Labour accuses Hunt of being ‘out of touch’ on economy as polls open in Kingswood and Wellingborough – UK politics live | Politics
Labour: Hunt’s ‘insulting’ comments on economy show he is ‘out of touch’
Labour have suggested Chancellor Jeremy Hunt’s comments on the UK entering technical recession meant he and his party were “out of touch” with voters, and demanded a general election.
In comments after figures showed the UK economy was in recession, Hunt told broadcasters:
We always expected growth to be weaker while we prioritised tackling inflation, that means higher interest rates, and that is the right thing to do because you can’t have long-term healthy growth with high inflation.
But also for families when there is a cost-of-living crisis, when the cost of their weekly shop is going up, their energy bills are much higher, it is the right thing to do.
The underlying picture here is an economy that is more resilient than most people predicted, inflation is coming down, real wages have been going up now for six months.
If we stick to our guns, independent forecasters say that by the early summer we could start to see interest rates falling and that will be a very important relief for families with mortgages.
Hunt also said that “there are signs the British economy is turning a corner”, claiming:
Forecasters agree that growth will strengthen over the next few years, wages are rising faster than prices, mortgage rates are down and unemployment remains low. Although times are still tough for many families, we must stick to the plan – cutting taxes on work and business to build a stronger economy.
In his January 2023 pledges, prime minister Rishi Sunak promised “We will grow the economy, creating better-paid jobs and opportunity right across the country.”
A spokesperson for the Labour Party said: “Jeremy Hunt’s comments are as insulting as they are out of touch. The Conservatives’ failure to take any responsibility for Rishi’s recession show why we need an election.”
Key events
A little bit before Rachel Reeves was giving her speech on Labour’s plan for economic growth – this does feel very much like I am doing a parallel business live blog today – Jeremy Hunt was continuing his media round. On GB News he said the UK will have “the most competitive business taxes in the world”.
PA Media quote him saying:
I have not changed my position, our future as a country is to have the most competitive business taxes in the world, and that’s why in the autumn statement we cut corporation tax.”
I’ve never hidden from the fact that I had to increase taxes in my first autumn statement as Chancellor but nor have I ever said anything other than I think the most successful economies in the long run have lighter taxes, and as soon as the chance arose I would start to bring down the tax burden.
Independent forecasters say if we stick to that plan we’ll get inflation right down, interest rates could start to fall in a matter of months and that is the thing that matters most to families.
When they’re making a choice for the future of this country they want to know that they have people who will do the right thing, even if it’s not always the easy thing.
Asked about murmurs this morning from Jeremy Hunt that he was planning to tax cuts which might entail spending cuts on public services, Rachel Reeves says:
I do recognise that our public services are under huge pressure, unlike perhaps the Conservatives do, which is why I’ve said there does need to be an immediate injection of cash into our public services.
Which is why we would end the tax break where non-dom’s don’t pay taxes in the country in which they live, why we would end the tax break where private schools are not paying VAT or business rates, why we would change the rules about how the bonuses of private equity managers are taxed.
And we would use all of that money to fund an immediate of injection of cash into the public services, which are on their knees today. But then we’ve got to have a serious plan to grow the economy
Rachel Reeves says she “rejects entirely” accusations that there is little difference between Labour and Conservative plans on the economy for growth.
She said:
We’ve got a comprehensive plan for growth that has been drawn up with business. Let me just give you a few examples of that. Labour would reform the planning system to get Britain building again. There are at the moment, something like £200bn worth of projects waiting for connections to our grid system, but they are being held back by restrictions in the planning rules.
At the moment ittakes something like two years to build a wind farm, but it can take 13 years to get a connection to the grid because of bureaucracies in the system. We need to turn that around so that we get Britain building again and ensure that that crucial national infrastructure is coming online and we are determined to do that.
She went on to say:
We’ve set out reforms to the apprenticeship levy to turn it into a growth and skills levy, to help businesses to train up the next generation of workers and a modern industrial strategy with strategies already published for life sciences, for financial services, and for automotives, and more of those industrial strategies that have been worked on in conjunction with businesses.
Reeves: Hunt is being ‘dangerous’ and ‘misguided’ in giving a running commentary ahead of March budget
Rachel Reeves has criticised the chancellor Jeremy Hunt for giving a “running commentary” ahead of his March budget, branding his words “dangerous” and “misguided”.
She told the media during a Q&A session after giving a speech on Labour’s economic plans:
I do find it extraordinary that the actual Chancellor of the Exchequer is providing a running commentary on his own budget. Now, I worked at the Bank of England for many years, and I’ve been in politics for a long time. Now, I have never seen anything like it with the chancellor giving a running commentary. It is dangerous and it is very misguided, and I would urge him to stop this because it creates the uncertainty that is that we really don’t need.
Rachel Reeves, shadow chancellor, has said in response to a question about Labour’s plan:
Unlike this prime minister and this chancellor, Kier Starmer and I have got a real plan. A concrete plan for growth. And don’t just take our word for it, take the words of the businesses who have helped us devise these plans, whether it is reform of planning, or of pensions, the national wealth fund and GB energy.
This is all about getting the growth in our economy that we need. The Conservatives have no plan. We have a serious plan that we’ve worked on with business and the green prosperity plan is still there.
A national wealth fund to invest in carbon capture and storage, in green hydrogen, in our steel industry, as well as GB energy with an endowment to invest in nuclear, tidal and floating offshore wind, there’s a plan.
This government don’t have that. A Labour government will have to grow our economy and to secure that growth and investment that we need to turn things round after 14 years of conservative failure.
Rachel Reeves has been giving a speech about Labour’s plan for growth. She has asked whether anything in the country works better than it did 14 years ago. She finished the speech by saying:
Do our hospitals, our schools, our police work better than they did 14 years ago? Frankly, does anything in our country work better than when the Conservatives came to power 14 years ago?
He is further evidence today in black and white. Britain has fallen into recession.
It is time to turn the page on 14 years of Conservative failure. It is time to demand better than managed decline. It is time to start a new chapter for Britain.
She is taking questions now, the first one is from Faisal Islam of the BBC who asked about whether she recognised that it was “a relatively mild recession”, and then about Labour ditching its £28bn green development policy.
Labour have just put out an attack video clip on the prime minister over this morning’s economic news, labelling it “Rishi’s recession”. It features Rishi Sunak yesterday saying “I really believe that the economy has turned a corner” followed by a montage of talking head clips from this morning’s news show analysing the news that the country has fallen into recession.
They aren’t the only people trying to pin the recession personally on the prime minister. Earlier this morning Liberal Democrat leader Ed Davey said:
Rishi’s recession has savaged the British economy by decimating growth and leaving families to cope with spiralling prices. Years of Conservative chaos and a revolving door of Conservative chancellors has culminated in economic turmoil.
It’s hardworking Brits forced to pick up the tab for this mess, through high food prices, tax hikes and skyrocketing mortgage bills. This year the country will have the chance to kick out this incompetent and out of touch Government once and for all.
The Liberal Democrats were in coalition with the Conservatives from 2010 to 2015. The Conservatives have had five different Chancellors since July 2019.
Data from the department for energy security and net zero shows that 13% of households in England were in fuel poverty last year. While largely unchanged from 13.1% in 2022, the figure amounts to 3.17 million households.
The figures also reveal that well over a third (36.4%) of English households, some 8.91 million, were forced to spend more than 10% of their income, after housing costs, on energy bills, up from 6.66 million in 2022.
PA Media reports that Simon Francis, co-ordinator of the End Fuel Poverty Coalition, said:
The numbers of households paying more than 10% of their income on energy is truly shocking, far exceeding previous estimates. The reality is that household energy debt is now at record levels, millions of people are living in cold, damp homes and children are suffering in mouldy conditions.
With the caveat that the Guardian has not independently verified the timing and location of this photograph, we appear to have our first dog at a polling station social media post from Wellingborough. This is, apparently, Monty.
On Sky News this morning Jeremy Hunt claimed that he would “only cut taxes in a way that was responsible” in the March budget, and the chancellor refused to be drawn on specific measures.
He told viewers:
You will know that chancellors don’t talk about budgets just a few weeks before and that is for a very good reason, because I don’t yet know the final numbers that I will receive from the office for budget responsibility.
I would only cut taxes in a way that was responsible, and I certainly wouldn’t do anything that fuelled inflation just when we are starting to have some success in bringing down inflation.
Inflation has dropped over the last year from 11% to 4%, but is still running much higher than the Bank of England’s target of 2%.
Questioned if tax cuts would come at the expense of cutting public services, Hunt said:
I am a passionate supporter of the NHS and all our public services, but in the long-run the best thing that I can do as chancellor for the NHS is to make sure that our economy is growing healthily. So what you will see in everything I do in the Budget on March 6 is prioritising economic growth.
He suggested that countries with “lighter taxes” did “tend to grow faster”. Earlier in February the prime minister acknowledged that he has failed to keep his promise to cut healthcare waiting lists in England.
Starmer: ‘working people’ are playing the price for ’14 years of Tory economic decline’
Keir Starmer has used today’s GDP figures as another opportunity to call for change, saying that it is working people who are paying the price for what he described as “14 years of Tory economic decline”.
Rishi Sunak has failed to turn the corner on 14 years of Tory economic decline.
Britain is hit by a recession and it’s working people who will pay the price.
It’s time for change. Only Labour will deliver it.
— Keir Starmer (@Keir_Starmer) February 15, 2024
Larry Elliott
Larry Elliott is the Guardian’s economics editor
In one sense, there is no comparison between 2009 and 2023. The former was a severe recession, with output declining by about 6% over a protracted period. In 2023 the economy has essentially stagnated: growing by 0.2% in the first quarter, remaining unchanged in the second quarter and then shrinking slightly in the second half of the year.
That said, even a technical recession is a headache for Rishi Sunak, the economy showed across-the-board weakness in the fourth quarter, with all three main sectors – services, manufacturing and construction – going backwards. There was also evidence that households had been cutting back on their spending as a result of cost of living pressures and the squeeze from higher interest rates.
Governments facing the prospect of a general election always want to generate a feelgood factor before polling day. Britain, in the last three months of 2023, had the opposite: a feel-bad factor.
The picture would have been even worse had it not been for a rising population. Gross domestic product per head of population has not risen for seven straight quarters (six falls, one quarter unchanged) stretching back to early 2022.
Jeremy Hunt put a brave face on what was clearly unwelcome news for a government. The economy was “turning a corner”, the chancellor said, and forecasters were predicting stronger growth over the coming years. Hunt may well be right. The worst for the economy is now probably over.
Read Larry Elliott’s full analysis here: Even a technical recession is a headache for Rishi Sunak
Why are people calling it a ‘technical recession’?
Because the amount of growth or shrinkage in the economy is small, you will see the phrase “technical recession” being bandied about a lot today –and I already note some questions about the term in the comments. See, I do read them.
Look at this way, a recession is defined as two consecutive quarters of negative growth, so if you have quarters where the economy grows by 0.2%, 0.1%, -0.2%, -0.1% you would have technically entered a recession. However, four quarters where growth was 0.1%, -0.5%, 0.1%, -0.5% wouldn’t be a recession, even though the economy had shrunk by more. Essentially when we are dealing with very small changes, you can fall into a recession which is in effect a flatline.
The ONS said growth over the course of 2023 as a whole was estimated at 0.1%, the weakest year since 2009 during the financial crisis, excluding the economic collapse in 2020 during the Covid pandemic.
The ONS have an explainer on recessions here – The ‘R’ Word: What exactly is a ‘recession’ anyway? – in which Darren Morgan, ONS Director of Economic Statistics is quoted as saying:
A technical recession is widely regarded as two consecutive quarters of negative growth. You could get a -0.1% or +0.1% change, but how different really was the economy at that point in time? I would say it was broadly flat, but some people do get excited about it.
Chief economist at the ONS, Grant Fitzner, adds – and I will try not to take this personally:
I think journalists need something quick and simple to understand, and I guess this [technical recession] meets the bill. But I don’t think anyone would seriously call that a ‘recession’. The common sense understanding of a recession is a prolonged and significant downturn in economic activity. So not just one or two quarters, and not just a 0.1% change, but actually something a bit more substantial.
Hunt ‘considering spending cuts’ to fund pre-election tax giveaway
Eleni Courea
Jeremy Hunt is considering making billions of pounds of spending cuts to fund pre-election tax cuts in the next budget, according to a report.
The chancellor is looking at “further spending restraint” after 2025 if official economic forecasts suggest he does not have enough headroom to pay for “smart tax cuts”, the Financial Times reported, citing Treasury insiders.
The newspaper said Treasury officials were looking at reducing the projected rise in public spending from 2025 onwards to about 0.75% a year, which would release £5bn to £6bn for tax cuts in this spring’s budget.
The cuts would have to be made in unprotected departmental budgets such as adult social care and Ministry of Justice funding for courts and prisons. NHS and schools spending is protected.
Read more of Eleni Courea’s report here: Jeremy Hunt ‘considering spending cuts’ to fund pre-election tax giveaway
Rachel Reeves, Labour’s shadow chancellor, has said that the prime minister’s promises on the economy are “in tatters” after it was announced that the UK was in recession.
She said:
The prime minister can no longer credibly claim that his plan is working or that he has turned the corner on more than 14 years of economic decline under the Conservatives that has left Britain worse off.
This is Rishi Sunak’s recession and the news will be deeply worrying for families and business across Britain.
It is time for a change. We need an election now to give the British people the chance to vote for a changed Labour Party that has a long-term plan for more jobs, more investment and cheaper bills.
Labour: Hunt’s ‘insulting’ comments on economy show he is ‘out of touch’
Labour have suggested Chancellor Jeremy Hunt’s comments on the UK entering technical recession meant he and his party were “out of touch” with voters, and demanded a general election.
In comments after figures showed the UK economy was in recession, Hunt told broadcasters:
We always expected growth to be weaker while we prioritised tackling inflation, that means higher interest rates, and that is the right thing to do because you can’t have long-term healthy growth with high inflation.
But also for families when there is a cost-of-living crisis, when the cost of their weekly shop is going up, their energy bills are much higher, it is the right thing to do.
The underlying picture here is an economy that is more resilient than most people predicted, inflation is coming down, real wages have been going up now for six months.
If we stick to our guns, independent forecasters say that by the early summer we could start to see interest rates falling and that will be a very important relief for families with mortgages.
Hunt also said that “there are signs the British economy is turning a corner”, claiming:
Forecasters agree that growth will strengthen over the next few years, wages are rising faster than prices, mortgage rates are down and unemployment remains low. Although times are still tough for many families, we must stick to the plan – cutting taxes on work and business to build a stronger economy.
In his January 2023 pledges, prime minister Rishi Sunak promised “We will grow the economy, creating better-paid jobs and opportunity right across the country.”
A spokesperson for the Labour Party said: “Jeremy Hunt’s comments are as insulting as they are out of touch. The Conservatives’ failure to take any responsibility for Rishi’s recession show why we need an election.”
UK economy in recession as households cut spending
Richard Partington
The UK economy fell into recession at the end of last year as hard-pressed households cut back on spending in response to soaring interest rates and rising living costs.
The Office for National Statistics said gross domestic product (GDP) fell by a larger than expected 0.3% in the three months to December after a decline in all main sectors of the economy and a collapse in retail sales in the run-up to Christmas.
It followed a drop of 0.1% in the third quarter, confirming a second consecutive quarter of falling national output – the technical definition of a recession.
Official confirmation of a recession is a blow to the government with an election less than a year away and will embarrass Rishi Sunak, after the prime minister made growing the economy one of his five priorities for government at the start of last year.
Read more here: UK economy in recession as households cut spending
Polls open for two byelections in testing times for Tories and Labour
Sammy Gecsoyler
Polls have opened in the Wellingborough and Kingswood byelections, seen as a final chance for Rishi Sunak to buck predictions that his party is heading for a landslide defeat at the next general election.
The Conservatives are defending majorities of more than 18,000 in Wellingborough in Northants and 11,000 in Kingswood in South Gloucestershire.
But Labour is expected to win both contests. The party has pulled off a string of byelection victories, gaining four Tory seats in a row since July.
The byelection in Wellingborough was called after Peter Bone was successfully recalled by voters in the constituency in December.
Bone’s partner, Helen Harrison, was selected as the Conservative candidate for the byelection.
In Kingswood, a byelection was called after Chris Skidmore, a leading Tory voice on green issues, resigned in protest against the government’s bill to allow new oil and gas licences to be issued.
Read more here: Polls open for two byelections in testing times for Tories and Labour
Welcome and opening summary …
Good morning. It is byelection day, against the backdrop of a UK economy that has just entered recession. Here are the headlines …
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Polls have opened in the Wellingborough and Kingswood byelections. The Conservatives are defending majorities of more than 18,000 in Wellingborough in Northants and 11,000 in Kingswood in South Gloucestershire, but Labour is hoping to win both contests. We expect results between 2am and 5am.
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The UK economy fell into recession at the end of last year as hard-pressed households cut back on spending. The Office for National Statistics said gross domestic product (GDP) fell by a larger than expected 0.3% in the three months to December after a decline in all main sectors of the economy and a collapse in retail sales in the run-up to Christmas. Rachel Reeves, the shadow chancellor, said: “Rishi Sunak’s promise to grow the economy is now in tatters.”
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A senior German minister has suggested the UK could contribute to a new European nuclear shield if Donald Trump becomes US president again.
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Home secretary James Cleverly has condemned as “utterly deplorable” a huge recorded rise in antisemitic incidents in the UK since the 7 October Hamas attack inside Israel.
I am expecting a quiet day. The Commons, Lords, Senedd and the Scottish parliament are not sitting. In Stormont there are committee meetings. That is about it for the diary.
It is Martin Belam here with you. You can email me at martin.belam@theguardian.com – especially if you have spotted an error or typo.
Reminder: I know you probably all know this, but please don’t tell us how you voted in the comments section – section 66a of the Representation of the People Act 1983 on the requirement of secrecy makes it an offence to publish information about the ballot before the polls close at 10pm. I have to be on my best behaviour too. Many thanks.
