Truss ignored Treasury warnings and ‘the country paid the consequences’ – Javid
The former chancellor has defended what Liz Truss derided as Treasury orthodoxy.
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Your support makes all the difference.Sajid Javid has criticised Liz Truss by saying she ignored Treasury warnings that her mini-budget would get a “massive negative reaction”.
The former chancellor said the public “paid the consequences” for Ms Truss’s shunning of what she called Treasury orthodoxy.
Ms Truss resigned after a brief stint as prime minister after her disastrous economic plan triggered turbulence in the financial markets and drove up mortgage rates.
Mr Javid defended Treasury orthodoxy by saying it is a “good thing” the department seeks to balance the books in the medium term.
The Treasury would have told her ... She ignored it and the country paid the consequences
He told an Institute for Government event: “I’m certain that the Treasury would have told Liz Truss when she was in office that if you go out with a budget that’s going to blow the deficit and without any sort of narrative, any sort of laying the ground, or any plans to bring that under control even over the long term, the markets are not going to like it. You’re going to get a massive negative reaction.
“The Treasury would have told her, that’s orthodoxy at work. She ignored it and the country paid the consequences.”
But Mr Javid also argued that the Treasury “does need to be more flexible” and look to “invest to save” while explaining to markets that “this is actually long term going to lead to less debt”.
“It’s obvious that hospitals need more investment … and we should be investing more in technology, and it will definitely save money in the long term.
“The challenge the Treasury always has with that is that the long term for them is five years maximum.
“There should be a sort of proper look at changing the approach to longer-term investment.”
The former Cabinet minister also made the case for more experts in Government and said there is “a problem with the talent of some ministers”.
Mr Javid, who has served in six Cabinet roles, also argued there is a need for a “better mechanism for cross-Government working”.
“We don’t do cross-Government working well, between departments,” he said.
Mr Javid, who entered the Commons as the MP for Bromsgrove in 2010, has announced he will stand down as an MP at the next election, due by January 2025.
In response to his comments about Ms Truss, a loyal ally of the former prime minister defended her “clear plan to deliver a healthier economy”.
Tory former cabinet minister Sir Simon Clarke said: “She was clear – and she was right – that urgent action is needed to get the UK economy going and avoid stagflation.
“As Margaret Thatcher recognised, you cannot tax your way to growth.
“I have great respect for Sajid, but it was he who appointed Andrew Bailey as governor of the Bank of England – an appointment which has clearly not delivered.
“Moreover, we are all living with the results of an economic theory that fails to account properly for the dynamic effects of lower taxes in delivering higher growth, all while sanctioning repeated bursts of money printing that have created the conditions for the current inflation trap.”