Liz Truss: Tory government has failed to deliver growth

LIZ Truss has admitted the Tory government has failed to deliver economic growth since taking power, while insisting her own radical plans were safe.

The Foreign Secretary said her £36 billion tax cut plans would “decrease inflation”, despite her rival for the Tory leadership, Rishi Sunak, saying they would have the opposite effect.

Inflation is already at a 40-year high of 9.4 per cent and expected to go even higher when energy bills jump dramatically again in the autumn.

Ms Truss, the bookies’ favourite to replace Boris Johnson in September, said her plan for an emergency budget to reverse the National Insurance rise, scrap the planned corporation tax increase and suspend green levies on energy bills was “not a gamble”.

She would buck the unwise “Treasury orthodoxy” of the last two decades, she said, a period when the Conservatives have been in power for 12 years compared to eight for Labour.

She said: “It’s not a gamble, it’s an economic reality that the higher taxes you have the more growth is choked off. What is the gamble is what we’re doing at the moment because, currently, the United Kingdom is projected to head for a recession,” she said.

“So we need to do something different in order to get growth going, in order to put money in people’s pockets.”

A former Treasury chief secretary, Ms Truss told Radio 4’s Today programme: “My tax cuts will decrease inflation.

“We have had a consensus of the Treasury, of economists, with the Financial Times, with other outlets, peddling a particular type of economic policy for 20 years. It hasn’t delivered growth.”

She went on: “What I know about the Treasury, from having worked there, is they… do have economic orthodoxy and they do resist change.

“What people in Britain desperately need now is change. We need to unleash investment in our country, we need to get the EU laws off our statute books and be attracting more funds – for example from pension funds – into high-growth businesses.”

She said reducing National Insurance and cutting corporation tax “increases the supply side of the economy”, adding: The reason we have inflation is it’s a supply shock, combined with a slightly loose monetary policy over time.”

Asked which economic experts agreed with the idea that cutting taxes using borrowed money would not increase inflation, Ms Truss cited Patrick Minford, who also suggested Brexit could increase UK GDP by 6 per cent.

Officials now expect it to cut GDP by 4%. 

Mr Sunak has vowed to bring down taxes but only once inflaation is under control.

Writing in the Daily Trelegraph, the former Chancellor said “low inflation and sound public finances” were needed as the foundation for the economy.

But “the best way to achieve economic growth is cutting taxes and bureaucracy, and boosting private sector investment and innovation”.


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