Truss vows to press on with tax cutting plans despite growing Tory rebellion

From left, Foreign Secretary James Cleverly, Chancellor Kwasi Kwarteng, PM Liz Truss her husband Hugh O'Leary and Deputy PM, Thérèse Coffey during a tribute to the late Queen Elizabeth at the Conservative conference.
From left, Foreign Secretary James Cleverly, Chancellor Kwasi Kwarteng, PM Liz Truss her husband Hugh O'Leary and Deputy PM, Thérèse Coffey during a tribute to the late Queen Elizabeth at the Conservative conference.

By Kathleen Nutt

Political Correspondent

LIZ Truss has acknowledged mistakes over the mini-budget but said she is standing by her tax-cutting plan as she refused to rule out public spending cuts as the Conservative conference got off to a stormy start.

The Prime Minister admitted she could have done more to prepare the ground for Kwasi Kwarteng's financial statement, which spooked the markets, sending the pound plummeting and forcing a £65 billion intervention by the Bank of England to save pension funds.

Ms Truss was accused of throwing her Chancellor "under the bus" by saying the mini-budget's most controversial measure - the abolition of the 45 per cent tax rate on earnings over £150,000 - was not discussed with the Cabinet but was a decision made by Mr Kwarteng.

Conservative former Cabinet minister Michael Gove gave a scathing assessment of the plans, branding them un-Conservative and hinting he could vote against them in Parliament while other former ministers also spoke out against them.

Meanwhile, business secretary Jacob Rees-Mogg was chased and heckled by protesters in Birmingham as he arrived at the party conference.

The Cabinet minister had to be escorted by several police officers as he was booed and cheered by protesters, some of whom shouted "Tory scum", as he headed towards his party's annual gathering at the nearby International Convention Centre.

Mr Rees-Mogg played down the protests as a "fact of democracy".

Ms Truss's defence of her £45 billion of tax cuts to be paid for by borrowing came as the four day Conservative Party conference got underway.

The Prime Minister, who will deliver her keynote address to the party faithful on Wednesday, is facing the challenge of reassuring the markets and the Conservative grassroots unnerved by the market turbulence and an opinion poll crash.

"I do want to say to people I understand their worries about what has happened this week," she told the BBC's Sunday With Laura Kuenssberg.

"I do stand by the package we announced and I stand by the fact we announced it quickly, because we had to act.

"But I do accept we should have laid the ground better... I have learnt from that and I will make sure that in future we do a better job of laying the ground."

The move to axe the top rate of income tax for the UK's highest earners during a cost-of-living crisis and to pay for it through borrowing has been widely criticised.

Ms Truss made Mr Kwarteng own the controversial decision, saying it was not discussed with the wider Cabinet.

"No, no, we didn't. It was a decision the Chancellor made," she said.

Former culture secretary Nadine Dorries said Ms Truss was failing to be loyal by "throwing your Chancellor under a bus on the first day of conference".

Ms Truss was clear that pensions will rise in line with inflation, saying she has "committed to the triple lock" protecting them against price increases.

But she refused to give the same guarantee for benefits and government departmental budgets, raising the prospect of real-terms cuts.

Not ruling out rowing back on Boris Johnson's promise to raise benefit payments in line with inflation, she said Work and Pensions Secretary Chloe Smith will "make a determination on that and we will announce that this autumn".

The Prime Minister repeatedly refused to rule out cuts to public services, saying she would not pre-empt Mr Kwarteng's medium-term fiscal plan in November.

"What I'm going to do is make sure we get value for money for the taxpayer. But I'm very, very committed to making sure we've got excellent frontline public services," she said.

Some of her own MPs fear rising interest rates and more taxpayers' cash being eaten up will lead to spending cuts.

But Ms Truss said: "I don't accept that argument and I will do what I can to win the hearts and minds of my colleagues across the Conservative Party because I believe we need to grow the size of the pie."

Ms Truss defended the dramatic break with past Conservative policy on stewardship of the public finances despite not having her own mandate at a general election.

She said people had voted for a "different future" in 2019, with hopes for investment in towns and cities, higher wages and economic growth.

"I'm not saying it's not going to be difficult - we do face a very turbulent and stormy time - but it will deliver, it will deliver on the promises we made," she said.

Mr Gove, a veteran of government who remains influential among Tories, was scathing about the plan, claiming the abolition of the 45p tax rate and lifting caps on bankers' bonuses at a time when people are facing hardship displays "the wrong values".

Mr Gove told the BBC there were "two major things" that were problematic with the plans set out by the Prime Minister and Chancellor: "The first is the sheer risk of using borrowed money to fund tax cuts. That's not Conservative.

"The second thing is the decision to cut the 45p rate (of income tax) and indeed at the same time to change the law which governs how bankers are paid in the City of London.

"Ultimately, at a time when people are suffering, and you are quite right to point out the concerns people have not just over mortgages but over benefits, when you have additional billions of pounds in play, to have as your principle decision, the headline tax move, cutting tax for the wealthiest, that is a display of the wrong values."

Pressed on whether he would vote for the measures in the Commons, he said: "I don't believe it's right."

Intensifying the row Conservative chairman Jake Berry warned any rebels during a Commons vote on the plans would be turfed out of the parliamentary party.

Damian Green, a former deputy prime minister, warned the Tories would lose the next election if "we end up painting ourselves as the party of the rich".

Tory ex-chancellor George Osborne said it was "touch and go whether the Chancellor can survive" the fall-out, telling the Andrew Neil Show it would be "curtains" for Mr Kwarteng if his speech today went badly.

Scottish Conservative MP Andrew Bowie, who like Mr Gove backed Rishi Sunak, in the party's leadership contest in the summer, also appeared critical of the PM's plans, though he disputed the interpretation that welfare cuts would pay for lower taxes for the highest earners.

“In principle, cutting welfare to pay for tax cuts is not would not be the right thing to do. But that’s not what’s been laid in front of us,” he told BBC Radio Scotland.

An opinion poll, published yesterday, illustrated the scale of the challenge facing Ms Truss to assert her authority over the party she only assumed leadership of in September.

The survey by Opinium put Labour on 46 per cent, 19 points clear of the Conservatives on 27 per cent. On the issue of the economy it found that a one-point lead for the Tories a week ago had become a 19-point advantage for Labour.

Writing in The Daily Telegraph, Labour leader Sir Keir Starmer said it is "unacceptable" that neither the country nor Parliament has had any say on the measures despite the chaos wreaked on the financial markets.

"The economy is not a laboratory experiment for the maddest scientists of the Conservative Party. Mortgages, pensions and family finances are not casino chips for a Government intoxicated by dogma," he said.