elementId":"fa1e9a75-aae6-49f2-82a0-ad9bb3607e75"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"

Here is the agenda for the day.

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8.30am: Liz Truss chairs her first cabinet meeting.

","elementId":"e6ba8846-caf9-4b21-afb5-d3738497a484"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"

10am: Andrew Bailey, the governor of the Bank of England, gives evidence to the Commons Treasury committee.

","elementId":"846dfd24-6688-4aff-a8d6-6386de27a1f4"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"

11.30: Chris Heaton-Harris, the new Northern Ireland secretary, takes questions in the Commons.

","elementId":"056295a1-0bd6-4047-aa2f-625b264524ba"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"

12pm: Truss faces Keir Starmer at her first PMQs.

","elementId":"df7a100c-12c7-4304-9a7d-7c83df4372a9"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"

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.

","elementId":"c46b3fe5-d48e-4774-aa7b-f0058e02e636"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"

If you want to attract my attention quickly, it is probably better to use Twitter. I’m on @AndrewSparrow.

","elementId":"6ff4c237-e9e8-4e87-ac7e-a2c194547b4e"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"

Alternatively, you can email me at andrew.sparrow@theguardian.com

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