Liz Truss has insisted her government’s economic policy is on the right course despite the need for emergency intervention from the Bank of England, saying she is “prepared to take difficult decisions” and will not change policy.
In a round of interviews with BBC local radio stations, her first public statements since warnings from the International Monetary Fund (IMF) and the bank’s intervention to prevent a run on pension funds, the prime minister said people would feel the benefits in the longer term.
“This is the right plan that we have set out,” Truss told BBC Radio Norfolk. “Of course there will always be people who will oppose a particular measures. And it’s not necessarily easy. But we have to do it.”
Pressed repeatedly by the presenters about why her government had cut taxes primarily for richer people in Friday’s mini-budget despite inflationary pressures, prompting a decline in the pound and a rise in the cost of government debt, Truss rejected any idea of error.
“Of course, some of these decisions are difficult,” she told BBC Radio Lancashire. “Some people don’t like them. But what I couldn’t do is allow the situation to drift. So that is why my government has taken urgent action.”
The shadow chancellor, Rachel Reeves, claimed the round of local radio interviews had “made this disastrous situation even worse” as she urged the prime minister to recall parliament to reverse what she described as Kwasi Kwarteng’s “kamikaze budget” last Friday.
“Her failure to answer questions about what will happen with people’s pensions and mortgages will leave families across the country facing huge worry,” she said. “It is disgraceful that the family finances of people across the country are being put on the line simply so the government can give huge unfunded tax cuts to the richest companies and those earning hundreds of thousands of pounds a year.
“This is a serious situation made in Downing Street and is the direct result of the Conservative government’s reckless actions. If the prime minister continues to prioritise saving her face over saving people’s homes, Tory MPs must join Labour in calling for parliament to be recalled so this kamikaze budget can be reversed. Failure to do so will make them complicit in this reckless bout of economic self-harm.”
With a number of Tory MPs openly mutinous in the run-up to next week’s Conservative party conference in Birmingham, Truss tried to argue that the issues faced by the UK were little different to those of other countries.
“This is a global problem,” she told BBC Radio Kent. “But what is absolutely right is the UK government stepped in and acted at this difficult time. We’ve seen difficult markets around the world because of the very difficult international situation we face. And what our government has done is we’ve taken decisive action.”
Stressing that the biggest part of the mini-budget involved help for energy bills, Truss said the government had sought to both curb inflation and help set “a better trajectory for the long term” with growth and wages.
She said: “Of course, that involves taking difficult decisions and as prime minister, I’m prepared to take difficult decisions and do the right thing.”
There is increasing speculation that ministers could seek significant cuts to public spending to help balance the loss of revenue from tax cuts, which will disproportionately assist richer people.
It is also possible that increases to benefits and pensions, which had been due to rise in line with inflation, could be reduced.
Chris Philp, the chief secretary to the Treasury, attempted to play down the scale of the financial crisis in which the pound slumped on Monday. Asked by LBC radio’s Nick Ferrari: “This is a crisis, you accept that? Or was this all part of the plan on Friday?” Philp replied: “I don’t accept the word ‘crisis’ at all.”.
Earlier in an interview with Sky News, Philp said departments would be expected to deliver public spending cuts. “The efficiency and prioritisation exercise is designed to firstly make absolutely sure we stick to those spending limits and secondly make sure that we are prioritising expenditure, not on anything that is wasteful, but on things that really deliver frontline public services and drive economic growth.
“We are going to stick rigidly to those spending limits because it is important to be financially responsible.”
Asked if he felt regret for the turmoil in the markets after Friday’s fiscal statement, Philp said: “No one’s perfect but I’m not going to apologise for having a plan to grow the economy.”