Liz Truss admits UK faces economic ‘disruption’ because of mini-Budget

Doing things differently means ‘disruption in short term’, says PM

Liz Truss has admitted her chancellor Kwasi Kwarteng’s mini-Budget caused “disruption” as she vowed to “do things differently” from previous Conservatives leaders.

As Tories prepare for their annual conference, the prime minister warned the country faced a “difficult winter” ahead as she made clear she had no plans to change course her radical, borrowing-fuelled tax-cutting agenda.

“I recognise there has been disruption, but it was really, really important we were able to get help to families as soon as possible,” the PM told broadcasters on Friday – pointing to the cap on the cost per unit of energy.

Ms Truss’s comments came at the end of a chaotic week which saw the pound slump to an all-time low, the Bank of England forced to spend billions on government debt and Labour take an astonishing 33-point lead over the Tories.

Unapologetic, Ms Truss claimed she had “actively decisively” and suggested more disruption lay ahead. “I am going to do things differently. It involves difficult decisions and does involve disruption in the short term,” she wrote in The Sun.

Despite having been in No 10 for less than a month, some have questioned whether Ms Truss can now survive to the end of the year. “She is finished, there are a lot of [no-confidence] letters going in,” one former minister told the i.

With economists and union leaders warning a return to austerity, Ms Truss refused to commit to the annual uprating of benefits in line with inflation in April – something Rishi Sunak had promised to do when he was chancellor.

Pressed in her interview, Ms Truss said only that it was “something the work and pensions secretary [Chloe Smith] is looking at”.

However, levelling up secretary Simon Clarke went further and suggested was looking to shrink the overall size of the state.

“I think it is important that we look at a state which is extremely large, and look at how we can make sure that it is in full alignment with a lower tax economy,” he told The Times.

Mr Kwarteng is due to publish a medium-term fiscal plan setting out how he intends to get debt falling – alongside an updated set of economic forecasts from the Office for Budget Responsibility (OBR) – on November 23.

Some Tory MPs have been pressing him to bring forward the date of publication so as to restore market confidence in the government.

Mr Kwarteng has defended his mini-budget – claiming that he “had no other choice” than to do “something different” to spark growth in the economy.”

The Confederation of British Industry (CBI) urged the government reassure the markets by laying out a “clear fiscal plan”. The CBI’s chief economist Rain Newton-Smith criticised the chancellor for failing to explain clearly how tax cuts would be paid for.

The levelling up secretary hinted that further radical plans for the economy announced by Mr Kwarteng in late November could include changes to the green belt.

“The fact the green belt is larger today than it was when Margaret Thatcher came to power is an extraordinary state of affairs,” said Mr Clarke.

The minister added: “We need to look at a planning system where we make sensible adjustments which don’t threaten communities and most fundamentally are about going with popular consent, and actually creating incentives that allow local areas to back growth.”

Following a series of polls showing huge swings to Labour in the aftermath of the mini-Budget, senior Tory MP Sir Charles Walker said it was “hard to construct an argument now that the Conservatives can win that general election”.

Sir Charles told Times Radio: “I suspect the conversation is, you know, ‘how much do we lose it by’?” The senior figure said the government still had a “duty to the country to get the public finances in the best shape possible” before it loses.

Tory MPs are reportedly in talks with Labour to defeat certain parts of the Budget in the Commons – with many particularly angry about the axing of the 45p top rate of tax.

Rebels are apparently in talks with the opposition to make sure that the government’s controversial new measures are brought to a vote in the Commons.