Liz Truss stunned the House of Commons today by saying she will “absolutely” stick to a pledge made during her leadership campaign that she is not planning public spending reductions.
Amid widespread expectations that public sector budgets will be reduced to fund her tax cuts, she told MPs she will rely on growth and through more efficient spending.
During the first Prime Minister’s Questions of the new session, Labour leader Sir Keir Starmer asked why Ms Truss “expected working people to pick up bill for unfunded tax cuts for those at the top” and whether she will stick to a pledge during the Tory leadership contest that she is “not planning public spending reductions”.
Ms Truss replied: “We are spending almost £1tn of public spending. We were spending £700bn back in 2010,” she said.
“What we will make sure is that over the medium-term the debt is falling. But we will do that not by cutting public spending, but by making sure we spend public money well.”
Ms Truss was defending the mini-budget which has led to rocketing interest rates and mortgage payments. She dodged questions from Sir Keir on rate increases, and a call to “reverse her kamikaze budget’, preferring to focus instead on the energy price guarantee.
Tax experts and economists have said that reversing the tax cuts or cutting public spending is the only way to balance the books.
Afterwards, Pat McFadden, Shadow Chief Secretary to the Treasury, said that if Ms Truss will not cut public spending then the minibudget “has a short shelf life”.
Treasury Select Committee chair Mel Stride agreed. He said Mr Kwarteng will need to u-turn on more of the tax cuts, which included cancelling planned increases in National Insurance and Corporation Tax.
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“Given the huge challenges, many, myself included, believe it is quite possible [the chancellor] will simply have to come forward with a further rowing back of on the tax announcements he made,” said Mr Stride.
During the Commons exchanges, the SNP’s Westminster leader Ian Blackford accused Ms Truss forcing up the cost of mortgages and “scapegoating the governor of the Bank of England” in order to save her Chancellor’s skin.
She replied that action had been taken to help families cope with rising bills. “What the honourable gentleman and his friends in Scotland can do to help us out is build the nuclear power stations that are going to help our energy security [and] help us get more gas out of the North Sea.”