Confusion reigns for another day in Liz Truss's government over fiscal forecast

British prime minister does not rule out further backtracking from the disruptive mini-budget

British Prime Minister Liz Truss says she has 'listened to people's concerns across the country'. PA
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Confusion reigned for another day in British Prime Minister Liz Truss's government, as Chancellor Kwasi Kwarteng insisted his plan to reveal an economic forecast would not be brought forward after government sources suggested that it would.

Reports surfaced on Monday evening that the government was set to make a second about-turn on the issue in as many days, hours after rolling back plans to abolish the top rate of tax.

Government sources had suggested the chancellor would publish the Office for Budget Responsibility’s forecast earlier after markets became spooked by concerns over how the UK would pay for its mini-budget.

The independent assessment had been scheduled for November 23, when Mr Kwarteng is to set out a medium-term fiscal plan.

But confusingly, Mr Kwarteng told GB News at lunchtime on Tuesday that the forecast would be published as initially planned, right as government sources were still saying it could be brought forward.

The prime minister and chancellor toured a construction site in Birmingham on Tuesday in a public display of unity.

But Ms Truss initially failed to say she trusted her chancellor and there have been mixed messages over whether he will be allowed to accelerate the timing of his plan to bring order to the public finances.

Speaking to reporters during her visit to the health research centre building site, Ms Truss was repeatedly pressed on whether she could trust her Downing Street neighbour after his humiliating climbdown over the plan to cut the 45p rate of income tax for top earners.

She declined to use the word “trust”, but said: “I work very, very closely with my chancellor.

“We are very focused on getting the economy growing, and that's what people in Britain want.

“We are facing difficult economic times, we are seeing rising interest rates around the world, very serious issues with energy prices and inflation, and we have acted decisively.”

Though she failed to say she trusts the chancellor during the visit, Ms Truss later did give that message during a round of interviews.

“I do trust the chancellor, absolutely,” she told TalkTV.

Mr Kwarteng used his conference speech on Monday to say the medium-term fiscal plan would be published “shortly”, which was seen as a sign that it could be moved forward to October rather than the end of November.

Allies of the chancellor said the OBR can move quicker and “so can we”.

But while Treasury insiders were considering moving the statement forward, publicly Ms Truss and Mr Kwarteng insisted the November 23 date remained in place.

Ms Truss told GB News: “We've got the date of November 23.

“This is when we're going to set out the OBR forecasts but also our medium-term fiscal plan.

“And what we've done is we've had to take very urgent action to deal with the immediate issues we face, the energy price, the inflation and a slowing global economy.”

Mr Kwarteng told the broadcaster "'shortly' is the 23rd [of November]” and suggested people had been “reading the runes” incorrectly.

“It's going to be November 23.”

Speaking on LBC radio on Tuesday, Ms Truss refused six times to rule out more U-turns.

“I’m absolutely determined to press ahead with this growth plan,” she said.

“We are pressing ahead with our energy package, with our tax reductions. And with the really important reforms to get Britain moving.”

Speaking about the top rate of tax change, she said: “We have listened to people's concerns across the country and we've decided not to proceed with that.

“And I think that's right because it was a distraction from the really important stuff we are doing, such as making sure people's bills are guaranteed and making sure we are getting the economy moving.”

“We have already implemented the biggest part of the package,” Ms Truss added, referring to the cap on the energy unit price to limit bills this winter.

Speaking on the BBC Radio 4 Today programme later, Ms Truss said the government has “committed to having a proper OBR forecast to reduce debt as a proportion of GDP over time”.

“But I do think it is important that we acknowledge the UK does have the second lowest debt in the [Group of Seven] and also, that raising taxes during a slowing global economy would have been a mistake,” she said.

She added that the government will “have to make decisions” about how it brings down debt as a proportion of gross domestic product in the medium term.

“I am very committed to supporting the most vulnerable. In fact, in addition to the energy price guarantee, we're also providing an extra £1,200 to the poorest households,” she said.

“So, we have to look at these issues in the round, we have to be fiscally responsible.”

Former Cabinet ministers Michael Gove and Damian Green have spoken out about their concerns about any refusal to increase benefits in line with inflation.

Mel Stride, Tory chairman of the Treasury Select Committee, said he would have to “think long and hard” if asked to vote to increase benefits in line with earnings rather than inflation.

Mr Stride told the Today programme: “The last time the benefits were uprated, because of the way the mechanism works, they're uprated in April but they're pegged against the previous September's inflation.

“And the way it worked last time was the uprating was just 3.1 per cent, because inflation was low the previous September. But of course inflation was much higher than that [in April].

“We're coming off the back of a kind of — quite a strong, real-terms squeeze on those benefits already, so, I think that will be a really tough call to make.”

Ms Truss told LBC “no decision has been made yet on benefit uprating” and added that it “will be taken in due course”.

Pressed on why she has committed to increasing pensions but not benefits, she said: “What I mean is when people are on a fixed income, when they are pensioners, it is quite hard to adjust.

“I think it's a different situation for people who are in the position to be able to work.”

Asked if she will rule out increased austerity, she said she has committed to reducing debt as a proportion of national income over the medium term.

“Well, I wouldn't use the term you describe. What I'm talking about is fiscal responsibility,” she said.

Updated: October 04, 2022, 2:25 PM
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