A warning from Liz Truss has come back to haunt her after footage showing her saying a tax cuts bonanza would lead to "boom and bust" was unearthed.
The clip, taken in 2018, showed the PM appearing to contradict her £43billion plan to slash taxes, which will increase the national debt. It comes after Chancellor Kwasi Kwarteng announced a giant package of tax cuts in his mini-Budget last month, spooking the financial markets in the process.
As reported by the Mirror, following a run on the pound Kwarteng scrapped the abolition of the top rate of income tax. However, he is pushing ahead with proposed changes to National Insurance and Corporation Tax.
Experts have suggested the tax cuts will put the country’s finances on an unsustainable footing. And speaking in June 2018, the PM sounded the alarm about the problems that would be caused if Britain “let fiscal responsibility slide”.
Ms Truss, who was chief secretary to the Treasury at the time, told a gathering at the London School of Economics the country could “carry out some regulatory and tax reforms – and see an economic boost”.
But she added: “Also let fiscal responsibility slide and allow the deficit to balloon, we’ve been there before… It leads to boom and bust.”
It came as Ms Truss was today told to get a move on as it was revealed she may put off a decision on benefits for weeks. Critics accused the dithering PM of leaving millions of families in a “grim limbo” as they wait to find out if she will snatch hundreds of pounds from those entitled to payments including Universal Credit.
The PM wants to break a promise made by Boris Johnson to put up benefits in line with rising prices next April. A single unemployed adult would lose £185, a single disabled adult would lose £380 and a working couple with two children would lose £752, if the increases match the rises in average earnings rather than inflation, according to the Resolution Foundation.
Ministers admitted today Ms Truss may not make a decision until as late as the end of next month, which would put further strain on struggling families worried about how they are going to make ends meet. But Cabinet sources tonight suggested pressure on the PM over the issue could mean it is fast-tracked with an announcement in the last week of this month.
The Mirror understands Work and Pensions Secretary Chloe Smith is privately arguing the government must stick to its promise to increase payments in line with inflation. Tory MPs last night urged the government to make a decision quickly to end the uncertainty as they face a backlash from worried constituents. One backbencher said: “We cannot take any more pain.”
As the benefits revolt got even bigger, former chancellor Sajid Javid became the latest senior Tory to demand they “must stay in line with inflation”. Conservative peer Philippa Stroud, who helped set up Universal Credit, argued: “You don’t build growth in the backs of the poor” as she warned a real terms cut would be blocked by MPs.
And Lib Dem Wendy Chamberlain warned the failure of Ms Truss to make a decision on the issue meant “millions of people are left in a grim limbo”. In an attempt to appease his critics, Mr Kwarteng today bowed to pressure to bring forward his wider economic plan to Halloween.
He had said he would wait until November 23 to explain how he intends to balance the books alongside the publication of independent economic forecasts, but this will now happen on October 31.
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