May 12, 2022

Boris Johnson refuses to rule out U-turn to impose windfall tax on energy firms


Maroš Šefčovič, the European Commission vice-president who is in charge of Brexit talks with the UK on behalf of the EU, released a statement this morning after his conversation with Liz Truss, the foreign secretary, on the Northern Ireland protocol. He says it is a matter of “serious concern that the UK government intends to embark on the path of unilateral action”. He added:

Unilateral action, effectively disapplying an international agreement such as the protocol, is simply not acceptable. This would undermine trust between the EU and UK as well as compromise our ultimate objective – to protect the Good Friday (Belfast) agreement in all its dimensions, while ensuring legal certainty and predictability for the people and businesses in Northern Ireland. Such unilateral action will also undermine the conditions which are essential for Northern Ireland to continue to have access to the EU single market for goods.

My colleague, Jennifer Rankin, the Guardian’s Brussels correspondent, says the EU feels “total exasperation” with the British.

EU believes it has already made big concessions with the October proposals.
And some point out that Boris Johnson signed the protocol and never told people what it meant.
Plus strong sense of ‘you are doing this now?! of all times.

— Jennifer Rankin (@JenniferMerode) May 12, 2022

More from former Tory minister David Gauke on the cost-of-living crisis, including his prediction that the government will end up taxing the profits of oil and gas companies.

He told BBC Radio 4’s World at One programme:

It’s not ideal. I don’t think it’s an easy or straightforward answer.

“I can understand why the Treasury is reluctant to go down this route when we do want to encourage investment, particularly in the energy sector, as we move away from relying on hydrocarbons.

“I suspect, in the end, the political case for it, the way in which one can raise really quite substantial sums of money, and if you can try to deliver this in a way that makes it clear that the government is not going to come back again and again, then it might not have that much of a behavioural impact.

“You know, I think increasingly it seems the oil companies are kind of reconciled to the fact that they’re going to get hit with this at some point or other.

“So, it’s not ideal, but I suspect in the end that they will turn to those oil and gas companies and pick up an element of what are exceptional profits.”

Here’s a bit more detail from PA on the news that Boris Johnson was not among those to be fined in the latest tranche of penalties issued by the Metropolitan police over Partygate.

PA reports:

Johnson’s official spokesman confirmed following the Met’s update that neither the PM nor cabinet Secretary Simon Case were among those fined in the latest tranche.

“With regards to the cabinet secretary and the Prime Minister, I don’t have any update … the position (is) we will update you if that were to change,” he said.

Pressed on whether it was his understanding that the PM and Case were not among those hit with the most recent set of penalties, the spokesman said: “That’s correct, yeah.”

He added: “You’ll know that the Prime Minister has on a number of occasions apologised and made clear that there were things we simply did not get right, and that he is sorry for how this matter has been handled.

“Obviously that remains the case. And like I say, he will have more to say at the conclusion … and when the Sue Gray report is published.”

The Prime Minister said he was “sure we’ll have plenty to say about that when the thing’s finished” when asked about the extent of law-breaking in Downing Street as he arrived for a cabinet meeting in Staffordshire on Thursday.

Ministers dodged questions on whether they still had faith in the PM when asked about the latest development at the same event.

Johnson is alleged to have been at six of the 12 events being examined by the force, meaning he could be fined again.

Asked in an interview broadcast on Thursday if he too should resign in the event the Labour leader steps down, Johnson told LBC: “What matters to me and the thing that gets me out of bed in the morning is not stuff that, I think, is, however fascinating (it) is to people, I don’t think is material to the cost of living.”

Culture secretary Nadine Dorries and education secretary Nadhim Zahawi also said they still had faith in their leader when asked about the fines as they attended the Staffordshire meeting.

The excerpt has been edited for length.

Downing Street has said that neither Boris Johnson nor the chancellor, Rishi Sunak, believed a windfall tax was the “right approach” to address the cost of living crisis, but that it was important to keep all options on the table.

The prime minister’s official spokesman said:

We do keep options on the table – rightly so.

But, as the prime minister has set out, as the chancellor has said, we do not think this is the right approach.

We want these companies that are making profits to make further investments. But we are simply not cutting off options given the circumstances that we find.

Senior Tory MPs have criticised ministers for their response to the cost of living crisis, arguing that they must ensure it is “first and foremost” in their policy priorities and that they should “tame inflation”.

PA reports:

Former cabinet ministers Liam Fox and Maria Miller led calls for the government to focus on such issues in the short term to enable it to realise its longer-term ambitions.

Fox, the Conservative MP for North Somerset, said the government’s first duty was to protect citizens from threats, adding:

There are other threats that I believe we have a right to be protected from: the debasement of our currency, the erosion of our earnings and the devaluation of our savings.

“ believe it is fundamentally wrong for governments to engage in structural profligacy, spending excess across the economic cycle and passing ever-larger amounts of debt on to the next generation, and I believe that it is the duty of central banks to safeguard the value of our money and our savings.

Fox called for the Treasury Committee to launch an “investigation into why the Bank of England so comprehensively underestimated the inflationary threat”.

Miller, the Conservative MP for Basingstoke, told day three of the Queen’s speech debate:

One of the levers the [government] can pull in their response to the challenges we face is around inflation, and it’s very much in the government’s gift to be able to make those changes to bring inflation more under control.

The cost of living problems that we’re struggling with at the moment need to come first and foremost into the eyes of every minister, regardless of their department.

Prime minister Boris Johnson said his focus would be on continuing strong employment rates and creating more high-wage, high-skilled jobs to help the UK recover from inflationary pressures and the pandemic’s economic aftershocks.

At a cabinet meeting held at a pottery in Staffordshire this afternoon, he said:

People said that we would have unemployment running up to 12% to 14% – it’s back down to 3.8% – and that is the single most important thing that we need to be focussing on, a strong jobs-led recovery.

We’re going to make sure we use all our ingenuity, all our compassion, everything we need to do to help people through the difficult aftershocks of Covid, and the inflationary pressures that we’re seeing, particularly on the costs of energy.

What the Queen’s speech will also do is give us the legislative firepower to deliver on tackling the underlying issues – the things that are driving up prices, particularly for energy, for people’s transport, for the education people need.

That is why I think the Queen’s speech is so important – infrastructure, education, technology – those are the things that we need to focus on – particularly cutting the cost of energy.

The former chief secretary to the Treasury, David Gauke, has urged the government to boost benefits to help those worst affected by the cost of living crisis.

Speaking to Edward Stourton on BBC Radio 4’s World at One, he said:

What we are seeing is a really significant squeeze on living standards and we are seeing a sluggish economy – and that has got to be a worry. Clearly the pressure is on the government to deal with this.

They can’t do everything – they can’t protect people completely from higher levels of inflation – but what they can do and should do is focus on those who are most vulnerable – those who are most likely to be affected – and I think that’s the weakness in the government’s response here.

You’ve got to use the benefits system. If you want to help the poorest, I can see a case for cutting taxes, but it won’t be well directed at those who need the support most.

The government has already announced quite a lot – a big increase in the national insurance contributions threshold – and that’s probably the best way of using the tax system to help low earners. But that still leaves quite a lot of people who have not got the support that they might have done.

Gauke was also asked about the row with the EU over the Northern Ireland protocol. He said:

I don’t think we can shy away from the fact that the economic consequences of Brexit are being felt and that has contributed to some of the inflationary pressures and of course we could make things much worse if we end up with a trade war with the European Union.

Labour has just issued its response to Partygate fines.

Angela Rayner MP, Labour’s deputy leader, said:

Boris Johnson’s Downing Street has now reached a century of fixed penalty notices for their partying.

They have racked up the dubious distinction of receiving more fines on the prime minister’s watch than any other location.

Boris Johnson made the rules, and then broke them at record-breaking scale. Britain deserves better.

The SNP has responded to the 50 extra Partygate fines.

The SNP’s Westminster deputy leader, Kirsten Oswald MP, said:

The sheer scale of law-breaking is staggering. With more than a 100 fines now issued by the Met Police over lockdown-breaking parties, Downing Street may well be one of the biggest law-breaking venues in the UK.

It’s beyond any doubt that while people made difficult sacrifices and followed the rules to look out for each other, Boris Johnson and his Tory colleagues believed the rules they set didn’t apply to them as they laughed and partied away.

People are being hammered by a Tory-made cost of living crisis and the reality is that the prime minister and his chancellor are too consumed by scandals to get on with the day job.

Boris Johnson should have resigned a long time ago over the law-breaking parties – it is beyond shameful that he continues to desperately cling on.

Rachel Hall here taking over the live blog – do send over anything we’ve missed, or other tips, thoughts and ideas to rachel.hall@theguardian.com.

In theory it should be easy for the Conservatives to hold Tiverton and Honiton, the seat in Devon where there will be a byelection following the resignation of Neil Parish over watching pornography in the Commons. Parish had a majority of more than 24,000 in 2019.

But James Johnson, who was in charge of polling at No 10 under Theresa May, says a focus group he conducted in the constituency suggests a Lib Dem win is very possible. He explains why in a Twitter thread starting here.

New: What’s happening in Tory heartlands in the South? We ran a @kekstcnc @timesradio focus group of swing voters in Tiverton & Honiton who voted Conservative in 2019.

None would vote Tory in the upcoming by-election, and all bar one said they will vote for the Lib Dems. (1/12)

— James Johnson (@jamesjohnson252) May 12, 2022

And here are some of his conclusions.

These voters – pro-Brexit Conservatives – feel extremely disappointed in the government with their frustrations led by Boris Johnson, lies over partygate, and a feeling that things promised have not been delivered.
Here is what they said about the Conservative leader. (2/12) pic.twitter.com/9P5p9vkD3J

— James Johnson (@jamesjohnson252) May 12, 2022

BUT discussion of beergate reminded them about what they see as the worse offence: partygate.

When asked to choose between Boris and Keir, 4 of the 6 chose Starmer. The Conservative ‘squeeze’ message used against Corbyn in the South may not work again with Starmer. (5/12)

— James Johnson (@jamesjohnson252) May 12, 2022

What about the by-election?

The issue agenda is stacked heavily in the Lib Dems’ favour. They said their most important issues were the cost of living, local issues including the NHS, doctors’ absences, potholes and housing developments in green areas. (7/12)

— James Johnson (@jamesjohnson252) May 12, 2022

There is not much love for Ed Davey (“the Biden of British politics – been around for ages and not done anything”), but the Lib Dems are seen as a “credible” party, “the lesser of evils” and a “happy medium” to vote for. There was no mention of tuition fees. (8/12)

— James Johnson (@jamesjohnson252) May 12, 2022

I am handing over to my colleague Rachel Hall for a bit. I will be back later this afternoon.

Simon Coveney, the Irish foreign minister, told the Dáil (Irish parliament) that Liz Truss’s threat this morning to unilaterally suspend the Northern Ireland protocol (see 10.39am) has gone done “very badly’ across the EU. He said:

Clearly, what the British government has said is that they intend to move ahead with domestic legislation of their own if they don’t see the compromises they are demanding.

That is deeply unhelpful and has gone down very badly across the European Union.

It has ratcheted up tension between the UK and the EU at a time when we don’t need it.

The beergate controversy has had no negative impact on Keir Starmer’s approval ratings, YouGov polling suggests.

Beergate seems to have had no negative impact on Keir Starmer’s reputation. % of Britons who now consider him to be…

Weak: 43% (no change from mid April)
Indecisive: 38% (-3)
Dislikeable: 37% (-2)
Untrustworthy: 36% (n/c)
Incompetent: 32% (n/c)https://t.co/ZesSC1Mi4a pic.twitter.com/ioIxEkNv5r

— YouGov (@YouGov) May 12, 2022

In fact over the last month Starmer’s positive ratings have gone up on “likeable”, on “competent”, on “strong” and (most of all) on “decisive”.

Starmer has higher positive ratings than Boris Johnson on “competent” and “decisive”.

Johnson has higher positive ratings than Starmer on “likeable” and “strong”. But on both these measures Starmer has a better net score because Johnson also outperforms Starmer on people saying he is “dislikeable” or “weak”.

Which of the following do you think would make the best Prime Minister? (9-10 May)

Keir Starmer: 33% (n/c from 5-6 May)
Boris Johnson: 26% (-1)https://t.co/ZesSC1Mi4a pic.twitter.com/ZpZ25K9T7O

— YouGov (@YouGov) May 12, 2022

Starmer’s lead over Johnson on best PM has fallen a bit over the past month, but over the last week it has started to nudge up again, the poll suggests

Which of the following do you think would make the best Prime Minister? (9-10 May)

Keir Starmer: 33% (n/c from 5-6 May)
Boris Johnson: 26% (-1)https://t.co/ZesSC1Mi4a pic.twitter.com/ZpZ25K9T7O

— YouGov (@YouGov) May 12, 2022

Dominic Cummings, Boris Johnson’s former chief adviser, says junior No 10 staff who were fined over Partygate – after attending events they were told were lawful – may get their revenge if they get the chance to give evidence to the Covid inquiry.

Junior staff told, PM’s PPS is coordinating with covid taskforce to ensure all no10 events are lawful. Junior staff had reasonable expectation this happening. So how do you fine junior staff for 14/1/21 & NOT the PM *who attended* & was responsible for entire shitshow?!

— Dominic Cummings (@Dominic2306) May 12, 2022

Also Tory MPs havent twigged: PM throwing all these junior staff under bus to cops makes his life nightmarish in covid inquiry. Am getting lots of texts today like ‘I can’t WAIT for the inquiry, I took lots of notes’. #DeepState will wreak revenge on ? in 23, yr before election

— Dominic Cummings (@Dominic2306) May 12, 2022

Maroš Šefčovič, the European Commission vice-president who is in charge of Brexit talks with the UK on behalf of the EU, released a statement this morning after his conversation with Liz Truss, the foreign secretary, on the Northern Ireland protocol. He says it is a matter of “serious concern that the UK government intends to embark on the path of unilateral action”. He added:

Unilateral action, effectively disapplying an international agreement such as the protocol, is simply not acceptable. This would undermine trust between the EU and UK as well as compromise our ultimate objective – to protect the Good Friday (Belfast) agreement in all its dimensions, while ensuring legal certainty and predictability for the people and businesses in Northern Ireland. Such unilateral action will also undermine the conditions which are essential for Northern Ireland to continue to have access to the EU single market for goods.

My colleague, Jennifer Rankin, the Guardian’s Brussels correspondent, says the EU feels “total exasperation” with the British.

EU believes it has already made big concessions with the October proposals.
And some point out that Boris Johnson signed the protocol and never told people what it meant.
Plus strong sense of ‘you are doing this now?! of all times.

— Jennifer Rankin (@JenniferMerode) May 12, 2022

At the Downing Street lobby briefing, the prime minister’s spokesperson confirmed that Boris Johnson and Simon Case, the cabinet secretary, are not among the latest group of people fined by the Metropolitan police over Partygate.

Johnson has already received one fine, but Case has not been fined.

Boris Johnson is chairing cabinet in Stoke-on-Trent today. In a briefing sent out ahead of the meeting, No 10 said ministers would “discuss how the Queen’s speech will deliver for people by boosting our economic growth and recovery, improve living standards and level up opportunities across the country – with Stoke-on-Trent being a prime example of levelling up in action”.

But it’s not – at least according to an exceptionally thorough analysis of progress on levelling up since 2019 carried out by Bloomberg.

The full details are here. Bloomberg’s Joe Mayers has a good Twitter thread explaining the findings that starts here:

Exclusive: Most of the UK has fallen further behind London & the South East since Boris Johnson became prime minister, a major blow for `levelling up’ 1/ https://t.co/XMy5JlO3cm pic.twitter.com/KTR0li7Cij

— Joe Mayes (@Joe_Mayes) May 12, 2022

Bloomberg reports:

Johnson’s rise was driven by his successful campaign to pull Britain out of the European Union. The so-called “levelling up” agenda was designed to turn that into tangible benefits by 2030, especially for the working class Brexit voters who abandoned the opposition Labour party to hand Johnson his party’s biggest majority since the 1980s.

More than two years on, in a period dominated by the coronavirus pandemic, most of the places that lagged behind London and the south-east of England when Johnson came to power have seen little sign of better times. In fact, as a new Bloomberg News analysis shows, they’re more likely to be falling further behind.

Bloomberg has studied data relating to 12 metrics, which broadly match the 12 performance targets, or missions, included in the government’s levelling up white paper. For each constituency in the UK, it has looked at how they were doing on each metric in 2019 (whether they were doing better or worse than London and the south-east) and it has also looked at the latest data (to see whether they are pulling ahead or falling behind).

Bloomberg says:

Our analysis shows that the salary gap is widening in nine out of 10 constituencies, that home affordability is getting worse nearly everywhere, and that public spending per head has fallen behind the capital in every region of England.

In 9 out of 12 metrics, the performance of most constituencies relative to London and the south-east is now worse or unchanged compared to 2019.

Only on a few metrics has the gap narrowed for much of the UK – including life expectancy and the share of people receiving universal credit benefits – and in both those cases it’s because the situation in London and the south-east has worsened.

Stoke-on-Trent is in the West Midlands and the Bloomberg analysis shows that, overall, there has been no levelling up in the West Midlands.

If you look at the data for the Stoke-on-Trent Central constituency, it is only levelling up on four of the 12 metrics: proportion of people on universal credit; civil service employment; broadband coverage; and wellbeing.

But on eight other metrics, the constituency is falling behind – sometimes by a little (crime; foreign investment), but mostly by a lot (salaries; home affordability; total government spending; government spending on transport; productivity; and life expectancy).

Rishi Sunak, the chancellor, has given a revealing interview to the BBC’s economics editor, Faisal Islam. Here are the key points.

I’m not naturally attracted to windfall taxes in general.

I find there are two camps of people actually. There are some people who think windfall taxes can never be the answer. And then there are other people who think windfall taxes are an easy, quick, simple answer to solve every problem. I’m not in either of those schools of thought. I’m pragmatic about it.

As I said, I’m not naturally attracted to the idea of them. But what I do know is that these companies are making a significant amount of profit at the moment because of these very elevated prices.

What I want to see is significant investment back into the UK economy to support jobs, to support energy security, and I want to see that investment soon.

But if that doesn’t happen, then no options are off the table.

This is significant because in the past Sunak sounded very much as if he was in the first camp, and was opposed to the idea of a windfall tax in princple. This is what he told the Commons in February when he explained why he was rejecting Labour’s call for a windfall tax.

[A windfall tax] sounds superficially appealing, but we on the government benches deal with complex problems in a responsible way. The obvious impact of a windfall tax would be to deter investment—it is as simple as that. At this moment I want to see more investment in the North sea, not less.

I’ve always said I stand ready to do more as we learn more about the situation.

I’m out every single week talking to people across the country … hearing what people are facing to figure out what the right way for us to help them is. That’s something we’re spending a lot of time thinking about.

And as I said, we continue to learn more and that will help us get the decisions right.

NEW
Chancellor tells me in TV pool after GDP figures showing economy falling in March “we’re confronting a global inflationary forces. Unfortunately, I can’t make them all disappear.

where we can make a difference of course we are,”

Full iv re NI, Windfall, recession shortly

— Faisal Islam (@faisalislam) May 12, 2022

Asked repeatedly if he recognises/ agrees with increasing forecasts of consumer led recession, Chancellor says he knows these are “difficult times” but wants to reassure the public over “underlying strength” of the economy… and says these are global inflationary forces/ shocks.

— Faisal Islam (@faisalislam) May 12, 2022

NEW asked Sunak why Government was thinking of a measure that could lead to tariffs on exports & imports with EU, exacerbating inflation:

“Protocol is causing challenges.. no decisions have been taken, always our preference to have negotiated solution, but situation serious”

— Faisal Islam (@faisalislam) May 12, 2022

Rishi Sunak

These are from the Daily Mirror’s Pippa Crerar (who is soon joining the Guardian as the next political editor)

No 10 sources confirm that Boris Johnson is *not* – as expected – among the 50 latest to receive an FPN.

He wasn’t at the Christmas bash – which blew this whole scandal open – so you wouldn’t expect him to get one. https://t.co/4SxvrL0o7E

— Pippa Crerar (@PippaCrerar) May 12, 2022

As we revealed on Sunday, fines started arriving for the No 10 Christmas party late last week.

Around 40 – 50 people – not incl Boris Johnson – knocked back glasses of wine, played party games and had a Secret Santa.

(Reposting with correct link)https://t.co/4iZplyBvHe

— Pippa Crerar (@PippaCrerar) May 12, 2022

And this is from the BBC’s Jessica Parker on the Truss/Šefčovič talks. (See 10.39am.)

NEW: Sefcovic / Truss chat is over &, from UK side, doesn’t sound like it went that well

Whitehall source even going so far as to describe it as “tetchy”

— Jessica Parker (@MarkerJParker) May 12, 2022

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