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Rishi Sunak woos Tory faithful with attack on  ‘immoral’ borrowing 

Rishi Sunak gave his conference speech in Manchester today in front of a packed audience of the Tory faithful. 

The Chancellor painted himself out as a safe pair of hands who believes in fiscal stability – and the power of Brexit.  

  • Mr Sunak said he believes borrowing more money for future generations to pay for is ‘immoral’ as he tried to stress his desire for fiscal responsibility. 
  • He told the crowd ‘the only sustainable route out of poverty comes from having a good job.’
  • He accused Labour of having ‘a desperately sad vision for our future’ that involved just increasing benefits and telling young families ‘the economic system is rigged against you and the only way you stand a chance is to lean ever more on the state’.
  • The Chancellor claimed he was told that supporting Brexit meant ‘my political career would be over before it had even begun’.
  • But he said he did so because ‘despite the challenges, …. in the long term I believed the agility, flexibility and freedom provided by Brexit would be more valuable in a 21st century global economy than just proximity to a market.’   
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Rishi Sunak today laid out his ‘New Tory’ vision slamming Labour’s obsession with state handouts – but defending brutal tax hikes saying it would be ‘immoral’ to let the government’s finances spiral out of control after Covid.

In his first big speech to the Tory conference – watched by Boris Johnson – the Chancellor gave an impassioned justification of his approach to ‘building back better’ as the UK recovers.

He insisted it would be fundamentally ‘un-Conservative’ to ignore the huge damage to the government’s books inflicted by the pandemic, pointing out more revenue is needed to bolster the NHS and social care. 

But he tried to quell rising anxiety about imposing the highest sustained tax burden on the economy by vowing that taxes will be slashed again once the crisis is past.

Mr Sunak also stood by the decision to axe the £20 a week uplift to universal credit, setting a stark dividing line with Labour by warning that making life better for ‘ambitious’ but struggling families cannot be just about ‘increasing their benefits’. 

He said that taking a ‘pragmatic’ stance would make the Tories the party of the ‘public sector and the private sector’. 

The set-piece in Manchester confirmed Mr Sunak’s status as the natural successor to Mr Johnson, with activists forming huge queues to squeeze into the hall. 

However, he paid a fulsome tribute to the PM saying it was down to him that the Tories were in power with an 80-strong majority. 

He also set out his own vision on what the party should stand for, arguing that it must abandon ‘dogma’ to protect future generations from the impact of the pandemic.  

‘I believe that mindless ideology is dangerous. I’m a pragmatist,’ he said.

‘I care about what works, not about the purity of any dogma.

‘I believe in fiscal responsibility. Just borrowing more money and stacking up bills for future generations to pay is not just economically irresponsible, it is immoral. 

‘Because it’s not the state’s money it’s your money.’

In his first big speech to the Tory conference – watched by Boris Johnson – the Chancellor gave an impassioned justification of his ‘plan’ for the UK’s recovery

Mr Johnson seemed delighted by the speech, which tried to set out a vision for how the Tories would handle the aftermath of the coronavirus crisis and Brexit

Mr Sunak tried to quell rising anxiety about imposing the highest sustained tax burden on the economy by vowing that taxes will be slashed again once the crisis is past

Mr Sunak tried to quell rising anxiety about imposing the highest sustained tax burden on the economy by vowing that taxes will be slashed again once the crisis is past

Mr Sunak tried to quell rising anxiety about imposing the highest sustained tax burden on the economy by vowing that taxes will be slashed again once the crisis is past

Mr Sunak and Mr Johnson have been putting on a show of unity after signs of tensions over spending commitments

Mr Sunak and Mr Johnson have been putting on a show of unity after signs of tensions over spending commitments

Mr Sunak and Mr Johnson have been putting on a show of unity after signs of tensions over spending commitments

Home Secretary Priti Patel was also in the crowd for the Chancellor's keynote speech today

Home Secretary Priti Patel was also in the crowd for the Chancellor's keynote speech today

Home Secretary Priti Patel was also in the crowd for the Chancellor’s keynote speech today

Alarm bells for Boris as poll shows Tory support down in Red Wall seats 

Alarm bells were ringing for Boris Johnson today after a poll suggested he is on track to see his majority halved.

The in-depth YouGov research found backing for the Tories has plunged by seven points since the 2019 election.

They are now only marginally ahead of Labour in 50 crucial battleground seats across the North, Midlands and Wales, on 41 per cent to 40 per cent. 

Using the MRP model that performed well in the last two elections, the experts concluded that Mr Johnson could lose 18 of the constituencies if an election was held immediately, and a further 14 were too close to call. 

That would reduce his Commons majority to 44 – still enough for a functional government but a significant fall from the current 80.  

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Mr Sunak was introduced by one of the beneficiaries of the KickStart programme to get young people into jobs.

And he insisted that was the kind of initiative that would address the root causes of poor living standards and poverty. 

‘Tackling the cost of living isn’t just a political sound bite, it’s one of the central missions of this Conservative government,’ he said. 

‘Is the answer to their hopes and dreams just to increase their benefits?

‘Is the answer to tell that young family, the economic system is rigged against you, and the only way you stand a chance is to lean ever more on the state?

Mr Sunak said more handouts from the government was the ‘essence of the Labour answer’.

‘I believe that the only sustainable route out of poverty comes from having a good job,’ he said.

‘It’s not just the pounds it puts in your pocket, it’s the sense of worth and self-confidence it gives you.’ 

On the topic of the national insurance hike – which will raise £12billion for the Treasury from April – Mr Sunak said: ‘I’ll tell you what is un-Conservative: unfunded pledges, reckless borrowing and soaring debt.’

He continued: ‘Yes, I want tax cuts. But in order to do that our public finances must be put back on a sustainable footing.’

Mr Sunak said Brexit – ‘despite the challenges’ – meant that in the long term the UK would have ‘agility, flexibility and freedom’ and help create ‘a renewed culture of enterprise’.

In a passing reference to the current crisis facing the Government, he said: ‘Right now we are facing challenges to supply chains, not just here but right around the world and we are determined to tackle them head on.’

Mr Sunak announced new measures to help ensure the UK remains ‘a global leader’ in artificial intelligence (AI), claiming it could be worth around £200 billion a year to the economy if it matched the transformational impact of the steam engine, computers or the internet.

‘And so today I am announcing that we will create 2,000 elite AI scholarships for disadvantaged young people and double the number of Turing AI world-leading research fellows, helping to ensure that the most exciting industries and opportunities are open to all parts of our society.’

Business anger over PM’s wage call amid supply chain crisis 

Boris Johnson faced business fury today after ministers dismissed calls for ‘uncontrolled immigration‘ and warned workers must be paid better amid fears of food and fuel shortages this winter.

Industry chiefs warned that the burden of higher wages will have to be passed on to consumers as the government dug its heels in despite rising alarm that supply chain chaos could continue for months.

There are concerns that could feed already-soaring inflation, sparking a spiral of higher pay settlements and spiking prices.  

But Mr Johnson refused to engage with questions about whether he was blaming businesses or risking sending the economy into a tailspin. 

Asked on a visit to a Network Rail construction site in Manchester whether he was worried about the ‘pain’ that rising inflation and tax rises would have on households, the premier merely said the Government was investing in a ‘high wage, high-skilled economy’. 

‘When you talk about some of the supply chain issues, that’s really a function of the world economy, particularly the UK economy, coming back to life after Covid, sucking in gas in particular – there is a massive demand for that in Asia,’ he said.

‘There is a shortage of lorry drivers actually around the world, from Poland to the United States, and even in China they are short of lorry drivers.’ 

In a round of interviews at Tory conference in the city earlier, Chancellor Rishi Sunak tried to cool the tensions saying the Government is ready to take ‘short-term’ action to help reduce the pressure. 

‘But we can’t wave a magic wand and make global supply chain challenges disappear overnight,’ he said.  

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In a round of interviews earlier, Mr Sunak was asked repeatedly about whether he would approve further tax increases, including a hike to council tax to help fund social care after a warning from local authorities. 

The Chancellor sidestepped as he was grilled about the prospect of increasing the levy local authorities can charge, or allowing them to increase the level without holding a referendum. 

But he also determinedly refused to kill off speculation that the government has pencilled in a tax cut for before the election if the economy recovers.  

Mr Sunak told Sky News he would not ‘pre-empt’ the local government finance settlement later in the year and added to LBC he ‘never can comment about future tax policy’.

He did not rule out an increase to income tax before the next election – but also refused to rule out a cut if there is enough headroom. 

Mr Sunak told BBC Breakfast: ‘Recently we did make a significant announcement on tax and it was a difficult decision to make, especially for a Conservative Chancellor and a Conservative Prime Minister.

‘But we took that decision because we wanted to make sure the NHS got the significant funds it requires to help recover strongly from coronavirus.’ 

Social care costs are partly met from central government funds, but also from councils – who have warned they require £2.6billion a year just to sustain current levels of social care. 

Ministers are reportedly looking at letting local authorities increase the social care levy above 3 per cent without the need for a local referendum.

An alternative would be a direct cash injection in the spending review later this month.  

Meanwhile, Mr Sunak is committing more than £500million in fresh funding to help people back into work as he seeks to stem the continuing turbulence of the coronavirus pandemic.

He is shifting the focus on to getting people into new or better jobs as the Government comes under sustained pressure over a major squeeze on living standards. 

Funding for the new jobs package in his conference speech will not be set out until the spending review and Budget later this month. 

Mr Sunak suggested it was his duty as Chancellor to tell the Prime Minister not to overspend after joking that he would cut up Mr Johnson’s ‘credit card’ to rein back his public spending.

‘That was an old thing but I think that’s something all chancellors say as part of our job,’ Mr Sunak told BBC Radio 4’s Today programme.

Mr Sunak was also forced to defend the decision to end the £20-a-week uplift to Universal Credit as families and workers face financial hardship, in a move some Tories have campaigned against.

And he conceded it is likely there will be shortages this Christmas, as the strains of coronavirus are compounded by a shortage of workers stemming from Brexit.

‘We’re seeing supply disruption not just here but in lots of different places and there are things we can try and mitigate and we are,’ Mr Sunak told Today.

Rishi Sunak (pictured on a visit to a building site in Manchester with Boris Johnson today) has dodged over rumours of a stealth council tax rise to help fill the black hole in social care funding

Rishi Sunak (pictured on a visit to a building site in Manchester with Boris Johnson today) has dodged over rumours of a stealth council tax rise to help fill the black hole in social care funding

Rishi Sunak (pictured on a visit to a building site in Manchester with Boris Johnson today) has dodged over rumours of a stealth council tax rise to help fill the black hole in social care funding

The in-depth YouGov research found backing for the Tories has plunged by seven points since the 2019 election

The in-depth YouGov research found backing for the Tories has plunged by seven points since the 2019 election

The in-depth YouGov research found backing for the Tories has plunged by seven points since the 2019 election

Mr Sunak and Mr Johnson togged up in hi-vis gear for the visit in Manchester today

Mr Sunak and Mr Johnson togged up in hi-vis gear for the visit in Manchester today

Mr Sunak and Mr Johnson togged up in hi-vis gear for the visit in Manchester today 

In a round of interviews at Tory conference in Manchester this morning, Chancellor Rishi said the government is ready to take 'short-term' action to help reduce the pressure

In a round of interviews at Tory conference in Manchester this morning, Chancellor Rishi said the government is ready to take 'short-term' action to help reduce the pressure

In a round of interviews at Tory conference in Manchester this morning, Chancellor Rishi said the government is ready to take ‘short-term’ action to help reduce the pressure

Farmers staged noisy protests outside the Tory gathering in Manchester this morning, after Mr Johnson shrugged off concerns about a mass culling of pigs because of a lack of abattoir staff

Farmers staged noisy protests outside the Tory gathering in Manchester this morning, after Mr Johnson shrugged off concerns about a mass culling of pigs because of a lack of abattoir staff

Farmers staged noisy protests outside the Tory gathering in Manchester this morning, after Mr Johnson shrugged off concerns about a mass culling of pigs because of a lack of abattoir staff

Sunak vows to ‘throw kitchen sink’ at getting people back to work 

Rishi Sunak today insisted the Government is ‘throwing the kitchen sink’ at helping people get a new job as he unveiled a £500million package to support furloughed workers. 

The Chancellor said he warned at the start of the coronavirus pandemic that ‘it wasn’t going to be possible for me or quite frankly any chancellor to save every single person’s job’. 

He said the end of the £70billion furlough programme will result in some job losses. 

But he said people should be ‘reassured’ that ministers are doing everything they can to help the unemployed back into work. 

Furlough is credited with saving millions of jobs during the Covid-19 crisis but an estimated one million workers were still on the programme when it finally closed last week, sparking fears of a surge in unemployment.  

In his keynote speech to the Conservative Party conference in Manchester today, the Chancellor confirmed new funding to ‘prioritise’ job support for workers coming off furlough.

The £500million extension to the Government’s so-called ‘Plan for Jobs’ will also provide tailored packages for others hit by the pandemic, including the young and workers aged over 50.

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‘But we can’t wave a magic wand. There’s nothing I can do about the decision by a country in Asia to shut down a port because of a coronavirus outbreak.’

Mr Sunak has insisted the Government is ‘throwing the kitchen sink’ at helping people get a new job as he unveiled a £500million package to support furloughed workers. 

The Chancellor said he warned at the start of the coronavirus pandemic that ‘it wasn’t going to be possible for me or quite frankly any chancellor to save every single person’s job’. 

He said the end of the £70billion furlough programme will result in some job losses. 

But he said people should be ‘reassured’ that ministers are doing everything they can to help the unemployed back into work. 

Furlough is credited with saving millions of jobs during the Covid-19 crisis but an estimated one million workers were still on the programme when it finally closed last week, sparking fears of a surge in unemployment.  

In his keynote speech, the Chancellor confirmed new funding to ‘prioritise’ job support for workers coming off furlough.

The £500million extension to the Government’s so-called ‘Plan for Jobs’ will also provide tailored packages for others hit by the pandemic, including the young and workers aged over 50.

The Chancellor’s speech came amid warnings of a cost-of-living crisis for some households who face rising energy bills, price hikes in shops and a cut to Universal Credit.

Household budgets will sustain a further blow next April when national insurance contributions rise by 1.25 per cent to help fund the NHS and social care.

Shadow work and pensions secretary Jonathan Reynolds said the package ‘will do nothing to compensate for the Chancellor’s tax rises, cost-of-living crisis and cuts to Universal Credit which are set to hammer millions of working families’.

Before the speech Mr Johnson and Mr Sunak toured a rail upgrade site in Manchester. 

They were shown blueprints for the so-called Northern Powerhouse Rail improvements while being talked through the upgrades by Network Rail bosses.

Following the briefing, the pair, wearing hi-vis jackets, were taken on a trip up to the tracks to see the overhaul first hand.

Sunak unveils £34m fund for AI scholarships  

A new £34million national artificial intelligence (AI) fund will support the creation of 2,000 new scholarships for disadvantaged students.

Chancellor Rishi Sunak said the move, along with an increase in the number of world-leading researchers in the UK under the Turing AI fellowship, would help cement the country’s status as a ‘scientific superpower’.

The announcement was set out by the Chancellor in his Conservative Party conference speech in Manchester.

‘As the latest general-purpose technology, AI has the potential to completely transform whole economies and societies,’ Mr Sunak said.

‘We want the UK to be a scientific superpower but also a high-skilled, high-tech economy.’

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The two men were told that signalling and other performance boosts will result in journeys of just half an hour between Manchester and Leeds and 42 minutes from York to Manchester once the work is completed.

Told that the planned six trains an hour between Manchester and Leeds will mean a more frequent service than on London Underground’s Metropolitan Line, Mr Johnson, a former mayor of the capital, replied: ‘That’s not saying much.’

While on site, the Cabinet colleagues cracked jokes about ‘levelling up’ – one of the Conservative administration’s policy catchphrases – as they were shown how technology helps ensure construction lines are level.

They then spoke with apprentices who are helping to dig in the improvements at the Miles Platting site.

Mr Sunak told them they are part of one of the biggest rail investments in their lifetimes.

The Prime Minister responded, saying jokingly ‘And thanks for paying for it, Rishi’, before adding: ‘It will be worth every penny.’

After telling the young workers they should be proud to be part of such a development, one apprentice told them the rail improvements will be ‘good for a night out’.

Asked what he meant, the worker said taxis are cheaper in Leeds, making it more reasonable for a night out than Manchester.

Mr Johnson chuckled and replied: ‘The taxis are cheaper? That’s good to know.’

What are the higher costs coming down the track for Britons over the coming years? 

National insurance rise – from April 

The rates of national insurance are due to be pushed up by 1.25 percentage points from April, in a move that will cost households hundreds of pounds. 

The move will raise £12billion a year, which will initially go on bailing out the NHS and clearing backlogs after the pandemic. However, in the longer term it is meant to be used for social care.

Boris Johnson has promised that no-one will pay more than £86,000 towards their care costs. However, that does not include accommodation and some other costs, with fears of a ‘postcode lottery’ as local authorities set different rules.  

Initially the hike will look like a NI rise on pay slips, but later it will be billed a ‘health and social care levy’. 

Ministers insist it is fairer than other tax options because it falls on business as well as individuals.

To raise the equivalent amount in income tax would require an increase in individuals’ tax of 2 percentage points.

A typical basic rate taxpayer earning £24,100 will contribute £180 in extra NI in 2022/23.

A higher rate taxpayer earning £67,100 will contribute £715. For the first time, the NI will be charged on people working over the state pension age of 66.

Universal credit – £20 uplift ends 6 October 

The Government introduced a temporary £20 increase to universal credit payments in response to the pandemic in April last year, but the scheme is set to officially end on 6 October. 

Close to six million people currently claim universal credit, almost double the three million before the pandemic, with almost 40 per cent of them classed as being in employment. 

Thanks to the boost, a single person aged 25 or over has gone from earning £317.82 to £409.89 a month, a difference of £23 a week or £1,104.84 a year.

In that case, the £23 a week boost made up more than a fifth of the amount they were paid. 

Citizens Advice has warned that a third of people on universal credit will end up in debt when the uplift is removed, with the average shortfall set to be of around £50 a month. 

Research by another charity, Turn2us, has found that over half of people on universal credit will struggle to pay their bills when the cut comes into effect, with a further one in four unable to afford their rent or mortgage payments. 

‘Due to the way Universal Credit is tapered as earnings increase, it’s not just a case of people picking up an extra couple of hours of work to help fill the gap, instead they will likely have to make tough decisions about what to pay for and what to cut from the household costs,’ notes Laura Suter, head of personal finance at AJ Bell.

‘Anyone who will be hit by the cut should check they’re getting all the benefits they’re entitled too – Citizens Advice is a good first port of call for help navigating the system.’   

Thomas Lawson, chief executive at Turn2us, said: ‘The £20 per week cut to Universal Credit was already going to leave many families struggling to keep up with the cost of living. 

‘This, now combined with a sudden surge in energy prices, could spell disaster and plunge thousands more people into financial insecurity or even poverty; especially those of us whose financial resilience has been worn away by the pandemic.’

Green revolution – coming years 

Homeowners are set to be hit with a new environmental tax on gas as ministers try to force them to abandon the fuel in favour of green alternatives.

Climate change levies currently added to domestic electricity, which average £159 per year, are expected to be axed and new payments added to gas to entice people to replace their central heating boilers and cookers.

The move is intended to encourage the take up of heat pumps and other electric alternatives as they seek to make the UK net zero for carbon emissions by 2050.

Ministers insist the change will mean no overall increase to bills and could help increase the take-up of electric cars as it become cheaper to charge them at home.

However critics doubt that will be the case, and the change comes at a time when UK gas prices have hit a record high.

Mr Johnson has also pledged to make all the UK’s electricity supplies ‘green’ by 2030, although again the government argues this will cut prices for households rather than increase them. 

Stamp duty holiday – already over

The full stamp duty holiday came to an end in June, with the nil-rate band – the portion of a property purchase buyers don’t need to pay stamp duty on – reduced from £500,000 to £250,000.

The tax break, which saved buyers up to £15,000 on their house purchases up until then, was cut back, with the maximum saving currently capped at £2,500. 

But from the 1 October, that went too, as the nil-rate band will revert to the normal £125,000.

Stamp duty has been blamed for pushing house prices higher over the past year, with many experts anticipating a drop in demand, and hence prices, after its end. 

And demand did indeed fall off a cliff between June and July, with the number of property transactions plummeting by 63 per cent, according to official figures from HMRC. 

But many believe prices will hold up well in the coming months thanks to cheap mortgages and demand continuing to be driven by people looking to relocate to larger homes in the countryside in the wake of the pandemic.

‘While there is likely to be a surge of property purchases pushed through before the deadline and a small drop in the month after, the early signs are that the property market isn’t headed for a large crash – particularly while borrowing is still so extraordinarily cheap,’ Suter said.

VAT reduction – already over  

The reduced VAT rate on food and soft drinks for hospitality businesses was introduced during the pandemic to help out struggling pubs and restaurants, and has been extended a couple of times. 

However, it will now come to a close at the end of the month – and could see businesses hike prices to customers.

On 30 September 2021 the current 5 per cent reduced rate will rise to 12.5 per cent, which will last until 31 March 2022, when it will rise back to the old standard rate of 20 per cent.   

‘Many hotels and restaurants decided to keep this reduction for themselves rather than pass it on to customers, to help shore up their finances post-pandemic,’ said Suter.

‘With food and energy costs rising it has provided a cushion for businesses and may have helped them put off increasing prices. 

‘But once the rate shoots back up it will be another squeeze on margins for businesses and means we’ll probably see higher prices when going out to eat or booking a trip away.’

Energy price cap – from October 1

On top of seeing much of Government support scrapped, many families and businesses are also facing rising energy bills thanks to the energy price cap.  

Some 11 million households on their suppliers’ default energy tariffs will see an increase of £139 a year to £1,277, while bills will also increase by £153 to £1,309 a year for 4 million pre-payment meter customers.  

The increased bills will start from 1 October and last for the following six months until the cap is reviewed again.

‘Usually you’d be far better off getting off your provider’s standard variable tariff and locking in a fixed-rate deal, but the energy market is so barmy at the moment that no one is offering a fixed deal for a cheaper price than the energy cap,’ Suter says.

‘This means everyone needs to face up to rising energy bills, just as we head into the colder months.

‘If your deal has ended you need to weigh up whether you want to secure a fixed-rate deal now, at a higher cost than your current price, with the expectation that you’ll be protected from rising energy prices. 

‘Or you can stick with the energy price cap rate and gamble that recent gas price rises end soon.’

Households struggling to pay their bills can also contact their supplier or ask for help from a debt advice charity.   

Rising inflation and food costs

Inflation fears were fuelled again this month, when the headline CPI rate recorded its largest jump ever in August to 3.2 per cent – with the Bank of England predicting it could soar above 4 per cent by the end of the year. 

Contributing to the rise was a jump in the price of food and drinks, partly as a result of the supply chain crisis gripping the country.

Food and non-alcoholic drink prices rose 1.1 per cent between July and August, and by 0.3 per cent over the year, according to the latest figures by the Office for National Statistics. 

The average price of a pint in the pub across the country could soon pass £4, the ONS said. 

Last year, the average household spent £277 a month on food expenses, but the latest inflation reading suggest this could increase to £285 a month this year, according to analysis by Royal London. 

‘Anyone who has been to the supermarket recently will have noticed that their weekly bill has been rising,’ said Suter. 

‘A combination of shipping issues, driver shortages, supply chain issues and a leap in demand have all lead to a spike in prices – in July we saw the largest monthly rise in food costs. 

‘While you can’t directly combat rising prices, you can reduce your food bill. There are lots of offers out there for using online grocery delivery services for the first time, which can get decent discounts on a shop. 

‘Or you can go back to the old fashioned methods of sticking to your list, meal planning and budgeting.’

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Source: Daily Mail UK

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