Starmer urges Truss to rethink budget as IMF criticises tax plans

Liz Truss needs to review the budget urgently after “very serious” criticism from the International Monetary Fund and with the UK economy out of control, Keir Starmer has said.

The Labour leader said November would be too late for the government to revisit its plans, as people were “very, very worried” about the possibility of rising mortgage rates and inflation.

While no government minister was available to defend the budget on the airwaves, Starmer gave a round of broadcast interviews accusing the Truss administration of losing control.

Speaking to BBC Radio 4’s Today programme, he said Truss needed to explain: “How are you going to fix the problems that you caused the problem on Friday? The government caused this on the theory, the ideology that the way we fix our country is to make the rich richer.”

After the IMF urged the government to reconsider the scale of tax cuts funded by borrowing, Starmer branded the budget set out last Friday by Kwasi Kwarteng a “self-inflicted” problem.

He told LBC: “The IMF statement is very serious and it shows just what a mess the government have made of the economy. And it is self-inflicted. This was a step they didn’t have to take … This government has got to respond to this. They’ve got to set out, in terms, how are they going to fix the problems that they have made.

“At the moment they are saying they might be doing something in November. That’s far too long. They’ve got to review the plans they put out on Friday. They’ve got to do it urgently, in my view.”

Starmer gave a round of broadcast interviews after his Labour party conference speech in Liverpool on Tuesday, in which he urged people not to forget or forgive the Conservatives for losing control of the British economy.

“They’ve crashed the pound – and for what? Higher interest rates. Higher inflation. Higher borrowing. And for what? Not for you. Not for working people. For tax cuts for the richest 1% in our society. Don’t forget. Don’t forgive,” he said.

Asked how Labour’s economic plans were different from the Conservative ones which spooked the markets, Starmer told Times Radio: “We’ve got two rules that we put in place last year, which was we would pay for day-to-day spend, we would borrow to invest.”

The Labour leader said he would cancel the cut in corporation tax, cancel the abolition of the 45p tax rate, change the non-dom status and bring in a windfall tax.

Many Tory MPs are privately furious with Truss and Kwarteng and considering ways to push them to revisit their plans, including rebelling over forthcoming legislation.

However, John Redwood, a Conservative MP and a Truss supporter, told Sky News: “The IMF were very wrong, as was the Bank of England, over the inflation, which they now rightly worry about. They didn’t warn us or the other central banks in the run-up to the big inflation, that the monetary policies of 2021 were far too loose, interest rates far too low, and the money printing was getting out of control. It’s a great pity they didn’t warn about that. Now they should be looking forward.

“We should be fighting recession. Of course, we must be prudent with finances. But the truth is that if the austerity policies have their way and we have a big recession, the borrowing won’t go down, the borrowings will soar.”

The party is deeply split ahead of next week’s Tory conference in Birmingham, where Truss and Kwarteng will give speeches to members and businesses.

Parliament is suspended until after the conference season, but the Liberal Democrats called on Wednesday for it to be recalled. Sarah Olney, the shadow Treasury spokesperson, said: “Truss and Kwarteng been in government for three weeks, and the IMF has already been forced to issue a statement on their reckless economic policy.

“Both are totally blinded by ideology, which is making millions across the UK suffer. We need to recall parliament to fix this mess.”