LIZ Truss is, if nothing else, full of surprises.
After having insisted absolutely that she would keep to her Budget plan to scrap the 45p income tax rate for high earners in England, 24 hours later she scrapped it. And after announcing the medium-term plan unveiling would be at the end of November, it’s now going to be at the end of October.
Having denounced the idea of a windfall tax on renewable and nuclear electricity producers, she is now intent on effectively imposing one on them by capping their revenues and having rejected having an energy efficiency public information campaign, she’s now decided to have one.
In her bid to raise cash to pay for her £43bn of unfunded tax cuts, she pulled another rabbit out of the hat at PMQs. With the wide expectation that the PM would have to cut public spending, she made clear “absolutely” to Keir Starmer that she would be sticking by her earlier pledge not to do so. Gasps of disbelief could be heard around the Commons chamber.
Economic experts have argued Truss will either have to cut Government spending significantly or reverse some of her planned tax cuts in order to balance the books. So too do some Conservative MPs.
Mel Stride, Chairman of the Commons Treasury Committee, suggested Kwasi Kwarteng would “simply have to come forward with a further rowing back” on the tax announcements given the “huge challenges” the Chancellor was now facing.
But, if the PM won’t unpick her pledge to cut taxes, such as the 1p off income tax - again for England – or at least defer it or reverse other measures and if she won’t cut spending, how does she fill the financial void?
It wasn’t just Labour, SNP and Liberal Democrat MPs on the Opposition benches, who looked incredulous at PMQs, so too did several Tories, who, arms folded, were looking quizzically into space as the PM spoke.
Her remarks came less than 24 hours after the Institute for Fiscal Studies calculated Truss would have to find £60bn in savings to retain credibility with the money markets, spooked by last month’s flurry of unfunded tax cuts.
The highly-respected think-tank said cuts of 15% to all Government departments, barring health and defence, would be needed.
Today, Sajid Javid, the former Chancellor, became the most senior Tory to suggest the PM had to change tack.
He stressed how it was “absolutely crucial” for the Government to show how it would balance the books on October 31 given its fiscal plan went “way beyond” what the markets had expected, thus contradicting Jacob Rees-Mogg, the Business Secretary, who earlier in the day brazenly argued the post-Budget market turbulence had nothing to do with the Government’s actions, suggesting, rather, it was the Bank of England’s failure to raise base rates quickly enough.
Post PMQs, Downing St made clear there would be “difficult decisions” for the Government on public spending in light of Truss’s promise to stick by her commitment not to make any public spending cuts.
The PM’s spokesman declined to say what they were and would not be drawn on whether or not departmental budgets would increase by less than inflation, which would result in real-terms cuts.
So, the mystery persists. Or does it? As people scratched their heads, one suggestion doing the rounds was that the Government’s tens of billions of pounds of support for energy consumers might be included in its overall spending package. Which would, of course, mean that some departments could face major cutbacks.
Yet in response to an Urgent Question from Labour on the economic crisis, Chris Philp, the Chief Secretary to the Treasury, told MPs there were no plans for "real-terms cuts" in Government spending or to put back the announced tax cuts.
“There are not any plans to reverse any of the tax measures announced in the growth plan,” he declared to which some on the Labour benches taunted him by shouting: “Yet.”
As it's impossible to square a circle, could the mother of all U-turns be just around the corner?
Playing on semantics is, of course, always a useful tool to any beleaguered government. Budgets are always an art in the now-you-see-it-now-you-don’t presentation.
As Truss banks the house on getting growth by the 2024 General Election, her problem is taking people with her; not only her own MPs but the voters and the markets as well.
At present, without clarity and credibility, she is failing on all fronts.
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