Liz Truss has set out her intent to be the Conservatives’ beacon for lower taxes and smaller government despite her disastrous 49 days inside No 10, arguing that the economic damage under her rule was largely the fault of “groupthink” from officials and the media.
In a pugnacious and lengthy Q&A after a speech in London, and taking notably more questions than she did as prime minister, Truss promised to push her message at the Conservative party conference in Manchester next month, which she will then expand on in a book.
While she was careful not to directly criticise Rishi Sunak, Truss strongly implied the prime minister was part of a failed economic model backed up by the Bank of England, Office for Budget Responsibility (OBR) and others.
Truss took some responsibility for the markets crisis that followed her government’s tax-cutting mini-budget almost exactly a year ago – “lots of people made lots of mistakes” – but said the main blame was with the Bank for allowing artificially low interest rates for too long.
Truss’s intervention, and pledge to continue to push for economic ideas that she said “aren’t fashionable on the London dinner party circuit”, prompted some strong criticism, including from a few fellow Conservative MPs.
Conor Burns said Truss’s best contribution to the party would be “sustained silence”, while Damian Green said he was “glad she’s not responsible” for this year’s budget.
Asked if the economic record of her time in office had damaged the Conservative brand, Truss accused the questioner of echoing opposition ideas.
“I really want to challenge this phrase, ‘crashed the economy’,” she told the Institute for Government event. “The fact is that since I left office, both mortgage rates and gilt rates have gone higher than they were at the time of the mini-budget. So I just think you are repeating a line to take from Labour.”
The Bank of England had been “pumping the system full of money”, keeping interest rates low, and allowing “excessive government spending”, Truss argued. “Interest rates were going to go up anyway,” she added. “I think the real failure was not to tell people, years and years ago, that interest rates were artificially low. That was the problem.
“We gave people an expectation that cheap money would go on for ever. And then when the interest rates went up, there was a problem.”
Asked why she did not have the OBR assess the mini-budget before it was delivered, Truss said it had not been asked to check much bigger spending commitments during Covid.
“So I think it’s interesting that media organisations choose to target the mini-budget for not having an OBR forecast, but don’t mention this when it’s about spending,” she said.
“I do think that reveals a mindset, which is: spending is good. They will always be relaxed about that, but cutting taxes is somehow a countercultural thing to do. I think that’s reflected in the media. I think it’s reflected in the polity more broadly.”
Truss also accused the OBR of leaking calculations that there was a £70bn hole in the mini-budget to try to undermine her. The OBR denied this, saying it had given any forecasts it made only to the Treasury.
Asked for examples of the civil service trying to block change, Truss said it was more a case of “warnings and back-covering”.
She said: “With anything to do with climate change, officials were enthusiastic and rush to get out papers. If it was something about doing the [migration] deal with Rwanda, there was less enthusiasm.”
While arguing that financial markets were necessarily influenced by politics, Truss conceded that she misjudged their likely response: “If we’d known the fragility of the markets we would have done things differently. These kind of questions are quite difficult because a lot of it, the way I did things, was basically the way I am, and my character.”
Asked if she accepted the view of many Tory MPs that her government had been fundamentally incompetent, Truss said: “What I didn’t want to do is point fingers. Of course, it was a very difficult circumstance and lots of people made lots of mistakes. There’s no doubt about that.”
