Prime Minister Liz Truss has said she stands by the package of measures announced in the mini budget but admitted she could have “laid the ground” better about the plans which triggered market turmoil.
She has also confirmed the decision to scrap the top rate of income tax for the nation’s highest earners was made by Kwasi Kwarteng rather than being agreed by the wider Cabinet.
Asked if she discussed the controversial move with the whole Cabinet, the Prime Minister told Sunday With Laura Kuenssberg on BBC One: “No, no we didn’t. It was a decision the Chancellor made.”
The Prime Minister told the BBC: “I understand how worried people are and I understand that people are struggling and it is very, very difficult times.
“This is a global problem. You have got (Vladimir) Putin’s war in Ukraine, the aftermath of Covid.
“What is happening around the world is that interest rates are rising, so the Federal Reserve has pushed its interest rates up to 4%.”
Pressed on the response to the mini-budget in the UK, she said: “I want to reassure people that we do have a very clear plan – first of all about how we are going to get through this winter with our energy plan but also how we are dealing with the issue of a slowing economy.” She said the Government had to act to reverse the national insurance rise and “on other areas of taxation” to make sure the economy did not slow down.
Ms Truss insisted she was right to increase borrowing this winter, making “tough decisions” in a “very difficult world”.
She told Sunday With Laura Kuenssberg on BBC One: “We’re not living in a perfect world, we’re living in a very difficult world where governments around the world are making tough decisions.
“And I believe it was the right decision to increase borrowing this winter.”
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She said the UK has the “second lowest borrowing in the G7”, borrowing less than France, the US, Canada and Japan, adding: “And I think it’s important people understand that.”
“Of course we need to bring down borrowing as a proportion of GDP over the medium-term, and I have a plan to do that. But what would have been wrong is for us not to have acted,” she said.
She acknowledged she could have “laid the ground” better about the plans contained in the Government’s mini-budget which triggered market turmoil.
She said: “I’m afraid there is an issue that interest rates are going up around the world and we do have to face that.”
But she added: “But I do want to say to people I understand their worries about what has happened this week.
“I do stand by the package we announced and I stand by the fact we announced it quickly, because we had to act.
“But I do accept we should have laid the ground better… I have learnt from that and I will make sure that in future we do a better job of laying the ground.”
The Prime Minister told the BBC’s Sunday With Laura Kuenssberg programme: “What I’m going to do is make sure we get value for money for the taxpayer.
“But I’m very, very committed to making sure we’ve got excellent frontline public services.
“And I’m not going to go into what the Chancellor will announce in his medium-term fiscal plan. He’s going to announce that very shortly, it will come together with an OBR forecast.”
Pressed on whether her refusal to rule out cuts suggested that she will go down that path, she said: “No it doesn’t, because I can’t exactly set out what is going to be in this plan. What I can promise is we’re going to reduce debt as a proportion of GDP.”
It comes as it was confirmed Conservative MPs who vote against the Government’s plan for tax cuts will lose the whip, the party chairman has said.
It has been reported that some Tory MPs are preparing to vote with Labour to prevent measures announced by the Chancellor on September 23, including abolishing the top rate of income tax.
Asked on Sky’s Sophy Ridge on Sunday whether this would result in them losing the party whip, Conservative chairman Jake Berry said: “Yes.”
He also urged Tory MPs to unite behind Liz Truss and her programme, saying she had “a mandate both from colleagues and our membership”.
He said: “I’m sure that if we do that it will lead ultimately to long-term electoral success.”
Meanwhile Former Cabinet minister Michael Gove said Liz Truss and Kwasi Kwarteng must address the multiple “mistakes” made during the mini-budget.
He told Sunday with Laura Kuenssberg on BBC One: “This is a time of profound uncertainty and concern for people across the country. We’re in grim economic circumstances, people are facing the prospects of their mortgages rising, people are looking to Liz and Kwasi and they want reassurance.
“They want to know this plan has been well thought through, that it will work, that it will command the confidence of the money men in the markets. But they will also want to know that the Prime Minister and the Chancellor share their values.”
Mr Gove did not say whether he had confidence the pair hold those values, instead saying: “There were a number of mistakes made last Friday in the fiscal event, the mini-budget, but there is room and time to address them and to correct them. That’s the challenge this week.”
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