Liz Truss blames poor communication for market chaos after mini-Budget

‘We should have laid the ground better’, says PM – but points to Putin and Covid when grilled on economy

Adam Forrest
Sunday 02 October 2022 12:03 BST
Liz Truss blames poor communication for market chaos after mini-Budget

Liz Truss has blamed poor communication from the government for some of the market chaos which followed chancellor Kwasi Kwarteng’s mini-Budget.

But the prime minister vowed to stick by her £45bn tax cut plan – insisting she had made “the right decision” to expand government borrowing to pay for the spree.

“I understand their worries about what has happened this week, but I stand by the package we announced and I stand by the fact that we announced it quickly,” she told BBC’s Sunday with Laura Kuenssberg.

The prime minister added: “But I do accept that we should have laid the ground better. I’ve learned from that and I will make sure that in future we do a better job of laying the ground.”

Asked about market turmoil – which saw the pound tumble and traders dump government bonds – Ms Truss pointed to the Russia’s invasion of Ukraine and the impact of the Covid pandemic.

“This is a global problem. You have got [Vladimir] Putin’s war in Ukraine, the aftermath of Covid. What is happening around the world is that interest rates are rising.”

Challenged by host Laura Kuenssberg that the markets had responded directly to the mini-Budget, Ms Truss said the government “had to act” to reduce the tax burden.

Again pointing to global problems, the PM added: “I’m afraid there is an issue that interest rates are going up around the world and we do have to face that.”

Ms Truss sought to distance herself and the government from rising mortgages rates, amid growing fears some families face unpayable monthly costs and repossession of their homes.

The prime minister said interest rates were “set by the Bank of England” and are “somewhat dependent on the global market”.

In Birmingham for the start of the Tory conference, Ms Truss warned rebel MPs that she will not change course – telling them the “status quo isn’t an option”.

Ms Truss said she remained “absolutely committed” to abolishing the 45p income tax rate for the rich – but refused to commit to increasing benefits in line with inflation.

“This is something the work and pensions secretary is looking at the moment, so she will make a determination on that and we will announce that this autumn,” she said.

The conference kicks off as the latest poll by Opinium put Labour on 46 per cent – 19 points clear of the Conservatives on 27 per cent per cent.

Sir Keir Starmer has urged Tory rebels alarmed by the tax cuts to work with Labour to defeat them in the Commons.

“The economy is not a laboratory experiment for the maddest scientists of the Conservative Party,” he wrote in the Sunday Telegraph. “There are many decent Conservative MPs who know this.”

Former cabinet minister Michael Gove told the BBC on Sunday that Ms Truss must “correct” mistakes made in the mini-Budget, saying that the public were desparate for “reassurance” from the government.

Mr Gove said he was “profoundly” worried about borrowing money to pay for tax cuts – saying it was “not Conservative”. He claimed the abolition of the 45p tax rate showed “the wrong values”.

Ms Truss’s former colleague – who would not say whether he could rebel over the tax cuts in the Commons – added: “There was a number of mistakes made … but there is room and time to address them and correct them.”

Former Tory MP Nick Boles said the party “has leaped further out to the right than even Jeremy Corbyn was out to the left”, adding: “It’s where literally no voters are – that’s the extraordinary thing about it.”

Tory MPs have told The Independent that discussions are already under way about how to replace Ms Truss. “It’s not ridiculous to suggest she may be gone by Christmas,” said one backbencher.

Talk has already begun over the possible “coronation” of a single candidate – as happened with Michael Howard in 2003 – to take the decision out of members’ hands.

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