Planet Normal: Government 'mishandled communication over mini-Budget,' says external Truss adviser

It has been a nightmare week for Liz Truss and Kwasi Kwarteng, but it could have been avoided according to one of the Prime Minister's own external advisers.

Dr Gerard Lyons, who helped advise Liz Truss during her leadership campaign, spoke to columnists Allison Pearson and Liam Halligan on the Planet Normal podcast this week, which you can listen to using the audio player above.

Dr Lyons suggests the Government did not do enough to prepare financial markets for the mini-Budget, and keep them on side.

"They failed to do anything to bring the market consensus," he said, "in the last few weeks I was warning that they should be doing this."

The result, according to Dr Lyons, "is as close to a sterling crisis as one can get."

"They mishandled the communication over the mini budget," he continued.

"Fiscal policy clearly needs to be credible. You need to have fiscal discipline. Unfortunately, the medium term fiscal plan should have been there last week if there was no OBR statement," he said.

Dr Lyons also took issue with the move to cut the top rate of income tax from 45% to 40%.

"There were aspects of it that I didn't think were necessary. For instance, the cuts of the top rates of income tax."

"They needn't go ahead with some of those tax changes outside of a major budget announcement," Dr Lyons argued, "you need the backdrop to convince the markets that the fiscal numbers add up."

Liam Halligan also took issue with the Government's decision to cut taxes for top earners, while the country is in economic turmoil.

"Cutting the top rate of tax just before the Labour conference wasn't just stupid, it was venal, it was ridiculous, it was indulgent," Liam said.

"If you're going to do that sort of thing and do it at a time when the country is feeling flush. Not when we're about to go into a serious cost of living crisis, an intensification of that cost of living crisis as the nights are drawing in and people are literally frightened."

Liam thinks the economic mess isn't just down to the mini-Budget announcement though, taking aim at the Bank of England's decisions on interest rates.

"The Bank of England should have been raising rates, interest rates for a lot longer and a lot faster. And and I think they should have done a bold 75 basis point interest rate rise on Thursday," he argued.

"What's vital now is that the Government and the Bank of England, while the Bank of England retains its independence, are seen to be working in a coordinated and harmonious manner and not trying to outdo each other."

Allison agrees the move to cut the highest rate of tax, less than 48 hours before the Labour Party conference, was "an act of political dumbfounding stupidity."

She is also frustrated that the new Liz Truss appears to be "hiding behind the sofa and hoping" at such a crucial time.

"I really think that the Prime Minister should have been out front and centre these last few days," Allison said.

"If she's got confidence in this growth plan, she should damn well have been out there."

Allison predicts the Conservative Party conference next week will be "embarrassment or bloodbath."

Listen to Planet Normal, a weekly Telegraph podcast featuring news and views from beyond the bubble, using the audio player above or on Apple Podcasts, Spotify or your preferred podcast app. 

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