Inside Politics: Interventions

Hello there, I’m Matt Mathers and welcome to The Independent’s Inside Politics newsletter.

Today is the day for Liz Truss. Will she be blown over by the size of the energy crisis? The new PM has ruled out extending the windfall tax on oil and gas giants as she prepares to deliver a statement on her plans to ease the squeeze.

Commons action gets underway at 9.30am with Defra questions. After that comes any urgent questions. Then Penny Mordaunt, the new Commons leader, makes her first business statement. PM Truss is up after that at around 11.15 to make a statement on the energy crisis, followed by a debate on gas and electricity costs.

Liz Truss will make her first major policy intervention later today when she sets out the details of her plan for how to deal with soaring energy bills. And rarely have the stakes been so high, with the new prime minister’s response to the crisis set to dominate the rest of the parliament, potentially deciding the next election and more importantly the fate of millions of people struggling to pay for their gas and electricity.

Details of the blueprint have slowly leaked out over the past few days. Truss is expected to cap bills at around £2,500 for up to two years – as part of a package which some reports say could cost upwards of £100 billion, with every household set to get at least some help. There will also be some form of support for businesses too, although the details on this are still unclear. Reports suggest the government could force energy firms to offer specific reductions on the unit price of the energy used by firms. Truss is also expected to reverse a ban on fracking and give the green light to oil and gas drilling in the North Sea.

There were two a few bits of unwelcome news for the PM yesterday as she put the final touches to her plan. The pound slumped to its lowest level against the US dollar since 1985 and the markets are becoming increasingly jittery about the size of the challenge faced by the new PM, who wants to pay for the intervention – and her tax cuts – through more borrowing. The second is that the Bank of England warned interest rates will probably rise regardless of whether or not bills are frozen and that a recession is still likely.

How to fund the rescue package dominated the exchanges at PMQs yesterday and there is clear daylight between the two main parties: Labour says it would extend the windfall tax on the gargantuan profits of oil and gas giants to pay, while the Conservatives want to borrow more. This means that, at some point in the future, you and I will have to pay for it through higher taxes. Keir Starmer claimed Truss’s refusal to impose a levy would “saddle the UK with debt for decades”. It is not clear, however, that Labour’s extra levy would, by itself, be enough to meet the scale of the challenge. Truss says another tax would deter investment. It will be worth keeping an eye on how Tory MPs not on the government payroll respond to the package in today’s debate and in media interviews. Windfall taxes have proved to be widely popular, including among Conservative voters.

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Truss’s cabinet reshuffle went as most had anticipated, with top jobs going to loyalists, close allies and “mates”, as some critics have put it. Sunak allies did get some posts further down the ministerial rung, but perhaps the most interesting hire – or the one that attracted the most attention – was that of arch-Brexiteer Steve Baker to the Northern Ireland Office.

He is the minister of state, so not quite at the centre of power, but some observers have interpreted the move as a signal that Truss is going to take a hard line on Brexit’s Northern Ireland protocol. Or, as a key member of the European Research Group, could he be the one best positioned to sell a compromise to his peers?

The row over NI’s trading arrangements is in the spotlight once again following a break over the summer, and Washington last night warned Truss that UK-US trade talks could be in jeopardy if her government undermines post-Brexit arrangements for Northern Ireland.

“There is a no formal linkage on trade talks between the US and the UK and the Northern Ireland protocol, as we have said, but efforts to undo the Northern Ireland protocol would not create a conducive environment,” White House press secretary Karine Jean-Pierre said.

Keir Starmer questions Truss’s refusal to consider a windfall tax.

“Every single pound in excess profits she chooses not to tax is an extra pound on borrowing that working people will be forced to pay back for decades to come. Families and public services need every penny they can get. How on earth does she think now is the right time to protect Shell’s profits?”

Torsten Bell, Resolution Foundation chief executive, draws attention to the cost of living crisis in Northern Ireland.

“The lack of attention to Northern Ireland during this energy crisis is criminal:

- never mentioned Ofgem/price caps don’t apply there

- Seven in ten (68 per cent of) Northern Irish homes are heated by oil

- lack of functioning executive means delays to support (ie £400 off bills)”.

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