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Liz Truss Defends "Controversial" Tax Cuts After Drastic Bank Of England Bail-Out

Truss has defended her "controversial" plans (Alamy)

7 min read

Liz Truss has defended the government's "controversial" mini-Budget which caused the pound to plummet in value, insisting that growth won't happen "overnight".

In her first public appearing in four days since the government's fiscal plans caused chaos in the financial markets and triggered emergency measures from the Bank of England, the Prime Minister defended her "controversial" economic plans.

Chancellor Kwasi Kwarteng's mini-Budget last Friday focussed on a range of sweeping tax cuts worth £45bn as part of the government plans to increase growth in the economy, but the plans triggered a rout in the financial markets as the UK currency came under a sustained attack.

The Prime Minister is taking part in a tour of local BBC radio broadcasters to defend the plans after she faced growing pressure from oppositions MPs and some of her own party to reverse some of the measures. There have also been calls to recall Parliament, which is in recess for conference season, in order to address the crisis. 

Speaking to BBC Radio Leeds on Thursday, Truss said it was necessary to take "controversial and difficult" economic decisions to help grow the economy, and pointed to plans to help cut energy bills from reaching a possible £6,000 this winter. 

"We had to take decisive action, which is why we took action to make sure people aren't paying a typical fuel bill of more than £2,500," she said. 

"I understand families are struggling with their fuel bills and we had to take urgent action to get our economy growing, get Britain moving and also deal with inflation. 

"Of course, that means taking controversial and difficult decisions, but I am prepared to do that as Prime Minister because what is important to me is we get our economy moving, we make sure people are able to get people through winter and we are prepared to take action."

Truss refused to accept that the government's tax cuts were responsible for chaos in the markets, but admitted their plans to lift growth in the economy would not happen "overnight" as she insisted there was pressure on the entire global economy.

"We are facing very, very difficult economic times, and we are facing that on a global level...the important thing is the British government acted to protect people from these very high energy costs, to make sure we are getting the economy going," she said.

"Of course, many of the measures we have announced won't happen overnight. We won't see the growth come through overnight, but what is important is that we are putting this country on a better trajectory."

Asked on BBC Radio Kent if she would consider reversing some of the measures to help reduce pressures on households who are struggling, she responded: "I don't accept the premise of the question. The action we've taken has been helping people with their fuel bills." 

In her appearance on BBC Radio Tees, Truss was asked to address growing child poverty rates in the area, but failed to directly explain how her latest budget measures would help improve the situation. 

"The number one thing we need to do to help deal with the issues that families face is to help more people get into work and create those high paid jobs and that is exactly what our mini-Budget is about," she said. 

The central criticism of the tax cuts introduced in last week's mini-Budget is that they disproportionately benefit the rich, leading BBC Radio Nottingham characterise Truss as a "reverse Robin Hood". 

But Truss dismissed the criticism: "That simply isn't true," she said. "The biggest part of the package that we announced is the support on energy bills, of making sure that people across this country are not facing energy bills of more than £2500 and the businesses can get through this winter."

Truss doubled down on her support for the package in her appearance on BBC Radio Norfolk, where she is the local MP, despite the measures having triggered major criticism of her leadership. 

"As PM I have to do what I believe in," she said. "Many people with many different opinions, but what nobody is arguing with is that we had to take urgent action to deal with a difficult economic situation."

BBC Radio Nottingham also challenged Truss on whether those in the area who had "lent" the Conservatives their vote at the 2019 election would still support the party. 

“What I would say is I've taken action and the Chancellor has taken action," Truss explained. 

“Because first of all, we want to help you get through this winter next winter without facing those excessive fuel bills. But also what we want to do is help grow the economy."

On Wednesday, the Bank of England was forced to take urgent measures to "restore orderly market conditions" as it warned there was "material risk to UK financial stability". 

The BoE said it was setting aside £65bn to buy government bonds over the next two weeks amid fears that some pension funds were facing significant pressures and could have collapsed without the intervention.

Truss said it was "right" the government continued to work "very, very closely" with the Bank, but suggested that global pressures were the key driver of economic turmoil in the UK markets.

"The Bank of England does a very, very good job on delivering financial stability... This is a global financial situation," she said.

She added: "We are here because of Putin's appalling war in Ukraine that has pushed up global energy prices. Countries are under pressure around the world, currencies are under pressure around the world," 

"We are working very, very closely with the Bank of England and it is important we have an independent Bank of England, they are responsible for setting interest rates, and of course the Chancellor of the Bank of England work closely together."

She told BBC Radio Nottingham that the government's major intervention in the energy markets would still help drive down inflation, which would reduce the UK's overall costs.

"The action we've taken on energy is expected to curb inflation by up to 5 per cent, and we're also taking action to grow the economy, because we were facing an economic slowdown," she said.

"We have to remember why that is: it's because of Putin's failing war in Ukraine which has pushed up global energy prices."

But her repeated insistence that global forces were primarily responsible for the UK's economic turmoil was questioned by BBC Radio Bristol, who asked whether the "intervention by the Bank of England was the fault of Vladimir Putin".

"What I'm saying is it's a very difficult and stormy times in the international markets," she said.

The Prime Minister also came under pressure over her decision to lift the ban on fracking, a move which could have serious environmental impacts on communities in the north of England.

Truss has already claimed new projects would only go ahead where there was "local community support", but struggled to explain how communities would be given a say.

“The Energy Secretary will be laying out in more detail exactly what that looks like but it does mean making sure there is local support for [fracking] going ahead," she told BBC Radio Lancashire. The region is likely to be a centre for the practice, sparking local concern. 

She distanced herself from her new Business Secretary Jacob Rees-Mogg, who accused people who were anti-fracking of being "Luddites" who had an "air of hysteria about them".

"I wouldn't have expressed it like that," she said. "I can assure you I am of the view that we need to have local consent to proceed with projects like fracking."

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