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Liz Truss urges Rishi Sunak to cut taxes, slash benefits and raise the retirement age as she defends record in No10
18 September 2023, 08:09 | Updated: 18 September 2023, 08:35
Liz Truss will encourage the government to cut taxes, trim benefits spending and raise the retirement age on Monday.
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Ms Truss is also set to defend her much-maligned record as Prime Minister in her 44 days in power.
The Conservative will say in a speech that she tried to do things too quickly, but that the "political and economic establishment" stopped her.
The former Prime Minister will deliver her speech at the Institute for Government on Monday in her first major intervention since stepping down.
Ms Truss will say: "Ministers need to explain the why as well as the how – making the case for free market economics and admitting that the state has got too big, partly as a result of the excess spending during Covid."
She will call for the government to cut corporation tax to 19%, adding: "We should also refuse to implement the OECD minimum tax agreement, which I have previously labelled a ‘cartel of complacency’... We also need to reduce marginal tax rates to make it worthwhile to work at every income level. Further changes like abolishing the tourist tax, abolishing the Windfall Tax and IR35 need to be made.
"We need to get a grip on the ballooning welfare and pensions bill. This means slowing the rate of increases to benefits and tougher work requirements. It also means raising the retirement age further.”
"We should – as many other Western countries are already doing – delay implementing Net Zero commitments such as the ban on new petrol and diesel vehicles from 2030. Other environmental regulations which are hiking the cost of living like enforcing the replacement of gas and oil boilers should also be abandoned."
Ms Truss and Chancellor Kwasi Kwarteng sent markets around the world into turmoil with their mini-budget last September, before sacking Mr Kwarteng and then resigning to become the shortest serving prime minister of all time.
The mini-budget included £45bn of unfunded tax cuts, and was followed by a fall in the value of the pound and rising mortgage rates.
Following the fallout from her government's mini-budget, Ms Truss was forced to resign after 44 days inside No10 - meaning the lettuce won.
Opposition parties have mocked the former prime minister ahead of the address, with Labour using the approaching anniversary of the mini-budget to call on Mr Sunak to block her resignation honours.
Ms Truss will defend her record, saying: "Some people said we were in too much of a rush. And it is certainly true that I didn’t just try to fatten the pig on market day; I tried to rear the pig and slaughter it as well. I confess to that.
“But the reason we were in a rush was because voters wanted to see results, having already voted for change twice – in 2016 and 2019. I knew with the level of resistance and the lack of preparation time that things weren’t going to be perfect. However, given the situation for the UK was so difficult, it was important to take action and not do nothing. I went into politics to get things done, not to do public relations.
“And to the people who say that if we had delayed things or spent more time rolling the pitch, it would have worked – I ask them to look at what has happened since. By October 7th the OBR were already leaking their calculations that there was a £70 billion hole in the budget – these numbers of course subsequently proved to be wrong – but that leak would have made delivery of the Corporation Tax freeze untenable.
"And since last year no major supply side reforms or tax cuts have been allowed to happen – whether it is financial services, childcare, planning or on the environment. In fact, 150 Conservative MPs have written to the Prime Minister saying there should be no change to Net Zero legislation."
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She will will say of her mini-budget: "Some people have described these as 'unfunded tax cuts'. This is not a fair or accurate description.
"Independent calculations by the CEBR suggest that cutting the higher rate of income tax and the 'tourist tax' would have increased rather than decreased revenues within five years.
"So quite the opposite of being unfunded, these tax cuts could have increased funding for our public services."
She is set to say: "I believe that the reason for the problems we have is the 25 years of economic consensus that have led us to this period of stagnation.
"And I believe it is vital that we understand that and shatter that economic consensus, if we are to avoid worse problems in the future."
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“Some say this is a crisis of capitalism – that free markets are responsible. But that’s not borne out by the facts. Quite the opposite is true.
"The fact is that since the Labour government was elected in 1997, we have moved towards being a more corporatist social democracy in Britain than we were in the 1980s and 1990s."
Ms Truss will say that free market advocates took their eye off the ball after the 1980s.
"Free market economists went off to lucrative jobs in the City, allowing academic institutions and think-tanks to be captured by the left."
“We Conservatives allowed the debate to be framed and led by the left. Whether it’s the anti-capitalist arguments of the Occupy movement, the woke diversity policies or the statist environmental solutions, the left have been making the running. We’ve seen that, regardless of which government has been in power.
"From the energy price cap to the 2050 Climate Change target to the ESG agenda in companies, there has been a cultural shift across both business and the public sector… Politicians assumed that the good times would go on forever.
"The discussion was about ‘sharing the proceeds of growth’ and talking about happiness and ‘General Well Being’ rather than GDP. The only question seemed to be how to distribute the pie, not how to ensure we had a bigger pie to share out."
She will claim Mr Sunak's Government has spent £35 billion more than she would have as prime minister, arguing that if the policies included in her growth plan had been followed, growth would have eventually been higher.
"Investment would not have faltered in the North Sea, were it not for the windfall tax," she will say. "We would have got moving on fracking and lower energy bills would now be on the horizon.
"A more competitive rate of corporation tax would have persuaded the likes of AstraZeneca not to relocate elsewhere. There would have been more duty-free shoppers and a boom in the number of self-employed."
Ms Truss will repeat her attack on the so-called "anti-growth coalition", and argue that her plan was not implemented due to a reaction from "the political and economic establishment which fed into the markets".
Hitting out at 25 years of "economic consensus", she will say: "The anti-growth coalition is now a powerful force comprising the economic and political elite, corporatists, parts of the media and even a section of the Conservative parliamentary party.
"The policies I advocate simply aren't fashionable on the London dinner party circuit."
Chancellor Jeremy Hunt is currently preparing for the Autumn Statement, but tax cuts have repeatedly been ruled out while inflation remains high.
Ms Truss will take specific aim at US President Joe Biden's landmark green subsidy push the Inflation Reduction Act, warning the West "cannot keep borrowing forever".
Ahead of the speech, Labour frontbencher Jonathan Ashworth wrote to the Prime Minister calling on him to block Ms Truss's yet-to-be published resignation honours list.
In the letter to Mr Sunak, he said: "Families and business across Britain are still paying (the) price for the Conservative Party crashing the economy and leaving working people worse, with higher taxes, higher mortgages and higher food and energy bills.
"Despite this, it has been widely reported that Liz Truss has submitted up to 14 people to receive resignation honours.
"This means that those who crashed the economy, who left millions to pay more for their mortgage and who undermined our economic institutions could receive an award.
"I urge you to block these honours."
Liberal Democrat deputy leader Daisy Cooper mocked Ms Truss.
She said: "Liz Truss giving a speech on economic growth is like an arsonist giving a talk on fire safety."