Prime Minister Liz Truss said the mini-budget was the “right plan” as she spoke publicly for the first time since last Friday's min-budget sent the Uk economy into turmoil. The value of the pound has collapsed and the Bank of England has stepped in with an historic intervention to stabilise the economy.
Ms Truss has defended Chancellor Kwasi Kwarteng’s mini-budget saying “urgent action” was needed to protect the country from rising energy bills and to get the economy growing.
In her first public comments since Mr Kwarteng’s statement plunged the financial markets into turmoil, the Prime Minister told BBC Radio Leeds: “We had to take urgent action to get our economy growing, get Britain moving and also deal with inflation.
“Of course that means taking controversial decision but I am prepared to do that as Prime Minister because what is important to me is that we get our economy moving, we make sure that people are able to get through this winter and we are prepared to do what it takes to make that happen.”
Mr Kwarteng slashed taxes - scrapping the 45% rate of income tax, scrapping the National Insurance rise and reducing the basic rate of income tax as well as slashing Stamp Duty and scrapping rises in alcohol duty. At the same time he confirmed help for people across the country in paying their energy bills - a plan that will cost more than £70billion.
Sir Mark Carney – who was governor of the Bank for nearly seven years until March 2020 – said the absence of scrutiny of the Government’s plans by the UK’s independent forecasters, the Office for Budget Responsibility (OBR), has compounded the market woes.
He told BBC Radio 4’s Today programme: “There was an undercutting of some of the institutions that underpin the overall approach – so not having an OBR forecast is much-commented upon and the Government, I think, has accepted the need for that, but that was important.”
Sir Mark has said the Government has effectively under-cut the central bank’s efforts to rein in rocketing inflation as its tax-cutting measures have sparked chaos in financial markets.
Sir Mark said that the Government’s mini-budget announcements of £45 billion in tax cuts, without any credible plan to get borrowing back on a sustainable footing, was “working at cross-purposes with the bank” and has caused a “dramatic” turn in financial markets.
Sir Mark told the BBC: “Unfortunately having a partial budget, in these circumstances – tough global economy, tough financial market position, working at cross-purposes with the Bank – has led to quite dramatic moves in financial markets.”
Treasury chief secretary Chris Philp has refused to apologise for the financial turmoil caused by Chancellor Kwasi Kwarteng’s mini-budget.
After the Bank of England was forced to step in to calm the markets, Mr Philp told Sky News: “No one’s perfect but I’m not going to apologise for having a plan to grow the economy.
“I am certainly not going to apologise for having an energy intervention which is protecting every single household in this country.
I’m not going to get into this post-facto raking over.
Mr Philp dismissed suggestions Mr Kwarteng should resign over his handling of the mini-budget.
“I don’t think he should. The Chancellor has set out very clearly a vision for growth, to get our economy growing. That is what we need.”
A Tory former secretary to the Treasury has said the Government has caused a “crisis” but “the pain is still to come”.
David Gauke told the BBC: “Now we have what can only be described as a crisis, and it is directly as a consequence of decisions made by the Conservative Government.
“The pain is still to come, in truth. The pain of higher interest rates, of tougher decisions on public spending is yet to be felt,” added the 50-year-old, who was the MP for South West Hertfordshire from 2005 to 2019.
Liz Truss said it was “really important” the Government “took action quickly” to “reduce the tax burden and get the economy going”.
The Prime Minister told BBC Radio Norfolk: “Of course there are elements of controversy as there always are, but my priority was making sure that we were supporting the British people in what is going to be a very difficult winter and a difficult time.”
