Liz Truss has admitted her plan to abolish the 45p top rate of income tax was a “bridge too far”, as she otherwise dug in in her defence of her failed bid to boost growth.
In her first interview since she was forced out of No 10, the former prime minister said she was maybe “trying to fatten the pig on market day” with the policy, as she vowed to continue to make the case for tax cuts.
Ms Truss repeated many of the arguments made in her 4,000-word article in The Sunday Telegraph, including accusing the Office for Budget Responsibility (OBR) of restraining fiscal policy.
“The OBR and its position is taken very seriously by the market, so it effectively constrains what the Government can do,” she told The Spectator magazine.
I’m not desperate to get back into Number 10, no
“It’s very important that forecasts are honest, but I think we have ended up in a place where they’re done so separately of government that it ends up driving fiscal policy.”
There should be “more discussion around the assumptions that are being made in the models”, with the Government being more involved in “creating the forecast”, Ms Truss said.
Ms Truss’s brief premiership lasted just 49 days as she was forced to quit after than chancellor Kwasi Kwarteng’s £45 billion package of unfunded tax cuts panicked the markets and tanked the pound.
Ms Truss said she did not regret going for the top job.
But asked whether she would want to be prime minister again, she answered: “No.”
She said: “I definitely want to be part of promoting a pro-growth agenda. I definitely want to carry on as an MP.
“I’m positive about the future of Britain and I’m positive about the future of the Conservative Party. I think we need to start building more of a strong intellectual base.
“But I’m not desperate to get back into Number 10, no.”
Ms Truss and Mr Kwarteng announced the biggest raft of tax cuts for half a century in their mini-budget, but were quickly forced to climb down over their plan to scrap the top rate of income tax for the highest earners.
Asked if she regretted putting in the plan to abolish the 45p top rate of income tax, Ms Truss said: “Well, we could all think different things with hindsight, and perhaps it was a bridge too far, but I’m not convinced that it was a magic bullet, that everything would have been fine if we hadn’t done that, because I thought it was quite significant that after there were more market wobbles and we reversed the 45p tax decision relatively soon, we were essentially forced to reverse the position on corporation tax.
“So although, maybe it was a step too far, who knows?”
She continued: “Was I trying to fatten the pig on market day? Maybe.
“There’s a long history of failing to make the case – and that’s what I’m thinking now. I’m thinking, how can we make that argument?
“Because it certainly isn’t going to make our country successful in the long term having ever-higher taxes, always having the argument that you can’t cut. It’s never a ‘good time’ to cut the top rate of tax, that’s the reality.”
My heart sank at the idea of former prime ministers taking the stage to tell us about what they did
The mini-budget triggered turbulence in the financial markets, sending the pound tumbling, forcing the Bank of England’s intervention and pushing up mortgage rates.
But Ms Truss suggested it was “unfair” to blame her for soaring mortgages, saying there was a “specific issue around the time” of her mini-budget related to problems with pension funds.
“I don’t think it’s fair to blame interest rises on what we did. I think that’s unfair,” she said.
The former prime minister also said she had not been warned of the risks to the bond markets from liability-driven investments (LDIs) – bought up by pension funds – which forced the Bank of England to step in to prevent them collapsing as the cost of government borrowing soared.
“I didn’t know the existence of LDIs, which turned out to be the main problem,” she said, adding that Mr Kwarteng “wasn’t informed of this either”.
Ms Truss said sacking her friend Mr Kwarteng was “extremely difficult” but suggested she was forced to take the step to avoid a market meltdown.
Asked whether she knew at that point that her premiership was over and if she had lost her authority, she said: “Well yes, and I think that was probably the case.”
“Obviously, looking back, from where we’re sitting now, I can see that. At the time, I was just thinking: ‘how do I make sure there’s not a market meltdown?’ So I wasn’t really focused on my long-term future – I was focused on making sure the country wasn’t in a serious situation”.
Earlier, Downing Street said Prime Minister Rishi Sunak would always listen to former PMs when questioned about Ms Truss’s return to the fray.
But No 10 also appeared to rebuff Ms Truss’s suggestion that the UK’s “fiscal policy is in a straitjacket” and that a “worrying economic consensus” is threatening growth.
A No 10 spokesman said that while he does not comment on former governments or prime ministers, “in broader terms, we value the scrutiny of independent bodies like the OBR [Office for Budget Responsibility].
“The Chancellor is working closely with them in the lead up to the spring budget as you would expect.
“And they will have a role in providing independent, credible and high quality analysis. We are making the fiscal decisions to get inflation down, which in turn will help us grow the economy.”
The spokesman said that Mr Sunak listens to all his predecessors.
“Of course the Prime Minister will listen to all former prime ministers,” he said.
“But you have seen that he has set out his priorities for the country and he is working hard on all of those.
“I think it is important to have diverse debate and that will continue and, like I say, he will listen to all former prime ministers.”
Ms Truss’s intervention is likely to be seen in Westminster as a rallying cry for Tory MPs who have been pressing Mr Sunak and Chancellor Jeremy Hunt to cut taxes.
Labour leader Sir Keir Starmer said his “heart sank” as Ms Truss returned to offer her thoughts on the economy.
Speaking to broadcasters in Bristol, the Labour leader said: “I have to say, my heart sank at the idea of former prime ministers taking the stage to tell us about what they did. They did huge damage to our country and to our economy.
“And there are millions of people across the country still paying the price for the failures, well, 13 years failure of this Conservative Government, so what the country needs is for us to move forward.
“We’re not going be able to do that until we have a general election now and a fresh start under Labour.
“But the former prime minister’s contest of who was the biggest failure is just about the last thing that this country needs right now.”
