Liz Truss blames communication issues for economic panic

The Prime Minister faced a grilling on the BBC's Sunday with Laura Kuenssberg in Birmingham, where the Tory party are currently holding their annual conference, and refused to rule out any public sector cuts or commit to raising benefits in line with inflation. 

It comes after a week of economic turmoil after the International Monetary Fund (IMF) issued an extraordinary statement calling on Chancellor Kwasi Kwarteng to "re-evaluate" his tax plans, the Bank of England (BoE) was forced to stage an emergency intervention to stop a full-blown financial crisis and complete collapse of pension funds, and mortgage rates soared causing worries amongst homeowners. 

READ MORE: SNP pan Liz Truss's Tories for plot return to austerity with 'no mandate'

On Thursday, the PM broke four days of silence with a series of painful local radio interviews.

On Sunday, she acknowledged she could have “laid the ground” better about the plans contained in the Government’s mini-budget which triggered market turmoil.

The SNP said the PM's attempt to blame the economic fallout on a communications error was Truss "putting her head in the sand". 

And, Kuenssberg left Truss speechless when she asked, "How many people voted for your plan?" at the end of the 40-minute-long interview.

The PM also admitted that Kwarteng was the one who had pushed for the higher rate of tax to be cut and that the Cabinet wasn't informed of the decision. 

Truss said: “I’m afraid there is an issue that interest rates are going up around the world and we do have to face that.”

But she added: “But I do want to say to people I understand their worries about what has happened this week.

The PM was grilled on a number of aspects of her government's financial plans (Image: BBC)

“I do stand by the package we announced and I stand by the fact we announced it quickly because we had to act.

“But I do accept we should have laid the ground better… I have learnt from that and I will make sure that in future we do a better job of laying the ground.”

Truss insisted she was right to increase borrowing this winter, making “tough decisions” in a “very difficult world”.

The PM said: “We’re not living in a perfect world, we’re living in a very difficult world where governments around the world are making tough decisions.

READ MORE: The five UK Supreme Court judges who will rule on fate of a Scottish independence referendum

“And I believe it was the right decision to increase borrowing this winter.”

She said the UK has the “second lowest borrowing in the G7”, borrowing less than France, the US, Canada and Japan, adding: “And I think it’s important people understand that.”

“Of course, we need to bring down borrowing as a proportion of GDP over the medium-term, and I have a plan to do that. But what would have been wrong is for us not to have acted,” the PM said.

Truss said she would ensure pensions rise in line with inflation, but refused to make the same commitment for benefits and government departmental spending.

Not ruling out departmental real-term cuts, the PM said: “I’m not going to write future budgets on your show.

Truss said Kwarteng made the decision to reverse the top rate of income tax without consulting the Cabinet (Image: PA)

“I believe in outcomes rather than inputs, so I believe in what people see and what people feel.”

Not ruling out rowing back on Boris Johnson’s promise to raise benefit payments in line with inflation, she said: “This is something the Department of Work and Pensions Secretary is looking at at the moment. She will make a determination on that and we will announce that this morning.”

But she was clear pensions would rise in line with inflation, saying: “I’ve committed to the triple lock. Yes.”

Truss said scrapping the top rate of income tax for the nation’s highest earners was a decision made by Kwarteng rather than being agreed upon by the wider Cabinet.

Asked if she discussed the controversial move with the whole Cabinet, Truss said: “No, no we didn’t. It was a decision the Chancellor made.”

READ MORE: Thousands join march Cardiff march calling for Welsh independence

On the issue of soaring interest rates, the PM blamed the "global market" and blamed fast-rising inflation on Vladimir Putin's war on Ukraine.

At the end of the interview, Truss was asked how many people voted for her economic plans.

After an excruciating pause, the PM said: "What do you mean by that?"

When Kuenssberg pointed out that there had been a significant ideological and political change in the Tory party since the 2019 General Election, Truss said: "Well, people in 2019 who voted conservative, voted for a successful country where we are levelling up all parts of the country where we're driving growth, enterprise and opportunity.

"Now, any government has to deal with the circumstances it faces and we face this situation of, which was unforeseen, huge energy costs, rising inflation due to the war in Ukraine and the aftermath, we are delivering."

SNP Deputy Westminster Leader Kirsten Oswald MP said: “The Prime Minister says she doesn’t accept the arguments made by her critics. The reality is she doesn’t care. 

“This morning’s interview was a chance for Liz Truss to show the country her government has finally seen sense after the near-universal condemnation of her mini-budget. Instead, the Prime Minister put her head in the sand and blamed communications.

“It’s also deeply concerning that the Prime Minister can unequivocally confirm tax cuts for the highest earners but fail to confirm whether benefits will be uprated in line with inflation.

“People across Scotland are looking on in horror as this shambolic UK government squeezes the poor to pay the rich. It’s only with the full powers of independence that Scotland can rid itself of Tory governments we don’t vote for once and for all.”