Truss takes on status quo to boost UK economy 2.5%
PRIME MINISTER Liz Truss has said she will use this week’s mini-budget to “boost prosperity” and turbo-charge growth.
With the country in the grip of a cost-of-living crisis, Friday’s plans represent a key early moment in her premiership.
She said she intends to “grow the size of the pie so everyone gets a bigger slice”. The Tory leader wants to see the country growing at 2.5 per cent and is preparing to tackle “vested interests” and face down defenders of the status quo.
Chancellor Kwasi Kwarteng will unveil details of tax cuts and measures designed to boost business investment and innovation in Friday’s “fiscal event”.
A source said: “The Prime Minister won’t duck the difficult decisions and is ready to have the debate. She won’t apologise for running the economy in a way that boosts prosperity and living standards.
“She will take on the vested interests and those trying to preserve the status quo for their own ends. She is focused on making Britain more globally competitive and not losing out to other countries on the continent and beyond.”
There were reports of outrage in the civil service after the ousting of Sir Tom Scholar earlier this month as permanent secretary at the Treasury.
It is claimed that Ms Truss, a former chief secretary to the Treasury, wanted new leadership in this powerful department.
The PM is convinced a fresh approach to the economy is needed. She argues that economic growth is essential if the country is to have worldclass public services, higher-paying jobs and see a revival of the nation’s high streets.
The source said: “She will be focused on growing the size of the pie so everyone gets a bigger slice, rather than descending into a redistributive fight over how we slice and dice the pie.”
Ms Truss is understood to want to “move away from tired economic managerialism” and for her Government to have a new focus on delivery.
The PM and Chancellor have set a test for each policy proposal: “How will it help grow the economy?”
Friday’s mini-budget will also be closely watched for estimates of the cost of capping energy prices.
The Government is expected to reverse the rise in National Insurance contributions that took place on Boris Johnson’s watch, and Ms Truss has also said she would suspend green levies on energy bills.
Economist Professor Patrick Minford – a leading
defender of Margaret Thatcher’s economic rescue measures in the 1980s – said that Ms Truss must champion growth to be a true heir to the Iron Lady.
He said: “She has got to be bold. The real interest of the British people is in growth, because that is the only way they are going to get their living standards up.”
Prof Minford said it is “really important” that the Chancellor stands up to senior civil servants in the Treasury if they put obstacles in the way of pro-growth policies.
Describing Lady Thatcher’s battles with top Treasury figures over the best way to bring down inflation, he said “a lot of senior mandarins had to go then because of their opposition to the correct policy of bringing down inflation – so it’s history repeating itself, really”.
He believes the Prime Minister and the Chancellor have the opportunity to avoid a recession – and is optimistic that they will, saying:
“I think we’ll get back to growth quite soon if we can pursue supportive fiscal policy. We’re also getting on top of inflation... Things are moving in our favour, really.”
Support for tax cuts has come from John Longworth, a former director-general of the British Chambers of Commerce, who now leads the Independent Business Network.
He said: “The PM should take this opportunity to stop the planned tax increases for people and businesses and instead indicate that there will be future tax cuts. She should remove the costly subsidies for green energy and relieve business, especially small and medium-sized businesses, of the burden of huge price rises by giving relief on business rates, National Insurance contributions, or corporation tax as appropriate to business types, from sole traders to large companies.”
Matthew Lesh, of the Institute of Economic Affairs, wants to see an “agenda to boost productivity and make work pay”. He said this week’s
fiscal event will be a “key opportunity for the Government to reset the agenda and demonstrate their interest in boosting Britain’s prosperity”.
He added: “The cost-of-living crisis can only be meaningfully addressed with reforms that boost the ability of the economy to produce goods and services, and thereby reduce prices.
“This means addressing how the tax and regulatory system discourages investment and work.”
In addition, he wants an end to the freeze in income tax thresholds and the abolition of the 45p rate, plus an increase in the stamp duty threshold to £1million. He argues that this will “unstick the property market” by encouraging
people to downsize. Katie Schmuecker, of the Joseph Rowntree Foundation, stressed the need for help for struggling households.
She said: “Households are already buckling under the weight of rising costs.the Government’s action on energy bills will give some certainty but the typical energy bill will still have doubled in a year. Food costs continue to rise by over 13 per cent since last year. The current support package doesn’t yet give families the security of knowing they can afford the essentials, and the tax cuts mooted do little to help them either.”
The mini-budget will come at the end of a frenetic week for the Government.
Ms Truss is due to fly to New York for the UN General Assembly on Monday night; Business Secretary Jacob Rees-mogg is expected to announce an energy support package for businesses on Wednesday; and on Thursday Health Secretary Therese Coffey is due to outline how she plans to get the NHS through the winter.
‘We will get back to growth quite soon’