Unfair to call my mini-budget tax cuts unfunded, Truss to claim

Liz Truss is set to urge the Government to cut taxes, shrink welfare spending and raise the retirement age in a speech one year on from her disastrous mini-budget.

The former prime minister will use a speech at the Institute for Government think tank on Monday to defend decisions made during her brief spell in Number 10, calling it unfair to say she had pursued unfunded tax cuts.

She will also call for Rishi Sunak’s Conservative Party to embrace free market ideologies and ditch some green commitments amid cost-of-living pressures on voters.

Ms Truss was forced out of office last October after the budget of £45 billion of tax cuts outlined by her chancellor Kwasi Kwarteng sparked an economic crisis.

Since then she has continued to defend and build on her brand of conservatism in a bid to find a solution to stagnant growth.

The speech is expected to see Ms Truss reject suggestions that her tax cuts were “unfunded”.

Opposition parties have mocked the former prime minister ahead of the address, with Labour using the approaching anniversary of the mini-budget to call on Mr Sunak to block her resignation honours.

She will point to analysis by the Centre for Economics and Business Research (CEBR) forecaster and consultancy body, while criticising the “static models” used by the Office for Budget Responsibility.

The founder of CEBR, Douglas McWilliams, is a member of her Growth Commission project and offered a more sympathetic analysis of last September’s mini-budget than some other economists.

Pitched as her first significant intervention on the economy since leaving office, Ms Truss will say: “Some people have described these as ‘unfunded tax cuts’. This is not a fair or accurate description.

“Independent calculations by the CEBR suggest that cutting the higher rate of income tax and the ‘tourist tax’ would have increased rather than decreased revenues within five years.

“So quite the opposite of being unfunded, these tax cuts could have increased funding for our public services.”

She will claim Mr Sunak’s Government has spent £35 billion more than she would have as prime minister, arguing that if the policies included in her growth plan had been followed, growth would have eventually been higher.

“Investment would not have faltered in the North Sea, were it not for the windfall tax,” she will say. “We would have got moving on fracking and lower energy bills would now be on the horizon.

“A more competitive rate of corporation tax would have persuaded the likes of AstraZeneca not to relocate elsewhere. There would have been more duty-free shoppers and a boom in the number of self-employed.”

Conservative Party Conference 2022
Liz Truss and her chancellor Kwasi Kwarteng both left office amid the disastrous fallout of their mini-budget a year ago (Stefan Rousseau/PA)

She will repeat her attack on the so-called “anti-growth coalition”, and argue that her plan was not implemented due to a reaction from “the political and economic establishment which fed into the markets”.

Hitting out at 25 years of “economic consensus”, she will say: “The anti-growth coalition is now a powerful force comprising the economic and political elite, corporatists, parts of the media and even a section of the Conservative parliamentary party.

“The policies I advocate simply aren’t fashionable on the London dinner party circuit.”

But she will concede that she and Mr Kwarteng were in a “rush” to get “results”.

“It is certainly true that I didn’t just try to fatten the pig on market day; I tried to rear the pig and slaughter it as well. I confess to that,” Ms Truss will admit.

In setting out her proposals for growth, she will call on her successor Mr Sunak to “be bold” to deliver growth.

Chancellor Jeremy Hunt is currently preparing for the Autumn Statement, but tax cuts have repeatedly been ruled out while inflation remains high.

Ms Truss will label that a mistake and call for a swathe of cuts, including bringing corporation tax back down to 19% and reforming marginal tax rates.

She will also suggest binning the tourist tax and abolishing the windfall tax.

“We need to get a grip on the ballooning welfare and pensions bill,” she will add. “This means slowing the rate of increases to benefits and tougher work requirements. It also means raising the retirement age further.

“We should… delay implementing net zero commitments such as the ban on new petrol and diesel vehicles from 2030.

“Other environmental regulations which are hiking the cost of living, like enforcing the replacement of gas and oil boilers, should also be abandoned.”

She will take specific aim at US President Joe Biden’s landmark green subsidy push the Inflation Reduction Act, warning the West “cannot keep borrowing forever”.

Ahead of the speech, Labour frontbencher Jonathan Ashworth wrote to the Prime Minister calling on him to block Ms Truss’s yet-to-be published resignation honours list.

In the letter to Mr Sunak, he said: “Families and business across Britain are still paying (the) price for the Conservative Party crashing the economy and leaving working people worse, with higher taxes, higher mortgages and higher food and energy bills.

“Despite this, it has been widely reported that Liz Truss has submitted up to 14 people to receive resignation honours.

“This means that those who crashed the economy, who left millions to pay more for their mortgage and who undermined our economic institutions could receive an award.

“I urge you to block these honours.”

Liberal Democrat deputy leader Daisy Cooper mocked Ms Truss.

She said: “Liz Truss giving a speech on economic growth is like an arsonist giving a talk on fire safety.”