Liz Truss is breaking her silence as she blames a “powerful economic establishment” and her own Conservative Party for her downfall.
The former prime minister says that she stands by her radical policy agenda but “the forces against it were too great” for it to succeed.
In an exclusive 4,000-word essay for The Telegraph, she admits that she is not “blameless” for the premature end to her time in Downing Street, but believes was “not given a realistic chance” of seeing her policies through.
She criticises Whitehall’s “strength of economic orthodoxy and its influence on the market”, and condemns Treasury officials for blindsiding her over the collapse of the pension market which preceded her resignation.
In an implicit rebuke to Rishi Sunak, who she does not mention by name, she doubles down on her opposition to corporation tax increasing from 19 to 25 per cent, branding the policy “economically detrimental”.
She goes on to say that she wanted to become prime minister to change things, not to “manage decline or to preside over our country sliding into stagnation”.
Ms Truss also accuses the Office for Budget Responsibility (OBR) of putting fiscal policy in a “straightjacket”, and says that she disagreed with its assessment of the impact of her proposed tax cuts.
The OBR, she writes, “tends to undervalue the benefits of low taxes and supply-side reforms for economic growth and overvalue the benefits of public spending”.
She added: “This inevitably puts pressure on a higher-tax and higher-spend outcome – hence the inexorable tax rises we are now seeing.”
Ms Truss stepped down after just 44 days in office, making her the shortest-serving prime minister in the history of the United Kingdom.
She won the Conservative leadership race last summer after promising to enact a low tax, high growth agenda.
But following her mini-Budget, the pound crashed and the Bank of England was forced to make an emergency intervention to calm market turmoil.
She reveals that she was given the “starkest of warnings” by senior officials that any further economic turbulence could leave the UK unable to fund its own debt.
Ms Truss sacked Kwasi Kwarteng, her chancellor, and less than a week later resigned as prime minister, saying she no longer commanded the confidence of her MPs.
“I still believe that seeking to deliver the original policy prescription on which I had fought the leadership election was the right thing to do,” she writes. “But the forces against it were too great.”
“I am not claiming to be blameless in what happened, but fundamentally I was not given a realistic chance to enact my policies by a very powerful economic establishment, coupled with a lack of political support,” she says.
She recalls entering office presuming her “mandate would be respected and accepted”.
“How wrong I was,” she writes.
She condemns “endemic” levels of “pessimism and scepticism” at the Treasury about the potential for growth in the British economy.
And in a damning indictment of the department, she reveals that in the run-up to the mini-Budget, no one there highlighted any risks to pension funds – which would trigger unprecedented volatility in the gilt market – to either her or Mr Kwarteng.
“At no point during any of the preparations for the mini-Budget had any concerns about Liability-Driven Investments (LDIs) and the risk they posed to bond markets been mentioned at all to me, the Chancellor or any of our teams by officials at the Treasury,” she says.
This was a significant omission, she argues, because this issue “would ultimately bring my premiership to an abrupt and premature end because of the panic it induced”.
“Only now can I appreciate what a delicate tinderbox we were dealing with in respect of the LDIs,” she adds.
Ms Truss says her mini-Budget was made a “scapegoat” for problems that had been “brewing” for a number of months including rising interest rates and mortgage costs, which had already been forecast to go up.
The former prime minister says it was not only domestic economic orthodoxy she was up against when she tried to challenge “high-spend, high-tax” policies, but that she was also “swimming against the international tide”.
“There was a concerted effort by international actors to challenge our Plan for Growth,” she says, citing US president Joe Biden’s remarks as well as comments by the International Monetary Fund (IMF).
“The IMF commented on distributional aspects rather than market stability, which is hard to conclude was anything but politically motivated.
“Then there was the intervention from President Biden, who publicly voiced his disagreement with our economic policy, stating: ‘I wasn’t the only one that thought it was a mistake.’”
Ms Truss also criticises the failure within her own party to make the case for lower taxes and deregulation which meant “the groundwork” was not in place for her radical economic agenda.
In an implicit swipe at the David Cameron, Theresa May as well as Boris Johnson administrations, she says successive Conservative governments since 2010 have instead “triangulated” with Labour policy.
“We have not done enough over the last decade to make the arguments for a lower-tax, more deregulated economy, which meant that the groundwork had not been laid for what I sought to do,” she writes.
“If we are unable to persuade the wider electorate that ever higher taxes, an ever more restrictive regulatory regime and historically high levels of state spending are the key underlying causes of poor economic performance, they are not going to be sympathetic to the sort of policy approach that I advocate.”
This meant that she was left “pushing water uphill” as large swathes of the public had “become unfamiliar with key arguments about tax and economic policy and over time sentiment had shifted leftwards”.
Ms Truss also says she was surprised at the reaction from fellow Tory MPs to her plans, citing the “furore” over the announcement to scrap the 45p rate of income tax.
She defends her decision not to commission a forecast from the OBR to go alongside the mini-Budget, saying it would not have been “appropriate”.
The former prime minister acknowledges that her communication “could have been better” – but adds that the Whitehall machine was not “enthusiastic” about promoting messages which are “contrary to its orthodoxy”.
And she argues that ultimately, improving public messaging would not have altered the course of events.
“Although there are many ways in which the policy could have been better communicated or tweaked to make it more acceptable, I struggle to see how that would have changed the fundamentals of what happened,” she says.
Ms Truss opens up about the toll her short-lived premiership took on her, saying “soul-searching has not been easy” and adding that it has been “bruising for me personally”.
And she also speaks of her regret at sacking Mr Kwarteng, saying it “deeply disturbed” her but was necessary to avoid a “serious meltdown”.
“Facing the headwinds we did, I could not allow the markets – backed by this economic consensus – to keep betting against the UK,” she writes.
“Before long, I was given the starkest of warnings by senior officials that further market turmoil could leave the UK unable to fund its own debt. This is why I reluctantly concluded I had no option but to remove the chancellor and change the policy.”
A senior government source said: “We are still picking up the pieces from the last time we tried to borrow £45 billion for tax cuts. Markets went into meltdown, pension funds were hours from collapse, interest rates hit the roof, and people were about to lose their homes. This reckless approach failed then, and will fail if tried again.”
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