When Simon Clarke, the chief secretary to the Treasury, said this morning that all options were on the table as the government considered its response to the cost of living crisis (see 9.52am), he did not mean that literally. As he made clear in a subsequent interview, on the Today programme, one option has been swept off the table; the government will not be restoring the £20 a week universal credit uplift paid during the pandemic. He said:
On that question [restoring the uplift], we were always explicitly clear that was a temporary response to the pandemic. That is not going to return. The question is how we best now look at the next range of solutions to deal with the challenges we’re facing.
But Clarke did suggested that a further cut to the universal credit taper rate was being considered. He said:
We took decisive action back in December with the change to the taper rate, that is to say the rate at which benefits are withdrawn as people’s earnings rise, and we cut that from 63p in the pound to 55p in the pound. That’s a tax cut worth an average of £1,000 to two million of the lowest earners in society.
I know that was something Iain [Duncan Smith, the Tory former work and pensions secretary] warmly welcomed at the time and which is precisely the kind of authentic Conservative solution to this question that we want to see.
Over the last few weeks we have been able to witness the debate in the Conservative party on the merits of a windfall tax on energy companies evolve to a remarkable extent in public. At one point most Tory MPs were happy to stick to what was then the Treasury line – that it was a bad idea that would discourage investment. But now more and more senior party figures are coming out to say they are in favour. Last night George Osborne, the former chancellor, told Channel 4’s Andrew Neil Show he was “sure” there would be a windfall tax (although he also said he did not think it would “massively help”). And Jesse Norman, the Conservative MP and former Treasury minister, has backed the idea. He told the Today programme:
We have a situation in which millions of people, because of the massive increase in global oil and gas prices, are facing fuel poverty and a serious cost-of-living crisis in the next few months.
And so the question is, how should government respond to that? And, of course, one thing to note is that those oil and gas prices have also resulted in a massive spike in the profits of the oil majors.
Now that is a spike in profits that no one expected even three or four months ago.
They’re not factored into any investment plans and the reaction of the sector, by and large, has been to acknowledge that, and to do what many large companies do which is to engage in share buy-backs and other forms of dividending back money to shareholders.
And all a windfall tax says is ‘look this is actually inequitable because these people were not expecting that money and these are extraordinary times and we should be thinking about the wider public interest’.
Norman has set out his argument in more detail in a Twitter thread starting here.
In his interviews this morning, Simon Clarke, the chief secretary to the Treasury, stuck to what is (for now) the government’s line – that while in general it does not like windfall taxes, it is not ruling one out. He told LBC:
The [oil and gas] sector is realising enormous profits at the moment.
If those profits are not directed in a way in which is productive for the real economy, then clearly all options are on the table.
And that’s what we are communicating to the sector, that we obviously want to see this investment, we need to see this investment.
If it doesn’t happen, then we can’t rule out a windfall tax.
Good morning. Westminster is – yet again – waiting for the Sue Gray report. The first wait was terminated by the announcement of the Metropolitan police investigation, and the Met’s ruling that publication of the Gray findings in full would compromise the inquiry. There was then a wait for Gray’s interim report – or “update”, as she called it, because the police veto made it so thin it could not be called a proper report. But this week we are finally expecting the whole thing. Very few people think it will be damning enough to trigger a Tory leadership contest, but it should provide the public with by far the best account of exactly who extensive lockdown rule-breaking was in Downing Street. Until now all we’ve had are news reports, based on evidence from unidentified whistleblowers, and limited information from the Met about the fines issued – which is many respects has begged more questions than it has answered.
Gray is a long-serving and very senior civil servant and she will have noticed that, when an independent-minded figure is about to deliver a verdict hostile to No 10, it is not unusual for Downing Street’s allies in the media to launch a hit job in advance. Right on cue, today’s Daily Mail carries a report accusing her of playing politics and grandstanding. It says:
“Sue Gray is supposed to be neutral but she’s been busy playing politics and enjoying the limelight a little too much,” said one insider.
The Mail claims Gray’s team incorrectly said Downing Street was responsible for scheduling a meeting some weeks ago between Gray and Boris Johnson – which prompted claims Johnson was trying to pressurise her when it was reported on Friday night. The Mail says:
Downing Street insiders are furious at the refusal of Miss Gray’s team to set the record straight. A source said: “It is infuriating. They have let this impression run that the PM has somehow tried to nobble the report when nothing could be further from the truth.
“He wants it all out there, however uncomfortable so we can all move on. He even wants the photos published.”
Allies of the PM have been shocked by media briefings from Miss Gray’s team.
Simon Clarke, the chief secretary to the Treasury, had to respond on the morning interview round this morning on behalf of the government. He made three main points on Partygate.
I would [condemn it]. I think the one thing I would say about Sue Gray, and I have never met her but I have heard a great deal about her, is that by repute she is one of the most fiercely independent and professional civil servants in the whole of government and brings a vast range of experience to bear, so I don’t think there is any politics.
In no way do I think there is anything other than a practical dimension to the question of when it comes out, now that the police have concluded their investigation.
- He said his understanding was that it was Gray who instigated the meeting at which she met Johnson.
- He said said the “extraordinary pressure” that No 10 staff were under during the pandemic helped to explain why the Partygate lockdown breaches happened. He said:
I think we also need to remember, without excusing what happened, but by way of context, the extraordinary pressure that group of people were under during the course of the pandemic.
They were working the longest imaginable hours under the most enormous amount of pressure. That in no way diminishes the seriousness of what happened, but it does provide some context.
As my colleague Peter Walker argues, this sounds like a preview of the case for the defence we will hear from No 10 when the full report comes out.
Here is the agenda for the day.
9.30am: The ONS publishes a report on hybrid working.
Morning: Boris Johnson and Keir Starmer are doing separate visits in or near London. They are both due to record clips for broadcasters.
11.30am: Downing Street holds a lobby briefing.
1pm: Kwasi Kwarteng, the business secretary, gives evidence to the Lords science and technology committee on the UK science strategy.
2.30pm: Tim Davie, the BBC director general, gives evidence to the Lords communications and digital committee on the future of the BBC licence fee.
After 3.30pm: MPs begin the second reading debate on the public order bill.
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