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Daily Mirror
Daily Mirror
Politics
Dave Burke

Solemn 'no cuts' promise Liz Truss made 3 months ago - that she's now set to break

Liz Truss stands on the brink of breaking her pledge not to cut public services - one of the promises which propelled her to the top job.

Back in July the Prime Minister, who was on the campaign trail trying to woo party members, told The Mirror unequivocally that her tax cutting plans would not involve slashing services.

But fast forward less than three months and her Chancellor is telling the country the exact opposite, refusing to rule out a fresh austerity drive while inflation leaves an £18 billion gap in public finances.

Ms Truss said at an event in Peterborough - her first campaign appearance after the leadership race was narrowed to two: "I'm very clear I'm not planning public spending reductions.

"What I am planning is public service reforms, to get more money to the frontline, to cut out a lot of the bureaucracy that people face and to support great organisations like this to make sure that people don't spend their time battling the system because the system is working for them, not against them."

Today Chancellor Kwasi Kwarteng refused to rule out a fresh wave of Tory austerity (PA)

She continued: "That is all about doing things better. I'm certainly not talking about public spending cuts, what I'm talking about is raising growth.

"If we get British growth levels up to the level of our best competitors, we will have more money to put in families' pockets which is very important to me.

"I want people to be able to keep hold of their own money but we'll also have more money to spend on our public services over the long term."

Today Kwasi Kwarteng refused to rule out a new era of austerity as Universal Credit claimants brace for a real-terms cut in benefits.

Fresh from a humiliating U-turn on the mini-Budget, the Chancellor faced accusations of leaving vital services with a "massive black hole in their budgets".

He said he would stick to spending review totals that were calculated in 2021 - but inflation has soared since then, meaning they are worth £18bn less in real terms.

The IFS think tank today warned: "The Chancellor has indicated that departments' cash spending plans that run to 2024-25 will be left unchanged, which amounts to a real-terms cut in their generosity in the face of higher inflation.

"This will squeeze public services, but will not be enough to plug the fiscal hole the Chancellor has created for himself."

Pressed on BBC Radio 4's Today programme whether there would be a "new era of austerity" to fund the measures, Mr Kwarteng declined to rule out the prospect.

"You will see what our spending plans are in the medium-term fiscal plan but I'm not going to be drawn on that," the Chancellor replied.

Asked again whether he would curb spending or drop the multi-billion pound tax cuts, the Chancellor said the government will stick to the 2021 spending review.

Without further funds, government departments could face real-terms cuts of around £18 billion - due to soaring inflation.

Unions have voiced their alarm over the change of direction and called on Ms Truss to think again.

TUC General Secretary Frances O’Grady said: “The Prime Minister promised during her leadership campaign there would be no return to austerity.

“But that pledge now appears in tatters. If spending on public services does not rise in line with inflation, schools, hospitals and other vital services face a massive black hole in their budgets.

“That would be devastating for communities across the country.

Liz Truss is on the brink of breaking her promise over public spending cuts (Getty Images)

“Public services have already been cut to the bone by successive Conservative governments. There is nothing to trim.

“If Liz Truss pushes ahead with another round of savage cuts this would be a huge betrayal of the British people and proof that her word counts for nothing.”

This morning the government announced a screeching U-turn on plans to axe the 45p tax rate - but experts warn this will not cushion public services.

Paul Johnson, director of the Institute for Fiscal Studies (IFS), said the about-turn is the "smallest part" of the mini-budget, representing around £2 billion of the £45 billion in tax cuts.

He warned the move will not prevent the Government from putting the UK's already creaking public finances on an "unsustainable footing".

He tweeted: "From a fiscal point of view, important to remember cut to 45p rate was just about smallest part of the mini budget. What was a £45 billion tax cutting package is now a £43 billion package.

"This U turn has, in itself, essentially no effect on fiscal sustainability."

In an interview with BBC News, he added: "This will make a small difference to overall levels of inequality, but actually the big story that this is now a £43 billion tax giveaway remains, and the story remains that we haven't had any forecasts from the Office for Budget Responsibility (OBR).

"We are pretty confident that on current tax and spending plans, the Government is on course to have an unsustainable fiscal policy... so from that point of view, it's pretty much as we were."

He added that by the fiscal statement on November 23, Mr Kwarteng "needs to have come up with something fairly convincing about how he's going to get the public finances on to a sustainable footing, whether that involves undoing some more of those tax cuts or some additional tax rises or something fairly dramatic on the spending side".

Torsten Bell, chief executive of the Resolution Foundation think tank, said that while the U-turn will help with internal and wider political pressure on the Government, it "doesn't change the big picture of a £40 billion package of unfunded tax cuts which drove the market reaction" or avoid the "big spending cuts that will follow".

Mr Bell had called Mr Kwarteng's mini-budget "the biggest unforced economic policy error of my lifetime".

Last week, the Resolution Foundation said the Government may be forced to return to the type of spending cuts not seen since the days when George Osborne was Conservative chancellor.

It predicts that without the OBR forecasting faster growth in the years ahead, the Government is likely to need to tighten fiscal spending by £37 billion to £47 billion for debt to be falling by 2026-27.

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