Tag: ExPM

Truss says she will be attending the Conservative party conference. And she will be “saying more”, she promises.

And that’s it. The Q&A is over.

Truss says the bond markets are influenced by politics. If they know a policy does not have political support, they will not back them.

She says, before she became PM, she did not fully realise how much power bodies like the OBR have. She suggests that the mini-budget collapsed because there was a leak from the OBR saying her policies would cost £70bn, and that this figure turned out to be wrong.

UPDATE: The BBC’s Faisal Islam has the quote.

“I didn’t realise before I got into No 10 is just sheer level of power that an organisation like the OBR has, because after immediate aftermath of LDI crisis, there was leak by OBR of a £70bn hole thats, in essence, what forced us to reverse the decision on corporation tax” Truss

Q: [From Liam Halligan, a journalist and economic commentator] When I speak to people in financial markets, they are critical of the role of the Bank of England during the period you were PM. Could you say more about that?

Truss says she was not the chancellor. She did not deal with the Bank directly.

But, on LDIs [liability-driven investments], she was blindsided. She did not know what an LDI was until the Monday after the mini-budget.

She says there needs to be more analysis of what happened in the markets?

Q: What would you have done differently?

Truss says preparing her premiership two years earlier would have helped.

She did not know this would happen. She thought Boris Johnson would survive. She was in Indonesia when it all kicked off. Launching a new economic policy two years before an election is not ideal, she says.

But she decided to go for it.

Obviously, if I’d known about the LDIs, we would have done things differently.

But, as for being more slick on the media, Truss suggests she cannot change the way she is.

Q: Are you happy with the way the OBR does its forecasts?

Truss says they should do more dynamic forecasting. They tend to understate the impact of regulation and tax cuts, and to overstate the impact of public spending.

This is from the Mirror’s Ashley Cowburn.

Liz Truss is taking more questions at a press conference post-IfG speech than she did in 49 days as Prime Minister.

Q: Should the Bank of England remain independent?

Truss says she thinks its mandate should be improved. It should focus more on the money supply.

Truss takes issue with a journalist who says the mini-budget “crashed the economy”. She says interest rates and gilt rates are higher now than after the mini-budget.

She does not want to attack the media, she says. But she says they could do a better job at explaining things like why the economy has stagnated, and why energy bills twice as high as in the US.

She says it is not helpful having all these issues reported just as part of a Conservative party soap opera.

Q: Will you apologise to people for interest rates going up?

Truss says interest rates were going up anyway. “The tax cuts we were were introducing were not major tax cuts,” she claims. She says they would have made a “fairly marginal difference”. But she was indicating a direction of travel, she says.

Truss is now taking questions from people in the audience.

Q: Do you think you should have consulted the Office for Budget Responsibility about your mini-budget plans?

Truss said the OBR was not asked to give a view on Covid spending decisions, like furlough. That reflects an underlying assumption that spending is good, she says.

She says there was no need to have an OBR forecast for the mini-budget. Her government was planning do to one later in the autumn.

Because the mini-budget spending plans were not bigger than furlough, her government did not think an OBR assessment was needed.

She also says she does not think the BBC did a good job of analysing the LDI [liability-driven investments] crisis in the pensions industry.

(The mini-budget collapsed because of the impact on LDIs in the pension industry. She seems to be saying the BBC was at fault for not warning her about this.)

Q: What is your response to Mark Carney, the former Bank of England governor, who said that instead of delivering Singapore on Thames, you delivered Argentina on the Channel? And do you see Rishi Sunak as part of the Tory anti-growth coalition?

Truss says people like Carney, and other central bankers, are not admitting their responsiblity for allowing government borrowing to get out of control. She says Carney is part of the economic consensus over the past 25 years that has led to low growth.

On the subject of anti-growth Tories, she says the party is split on this. People like her want to focus on growth. But some of her MP colleagues do not agree. She is making this speech today because she wants to win the argument, she says.

Q: Do you accept that you have personally undermined support for the policies that you support?

Truss says the mini-budget was attacked by international economic bodies.

But she had a choice – either accept the orthodoxy, or challenge it. She chose to challenge it.

In her book, which is out in April, she will argue this has given her “a real insight into why it’s so difficult for governments to deliver a smaller state or tax cuts”.

Q: How much power do you think economic institutions should have?

Truss says in some instances it is right for outside bodies, like regulators, to have power.

But over the last 30 or 40 years more power has gone to quangos, she says.

She says politicians end up getting the blame anyway. She thinks politicians should have more power.

Q: So would you be happy with, say, John McDonnell and the Treasury not constrained by outside bodies?

Truss says institutions are Balkanised. There are different ones competing with each other.

She says, fundamentally, she is a democrat. If the public elect John McDonnell as chancellor, he should be able to implement its policies.

Q: Can you give examples of where you were blocked from doing things by institutions?

Truss says she is writing a book that will cover this.

She thinks many civil servants are brilliant at what they do. But she thinks “institutional bureaucracy” stops politicians doing what they want.

During the Tory leadership campaign she tried to challenge the economic orthodoxy of the Treasury. She did not get much support.

Liz Truss has finished her speech. She is now taking questions, firstly from the Institute for Government’s Catherine Haddon, who is chairing the event.

Q: Voters are already unhappy with the state of public services. Wouldn’t they be worse under the cuts you were planning?

Truss turns to housing. With proper reform of planning laws, housing could be cheaper. But that would take time, she says.

People want better services, cheaper housing, cheaper childcare and lower fuel bills, she says. She says they do not care how those things are delivered.

She says it would have been hard to implement these reforms before an election in 2024. But, as PM, she wanted to spell out a trajectory for reform.

Q: How would you reform the NHS?

Truss says there are serious problems with it. She wanted to decentralise, and to push power down. “I don’t think the problem in the NHS is lack of money,” she says.

Liz Truss is about to give her speech to the Institite for Government now.

I will post the highlights when I’ve read the full text.

After she finishes, she will be taking questions. I will cover those exchanges here in full.

In her speech this morning Liz Truss will claim that it is wrong to describe some of the measures in her mini-budget last year as unfunded tax cuts. She will say:

I felt we needed to begin reforming our tax system with measures to make it more business-friendly and make the UK a more attractive place to invest.

The impending hike in corporation tax needed to be reversed. Cutting the top rate of income tax would show Britain was open to talent.

Reforming IR35 would have cut red tape for small businesses. And a return to VAT-free shopping for foreign visitors would make our great cities more attractive.

Some people have described these as “unfunded tax cuts”. This is not a fair or accurate description.

Independent calculations by the CEBR [the Centre for Economics and Business Research] 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.

The CEBR also says that the cost of freezing corporation tax was much less than the Treasury suggested.

Their costing of the measures was £25bn over five years, not £45bn.

Regrettably the static models used by the OBR failed to acknowledge this.

Rupert Harrison, George Osborne’s former chief of staff, argues this is nonsense.

Even on its own terms this still leaves £25bn of permanent additional borrowing at a time when the main issue was inflation. But the CEBR costings are also wildly optimistic, and it’s factually incorrect to say that the OBR models are static.

Rupert Harrison, who was chief of staff to George Osborne when Osborne was chancellor and who is now the Conservative parliamentary candidate for Bicester and Woodstock, has accused Liz Truss of “brass neck” in offering advice on economic policy. He claims nobody in the party is listening to her.

Good morning. Saturday will mark the first anniversary of Liz Truss’s mini-budget, arguably the most disastrous “fiscal event” in the long history of the Treasury. But Truss herself does not see it that way, and this morning she will give a speech defending her record and saying what she thinks the UK must do to promote growth. She has given speeches focusing on foreign policy since she resigned as PM, and earlier this year she published a 4,000-word article in the Telegraph defending the mini-budget, but this is her first big speech on domestic politics as an ex-PM. Kiran Stacey has a preview here.

Truss’s decision to give the speech will fuel speculation that she is interested in some sort of political comeback. No prime minister has returned to No 10 after leaving office since Harold Wilson in 1974, and the prospect of the Tories giving Truss another go seems unlikely, but stranger things have happened. In a recent interview with the Mail on Sunday, asked about a political comeback, she did not rule it out. She told the paper:

I want to stay involved in politics, I really care about politics. I went into politics not to become prime minister but to change things, that’s what motivates me and I will not rest until we have achieved the changes because I believe that Britain does need real change.

I think that can be delivered but I’m not specifying any role for myself in the future.

In response to the speech, the Labour party is saying Rishi Sunak should cancel her resignation honours list. Jonathan Ashworth, the shadow Cabinet Office minister, told Sky News this morning:

The key issue here is that it’s 12 months now since that quite disastrous set of decisions the Conservative government took, which ran our economy off the cliff, it led to a run on pension funds, it means that homeowners are paying hundreds if not thousands of pounds more on their mortgages. And at the same time, I think something like £300bn has been wiped off the value of properties so people’s mortgages are going up, rent going up, and the value properties coming down because of decisions taken by the Conservative government 12 months ago.

And now for Liz Truss to be out here today saying it was the London dinner party circuit that blocked her when people in Leicester, in Ashfield, in Barry and Bolton and Bolsover are paying more for food, I think is just extraordinary.

If Rishi Sunak had any backbone, he would block this Liz Truss list today, because I don’t think businesses, hardworking families paying so much more on their mortgage think that list should go ahead. In many ways it’s a kick in the teeth.

Truss’s resignation honours list has not been announced yet, but it has been reported that there are 14 names on it, some of whom will get peerages. No 10 has in the past indicated that it won’t block the list.

I will be covering the speech in some detail. I will also be looking at reaction to Keir Starmer saying he wants a major rewrite of the Brexit deal. Jem Bartholomew has the story here.

Here is the agenda for the day.

10am: Liz Truss, the former PM, gives a speech to the Institute for Government.

11.30am: Downing Street holds a lobby briefing.

2.30pm: Suella Braverman, the home secretary, takes questions in the Commons.

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