Former British Prime Minister Liz Truss has blamed the “very powerful economic establishment” for her failure to realise her low-tax, high-growth economic vision in her brief time in office.
Truss was forced to quit as prime minister in October after just 49 days in Downing Street, as the financial markets were plunged into turmoil after her chancellor Kwasi Kwarteng announced a £45 billion ($54 billion) package of tax cuts in his “mini-budget,” which was to be funded with government borrowing instead of spending cuts.
In her first detailed comments since her departure from Number 10, Truss wrote: “I am not claiming to be blameless in what happened, but fundamentally I was not given a realistic chance to enact my policies by a very powerful economic establishment, coupled with a lack of political support.”
In a 4,000-word article for The Sunday Telegraph, Truss said she had not appreciated the strength of the resistance she would face to her plans and complained her government had been made a “scapegoat” for long-standing economic issues.
She wrote: “I assumed upon entering Downing Street that my mandate would be respected and accepted. How wrong I was. While I anticipated resistance to my programme from the system, I underestimated the extent of it.
‘A Useful Scapegoat’
The former prime minister said that she believes that over the medium term her policies would have increased growth and therefore brought down debt.But she said she had not been warned of the risks to the bond markets from liability-driven investments (LDIs)—bought up by pension funds—which forced the Bank of England to step in to prevent them collapsing as the cost of government borrowing soared.
“Only now can I appreciate what a delicate tinderbox we were dealing with in respect of the LDIs,” she said. “Regrettably, the government became a useful scapegoat for problems that had been brewing over a number of months.”
She said that with the benefit of hindsight, she would have acted differently, but she had had to battle against the “instinctive views of the Treasury” and “the wider orthodox economic ecosystem.”
She said she was “deeply disturbed” at having to sack Kwarteng as chancellor, but believed she had been left with no choice.
“At this point, it was clear that the policy agenda could not survive and my priority had to be avoiding a serious meltdown for the UK,” she said.
‘Deal With the Fundamentals First’
Truss’s economic vision still enjoys considerable support within the Conservative Party. The newly-founded Conservative Growth Group in the House of Commons, which is supported by around 50 Tory MPs, has been pressing Prime Minister Rishi Sunak and Chancellor Jeremy Hunt to bring down taxes so as to kick-start growth.But Business Secretary Grant Shapps warned against Truss’s attempt to push ahead with tax cuts before bringing inflation under control.
Shapps told Sky News’s Sophy Ridge on Sunday programme: “You have got to deal with the fundamentals first. You have got to reduce inflation which is the biggest tax cut anybody can have.
“I notice she said they hadn’t prepared the ground for these big tax changes. What you have got to do is deal with the big structural issues first, deal with inflation first, deal with debt, and then you look towards tax cuts.”
Shapps said he “completely” agrees with Truss’s “instinct to have a lower tax economy.” But he added: “We also know that if you do that before you’ve dealt with inflation and dealt with the debt then you end up in difficulty. You can’t get the growth out of nowhere.
Straightforward Economics
Conservative lawmakers are divided on Truss’s defence of her own record.Lord Barwell, who served as chief of staff in former Prime Minister Theresa May’s government, wrote on Twitter that Truss was brought down because “in a matter of weeks you lost the confidence of the financial markets, the electorate and your own MPs.”
But Sir Jake Berry, former Conservative Party chairman, told BBC One’s Sunday With Laura Kuenssberg: “I still agree with Liz’s diagnosis of the disease that is facing the country and I think she accepts in this story that the prescription that we wrote—which I have to take part of the blame—wasn’t delivered in the correct way.
“But I think her point of we need to lower taxes, we need to create a growing economy, that’s what people want.”
The opposition Labour Party has ridiculed Truss’s claim that she had been brought down by a left-wing economic establishment.
Labour’s shadow business secretary Jonathan Reynolds told Sky News: “Will there ever be a Conservative willing to take responsibility for their own actions?
“Liz Truss had to stand down because her policies were incoherent and unsustainable and the idea she’s been brought down by a left-wing economic establishment—she’s been brought down by straightforward economics.”
