A week on from the government’s mini-budget in which the chancellor Kwarsi Kwarteng announced a range of tax cuts, including the abolition of the top income tax rate of 45p, the approach has been defended by the prime minister.
Speaking on the BBC 1 Laura Kuennsberg programme this morning, Liz Truss said, “The 45p rate actually raises very little and makes our tax system very complicated. We must stop thinking that everything is about how resources are distributed. We also need to make sure that we have got a tax system that is competitive internationally, is helping us to bring in the investment, get people into work, and get people wanting to get up the career ladder”.
Despite the fact the Conservative party is in decline in opinion polls, and sterling still under pressure in markets, Liz Truss said that there would be no changes in approach.
“I do stand by the package we announced. And I stand by the fact we announced it quickly because we had to act”.
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Accepting some of the recent cirticism, albeiit only in terms of the communication strategy, Truss said, “I do accept that we should have laid the ground better. I have learnt from that, and I will make sure that in future we will do a better job of laying the ground”.
The prime minister’s comments ahead of the Conservative party conference in Birmingham this week come as a number of Conservative MPs are now breaking cover to criticise the government.
Speaking on the same programme as Liz Truss, the former cabinet minister Michael Gove said, “I think there were a number of mistakes made last Friday in the fiscal event”, adding that, “The public want, to know that the Chancellor and the prime minister share their values and this is a critical question, it is not just about commanding economic confidence, it is about showing that in their hearts they know what people want to see in the next few years”.
During Liz Truss’ interview, the former Conservative cabinet minister, Julian Smith MP went even further. He tweeted to say, “The first job of an MP is to act in the interest of their constituency and in the national interest. We cannot clap for carers one month and cut tax for millionaires months later”.
Some signs suggest that the government may struggle to get the parliamentary votes to support its package, including private murmurings by Conservative MPs.
On Friday the Conservative MP Sir Charles Walker told the BBC Radio 4 ‘World at One’ programme that he was not sure he would be voting for the government’s mini budget when it returns. Sir Charles had previously told Channel 4 that the minu budget looked, “like some numbers written down on back of a fag packet”.
Nonetheless, Truss, who looked visibly tied during today’s BBC TV interview, doubled down on the idea that she may be forced to change course, saying:
“What I care about is making our country successful, making our economy successful, and I do think that there has been too much focus in politics about the optics, on how about how things look, as opposed to the impact they have on our economy”
“We have two decades of relatively low growth, and decisions have been made historically quite often on the basis of we can’t do this, because X will be annoyed, or Y will be annoyed, and that leads to a failure to make decisions over time. And we have ended up with a very complicated tax system, we have ended up with our tax burden and our tax system at a 70 year high, and that has not led to economic growth”.
During this morning’s interview, Truss also refused to say that she wouldn’t make cuts in public spending as the government looked to reduce borrowing as a percentage of GDP. medium term.
Emphasizing the importance of outcomes rather than inputs, Truss said, “What I am going to do is make sure that we get value for money for the taxpayer but I am very very committed to making sure we have got excellent front line public services”.
Truss refused to comment on whether any benefit payments would be adjusted with inflation in this year’s budget, but she did reiterate her support for the triple lock for pensioners.
Kwarsi Kwarteng, the chancellor, will defend his recent proposals tomorrow in his speech to conservative party conference. Truss herself will address party members at Birmingham on Wednesday morning.
