Hannah Walton-Hughes
After 3 months of silence, Britain’s shortest-serving Prime Minister has decided to give her side of the story, through a 4000-word essay published in The Sunday Telegraph, and a 50-minute interview by The Spectator. Impact’s Hannah Walton-Hughes reports on the key points raised in both.
“I assumed upon entering Downing Street that my mandate would be respected and accepted. How wrong I was.”
In Liz Truss’ first intervention since leaving office, she has reflected on her short premiership.
Truss declared that this “soul searching” “has not been easy.”
She remains proud of the large-scale energy package that was 60% of September’s ‘mini budget’
Reflecting on the serious issues facing the country, she admitted her awareness that going quickly with the changes “risked mistakes being made”, but the usual pace of the Whitehall “machine” was not viable.
She remains proud of the large-scale energy package that was 60% of September’s ‘mini budget’. “There are firms which remain in business today only because of the action we took.”
Initial reactions to the Budget were positive. The National Institute of Economic and Social Research said that the overall package would “lead to positive GDP growth in the fourth quarter of 2022.”
When questioned as to whether she felt the energy package should have been more targeted, she responded by claiming that they “couldn’t deliver (that) with the systems the government had.”
The Queen’s death occurred on the day of the energy package. Therefore, Truss explained how the government had to set the date of the budget “quickly” so that the market wouldn’t have been concerned about “open-ended” costing.
Her biggest revelation came in relation to the pension funds, that were in such peril following the mini budget. Truss claims that neither she nor her Chancellor (Kwasi Kwarteng MP), were made aware of this “delicate tinderbox”, and the issues of LDIs (Liability Driven Investments).
“We would have done things differently”
Truss views this as one of the core reasons for her premiership’s “abrupt and premature end”, and stated that had she and the Chancellor been informed about the fragility of pension funds, or the existence of LDIs, “we would have done things differently.”
She also addressed the matter of the OBR (Office for Budget Responsibility).
The OBR, according to her, can often end up driving the government’s fiscal policy on tax and spending, and is taken very seriously by the markets. However, one of the problems is that “the forecasts aren’t done alongside developing the policy in the Treasury.”
More broadly, Truss pointed to what she feels is a current aversion to low taxes and lower regulation. She thinks that Conservatives have failed to make these arguments about tax since 2010.
She explained how the “wider institutional structure” and the “economic orthodoxy” doesn’t share her approach, which, coupled with a lack of “political support”, made things difficult.
The orthodoxy apparently favours higher taxes over reducing spending, and short-term over long-term measures. Truss believes that high taxes are not the way to change the relatively low growth seen for over ten years.
Truss believes that high taxes are not the way to change the relatively low growth
She referenced a Parliamentary, and indeed public, “drift” towards “more socially democratic policies”.
Regarding the 45p tax cut, Truss admitted that this perhaps was “a bridge too far”. She still believes it was the right economic measure for Britain, but said she underestimated its “political impact”.
Truss disputed the term “unfunded tax cuts”, pointing out that most of the measures equated to simply not raising taxes.
In terms of interest rates and mortgage rates, Truss countered common perception, by explaining that they had both been rising globally.
She referenced how the government became “a useful scapegoat for problems that had been brewing over a number of months.”
When questioned about the sacking of Kwasi Kwarteng, Truss described it as “very difficult”, admitted that they did not disagree on anything, but ultimately “I needed to do as much as I could to indicate that things were different”, after receiving “some very serious warnings from senior officials” about a potential market meltdown.
Describing the personal toll the situation had taken on her, Truss responded simply: “it was absolutely tough”, but “I just got on with it.”
In reference to her resignation, Truss said that “once (she’d) appointed the new Chancellor and we’d had to change the policies”, “it was difficult for me to continue”.
“I am not claiming to be blameless for what happened”, “the communication wasn’t good enough”, but “I was not given a realistic chance to enact my policies”.
Truss wants to continue pursuing her economic argument and encourages others to do the same
Truss wants to continue pursuing her economic argument and encourages others to do the same: “Nobody would be more delighted than me if there were lots of other people coming forward and making these arguments.”
She does not regret going for PM, but would not want to be in the job again.
Truss admitted that the “experience of last autumn was bruising for me personally”, but “I will expand upon the lessons I have learnt”.
Finally, her continuing support for Rishi Sunak was emphasised towards the end of the interview.
Hannah Walton-Hughes
Featured image courtesy of Marcin Nowak via Unsplash. Image license found here. No changes were made to this image.
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