Liz Truss: Tory party was not ‘fertile ground’ for tax cuts

Liz Truss has said the Conservative Party was not “fertile ground” for the tax-cutting agenda she tried to implement during her brief premiership.

The former prime minister, who was forced out of office last October, said her wing of the party’s failure to win the tax argument was why she had decided to speak out to promote a “pro-growth” agenda.

But she pledged that despite differences over tax, she would be loyal to her successor Rishi Sunak.

In the interview with Spectator TV, Ms Truss admitted for the first time that her decision to scrap the 45p tax rate may have been a “bridge too far”.

She claimed there were “forces within the Government itself” that oppose tax cuts and Brexit - and said she was “surprised” when Joe Biden, the US president, spoke out to oppose her plans.

And she said that while she did not regret running for prime minister last year, she would not be standing again.

Ms Truss’s controversial mini-Budget last September brought forward a planned income tax cut, reversed Boris Johnson’s rise in National Insurance to pay for social care, and cancelled a planned rise in corporation tax.

The most controversial measure was scrapping the 45p rate of income tax in a bid to attract investment.

Asked whether she regretted the 45p policy, she said: “We could all think different things with hindsight, and perhaps it was a bridge too far, but I’m not convinced that it was a magic bullet, that everything would have been fine if we hadn’t done that.

“I thought it was quite significant that after there were more market wobbles and we reversed the 45p tax decision relatively soon, we were essentially forced to reverse the position on corporation tax. So although, maybe it was a step too far, who knows?

“This is my point about counterfactuals. It’s easy to say: ‘I still believe it’s the right thing to do for Britain.’ During the vast majority of the Labour government we had a 40p top tax rate.”

Accepting that the argument for cutting taxes was one “we fundamentally haven’t won”, she said: “Was I trying to fatten the pig on market day? Maybe. There’s a long history of failing to make the case - and that’s what I’m thinking now.

“I’m thinking: how can we make that argument? Because it certainly isn’t going to make our country successful in the long term having ever higher taxes, always having the argument that you can’t cut. It’s never a ‘good time’ to cut the top rate of tax, that’s the reality.”

Ms Truss suggested she was surprised to find that so few Conservative MPs supported her push for lower taxes.

“What I found trying to make those arguments - that low taxes are a good thing, that they will help attract investment into Britain, that that will drive economic growth and that economic growth will benefit everybody - those arguments didn’t fall on particularly fertile ground,” she said, adding: “Including in my own party.”

“Broadly across the media, the arguments that we might have made 20 years ago that were taken for granted are no longer readily believed,” she said.

The ex-premier said that was why it was important for those who support low taxes and high growth need to up their game and build a stronger “intellectual base”.

“Raising taxes is counter-productive,” she said. “It’s not actually going to lead to reducing debt in five years’ time. But my view is not shared by this broader orthodoxy, that’s the issue.

“I definitely want to be part of promoting a pro-growth agenda. I definitely want to carry on as an MP.

“I’m positive about the future of Britain and I’m positive about the future of the Conservative Party. I think we need to start building more of a strong intellectual base. But I’m not desperate to get back into Number 10, no

“I’ve got more time available now to think about these things and make the argument. And that’s what I want to do.”

The ex-premier criticised civil servants for working against her goals on reducing taxes and implementing Brexit.

“There are forces within the Government itself and the wider institutional structure that have a point of view which isn’t necessarily the point of view of the elected government,” she said.

“I’ve seen that in every government department I’ve worked in.”

She said this particularly affected her desire to diverge from the EU. She said: “Not doing some of the deregulatory stuff that might have got growth going more, so those attitudes were part of the system,” she said,

“At the same time, the level of political support required to maybe change some of those attitudes wasn’t there. That’s what I found.”

Ms Truss criticised the power that the Office for Budget Responsibility had over government policies.

Its forecasts and warnings were listened to by the markets, meaning “an outside agency is determining the envelope you operate in” - which she claimed led to the decision to increase corporation tax.

Criticising the Treasury, she said: “I think it’s important that the chancellor or other government ministers are able to make sure they’ve got the officials around them that they feel will support the policies, that they are putting in place the measures that will support the policies.

“I didn’t realise just how strong the orthodoxy was and how embedded around the system it was.”

Asked whether she felt to blame for the fact that mortgages had become more expensive since her premiership, she said: “I don’t think it’s fair to blame interest rises on what we did. I think that’s unfair.”