London: Former British prime minister Liz Truss has broken her silence to blame a “powerful economic establishment” and her own Conservative Party for her downfall.
Truss says she stands by her radical policy agenda but “the forces against it were too great” for it to succeed.
Liz Truss has defended her record and blamed external forces for her downfall. Credit:AP
In a 4000-word essay for the London Telegraph, she admits she is not “blameless” for the premature end to her time in Downing Street, but believes she was “not given a realistic chance” of seeing her policies through.
She criticises British public service’s “strength of economic orthodoxy and its influence on the market”, and condemns Treasury officials for blindsiding her over the collapse of the pension market which preceded her resignation.
Truss stepped down after just 44 days in office, making her the shortest-serving prime minister in the history of the United Kingdom.
In her essay she implicitly rebukes Conservative Prime Minister Rishi Sunak, who she does not mention by name, doubling down on her opposition to corporation tax increasing from 19 to 25 per cent, describing the policy as “economically detrimental”.
She says she wanted to become prime minister to change things, not to “manage decline or to preside over our country sliding into stagnation”.
Truss also accuses the Office for Budget Responsibility (OBR) of putting fiscal policy in a “straitjacket”, and says she disagreed with its assessment of the impact of her proposed tax cuts.
The budget office, she writes, “tends to undervalue the benefits of low taxes and supply-side reforms for economic growth and overvalue the benefits of public spending. This inevitably puts pressure on a higher-tax and higher-spend outcome – hence the inexorable tax rises we are now seeing”.
Truss won the Conservative leadership race after promising to enact a low-tax, high-growth agenda.
Following her mini-budget, the pound crashed and the Bank of England was forced to make an emergency intervention to calm market turmoil. She reveals she was given the “starkest of warnings” by senior officials that any further economic turbulence could leave the UK unable to fund its own debt.
British Prime Minister Rishi Sunak.Credit:Getty
Truss sacked Kwasi Kwarteng, her chancellor, and less than a week later, resigned as prime minister saying she no longer commanded the confidence of her MPs.
She writes: “I still believe that seeking to deliver the original policy prescription on which I had fought the leadership election was the right thing to do but the forces against it were too great.”
“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,” she says.
She recalls entering office presuming her “mandate would be respected and accepted”.
“How wrong I was,” she writes.
She condemns “endemic” levels of “pessimism and scepticism” at the Treasury about the potential for growth in the British economy.
And in a damning indictment of the department, she reveals that in the run-up to the mini-budget, no one there highlighted any risks to pension funds – which would trigger unprecedented volatility in the gilt market – to either her or Kwarteng.
“At no point during any of the preparations for the mini-budget had any concerns about Liability-Driven Investments (LDIs) and the risk they posed to bond markets been mentioned at all to me, the Chancellor or any of our teams by officials at the Treasury,” she says.
This was a significant omission, she argues, because this issue “would ultimately bring my premiership to an abrupt and premature end because of the panic it induced”.
“Only now can I appreciate what a delicate tinderbox we were dealing with in respect of the LDIs,” she adds.
Truss says her mini-budget was made a “scapegoat” for problems that had been “brewing” for a number of months including rising interest rates and mortgage costs, which had already been forecast to go up.
The former prime minister says it was not only domestic economic orthodoxy she was up against when she tried to challenge “high-spend, high-tax” policies, but that she was also “swimming against the international tide”.
“There was a concerted effort by international actors to challenge our Plan for Growth,” she says, citing remarks by Joe Biden, the US President, as well as comments by the International Monetary Fund (IMF).
Truss also criticises the failure within her own party to make the case for lower taxes and deregulation, which meant “the groundwork” was not in place for her radical economic agenda.
In an implicit swipe at the David Cameron, Theresa May and Boris Johnson administrations, she says successive Conservative governments since 2010 have instead “triangulated” with Labour policy.
“We have not done enough over the last decade to make the arguments for a lower-tax, more deregulated economy, which meant that the groundwork had not been laid for what I sought to do,” she writes.
She claims she was left “pushing water uphill” as large swathes of the public had “become unfamiliar with key arguments about tax and economic policy and over time sentiment had shifted Left-wards”.
Truss also says she was surprised at the reaction from fellow Tory MPs to her plans citing the “furore” over the announcement to scrap the 45 per cent rate of income tax.
She defends her decision not to commission a forecast from OBR to go alongside the mini-Budget, saying it would not have been “appropriate”.
Truss acknowledges her communication “could have been better” but adds that the public service machine was not “enthusiastic” about promoting messages “contrary to its orthodoxy”.
And she argues that ultimately, improving public messaging would not have altered the course of events. “Although there are many ways in which the policy could have been better communicated or tweaked to make it more acceptable, I struggle to see how that would have changed the fundamentals of what happened,” she says.
Truss opens up about the toll her short-lived premiership took on her, saying “soul-searching has not been easy” and adding that it has been “bruising for me personally”. And she reveals her regret at sacking Kwarteng.
A senior government source said Truss’s approach “failed then, and will fail if tried again”.
The Telegraph, London
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