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The Guardian - UK
The Guardian - UK
Politics
Mattha Busby (now), Andrew Sparrow (earlier)

Hunt says Merkel is willing to look at a new Brexit deal package – as it happened

Composite of Johnson and Hunt
Boris Johnson and Jeremy Hunt were both involved in media interviews on Monday Photograph: PA and Getty

Closing summary

  • Jeremy Hunt said German chancellor Angela Merkel told him she is willing to look at a new Brexit deal package (see 8.20pm). The foreign secretary also brought forward the operative Brexit deadline from 31 October to 30 September

I’ve had a conversation with Angela Merkel and... (she said) ‘of course we will look at any proposals made by a new UK prime minister’, because she wants to solve this problem.

And providing we’re sensible, and I think the approach that I’ve laid out is a sensible approach and a fair approach, and I think that it’s in Germany’s interests as well. What she has said is she will look at the package and I think she will look at it with an open mind.

  • The leadership frontrunner, Hunt’s predecessor as foreign secretary, also reiterated that only he can deliver Brexit by 31 October after his rival did not include an absolute deadline for withdrawing the UK from the EU in a 10-point plan released on Monday. (see 7.50pm)
  • The pair will visit Northern Ireland on Tuesday where they are set to face further questions from party members about their Brexit plans at a hustings. Hunt has said he believes there is “technology there now” to provide a solution, while Johnson has suggested the backstop issue could be solved during the implementation period.
  • The Daily Telegraph reported on Monday evening that allies of Johnson are urging him to shrink the size of the Cabinet by merging government departments. However a campaign source told PA: “This is absolute nonsense.”
  • The speaker John Bercow refused to allow vote on proposal to halt government spending if the prime minister presses ahead with no-deal (see 4.57pm).
  • The SNP’s Kirsty Blackman said support for independence in Scotland is growing (see 5.44pm) in remarks supported by the leading psephologist Prof Sir John Curtice who said that support for independence is rising because remain voters are becoming more nationalist (see 7.50pm).

That’s all for today, thanks for joining us.

Updated

After Jeremy Hunt said that German chancellor Angela Merkel had indicated the EU would look at a sensible new proposal put forward by the new prime minister (see 20:02 pm), the foreign secretary asked in a tweet who Conservative members trusted to renegotiate a better Brexit deal.

However, it is worth noting that there does not appear to have yet been confirmation from Merkel or her spokesman.

Interviewer Beth Rigby also later noted what is potentially the key difference between Hunt and frontrunner Boris Johnson:

On a slightly more lighthearted note, when asked to tell a joke, Hunt earlier told Sky News:

I was dreading you asking something like that. Well I think in this campaign, the best jokes I’ve probably seen have been on the internet. For the time time in my life actually, the internet has been quite kind to me .. because they think I’m the underdog. They actually ran a campaign to tell Jeremy what his slogan should be for this leadership campaign. So we had #takeapuntonhunt, #jezzasthebezza, and then the one you’re really not going to try and say is #huntymchuntface.

He then tweeted in response to a former MP who claimed Johnson had recently asked him the same question twice.

Updated

Here is the full story on Boris Johnson’s phone-in from Amy Walker.

After Philip Hammond tweeted today that no-deal funds would only be “if we leave with an orderly transition”, the chancellor told BBC News that the promises made insofar by leadership contenders Jeremy Hunt and Boris Johnson were unaffordable without increased borrowing, cuts or taxation rises.

The promises that have been made so far greatly exceed the fiscal headroom. So they would either require borrowing to be increased way beyond the government’s cap on borrowing, or they’d require cuts in spending somewhere else, or they require increases in tax somewhere else.

Pressed by BBC political editor Laura Kuenssberg on what he meant by “fiscal headroom”, Hammond said there was not a “pot of money sitting in the Treasury” in preparation in the event of no deal.

So at the Spring statement i said that we’d built up fiscal headroom to protect against the costs of a no-deal exit and that that fiscal headroom could be released for additional spending or tax cuts if we have a smooth Brexit with a transition period in an orderly way. But that isn’t a pot of money sitting in the Treasury, it’s actually more borrowing without breaching the government’s borrowing limits.

My concern is that this government has built up a reputation for fiscal responsibility and the British people have worked incredibly hard over a decade now to rebuild our public finances and I think it’s very important that we don’t throw that away.

Asked whether he believed the candidates were putting what Kuenssberg said was the Conservative party’s reputation for economic competence at risk, Hammond responded:

Well whether it’s a leadership competition or a general election, there is always a temptation to sort of get into a bidding war about spending more and cutting taxes. But you can’t do both and if we’re not careful all we end up doing is borrowing more, spending more on interest instead of on our schools and our hospitals and our police and delivering a bigger burden of debt to our children and our grandchildren. I don’t think either of the candidates would want to do that, that is not what the Tory party is about, but we just need to sometimes stop and think about what we’re doing.

Though he recognised both Johnson and Hunt were people he was sure would take fiscal discipline and responsibility seriously, while ensuring borrowing does not rise unsustainably, Hammond said:

I just think that everyone needs to bare in mind the importance of managing the public finances. Of course everybody wants to see the era of austerity behind us. but in order to be able to release the headroom we have built up we have to get a deal as we leave the EU so we that we do so smoothly. If we don’t get a deal the all of the headroom and more will be needed to support the economy to deal with the consequences of a no-deal exit and the hole that will make in our public finances?

I think [Johnson and Hunt] need to be very careful about setting out these ambitions and being clear about the consequences.

Updated

After Jeremy Hunt elaborated on his plans in the event of a no-deal Brexit, the civil service union criticised the foreign secretary’s suggestion that all August leave could be cancelled for civil servants in some departments if their plans are not “on time and on track”.

PCS general secretary Mark Serwotka said:

For a potential Prime Minister to unilaterally declare that leave for civil servants will be cancelled without consulting them or their union is utterly ludicrous.

The government’s handling of Brexit has been shambolic and civil servants have stepped up to the plate on numerous occasions and done their best to prepare for all eventualities.

Our members working in job centres and other government departments are not responsible for the mess inflicted on them and the country by the sheer incompetence of ministers. They will not put up with their leave being cancelled.

Dave Penman, head of the FDA union that represents senior civil servants, told the Times that Hunt’s plan was “divorced from reality”.

This shows no understanding at all of how the civil service works. Is he suggesting that if a government department is not up to speed then officials who aren’t even working on Brexit will have their leave cancelled?

He is spouting macho nonsense that undermines the credibility of his plan and smacks of a teacher deciding to punish the whole class. This is a crisis made in parliament yet he is proposing that it is civil servants that should cancel their holiday.

He added that it would be totally unacceptable to cancel civil service leave if parliament went into recess.

An anonymous civil servant recently warned in the Guardian that “we can’t make Boris Johnson’s no-deal fantasy into reality”.

Hunt said he felt “deeply uncomfortable” that his “posh school” education meant his life chances may be better than someone else who did not receive the same schooling.

“I went to a posh school, I had a fantastic education, and I was very lucky,” he told Sky News.

And I also felt deeply uncomfortable that because I was lucky enough to go to that school I might have better life chances than someone with equal talents, equal ambition, equal energy, who didn’t have the chance to get such a great education.

I am incredibly proud of the education reforms that have been championed by Michael Gove under this Conservative government that have improved the quality of state schools so that a number of them are as good as Charterhouse, the school I went to.

And I think that’s a fantastic reform, but I still think we have a national blind spot, and that’s why I said I want education to be our social mission.

The Guardian’s political correspondent Peter Walker tweets:

Updated

On the issue of the Irish border backstop, Hunt said he believes there is “technology there now” to provide a solution, adding checks can be done away from borders.

“My impression having read many Government documents on this is that it is, I think, overall it is technically possible and it’s a question of creating a negotiating environment where it is also politically acceptable to the EU and to the government in the Republic of Ireland,” he said. “That is why I think if we send the right prime minister we have a chance.”

Asked if it was possible before 2030, Hunt replied: “I believe it’s technically possible now.”

He went on to say: “It is imperative that we deliver on the referendum result .. with or without a deal. [However] I think we have to recognise that no deal will be scary to a lot of people.”

Citing possible difficulties farmers exporting produce to the EU may encounter, Hunt said there would be a £20m support package for business, for farmers, and for the fishing community to “weather the storm” that a no-deal Brexit could spell. “But it’s not my first choice,” he added.

Updated

Hunt: Merkel says she is willing to look at a new Brexit deal package

Tory leadership contender Jeremy Hunt has been speaking to Sky’s Kay Burley in an hour-long interview where he said the German chancellor Angela Merkel has told him she is willing to look at a new Brexit deal package put forward by a new prime minister.

“I’ve had a conversation with Angela Merkel and .. she said ‘Of course we will look at any proposals made by a new UK prime minister’ because she wants to solve this problem,” the foreign secretary told Sky News.

“And providing we’re sensible, and I think the approach that I’ve laid out is a sensible approach and a fair approach, and I think that it’s in Germany’s interests as well.”

He added: “What she has said is she will look at the package and I think she will look at it with an open mind.”

Hunt then claimed Jeremy Corbyn would be blocked from delivering Brexit by the Labour party, as he warned against an “accidental” general election that would elect the current party of opposition.

“We’re at a very pivotal moment in the Brexit negotiations and we don’t have a majority in Parliament, and if we get this wrong we could end up with an accidental general election that lets in Jeremy Corbyn and we would end up with no Brexit at all because the one thing the Labour Party would not allow him to do is to deliver Brexit,” he said.

Shown video footage of protesters clashing with police in Hong Kong, Hunt said his “heart goes out” to the demonstrators.

When I look at those situations that we’ve just seen, and those terrible scenes in Hong Kong, my heart goes out to people who do have to fight for their freedoms and who are worried they could lose very, very precious way of life.

I don’t support violence in any circumstances but I understand their worries about changes that are happening in Hong Kong.

On Iran, Hunt said: “It is one of the biggest worries on my mind at the moment - if you look around the world you say ‘which is the part of the world where we could have an unexpected war, a conflict which draws big powers in and becomes much, much more significant than might at first seem?’ It is here.”

Updated

Johnson: 'Only I can deliver Brexit by 31st October with comprehensive no deal plan'

In a press release issued just before the phone-in, the ‘Back Boris’ campaign said Jeremy Hunt had today shown he was “not serious” about a no deal Brexit given that his 10-point plan for Brexit did not include an absolute deadline for delivering it.

The ‘Back Boris’ campaign said:

It is impossible to prepare for a no deal without a fixed deadline for Brexit. Doing so would risk repeating the disaster of the two delays we have already had, the wasted money that has already gone into no deal preparation and the uncertainty that businesses and citizens have had to endure.

Only Boris Johnson is committed to leaving the EU by 31stOctober. By delaying making a decision about no deal preparation, Jeremy Hunt is failing to provide the certainty that our businesses deserve and finally deliver on the result of the referendum once and for all.

Boris Johnson said:

What you can’t do is to keep saying that we’re going to have a deadline of October 31stand then say it’s actually not really a deadline at all and we can delay beyond October 31st.

Look at what happened on March 29th, a huge amount of work was done, the country did get ready and then we failed to get out. We failed to get out on April 8th. And a lot of the preparations then sagged back down again. What is vital now is that we commit to coming out on October 31st- we mean it, we get ready for a ‘No Deal’ outcome and we prepare.

I just say to people, look this is a great country, we’ve spent a long time now, three years, waiting to do this. Preparations were already been made to come out on March 29thand we were very nearly there. Those were allowed to sag back again as a result of not coming out and that was a mistake. So it’s very important to have a hard deadline, to be absolutely clear about what we’re doing and to come out on October 31st’.

Responding to a call from a “passionate Brexiteer” who said it was the Remain side who had to compromise “because they lost” and respect the result of the referendum, Johnson said his primary duty was to “deliver on the verdict and the mandate of the people”.

“To have another referendum before we have done that would be peculiar, wrong and divisive,” he said. “People would think there was some sort of establishment conspiracy against them.”

A Polish national asked how Europeans can sleep peacefully, and Johnson said he wanted to pass immediately into law a provision for giving EU nationals automatic right to remain, while recognising it was crucial people living in the UK before the cut-off date get indefinite leave to remain.

The UK must protect the 3.2m European nationals living and working in the country, he said. “They have done huge amount of good, including Polish community .. Polish pilots played a pivotal role in Battle of Britain, we owe them an incalculable debt.”

Johnson said “uncontrolled immigration helps depress the lower end of wages”, and the UK needs an Australian-style points based system to provide the country with the right skills, from software manufacturers to fruit pickers.

He added that he also thought he found it odd when people complained about rises in wages. “ Lot of people live on modest incomes,” he said. “Its good if wages and productivity increases, which it generally does.”

The leadership frontrunner went on to say that he would prioritise home ownership for young people by building on brown field sites to increase supply, while expressing support for bringing the student loan interest rate down from the current level of more than 6%.

Asked what practical plans Johnson has to “get people together after Brexit”, the MP for Uxbridge and South Ruislip asked whether the caller was referring to within the Tories or the country at large.

“I’m the candidate who has the support of the most Remainers and leavers together, half the party, dozens on each side,” he said, citing how an alliance is already forming and that he has been campaigning with Bob Neil and Jo Johnson today, who both opposed Brexit.

“Once we’ve got it done, actually you’ll find people naturally become much less [irated] by the whole issue, once we have Brexit delivered, a lot of the stress with come out,” he said. “[There has been] No clarity of direction, which has fermented unrest on both sides.”

A caller said that Jeremy Hunt would defend the union at all costs, and asked why Johnson was putting it in danger.

The former foreign secretary said that delaying Brexit “kicks the can down the road” and that Brexit could in fact entrench the union.

“What are the [Scot Nats] going to say about their plan to join the EU once we’ve left? “ he said. “Are they really going to say Brussels should take control of Scottish fisheries? This is a fantastic opportunity to get Brexit done and spike the guns of the SNP

He proposed that the next prime minister should be minister for the union, adding that the United Kingdom is “far more together than the sum of our parts”.

On how to win the next general election, Johnson said his party must “get back to basic message of conservatism” which he lauded as a moral force and correct analysis of the human, society and nature.

He called on the Conservative party to “look after the interests” of entrepreneurs in order to fund public services.

“Corbyn only understands one side,” Johnson said. “He marches solely on the left.”

He added that the Labour leader “doesn’t understand the need to have a strong dynamic economy, which supports the forces of the free market economy.

Johnson claimed the Tories are “streets ahead of Labour” on the environment, but that it needs to be the party which speaks to young people on the issue. He cited goals to expand wind turbines, increase use of electric vehicles and cracking down on plastic.

Johnson: stop and search must be 'performed' to reduce knife crime

Conservative party voters have been asking Boris Johnson a wide variety of questions during a phone-in this evening.

The leadership frontrunner was characteristically vague about the exact policies he would pursue to achieve his stated aims, which seemed to focus on law and order, adult social care and infrastructure.

  • Johnson said police should be given the “political cover and support” they need to perform stop and search efforts in a bid to tackle rising knife crime in the UK.
  • In response to a question from a veteran who said former service people were treated “appallingly” after leaving the military, having their mental health concerns ignored, Johnson recognised more must be done to help veterans when they face mental health issues. “We need wraparound care for homeless veterans,” he said, adding that unfair prosecutions of people who have served their country loyally must be stopped.
  • The former Mayor of London criticised how the government has “kicked the white paper on social care down the road”, saying “no-one should be kicked out of their own home to pay for care”. The precise details of how Johnson would achieve “something politically possible” remain unclear, and he called for a national consensus “to try to crack this one”.

Updated

Support for independence in Scotland rising because remain voters getting more nationalist, polls suggest

The SNP’s Kirsty Blackman says support for independence in Scotland is growing. (See 5.44pm.) She’s right. In a blog for the What Scotland Thinks website, Prof Sir John Curtice, the leading psephologist, looks at the recent polling on Scottish independence and concludes that support for independence is rising because remain voters are becoming more nationalist. He explains:

In recent polls support for yes has on average been running at some four points above where it stood in the second half of last year among remain voters (and, indeed, those who did not vote in 2016). In contrast, there is no sign of any increase in support for yes among those who voted no – indeed, if anything, the opposite is the case.

In short, not only have recent polls suggested that there has been something of an increase in support for independence in recent months, but also that this rise has occurred entirely among those who voted remain (and those who did not vote in 2016). It would seem that the Brexit impasse has motivated some remain supporters in recent months to re-evaluate their attitudes towards the union. If so, then we do not need to rely on the answers to hypothetical polling questions to conclude that the outcome of the Brexit process could potentially change the balance of support for independence versus staying in the union – and so determine the future of the British state.

And here is the chart with the figures showing that switching remain voter explain the rise in support for independence.

That’s all from me for tonight. My colleague Mattha Busby is taking over now.

Polling on Scottish independence
Polling on Scottish independence Photograph: What Scotland Thinks

Updated

Here is the New Statesman’s Stephen Bush on the Speaker’s decision on the Beckett/Grieve amendment. (See 4.57pm.)

Johnson and Hunt 'have become Thelma and Louise of Brexit', says SNP

Kirsty Blackman, the SNP’s deputy leader at Westminster, has described Boris Johnson and Jeremy Hunt as the “Thelma and Louise of Brexit”. She explained:

The two men vying to be prime minister are locked in a no-deal Brexit bidding war to try and win over the Tory faithful – and it is ordinary people who are set to pay the price.

Boris Johnson and Jeremy Hunt have become the Thelma and Louise of Brexit – it beggars belief that both are prepared to drive the UK economy off a Brexit cliff-edge, regardless of the catastrophic consequences for the economy and people’s jobs.

Even Chancellor Philip Hammond admits that Tory plans for a no-deal Brexit would waste billions of pounds of taxpayers’ money, plugging the huge hole it would create in public finances – and leaving the UK poorer and worse off as a result.

It’s no wonder that support for independence in Scotland is growing, with polls showing a majority want a fresh independence referendum. People in Scotland deserve the choice of a better future than the Brexit Britain on offer from Westminster.

Thelma and Louise ending

Johnson/Hunt spending promises show austerity was 'political choice', says McDonnell

And John McDonnell, the shadow chancellor, has released a statement saying that the fact that Boris Johnson and Jeremy Hunt are proposing to increase public spending by so much shows austerity was a political choice. He said:

The spending promises being thrown around by both Johnson and Hunt once again prove that austerity was a political choice for the Conservatives and not an economic necessity.

With the two Tory candidates trying to outdo each other on who is more likely to pursue a no-deal Brexit, and who can make the largest and most reckless spending commitments, both Johnson and Hunt are putting our economy at risk and can’t be trusted to follow through on their promises to invest.

John McDonnell
John McDonnell Photograph: Andy Rain/EPA

Here is Tom Watson, Labour’s deputy leader, on the Jeremy Hunt speech.

Here is some comment on the Speaker’s ruling on the Beckett/Grieve amendment. (See 4.57pm.)

From the Sun’s Steve Hawkes

From Nikki da Costa, a former head of legislative affairs for Theresa May in Downing Street

From the Sun’s Tom Newton Dunn

The earlier attempt was this one.

Bercow refuses to allow vote on proposal to halt government spending if PM presses ahead with no-deal

MPs are just beginning the two-day debate on the estimates (Commons terminology for government spending plans). The Labour MP Margaret Beckett and the Conservative Dominic Grieve have tabled amendments that would have turned off government spending in some departments in the event of the new PM trying to implement a no-deal Brexit without the approval of parliament, but John Bercow, the Speaker, has just announced that he will not call them - ie, he will not put them to a vote.

No votes were expected tonight anyway. The two-day estimates debate continues tomorrow, when voting will take place at 7pm.

Lord Young of Cookham, the former cabinet minister George Young who is now a government whip in the Lords, told peers this afternoon he was viewing “with alarm” the promises made by Tory leadership candidates.

In response to a question about the UK Statistics Authority, and a suggestion from a Labour peer that it should investigate the claims made by Boris Johnson and Jeremy Hunt, Young said:

As a former Treasury minister I view with alarm the weeks that are passing under the contest that is under way with increasingly generous commitments being made out of the headroom which I think only lasts for one year.

I hope that in due course there will be costings for all these commitments so members of my party, who are choosing which is the most responsible leader, can see which one has the most credible economic policy.

Boris Johnson at the Polhill garden centre near Halstead in Kent earlier today.
Boris Johnson at the Polhill garden centre near Halstead in Kent earlier today. Photograph: Stefan Rousseau/POOL/EPA

This is from my colleague Heather Stewart.

In the Commons Jon Trickett, the shadow Cabinet Office minister, is raising a point of order. Jeremy Corbyn is sitting beside him. Trickett says Corbyn’s fitness is “legendary”. He asks John Bercow, the Speaker, if any minister is planning to make a statement about a report in the Times (paywall) on Saturday saying: “Senior civil servants have become increasingly concerned about Jeremy Corbyn’s health and warned that he may be forced to stand down as Labour leader because he is not up to the job ‘physically or mentally’.” Trickett says for civil servants to be briefing against the leader of the opposition like this would be undemocratic and unconstitutional.

Bercow says he has not been told about any statement but he says the civil service should be neutral.

Amber Rudd, the work and pensions secretary, who is on the front bench because DWP questions has just ended, says the government has complete confidence in the fairness of the civil service. She says Sir Mark Sedwill, the cabinet secretary, will be writing Corbyn about this matter.

Momentum is vowing to flood Boris Johnson’s west London constituency with hundreds of activists in a bid to unseat the Tory leadership front runner at the next general election, the Press Association reports. The pro-Corbyn organisation is planning a “mass canvassing event” in Uxbridge and South Ruislip ahead of the announcement on July 23 of the Conservative leadership race. It says it will follow up with further “unseat” events over the next year, as well as a social media operation targeting swing voters in the constituency. The move reflects a belief that Johnson - who saw his majority cut by more than half at the 2017 general election to 5,034 - could be vulnerable the next time the country goes to the polls.

Jeremy Hunt's Brexit speech - Analysis

Yesterday the Sunday Times splashed on a story about how Jeremy Hunt and Boris Johnson are involved in a “hard Brexit bidding war” and in his speech this morning Hunt effectively tried to use two manoeuvres to outflank Johnson on Brexit.

Until now Johnson has always been seen as being tougher on Brexit because: a) he is committed to taking the UK out of the EU by 31 October, whereas Hunt would led that deadline slip by a few weeks; and b) he is willing to contemplate proroguing parliament to stop MPs blocking a no-deal Brexit, which Hunt won’t countenance.

But today Hunt came up with two Brexiter virility USPs of his own.

  • Hunt brought forward the operative Brexit deadline, from 31 October to 30 September. Both Hunt and Johnson are saying that, unless the EU agrees to compromise on the backstop, they will trigger a no-deal Brexit. Johnson has said the UK will leave without a deal on 31 October if necessary. But Hunt is saying the final point for the EU to effectively signal that a deal is doable is 30 September. He explained in his speech:

Following the vote for the new plan in the House of Commons I will then allow 3 weeks for negotiations with the EU. As prime minister I will make a judgement on 30th September as to whether there is a realistic chance of a new deal being agreed that can pass the House of Commons.

If my judgement - and the judgement of my cabinet - is that there is a deal to be done I will seek to conclude the negotiations and pass a new meaningful vote and any necessary legislation in the House of Commons before the end of October.

If my judgement is that there is no deal to be done I will immediately cease all discussions with the European Union and focus the whole country’s attention on no deal preparations.

  • Hunt said that he would start his premiership on the assumption that a no-deal Brexit was the most likely outcome. He said:

So from the start of my premiership, So I will work on the basis we are leaving on 31st October without a deal unless the commission changes its position.

This is a concession to Brexiters, some of whom have been arguing for some time that no-deal should be the government’s central planning assumption. With this line Hunt also differentiates himself from Johnson, who is claiming (implausibly) that the chances of a no-deal Brexit under her premiership would be a million to one.

You can read the full text of Hunt’s speech here. It includes the full details of his 10-point plan for Brexit. Of those 10 points, six of them are not especially new, because they are essentially rebadged descriptions of things that are happening, or would happen, anyway: ramping up no-deal planning; a cabinet task force; engaging with EU leaders; a committee to look at no-deal logistics; carrying on with the government’s no-deal tariff policy; and financing work on alternative customs solutions.

But four of his proposals were significant.

1) Hunt said a new Brexit negotiating team (see 11.22am) would produce a new Brexit plan for publication at the end of August. But he did not say anything about the Sunday Times report saying his team would include Stephen Harper, the former Canadian PM.

2) He gave details of his no-deal budget (see 11.26am), which he said he would introduce even if there were a deal.

3) He proposed a £6bn no-deal bail-out for farmers and the fishing industry. (See 9.20am.)

4) He set 30 September as a deadline for when the EU would have to decide whether or not to compromise.

Updated

IFS implies Boris Johnson's 'pledge' to boost public sector pay meaningless - because pay freeze ending anyway

The Institute for Fiscal Studies has been working overtime recently trying to ground the Tory leadership election promises in economic reality. Paul Johnson, its director, was on the World at One a few minutes ago with some comments on Jeremy Hunt’s Brexit speech. Here are the main points.

  • Johnson implied that the Boris Johnson campaign “pledge” this morning on public sector pay (see 9.20am) was meaningless because the public sector pay freeze was ending anyway. He said:

In the normal run of things, supposing we get a deal in October, austerity can come to an end because there is in the order of £15bn a year or so more that can be spent whilst keeping to normal sorts of fiscal rules about keeping the debt falling.

The problem is, of course, if we don’t get a deal, if we go out with a no-deal type Brexit, then the economy will grow less quickly, we will lose that fiscal headroom and there certainly won’t be scope in the long run for spending increases and tax cuts, although you might need to do something in the short run to cushion the economy from the immediate shock.

The Johnson camp got Matt Hancock to promise “a pay rise for everyone” in the Times this morning, but Johnson has not been willing to make that commitment himself in public. (See 12.43pm.)

  • Paul Johnson said that Boris Johnson and Hunt were both misleading people by implying that the Treasury’s Brexit ‘war chest’ would fund their spending commitments. And although Johnson and Hunt were both acknowledging they might borrow more, they were not saying how much, he said.
  • Paul Johnson said Hunt’s claim in his speech this morning that the UK spent just over £1tr bailing out the banks after the financial crisis was not true. He said:

It is simply not true that in any real sense we spent £1tr bailing out the banks in the same way that he’s referring to potentially finding £6bn for the farmers and fishermen.

He also said the financial crash was not something that the government has chosen as an outcome.

  • He suggested that Hunt’s proposed £6bn bail-out fund for farmers and the fishing industry (see 9.20am) would not address the real problems caused by a no-deal Brexit. He said:

Farming and fishing are tiny parts of the economy. It is actually manufacturing and services who are likely to suffer particularly badly, not as a result of tariffs - we obsess about tariffs - it’s the non-tariff barriers ... the matching the regulations in other countries ... which potentially have really significant effects on things like the cars and the textile industries.

Paul Johnson, director of the Institute for Fiscal Studies
Paul Johnson, director of the Institute for Fiscal Studies Photograph: Felix Clay/The Guardian

Dan Dalton, who was a Conservative MEP until he lost his seat in the Euro elections this spring, has said that he is now backing Jeremy Hunt having originally started as a Boris Johnson supporter. He said:

All Conservatives agree that we have to deliver Brexit before the next general election, but to actually do it will need considerable skill, compromise and flexibility.

Of the two candidates in front of us, I have gradually come to the conclusion that Jeremy Hunt is the one more likely to do that. I do not say that lightly. I started this campaign as a Boris Johnson supporter, and he has many qualities, but having worked in Brussels throughout the Brexit negotiations, I just do not see how his strategy can work, whereas Jeremy Hunt’s might.

Yesterday the Observer published a report by Toby Helm based on a vox pop of Conservative party members who attended the hustings at Exeter. Toby picked up some evidence of swing towards Hunt.

Laura Kuenssberg, the BBC’s political editor, says the BBC is hearing people saying the same thing.

It is important to stress, though, the Conservative membership surveys suggest Johnson remains the overwhelming favourite. It is perfectly possible for both propositions to be true; that Hunt is gaining support, but that Johnson is still on course to win.

Make UK, the trade body representing the manufacturing industry has said the competition between Boris Johnson and Jeremy Hunt to out hard-Brexit each other with “no deal” pledges is the “height of irresponsibility” with “zero understanding” of the consequences.

It made its remarks after manufacturers suffered the sharpest fall in activity in more than six years last month indicating signs of economic weakness.

Seamus Nevin, chief economist at the organisation, said the latest purchasing managers’ index (PMI) data showed that the decline in manufacturing activity in May was not just a one-off linked to the aftermath of Brexit stockpiling in March and the stoppages of some car manufacturing in April. He said:

Today’s data proves that May’s plunge below the 50-threshold was not just a one-off with UK manufacturing activity collapsing to its lowest level in six and a half years. Businesses are cutting back on both day-to-day and capital spending with the contraction in output a reflection of growing Brexit uncertainty and, worsening global trade winds.

Ominously, the PMI’s output measure dropped to 47.2 from 50.3 in May, the biggest contraction in a single month since October 2012. Firms are reporting that export demand is falling month-on-month as customers around the world are losing confidence in the future of the UK market.

Looking ahead the picture shows little sign of improvement with signs of weakness now spreading across the eurozone. Given this outlook, increasing competition to see who can race to the bottom and act tough on ‘no deal’ is the height of irresponsibility with zero understanding of the consequences.

Not everyone at the Polhill garden centre in Kent was pleased to see Boris Johnson, the Press Association’s Lewis Pennock reports.

Boris Johnson calls for 'decent pay' in public sector - but avoids committing to above-inflation rises

On a visit to a garden centre in Kent this morning Boris Johnson was asked if could confirm that he would increase public sector pay, as his proxy Matt Hancock has told the Times he would. (See 9.20m.) Johnson said he thought public sector workers needed “decent pay” but, in response to a question from the BBC, refused to guarantee above-inflation pay rises. He said:

I certainly think that you need to have decent pay in the public sector, absolutely.

When pressed again on this, he said:

I used to run large public sector organisations in London. I was very proud of what we did. And it’s very, very important when you’re in charge of a great public service, whether it’s the police or transport or local government, you’ve got to make sure that you understand their cares and their needs. And the only way to get the reform that you sometimes need in public services is to be their champion and their support.

This echoes the line Johnson used at a hustings on Thursday night, when talking about public services, about how: “You’ve got to love up the people that you lead.”

Boris Johnson meeting customers during a visit to Polhill Garden Centre near Halstead in Kent.
Boris Johnson meeting customers during a visit to Polhill Garden Centre near Halstead in Kent. Photograph: Stefan Rousseau/PA

Hunt's Q&A - Summary

Here are the main points from Jeremy Hunt’s Q&A on his speech. I will post more on the speech itself soon.

  • Hunt dismissed Boris Johnson, his rival for the Tory leadership, as a “showman”. Asked if he had the charisma to be prime minister, he replied:

When I talk to people running their own businesses, to farmers, to shopkeepers, to people on the high street who are worried about the situation we are in now, they don’t want a showman, they don’t want to be entertained, they want a prime minister who is going to lead us out of this crisis.

  • He challenged Johnson to debate with him on Sky News tonight.
  • He dismissed claims that his spending pledges showed he was abandoning the Conservatives’ reputation for fiscal responsibility. When this was put to him, he replied:

The only reason I was able to negotiate that extra money was because we took those painful decisions, we put the economy back on its feet. And so we will never throw that fiscal responsibility away. It is essential to our prosperity.

He also said proposing to spend more in response to an economic shock was sound economics.

My response to an economic shock is the response that chancellors from all parties have made over the years, which is to allow some loosening in the system to support businesses that are most directly affected. What [these plans] do is allow businesses the time and the breathing space to change their business models and develop their business models so that they can survive.

  • He rejected suggestions from Philip Hammond, the chancellor, that his plans for a no-deal Brexit involve the Treasury spending money it does not have. In a tweet this morning, Hammond said the “fiscal headroom” set aside by the Treasury was there to make up for the loss of revenue there would be to the exchequer from no-deal.

Hammond did not mention Hunt by name, but the timing of his tweet, and its content, suggest it was directed at Hunt as well at Johnson. But when this was put to Hunt, he claimed the plans he announced today did not amount to spending the Treasury money twice. Hunt said:

We have build up headroom, around £26bn of headroom, which makes it possible to make the commitments that I’m making today whilst still sticking to our plans to reduce the deficit and reduce the national debt as a proportion of GDP.

  • Hunt accepted that some of his spending plans would have to be postponed in the event of a no-deal Brexit. He said:

I think what Philip Hammond was talking about was the headroom that he has built up, and is jealously guarding at the moment, is headroom that is there to deal with the eventuality of a no-deal Brexit. So I was very explicit yesterday that some of my other spending plans, more money for education, for example, things I passionately want to do, they will take longer to do in a no-deal situation because our immediate priority is going to be to support businesses that are directly affected by a dramatic change in our economic circumstances.

Jeremy Hunt
Jeremy Hunt Photograph: Frank Augstein/AP

Updated

Q: What would your message to Boris Johnson be?

Hunt says Johnson is a “great guy” and very talented. He says he has set out his plan. He says Johnson should agree a debate with him, so they can explain to Tories their respective plans. He says Sky News is willing to host a debate tonight. “It is time for some MoJo from BoJo,” he says.

And that’s it.

I will post a summary soon.

Q: Do you have the character and charisma to be PM?

Hunt says, when he talks to people, they do not want a showman. They wants someone who can lead us out of this crisis.

Q: You said recently that a no-deal Brexit would be political suicide.

Hunt says he said it would be political suicide to go into a general election promising no-deal.

Hammond tells Hunt and Johnson that Treasury 'fiscal firepower' will not be available for extra spending in event of no-deal

Q: Philip Hammond, the chancellor, says if there is a no-deal Brexit, the money you plan to spend won’t be available. And do you accept that no-deal Brexit will lead to job losses?

Hunt says he knows what it is like to have to lay off staff.

He says he wants to support businesses in the event of a no-deal Brexit.

Referring to Hammond’s comment, he says he admits that, if there is no-deal, then there are some spending decisions he will have to postpone.

Q: In the financial crisis you argued for lower public spending. Now you are arguing for more. Aren’t you sounding like Comrade Corbyn?

Hunt claims Labour was to blame for the financial crisis. He says, when you face a financial crisis, it is responsible to spend money.

He says chancellors from all parties have loosened spending in the face of an economic shock.

Hunt's Q&A

Q: Do you accept you are now abandoning the Tories’ reputation for fiscal responsibility?

Hunt says he was part of a cabinet that took “painful’ decisions on budgets. He knows what it is like to have to make cuts. The NHS is only able to get extra money now because of decisions taken earlier. He says he will never throw away the Tories’ reputation for fiscal responsibility.

Q: Why do you think you can get a deal in three weeks? No one believes that.

Hunt says the EU will not be seeing his ideas for the first time. But he has set a hard deadline. If he judges a deal is not possible on 30 September, he will go for no-deal.

Hunt says, if MPs try to block a no-deal Brexit, that could make getting a deal harder.

In any negotiation you need leverage, and part of ours is showing that we have a plan to ensure we succeed as a country through a no deal Exit from the EU, and we are willing to use it if an acceptable deal can’t be done.

So I urge any colleagues thinking of blocking a no deal Brexit to reflect that you may in fact be making it harder to get a negotiated exit, by giving the EU misplaced confidence that we will give ground, and ultimately increasing the chance that we leave without one.

And he says Boris Johnson was wrong to put the chances of a no-deal Brexit at a million to one.

I also urge others to be clear with people about the facts.

There is no implementation period without a deal.

There is no recourse to GATT 24 without the agreement of the other side. You can’t do a trade agreement by yourself.

And the chances of no deal, far from being a million to one, are real which is why we must prepare.

The point about making no deal a credible threat is that you actually have to prepare for it.

Hunt says he would guarantee the rights of EU nationals living in the UK in all circumstances.

Hunt says he would decide on 30 September whether or not Brexit deal possible

Sixth, he will start planning a no-deal budget.

This will include my existing policies of cutting corporation tax cut to 12.5%, increasing the annual allowance to £5m, and taking 90% of high street businesses out of rates, which I will introduce in any circumstance.

Seventh, he will produce a no-deal “relief programme”.

This will include a £6bn fund for the fishing and farming sectors who export to Europe to ease transition out of the European Union whilst honouring our international obligations. It will also consider what relief other industries will require.

Eighth, he will pursue the government’s existing approach to tariffs.

Ninth, he finance “the development of customs solutions which can help deliver our cast iron guarantee that we will never put up a hard border.”

And, tenth, he will follow a clear timetable for the negotiation.

Following the vote for the new plan in the House of Commons I will then allow 3 weeks for negotiations with the EU. As prime minister I will make a judgement on 30th September as to whether there is a realistic chance of a new deal being agreed that can pass the House of Commons.

If my judgement - and the judgement of my negotiating team - is that there is a deal to be done I will seek to conclude the negotiations and pass a new meaningful vote and any necessary legislation in the House of Commons before the end of October.

If my judgement is that there is no deal to be done I will immediately cease all discussions with the European Union and focus the whole country’s attention on no deal preparations.

Hunt is now running through his 10-point no-deal plan.

First, on day one of his premiership he will ramp up no-deal planning.

All government departments will be expected to act on the basis that we are leaving without a deal on October 31st. All August leave will be cancelled unless I receive a signed letter from the relevant permanent secretary saying that preparations in his or her department are on time and on track.

  • Hunt to cancel summer leave for civil servants unless their no-deal plans are ready.

Second, he will set up a no-deal cabinet task force.

Third, he will establish a new negotiating team.

A new political negotiating team will be convened with members of the ERG, the DUP, members of the One Nation Group and Welsh and Scottish Conservatives. It will be led by the Brexit Secretary and supported at an official level by Crawford Falconer. He will be supported by top experts from around the world. They will be tasked with producing an alternative exit deal, based on the alternative arrangements proposals, that can command a majority in the House of Commons and addresses, seriously and forensically, legitimate EU and Irish concerns about the Irish border and the integrity of the single market. This plan will be published by the end of August.

Fourth, he will engage with EU leaders and the commission in July and August.

Fifth, he will set up a new national logistics committee to keep goods flowing in and out of the UK in the event of no-deal.

Hunt says renegotiating Brexit will not be easy. But it will not be impossible either.

But we also have to prepare for the possibility that the European Union refuses to budge.

Which means a comprehensive no-deal plan.

But, Hunt says, first the UK must leave the EU.

And as one of the oldest democracies in the world we show the world that in this country it is the people not the politicians who are the boss.

As your prime minister I will.

But belief alone won’t cut it. Rhetoric is not enough. This is about the hard graft, focus and attention to detail

Deal or no deal.

Every eventuality. Every law or statutory instrument. Every industry. And every part of the UK

One slip, we lose our leverage, our security and possibly even Brexit itself.

Jeremy Hunt is speaking now. He says, since the Tory leadership contest started, he has travelled more than 3,000 miles across the country.

He starts with a summary of his overall pitch.

As an entrepreneur I want to fire up our economy, cut corporation tax and scrap business rates for thousands of high street companies up and down the country.

As a reformer I want our next social mission to be to abolish illiteracy and ensure that every young person has the skills they need to get a well-paid job.

And as the son of a naval officer I want us to walk tall in the world with a decisive increase in defence spending so that Britain continues to defend the values we believe in.

Liam Fox, the international trade secretary, is introducing Jeremy Hunt,

Fox says if the party is electing a prime minister, it has to choose someone ready for office from day one. And you need someone who can connect, he says. He says he has been impressed by the way Hunt connects with people.

But Tories need to deliver Brexit first, he says. And he says, having seen Hunt in cabinet, he knows how meticulously he prepares for things.

Jeremy Hunt's Brexit speech

Jeremy Hunt is about to start his Brexit speech. He is addressing Policy Exchange thinktank.

There is a live feed at the top of the blog.

Updated

Both Lib Dem leadership candidates rule out coalition with Corbyn's Labour

Turning to the other leadership contest, Jo Swinson and Sir Ed Davey, who are competing to replace Sir Vince Cable as Lib Dem leader, have been taking part in a debate on Sky’s All Out Politics. Here are some of the key lines.

Jo Swinson (left) and Sir Ed Davey (right), with Adam Boulton presenting
Jo Swinson (left) and Sir Ed Davey (right), with Adam Boulton presenting Photograph: Sky News

Hancock claims no realistic chance of Boris Johnson needing to prorogue parliament to stop MPs blocking no-deal

Matt Hancock, the health secretary, was in full word-munching mode on the Today programme this morning. When he was standing as Tory leadership candidate himself, he criticised Boris Johnson for being anti-business (saying “I say fuck ‘fuck business’” - one of the more memorable lines of the contest) and he said that proroguing parliament to facilitate a no-deal Brexit, which Johnson is reserving as an option, would be an insult to D-day veterans. But now he is a cheerleader for the Johnson campaign, and he had to explain why. Here are the key points.

I just don’t think that [proroguing parliament] is where this is going to end up ...

I made the argument that [earlier in the leadership contest[ parliament would stop a no-deal Brexit. But during the leadership contest we had a vote in parliament. And I expected that vote to be to carry on the government to be defeated. It was a vote on whether we made parliamentary time to stop no-deal. Actually, it turned out that the government carried that vote by 11. And it is absolutely clear that the European election results have fundamentally changed the politics of this in Westminster too.

  • Hancock dismissed a question about why he was now backing Johnson given what he had said about business by replying: “But you’ve got to look forward in life, you’ve got to look forward, John.”
  • He said that he was backing Johnson because he was “best placed to deliver Brexit”. Humphrys started the interview by adopting the famous line to Debbie McGee and asking what was it about the runaway favourite in the contest, Boris Johnson, that made Hancock want to support him. Hancock began his reply by saying:

Well, and the reason that I’m backing Boris Johnson is because I think he’s best placed to deliver Brexit, and then to unite the country, and the storey we’re talking about this morning uniting the country on a path plan of higher pay not higher taxes is exactly the sort of thing that I want to see.

That confirmed this line in Tim Shipman’s Sunday Times account yesterday (paywall) about the rigid message discipline being imposed by the Johnson team. Shipman wrote:

On Tuesday Mark Fullbrook, the business partner of Johnson’s election guru Sir Lynton Crosby, was drafted in to take over the campaign, a move that was long planned but which contributed to a sense of panic.

Fullbrook put MPs’ noses out of joint at a presentation in parliament’s Thatcher Room that evening when he outlined campaign messaging. One MP present said Fullbrook shot down Bob Seely, the MP for the Isle of Wight, “like a heckler” when he tried to ask a question, and mocked veteran Eurosceptic Sir Bernard Jenkin for yawning. Seely walked out.

“The way he did it didn’t go down well with colleagues,” the MP said. “There are three messages: ‘Boris will deliver Brexit on October 31; Boris will reunite the party and the country; and Boris will beat Jeremy Corbyn.’ That’s all we are allowed to say.” These messages had been a feature of the campaign for weeks, but Fullbrook made clear they would now be rigidly enforced.

Here is some comment on the interview from journalists.

From Sky’s Rob Powell

From my colleague Peter Walker

From the Daily Mail’s Jason Groves

From the Times’ David Aaronovitch

From BuzzFeed’s Stuart Millar

From my colleague Patrick Wintour

From my colleague Marina Hyde

Updated

Liam Fox, the international trade secretary, has told the Today programme that Scottish independence and a push for Irish reunification would be “real threats” from a no-deal Brexit. Speaking on the Today programme this morning Fox, who is backing Jeremy Hunt for the Tory leadership, was asked whether a no-deal Brexit could lead to Scottish independence and a border poll to reunite the island of Ireland. Fox replied:

We know they are both real threats, there’s no point in pretending they’re not there.

And therefore we have to put in place the details of what a no-deal would look like, including how we protect crucial industries like fishing and farming and how we deal with small businesses.

It’s not good enough to simply say we are going to have a no-deal; we need to prepare about it, that’s what government is all about.

Hunt proposes £6bn no-deal bail out for farmers and fishing industry

At the last election Conservative politicians often accused Labour of resorting to “the magic money tree” to fund its promises. Even though Labour’s manifesto had details of how it would raise money for these commitments, the jibe was intended to show that Labour’s commitment to fiscal rigour was bogus, and that the party just expected to conjure money out of thin air.

That was two years ago. Now the Conservative party is holding a leadership contest and the candidates seem to have discovered not just the magic money tree, not just a Heseltine-sized magic money arboretum, but an entire magic money Amazon rain forest. We’ve got two good examples this morning.

  • Jeremy Hunt, the underdog in the contest, is proposing a £6bn fund to protect farmers and the fishing industry from a no-deal Brexit, as part of a 10-point plan to prepare the UK for possibly leaving the EU at the end of October without an agreement. He will set out details in a speech this morning and, although he is still stressing that he would prefer to get a Brexit deal with the EU, this seem seems to be further evidence that he is engaged in what the Sunday Times splash headline yesterday called a “hard Brexit bidding war” with Boris Johnson. Hunt’s plan also includes setting up a no-deal cabinet task force, establishing a national logistics committee to produce a plan to keep goods moving in the event of no-deal and holding a no-deal budget, which would among other things cut corporation tax to 12.5%. Last week the Institute for Fiscal Studies said this tax would cost £13bn a year. (By comparison, abolishing tuition fees for new students, Labour’s headline spending pledge at the last election, came in with a price tag of just £9.5bn, which Labour costed through tax increases for high earners.) Commenting on his plan, Hunt is due to say in his speech:

If you’re a sheep farmer in Shropshire or a fishermen in Peterhead I have a simple message for you. I know you face uncertainty if we have to leave the EU without a deal.

I will mitigate the impact of no deal Brexit on you and step in to help smooth those short term difficulties. If we could do it for the bankers in the financial crisis, we can do it for our fisherman, farmers and small businesses now ...

I have made it clear that my preference is for us to leave with a new deal. One that removes the backstop and ensures we have a fully independent trade policy. And if the commission engages in good faith I believe this is possible.

But Britain deserves a leader with the courage to not just tell the European commission he will walk away. But to show them he is willing and able to do so.

Because in the end, without those abilities, without that determination, and without that plan, it is just a wing and a prayer.

Now that there’s money available, we need to show the public sector some love — they do a brilliant job for the country. People in the public sector need to be properly rewarded for the brilliant work they do. Higher pay, not higher taxes, means a pay rise for everyone, including in the public sector.

It is important to stress that this is not the way politicians normally announce policy, and the effect of using proxies to make policy announcements on his behalf is to give Johnson what the Americans call “plausible deniability”; if questioned on this “promise” in the Commons in six months’ time, perhaps after the public sector pay rise has not materialised, Johnson can always say he never made this commitment himself.

Hancock has also been giving interviews this morning. His Today programme one was not his finest hour. More on that soon.

When challenged about how they would fund their spending plans, Johnson and Hunt have both pointed out that the Treasury has “headroom” available for extra spending (which is true, but only up to a point) and that the country can afford to borrow more (which is also true, but counter to the main thrust of Conservative thinking on the economy for the whole of the last nine years). Generally, thought, Johnson and Hunt have not dwelled much on questions about how they will fund their promises, and at Conservative party hustings they have not been challenged much on this point either.

Here is the agenda for the day.

11am: Jeremy Hunt delivers a speech on Brexit.

After 3.30pm: MPs begin a two-day debate on the estimates. Backbenchers are trying to force a vote on amendments that cut off government funding if a new PM tried to take the UK out of the EU without a deal.

As usual, I will be covering breaking political news as it happens, as well as bringing you the best reaction, comment and analysis from the web, although I will be focusing mostly on the Tory leadership contest. I plan to publish a summary at lunchtime and then another when I finish.

You can read all the latest Guardian politics articles here. Here is the Politico Europe roundup of this morning’s political news. And here is the PoliticsHome list of today’s top 10 must-reads.

If you want to follow me or contact me on Twitter, I’m on @AndrewSparrow.

I try to monitor the comments below the line (BTL) but it is impossible to read them all. If you have a direct question, do include “Andrew” in it somewhere and I’m more likely to find it. I do try to answer questions, and if they are of general interest, I will post the question and reply above the line (ATL), although I can’t promise to do this for everyone.

If you want to attract my attention quickly, it is probably better to use Twitter.

Updated

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