Inside Politics: Inflation surge

New forecast estimates inflation could surpass 18% next year as Tory leadership rivals come under further pressure to act, writes Matt Mathers

Tuesday 23 August 2022 09:07 BST

(PA)

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

Maybe it’s not the end of days for Manchester United after all? The same can’t be said for Rishi Sunak, who has been played off the pitch in the Tory leadership and looks to have failed to win over the party’s home fans, as talk turns to whether or not he will accept a job in Liz Truss’s government. In more grim news, a new forecast warns inflation could soar to more than 18 per cent next year.

Inside the bubble

Parliament is not sitting.

Shadow defence secretary John Healy on Sky News Breakfast at 8.05am.

Tory MP and Sunak supporter Mark Harper on TalkTV Breakfast at 8.32am.

Daily briefing

It’s a gas

The news that surging wholesale gas prices could send inflation spiralling to more than 18 per cent next year dominates the news websites and papers this morning amid fears that the poorest will endure a second successive year of effective cuts to their benefits.

The grim forecast by analysts at the investment banking company Citigroup is far higher than the 13.3 per cent predicted by the Bank of England and puts the UK on course to have the highest prices of any large western country.

As if that wasn’t bad enough, a separate forecast by Consultancy firm Cornwall Insight estimates that energy prices, the main driver of the inflationary spike, could top a similarly staggering £5,341 by April next year. Both updates pile further pressure on the Tory leadership contenders, scheduled to take part in another hustings event in Birmingham tonight, to take more action to help people struggling with their bills.

Liz Truss, the foreign secretary and favourite to replace Boris Johnson as prime minister, is still refusing to set out the precise details of what she would do on the cost of living crisis. Truss did, however, say that she would not hold an emergency budget if she wins the keys to No 10 Downing Street, and will hold a “fiscal event” instead.

Allies of Rishi Sunak, meanwhile, ramped up their attacks on Truss’s wider tax-cutting agenda, with Kevin Hollinrake, the MP for Thirsk and Malton, warning that “people are going to be on the streets. Things are going to be that bad for some households.” The former chancellor also hinted that he would not take a cabinet job in Truss’s government, following reports that he could be offered the health brief.

Rishi Sunak and Liz Truss are competing to become the next Prime Minister (PA) (PA Wire)

Crap move

Many readers will have seen the reports – and disgusting pictures – of sewage being pumped into the sea at popular beach spots around the UK, following recent flash foods (Victoria Richards, our voices editor, has written about it here).

Now it has emerged that Truss presided over “efficiency savings” that significantly slashed Environment Agency funding and resulted in “doubled sewage discharge”.

Labour Party analysis of official figures shows that since 2016, when Truss was in charge of Defra, raw sewage discharge more than doubled from 14.7 per overflow in 2016 to 29.3 in 2021. This coincided with her cutting £80m of sewage monitors as part of a £235m Tory axe to the EA’s budget, which she branded “efficiency savings”.

Jim McMahon, the shadow environment secretary, said the analysis demonstrated Truss’s lack of “foresight” and “care for detail”. A senior consultant for the Environment Agency told The Guardian about the cuts: “They plummeted to the point it was impossible for the Environment Agency to know what’s going on.

A government spokesperson said: “Since 2015 the Environment Agency has brought 48 prosecutions against water and sewerage companies, securing fines of over £137m.” The spokesperson added that since privatisation, the equivalent of £5bn had been invested to upgrade water infrastructure, but the companies must “continue to take action”.

On the record

Sunak hints that he won’t take cabinet job in Truss government.

“I’m not focused on all of that. I’m trying to win this race at the moment – I’m not thinking about jobs. You really need to agree with the big things, because it’s tough, as I found out, when you don’t. And I wouldn’t want to end up in a situation like that again.”