Brevia Consulting is providing a weekly round-up and analysis of the UK headlines. This week, read about Liz Truss and Rishi Sunak facing criticism for their latest policy proposals, and the Bank of England’s decision to raise interest rates to 1.75 per cent.
LIZ TRUSS U-TURNS OVER PUBLIC SECTOR PAY
Just hours after it was announced, Conservative Party leadership candidate Liz Truss dropped her plan to link public sector pay to local living costs.[1] On Monday night, Truss’s campaign team announced a proposal to introduce regional pay boards so that public sector employees living in areas with a lower cost of living would be paid less. Currently, public sector workers are paid the same regardless of where they live, with the exception of London. She claimed this would result in savings of £8.8bn a year, a figure which came from a report by the Taxpayers’ Alliance.[2] Her plans faced criticism from the unions, the Labour Party and some Conservatives. However, Liz Truss later announced that she ‘will not be going ahead with the regional pay boards’ and that this was ‘no longer [her] policy’.[3]
RISHI SUNAK PROPOSES EXPANDING DEFINITION OF EXTREMISM
Rishi Sunak faced backlash earlier this week for a policy he proposed as part of his Conservative Party leadership campaign. Sunak announced on Tuesday that he would expand the official definition of extremism to include ‘vilification of the United Kingdom’.[4] This means individuals reported for this behaviour would be referred to the government’s Prevent programme, a deradicalisation programme aimed at stopping vulnerable people being drawn into extremism or terrorism. Sunak’s policy proposal received criticism from former counter-terrorism chief Sir Peter Fahy, who accused the change of ‘straying into thought crimes and political opinions’.[5] This plan is one of several red meat policies announced by Sunak to appeal to voters on the right of the Party, as he trails 34 points behind his opponent Liz Truss in the latest polls.[6]
BANK OF ENGLAND RAISES INTEREST RATES AMID BLEAK FORECASTS
On Thursday, the Bank of England’s Monetary Policy Committee voted to raise interest rates to 1.75 per cent, an increase of 0.5 percentage points. The Bank took this move in response to ‘inflationary pressures’ caused principally by an increase in wholesale gas prices.[7] The Bank now expects inflation to rise to ‘just over 13 per cent’ by the end of the year and forecasts a recession from Q4 2022, lasting for five quarters.[8] These announcements will have a direct effect on household finances, with the Bank’s Governor saying ‘it will get worse’ for ‘those who are least well off in society’.[9] The announcements will also cause difficulty for Liz Truss and Rishi Sunak, with the BBC’s Faisal Islam commenting that these forecasts will mean a ‘wrecking ball’ to the forecasts of government borrowing, throwing the two candidates’ tax and spending policies into question.[10]
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Notes
[1] BBC News, ‘Why did Liz Truss U-turn over public sector pay?’, 2 August 2022, Link
[2] Tax Payers Alliance, ‘Regional Pay Bargaining’, July 2022, Link
[3] BBC News, ‘Truss: I will not be going ahead with regional pay boards’, 2 August 2022, Link
[4] The Independent, ‘Sunak defines ‘vilification of the UK’ as extremism in terrorism policy proposal’, 3 August 2022, Link
[5] The Guardian, ‘Former counter-terrorism police chief attacks Rishi Sunak’s Prevent plans’, 2 August 2022, Link
[6] Conservative Home, ‘ConHome’s new Tory leadership election survey. Truss 58 per cent, Sunak 26 per cent – 12 per cent undecided.’, 4 August 2022, Link
[7] Bank of England, ‘Bank Rate increased to 1.75% – August 2022’, 4 August 2022, Link
[8] Ibid.
[9] Reuters, ‘’All options are on the table’: BoE press conference after rate hike’, 4 August 2022, Link
[10] BBC News, ‘Bank of England warns the UK will fall into recession this year’, 4 August 2022, Link
