Rishi Sunak latest news: PM still on track to halve inflation, claims No 10 (2024)

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Britain’s soaring benefits bill drove up public borrowing to its highest May level outside of lockdown, official figures show, pushing the UK’s debt above the size of the economy for the first time since 1961.

The Government borrowed £20bn to plug the gap between tax receipts and public spending in May.

This is more than double the £9.4bn borrowed in the same month a year ago, according to the Office for National Statistics (ONS).

It is also the second highest May borrowing since monthly records began in 1993, only behind the first Covid lockdown in May 2020.

You can read the full story here.

Jeremy Hunt said it is “going to take time for food prices to come down” as he said he saw “absolutely no reason” why the UK cannot return to two per cent inflation.

He said in a new Treasury video posted on Twitter: “There is absolutely no reason if we don’t stick to our course why we can’t bring inflation right down to the two per cent level that the Bank of England is required to do and that is what we are going to do.”

Oliver Dowden, the Deputy Prime Minister, is giving evidence to the official Covid inquiry today.

Mr Dowden, who was minister for the Cabinet Office from July 2019 to February 2020, said he was reassured during his time in the department that the UK was in a “pretty strong state of preparedness” for any future pandemic.

He also told the inquiry that preparations for a no deal Brexit put the country in a “strong position” to respond to other challenges.

Mr Dowden said he taken an interest in planning, including for a possible flu pandemic: “I asked for further specific briefing on that – received that briefing – and indeed, throughout my time as a minister, received further briefings, all of which were consistent with advice that we were broadly in a pretty strong state of preparedness.”

Net zero goals to turn the electricity system green risk the lights going off, MPs have warned.

The Government wants the electricity system to be fully green by 2035 by boosting wind, solar and nuclear power to end reliance on coal and gas.

But MPs on the powerful Public Accounts Committee have cast doubt on the credibility of the plans, and called on the Government to come clean on costs to households.

You can read the full story here.

Downing Street has insisted Rishi Sunak is still on course to deliver on his pledge of halving inflation by the end of the year despite it remaining stubbornly high.

The Prime Minister’s Official Spokesman said: “That remains the target.”

Asked if the Government was on track to fulfil the promise, the spokesman said: “Yes. Despite some of the coverage at the time [of the announcement of the pledge] this was never something that was straightforward.

“It was rightly an ambitious target that we remain committed to and it can only be achieved with fiscal discipline.”

Mr Sunak made the pledge in January this year when inflation was about 10 per cent. Today’s figure for the 12 months to the end of May was 8.7 per cent.

Rishi Sunak has given his “full support” to the Privileges Committee after MPs approved its report that found Boris Johnson lied to Parliament with his partygate denials.

Following attacks aimed at the cross-party committee by Mr Johnson and his allies, the Prime Minister’s press secretary said: “The Privileges Committee was established by the House. The Prime Minister believes they have conducted a thorough inquiry and have his full support in doing so.

“He respects the view of the House that was taken on Monday and it’s right that members, whoever they are and whatever position they have held, are held to account for their actions.”

She would not set out whether Mr Sunak agreed with the committee’s report, just saying he “respects” the view of the House.

Britain is only “just holding on” to its influence in Nato because its Army is too small, the alliance’s deputy commander has warned.

Gen Sir Tim Radford, the Deputy Supreme Allied Commander Europe (DSACEUR), the second-in-command of Nato’s military arm, said Britain’s position as one of the organisation’s leading nations could be in doubt after years of defence cuts.

The Army currently has 76,000 serving troops, 21,000 fewer than a decade ago and less than a third of the total when Gen Sir Tim joined the military.

You can read the full story here.

Stephen Flynn, the SNP’s leader in Westminster, questioned the Prime Minister’s comments about interest rates being the same in other G7 countries (see the post below at 12.12).

He said: “Britain is broke. Seven years after their EU referendum, will he finally admit that it was Brexit that broke it?”

Mr Sunak said: “The rise in inflation and interest rates is a global phenomenon but that is why, early, I set out that it was the right economic priority to have to bring inflation down.”

Sir Keir Starmer told the Commons: “After 13 years of economic failure across the country people are paying the price of un-costed, reckless, damaging decisions by the Tory Party.”

Mr Sunak said: “No amount of personal attacks and petty point scoring can disguise the fact that the honourable gentleman does not have a plan for this country.

“He comes here every week to make the same petty points. We are getting on and delivering for this country.”

Sir Keir Starmer asked Rishi Sunak what action the Government was going to take to help families struggling with mortgage repayments.

He told the Commons: “The situation is so dire that repossessions are already up 50 per cent, a total betrayal of the idea that if you work hard you will get on.

“So what is the Prime Minister going to do to make sure more families don’t lose their homes?”

Mr Sunak replied: “I know he is reading from his prepared script but he failed to actually listen to the answer that I gave. I did actually spell out in detail what we are doing.

“We have increased the generosity of support of the mortgage interest scheme... we have also established a new FCA consumer duty that will protect borrowers for example by allowing them to extend their mortgage terms or switch to interest only mortgages and we have spent tens of billions of pounds supporting households with living costs.”

Sir Keir Starmer said he had spoken to a police officer whose mortgage was going up by £400 a month and he had therefore decided to sell the house and downsize, requiring his children to share a room.

The Labour leader asked Rishi Sunak: “Why should James and his family pay the cost of the Prime Minister’s failure?”

Mr Sunak said he hoped that when Sir Keir spoke to the police officer that he had explained that Labour’s spending plans would “make James’s situation worse”.

The Prime Minister said the Government was providing “responsible economic leadership”.

Rishi Sunak asked Sir Keir Starmer if he could explain to the House of Commons why interest rates were the same as the UK’s “in the United States, in Canada, in Australia and New Zealand”.

The Prime Minister said: “That is why it is important that we have a plan to reduce inflation.”

Attacking Labour’s spending plans, Mr Sunak told Sir Keir: “He doesn’t have many policies but the few that he does have all have the same thing in Commons: They are dangerous, inflationary and working people would pay the price.”

Sir Keir Starmer said that one Tory MP has warned the nation is facing a “mortgage catastrophe”.

The Labour leader asked Rishi Sunak: “Does he agree with her?”

Rishi Sunak said it was right for the Government to support people with mortgages and that his promise to halve inflation was the right economic priority.

Sir Keir hit back and said that the economic situation was the result of “13 years of economic failure and a Tory kamikaze budget”. He asked Mr Sunak “how much the Tory mortgage penalty is going to cost the average home owner”.

Mr Sunak said Sir Keir did not seem to be aware of the “global macro-economic situation” but that the Government was taking action to help people: “We have deliberately and proactively increased the generosity of our support for the mortgage interest scheme...”

PMQs is now underway in the House of Commons.

Rishi Sunak was immediately challenged by an SNP MP over high inflation levels.

He was asked how far living standards have fallen in his eight months in 10 Downing Street.

The Prime Minister said that “inflation is putting pressure on family budgets” but that the Government had taken “decisive action to support families through this difficult time”.

A Tory MP has told Jeremy Hunt that interest rate rises are not a “magic bullet” for bringing down inflation, warning that repeatedly hitting mortgage-holders is “wrong”.

Lucy Allan replied to the Chancellor’s video (posted below at 10.50) in which he said the Government must “stick to its guns” on bringing down inflation.

She said the Bank of England’s monetary policy committee “has only one tool in the box - interest rates - but Government has many”.

“Government must bring down inflation, of course, but the idea that just continuing to hit hard those who hold mortgages is the magic bullet is wrong,” she tweeted.

The boss of the supermarket chain Iceland appears to have cooled on the idea of standing as a candidate for the Conservative Party at the next general election.

Richard Walker is on the Tories’ approved list of parliamentary candidates and had been expected to stand.

Asked if he was still planning to stand, Mr Walker told BBC Radio 4’s Today programme: “I am fully focused on the business at the moment. As we have just been debating it is of course really challenging times for our customers. So, that is 100 per cent of my focus and we will see what happens in the future.”

Mr Walker said he was “still on the list” and that “we will see where we get to”.

The Government should resurrect the mortgage interest relief at source (MIRAS) scheme to provide mortgage-holders with a tax cut to help take the sting out of rising interest rates, Sir Jake Berry has suggested.

MIRAS was abolished by Gordon Brown in 2000. Sir Jake, the former chairman of the Conservative Party, said MIRAS “wasn’t hugely generous, but it certainly is a help”.

He told Times Radio: “I’m suggesting a targeted intervention probably targeted at the 20 per cent bracket of taxpayers, excluding people earning over 50,000 pounds, trying to make sure that families who have got all sorts of financial pressures don’t sort of get that compounded by losing their home.”

Sir Jake Berry, the former Tory chairman, suggested the Government will intervene to help mortgage-holders despite Jeremy Hunt’s insistence that there will not be any fiscal interventions. He also claimed the Bank of England’s approach of hiking interest rates is “reaching the end of the road”.

Mr Hunt told broadcasters this morning that the Government must “stick to its guns” on tackling inflation and “no matter what the pressure from left, right or centre, we won’t be pushed off course” (see the post below at 08.49) in comments which appeared to rule out extra help for households.

But Sir Jake told Times Radio: “The sort of Bank of England monetary policy of increasing interest rates, in my view, is being proven not to work because this is what you would call cost push inflation, it’s actually inflation driven by prices of everything we buy, day to day going up. It’s not caused, and I’m sure your listeners would agree, it’s not caused by us all having so much in our bank accounts, spare cash at the end of the month, going out and buying fancy holidays.

“So I think we’re sort of reaching the end of the road a bit with the Bank of England’s response to this. I don’t think we can keep putting up rates infinitum. I do think there probably is, you know, a requirement for government to act.

“Having served in the Cabinet twice myself, governments always say they’re not going to do things until they actually have to do it. It just feels to me like we’re not going to allow a situation where people leave their homes.So let’s level with the British public, and try and help them now and give them a bit of certainty.”

Sir Jake Berry, the former chairman of the Conservative Party, said the Government is “going to have to do something” to help struggling mortgage-holders as rising interest rates continue to bite and pile the pressure on household budgets.

He told Times Radio: “We are going to have to do something as a Government to help people out.We cannot see mass evictions...I do think the Government’s going to have to act.

“Solet’s act in a controlled way now and in a targeted way,and do clever things like exclude buy to let mortgages and second homes, rather than when we’re forced to act on a more panicked response.”

Rishi Sunak said Ukraine represents an investment opportunity, with its resistance to the Russian invasion demonstrating its people’s capacity for innovation.

Opening the Ukraine Recovery Conference in London this morning, the Prime Minister said: “Before this terrible war, Ukraine’s economy was becoming a huge investment opportunity.

“It was the breadbasket of Europe, exporting millions of tonnes of food and grain each month, a top-five exporter of iron ore and steel, a leader in energy – pushing forward renewables, hydrogen and electric vehicles – and a start-up nation which helped spark names like PayPal, WhatsApp and Revolut, with a thriving tech sector which actually had a record year in 2022.

“The truth is, that opportunity is still there today – in fact the war has only proved how much Ukraine has to offer.”

A Ukraine Recovery Conference is being held in London today and Boris Johnson has marked the occasion by urging Kyiv’s allies to provide it with F-16 fighter jets to deliver “air superiority” over Russia.

The former prime minister said Ukraine must be provided with “everything that they could possibly need” as it undertakes its counteroffensive.

“For months and months, I have been saying that what they need is the deep fires, the long-range missiles that they’re going to need to take out the Russian command-and-control positions,” he said in a video posted on Twitter.

“It’s also increasingly clear that it’s no good just giving the Ukrainians help with armour from the West, armoured vehicles, Bradleys, Challenger tanks, Leopards, and so forth, unless the Ukrainians also have air superiority.

“That’s why we’ve got to go back to that question urgently of giving them the F-16s, the planes that they need to command the airspace and take out those Russian attack helicopters.”

Jeremy Hunt said the Government will “stick to its guns” and insisted patience was needed for Bank of England interest rate rises to curb inflation.

The Chancellor said the UK needed to “squeeze every last drop of high inflation out of the economy”.

He told broadcasters this morning: “Today’s figures strengthen the case for the Government to stick to its guns. No matter what the pressure from left, right or centre, we won’t be pushed off course.

“Because if we are going to help families, if we are going to relieve the pressure on people with mortgages, on businesses, we need to squeeze every last drop of high inflation out of the economy.”

He added: “If you look at what’s happening in other countries, you can see that rises in interest rates do bring down inflation over time. That will happen here but we need to be patient, we need to stick to the course and then we’ll get to the other side.”

The UK’s national debt is now larger than the overall size of the economy, figures published by the Office for National Statistics this morning have revealed.

The ONS said that public sector debt at the end of May this year was £2.57trillion, provisionally estimated at 100.1 per cent of the nation’s gross domestic product (GDP).

The debt-to-GDP ratio has not been above 100 per cent since March 1961.

You can read the full story on the nation’s debt mountain here.

The Liberal Democrats claimed the Tories are “failing miserably” to reduce inflation, accusing Chancellor Jeremy Hunt of “sitting on his hands”.

Sarah Olney, the party’s Treasury spokeswoman, said: “These worse than expected figures (see the post below at 08.14) show the Government is failing miserably to bring inflation down and provide relief for struggling families facing soaring bills.

“Homeowners now face the likelihood of even more interest rate hikes adding to their monthly mortgage payments, all while the Chancellor just sits on his hands.

“It beggars belief that ministers are refusing to support hard-pressed families when it’s this Conservative Government’s catastrophic failure to run the economy that caused this crisis.”

Rachel Reeves claimed the Tories “can’t get a grip” of high levels of inflation “because they are the problem” as she responded to this morning’s numbers published by the Office for National Statistics (see the post below at 08.14).

The shadow chancellor said: “This Tory government can’t get a grip of this problem because they are the problem. 13 years of the Tories and their disastrous mini-Budget are damaging our economic security and leaving families worse off.

“Simply continuing on this Tory path of managed decline is not the summit of Labour’s ambition. We need a more secure economy, more secure family finances and a plan to help us grab hold of the opportunities before us.

“With a relentless focus on the cost of living, our strong fiscal rules and our mission for growth, that is what a Labour government will bring.”

Jeremy Hunt, the Chancellor, gave the Bank of England the Government’s full backing ahead of tomorrow’s interest rates update, with another rise widely expected.

Responding to this morning’s inflation numbers (see the post below at 08.14), Mr Hunt said: “We know how much high inflation hurts families and businesses across the country, and our plan to halve the rate this year is the best way we can keep costs and interest rates down.

“We will not hesitate in our resolve to support the Bank of England as it seeks to squeeze inflation out of our economy, while also providing targeted support with the cost of living.”

The overall level of inflation remained at a stubbornly high level in May in a blow to Rishi Sunak’s hopes of delivering on his promise of halving inflation by the end of the year.

The Consumer Prices Index (CPI) rose by 8.7 per cent in the 12 months to May, unchanged from April.

Meanwhile, core inflation, which excludes volatile elements like food and energy prices, increased to 7.1 per cent in May, up from 6.8 per cent in April, its highest level since 1992.

The numbers published by the Office for National Statistics this morning immediately prompted market speculation that the Bank of England could raise interest rates to six per cent by the end of the year. Interest rates are currently set at 4.5 per cent with the Bank due to deliver an update tomorrow.

Mr Sunak pledged to halve inflation by the end of 2023 back in January when rising prices stood at just above 10 per cent.

The Labour Party has taken its biggest “Blue Wall” poll lead over the Tories since March in a fresh headache for Rishi Sunak.

A new Redfield & Wilton Strategies survey conducted between June 17-18 put Labour on 38 per cent of the vote and the Conservative Party on 31 per cent, an overall lead for Sir Keir Starmer of seven points.

Labour was up by four points on a poll conducted on June 4 while the Tories were up by one point as the former extended its advantage by three points. It is Labour’s biggest lead since March 26 when it was up by eight.

The Blue Wall refers to 42 seats in the south of England which the Tories won in 2019 and where they have traditionally received strong support.