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Health secretary says Truss did not focus too much on rewarding friends in cabinet appointments; new ministers attend first cabinet meeting.
Freezing energy bills would help richer people the most, Paul Johnson, director of the Institute for Fiscal Studies, told the Today programme this morning.
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.
Johnson said a price freeze on its own would be poorly targeted. He explained:
If this is a straightforward bill freeze then the majority of the money will go to better-off people who use more energy. 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. 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. 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.
If this is a straightforward bill freeze then the majority of the money will go to better-off people who use more energy.
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.
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.
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.
Johnson also said the government could afford to borrow £100bn. He told the programme:
We can afford to borrow that amount. We're still managing to borrow relatively straightforward on the international markets.
But he warned that freezing energy bills could cost even more in the long term.
The big question here is: 'Is it going to be 100bn? What is the exit strategy from supporting bills?' 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. 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. 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.
The big question here is: 'Is it going to be 100bn? What is the exit strategy from supporting bills?'
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.
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.
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.
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.
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.
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.
Stroud said:
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.
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.
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.
Here is a full list of the new cabinet. And here is our overnight story about it.
Related: Liz Truss culls cabinet on first day as loyalists and allies get top jobs
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:
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. I know that Liz is very keen . to make sure that we have really focused delivery.
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.
I know that Liz is very keen . to make sure that we have really focused delivery.
And on Sky News Coffey said:
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.
I will post more from the Coffey interviews soon.
Here is the agenda for the day.
8.30am: Liz Truss chairs her first cabinet meeting.
10am: Andrew Bailey, the governor of the Bank of England, gives evidence to the Commons Treasury committee.
11.30: Chris Heaton-Harris, the new Northern Ireland secretary, takes questions in the Commons.
12pm: Truss faces Keir Starmer at her first PMQs.
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And here are some more line from Thérèse Coffey's morning interview round.
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.
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:
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.
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.
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:
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.