Weakened Truss says disruption will be worth it to spur UK growth

'For too long, the political debate has been dominated by how we distribute a limited economic pie. Instead, we need to grow the pie so that everyone gets a bigger slice,' Truss will tell her party

Reuters
Published : 5 Oct 2022, 08:30 AM
Updated : 5 Oct 2022, 08:30 AM

British Prime Minister Liz Truss will argue on Wednesday that disruption sparked by her economic plans will be worth it in the long run, using her first speech to the party faithful as Conservative leader to try to restore her dwindling authority.

Weakened after being forced into a U-turn on one of her tax cuts less than 24 hours into her party's annual conference, Truss will double down on her message that her plan is the right one to tackle the long list of problems facing Britain.

But with lawmakers empowered after forcing a reversal of the cut to the top rate of tax, she now faces a fight over how to fund her policies, possibly not only diluting her "radical" agenda but also raising suggestions of an early election.

Seemingly undeterred, Truss will tell party members and lawmakers that she will build a "new Britain for the new era", acknowledging that change brings "disruption" while repeating that her government believes decisive action is the right route to take.

"For too long, the political debate has been dominated by how we distribute a limited economic pie. Instead, we need to grow the pie so that everyone gets a bigger slice," she will tell the party in the central English city of Birmingham.

"That is why I am determined to take a new approach and break us out of this high-tax, low-growth cycle."

The conference, once expected to be her crowning glory after being appointed prime minister on Sept 6, has turned into a battle for her political future after her plan for 45 billion pounds ($51 billion) of unfunded tax cuts triggered market turmoil.

As the conversation moved on to how the government would fund the tax cuts, lawmakers and ministers openly clashed over the best way forward, in stark contrast to the sense of discipline on display at the opposition Labour Party conference.

Opinion polls now point to an electoral collapse for the Conservatives.

Markets have largely stabilised after the Bank of England stepped in with a package worth billions of pounds to shore up the bond market, though borrowing costs remain higher than before the tax plans were set out on Sept 23.

A government source also suggested Truss's finance minister, Kwasi Kwarteng, was considering bringing forward his medium-term fiscal  programme- showing how the so-called "growth plan" of tax cuts and spending would be funded to try to calm the markets.

'A NECESSARY BLIP'

Truss will reiterate on Wednesday that her government will keep "an iron grip" on Britain's finances, and will set out her belief in fiscal responsibility, value for money for the taxpayer, sound money and a smaller state, her office said.

Her critics say she is relying on the discredited ideology of "trickle-down" economics that will only widen inequality in an already deeply divided country and fail to provide investment in the short term.

It is not an argument Truss accepts and she will admit on Wednesday that "not everyone will be in favour" of her changes.

Foreign minister James Cleverly said the "bitter tasting medicine" would make the country stronger in the long run. "This is a blip. It's a necessary blip," he told Times Radio.

Some lawmakers fear Truss will break a commitment to increase benefit payments in line with inflation, something they argue would be inappropriate at a time when thousands of families are struggling with soaring prices.

Ministers say they are yet to take a decision and are obliged to look at economic data later this month.

With opinion polls showing the Conservative Party trailing Labour badly and facing a possible wipeout in the event of an early election, several lawmakers feel there is no easy option to restore their standing.

Some say the risk is that the Conservatives again become "the nasty party" - a moniker coined by a senior party figure 20 years ago when it was in a long period of opposition.

John Curtice, Britain's best known pollster, said Labour now held an average lead of 25 percentage points. "The Conservative Party has to realise, accept and try to work out how it gets around the fact that it's now in deep, deep electoral trouble," he said.

Truss will again say there is only one way forward.

"Whenever there is change, there is disruption. Not everyone will be in favour," she will say. "But everyone will benefit from the result - a growing economy and a better future. That is what we have a clear plan to deliver."

Toufique Imrose Khalidi
Editor-in-Chief and Publisher