Penny Mordant was knocked out of the Conservative leadership contest yesterday

By Suzanne Evans, Director, Political Insight

Penny Mordant was knocked out of the Conservative leadership contest yesterday, meaning that Foreign Secretary Liz Truss and former Chancellor Rishi Sunak are the two final names on the ballot paper for the 160,000 or so Conservative party members who will make the final choice. The two final candidates have clashed on the economy: Truss has promised to introduce £38bn of tax cuts if she becomes PM and says she will scrap April's rise in National Insurance which was introduced by the government when Sunak was still leading the Treasury. She has also pledged to cancel planned corporation tax rises from April 2023, which Sunak announced in March last year. He, meanwhile, has slammed her proposals, saying the tax rises are needed to repair the public finances after Covid and accusing her of peddling "something-for-nothing economics". He has said he wants to lower the tax burden, but this should only be done when inflation, currently running at its highest level for 40 years, has been brought under control. Regional hustings for party members will take place between 28 July and 31 August, beginning in Leeds. Truss and Sunak will also go head-to-head during a live debate on BBC One next Monday. Voting by members will take place by post or online between early August and 2 September, with the winner announced on 5 September.
 
The BBC reports that surging inflation led interest payments on government debt to hit the highest amount on record in June, - a total of £19.4bn. Borrowing was £22.9bn during the month, up £4.1bn from a year earlier, the Office for National Statistics said. However, as economist Julian Jessop points out on Twitter, the debt on index-linked gilts fluctuates according to the Retail Prices Index and will not have to be paid out until the gilts mature. How much the government actually paid out in interest is not known, but Jessop estimates it is in the region of £3bn. He also pointed out that the headline figure is lower than the Office for Budget Responsibility forecast for June of £19.7bn.
 
The loan scheme for small businesses, launched in April 2021 during the Covid-19 pandemic, is to be extended by two years. Business Secretary Kwasi Kwarteng said yesterday: "Small businesses are the lifeblood of the British economy, which is why we are determined to support our traders and entrepreneurs in dealing with worldwide inflationary pressures. The extension of the Recovery Loan Scheme will help ensure we continue to provide much-needed finance to thousands of small businesses across the country, while stimulating local communities, creating jobs and driving economic growth in the UK." The scheme has helped more than 16,000 businesses in England, 1,000 in Scotland, 600 in Wales and 300 in Northern Ireland, with average loans of £202,000 each.
 
The government has given the go-ahead for the new Sizewell C nuclear power plant on the Suffolk coast, the BBC reports. The project, which is mainly funded by French energy company EDF, is expected to cost in the region of £20bn. EDF said it will generate about 7% of the UK's electricity needs, enough for about six million homes, and operate for 60 years.
The two-reactor plant is to be built next to the existing Sizewell B, which is still generating electricity, and Sizewell A, which has been decommissioned. Campaigners Stop Sizewell C said they "will be looking closely at appealing this decision".
 
Transport Secretary Grant Shapps appears to be promoting the idea of taking Doncaster Sheffield Airport into public ownership to ensure its survival after directors said it "may no longer be commercially viable". Shapps said South Yorkshire's mayor could follow the example of Teesside Airport, which was taken over by the regional mayor in 2019, the BBC reports. However, Mayor of South Yorkshire Oliver Coppard said he believed the private sector should lead on airport investment. The airport was acquired by the Peel Group in 1991 and opened as an international commercial airport in 2005. Services from there fly to 50 destinations and it deals annually with more than one million passengers. Announcing a six-week consultation on the airport's future last week, the Peel Group said it had "never achieved the critical mass required to become profitable".
 
The RMT transport union says it has seen evidence that the Ministry of Defence (MoD) bought slots on P&O's Dover-Calais service, despite government condemnation of the firm for sacking nearly 800 staff without notice and replacing them with foreign agency workers paid less than the minimum wage. At the time, Transport Secretary Grant Shapps accused P&O of "acting like pirates of the high sea" and initiated a review of the government's contracts, which led to the termination of a contract between the Home Office and P&O Ferries. The BBC says the MoD has now confirmed it used P&O to support a recent exercise while air transport was busy supporting Ukraine. A government spokesperson said: "We do not have any contracts with P&O. The MoD occasionally require specific logistics operations to support national and international security arrangements. P&O Ferries are the provider of last resort in such situations, on an exceptional basis only". The Department for Transport said it cannot rule out the possibility government departments will use P&O services on an ad-hoc basis. However, RMT general secretary Mick Lynchdescribed the MoD's use of P&O services as "new low, even by this zombie government's sinkhole standards". He urged the government to issue a statement prohibiting public contracts with P&O Ferries and its parent company DP World.
 
A strike by refuelling staff at Heathrow Airport has been called off as a fresh pay offer was now on the table after talks at arbitration service ACAS. The Unite union said It will now ballot members on the new offer, which was not revealed. Staff had refused a 10% pay offer after no increases in three years.
 
Trains have been cancelled and rail services disrupted after the UK recorded its hottest day on record. More than two dozen services leaving from London King's Cross and Euston stations were axed or delayed yesterday morning, the BBC says, because of damage to overhead electric lines and railway tracks. Network Rail said it has launched a new taskforce to investigate how the railway can become more resilient in the wake of the heatwave. Services on the East Coast Main Line, which connects London and Edinburgh, were also disrupted after a fire on the track near Sandy in Bedfordshire.
 
Five Just Stop Oil protesters scaled three gantries on the M25 yesterday morning, forcing police to shut sections of the motorway and to close lanes. By late afternoon all the protesters were moved on. The environmental protest group said it was declaring the M25 "a site of civil resistance" and warned it would carry out further protests on the motorway in the coming days. All five were arrested.
 
The AA says the average cost of filling up a car is set to be £10 cheaper within the next two weeks because wholesale petrol and diesel prices are continuing to fall. The price of petrol has dropped by 2.8p a litre from record highs, knocking £1.50 off the price of a tank of fuel. The wholesale price went over £1 a litre on 1 June but fell back below 80p a litre for much of last week. The average retail petrol price is now 188.76p a litre, while diesel is 196.96p.
 
The latest data from EY suggests the UK economy will grow 3.7% this year, and 1% in 2023, a downgrade from May’s 4.1% and 1.9% expectations because of the continued squeeze on real incomes because of higher inflation; ongoing supply chain disruption; and interest rate hikes. However, EY also says Britain will narrowly avoid a recession, provided there are no further energy price shocks, and the Bank of England (BoE) does not tighten monetary policy too quickly.
 
Sky News analysis of the latest Office for National Statistics (ONS) figures on inflation shows that shoppers in London are facing price rises that double those seen in Yorkshire. The ONS measures inflation by recording the prices of 730 foods, goods and services thought to be representative of what British consumers spend their money on. The list, known as "the shopping basket", is updated every year so it remains relevant. Sky concludes that while food prices in London have gone up 6.3%, the have only gone up 3% in the East Midlands, for example, and a pint of draught bitter will set you back £1.50 more in London than in the Northeast. However, there is only a five pence difference between the average price of milk in the cheapest part of the country, the northwest, where four pints of whole milk costs £1.28, and in the most expensive, the northeast, where it costs £1.33. Meanwhile, stark regional differences in hospitality costs reflect wage differences, Sky says, because of the high wage costs of employing the chef, the waiters and whoever else works there. Sky acknowledges that the figures analysed only cover items found in store, while the ONS also records a proportion of prices online and over the phone.
 
EasyJet shareholders have approved the purchase of 56 Airbus A320neo family aircraft and conversion of 18 A320neo family aircraft to A321neo aircraft. At a general meeting earlier on Wednesday, 99.95% of votes were cast in favour of the acquisition.
 
McLaren Group is reportedly close to securing a new funding injection worth more than £100m as it races to bring its latest supercar models into full production. According to Sky News, the car maker is close to finalising a new equity raise that would give it access to at least £80m of additional capital in what insiders said amounted to a show of confidence from existing investors. It was understood that McLaren shareholders including Saudi Arabia's Public Investment Fund (PIF) sovereign wealth vehicle and its Bahrain-based counterpart Mumtalakat, are expected to be among those supporting the latest cash call. A person close to one investor told Sky it could be finalised as soon as Wednesday evening.
 
The European Commission has urged countries across the EU bloc to cut their gas use by 15% from August to March amid fears Russia could halt supplies. It says the target is voluntary but will become legally binding if Moscow turns off the taps this summer, the BBC reports. The key Nord Stream 1 pipeline from Russia to Germany has been offline for maintenance for 10 days and is due to be turned back on this Thursday, but there are concerns Moscow will not follow through on its promise. Russia supplied Europe with 40% of its natural gas last year, with Germany the continent's largest importer in 2020, followed by Italy. European Commission President Ursula von der Leyen said a Europe-wide cut-off was now a "likely scenario".  "Russia is blackmailing us. Russia is using energy as a weapon," she said. "Therefore, in any event, whether it's a partial, major cut-off of Russian gas or a total cut-off of Russian gas, Europe needs to be ready," she said yesterday.
 
According to Reuters, the German government is set to take a 30% stake in struggling energy firm Uniper and be allowed to pass on some of its rising costs to customers. The plan is set to be finalised as early as this week. Uniper's credit line with the state-owned bank KfW is also said to have been quadrupled to €8bn. Uniper, which was spun off from E.ON in 2016, and is owned by Fortum, which is itself owned by the Finnish state, has been struggling to keep its head above water in the economic fallout of Russia's invasion of Ukraine, which has seen natural gas prices surge in Europe, with Germany particularly reliant on fuel from the east.
 
Netflix has lost another one million subscribers in the three months to the end of June, although the streaming giant said it had expected to lose two million. Netflix shares have fallen 66% so far this year.
 
Electric Vehicle maker Tesla has sold off 75% of its Bitcoin holding, it has been revealed in a quarterly report by the firm, which added Bitcoin was one of the factors that hurt its profitability. The BBC says Tesla invested $1.5bn in Bitcoin in February 2021, prompting a surge in the cryptocurrency, not least because the pronouncements about the currency by CEO and founder Elon Musk on Twitter, often drove significant trading activity. The price of the notoriously volatile cryptocurrency soared last year to almost $70,000 in November before crashing. Tesla’s Bitcoin stash was worth about $2bn (£1.7bn) at the end of 2021, but now its value has plunged, falling by more than 50% this year. One Bitcoin now trades for less than $25,000. Tesla declared it had bought traditional currency with the $936m (£782m) from its Bitcoin sales.

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