Liz Truss has admitted for the first time that there has been “disruption” in the UK economy after last week’s mini-budget.
Since the Chancellor announced £45bn in tax cuts, the value of the pound has fallen, almost half of mortgages have been drawn and the Bank of England has launched a £65bn bailout to protect pension funds from the to save collapse.
Asked Friday whether she accepted that this was largely a crisis of her own government, she said prime minister said: “It was very, very important that we took urgent action to deal with the costs families are facing this winter and put in place the Energy Price Guarantee, which required us to borrow to cover the costs …but also to ensure we don’t raise taxes at a time when we are grappling with global economic forces caused by the war in Ukraine.
“I know there have been disruptions. But it was really, really important that we could help the families as soon as possible – that help is coming this weekend.
“Because this is going to be a difficult winter and I am committed to doing everything I can to help families and the economy at this time.”
The government’s energy price guarantee comes into effect on Saturday.
That means the average household doesn’t have to pay more than £2,500 a year on their energy bill.
Ms Truss defended the decision to present last week’s mini-budget without an accompanying Office for Budget Responsibility (OBR) forecast due to the need to react quickly to rising energy prices, and feared average annual household bills could soon reach £6,000.
The lack of such a forecast has been blamed by many – including Conservative Treasury Select Committee chair Mel Stride MP – for contributing to the turmoil in markets this week.
The OBR said the Chancellor had been offered a forecast Kwasi Kwarteng but was not commissioned.
On Friday morning the Prime Minister and the Chancellor met with the Budget Responsibility Committee of the OBR and subsequently issued a statement saying they had “made it clear that they value their exam”.
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But Ms Truss didn’t accept that not commissioning a forecast last week had been a mistake.
“It was important that we acted quickly, there could not be a full OBR forecast in this timeframe. But we are committed to the OBR forecast.
“We work together with the OBR. There will be an event on November 23rd where the guidelines will be fully analyzed by the OBR, but making sure we are working to help families in difficulty has been a real priority for me.”
On Thursday, the chancellor pledged to maintain the triple lock on state pensions, meaning they would rise in line with inflation (the triple lock means higher consumer price inflation, average wage growth, or 2.5% higher, depending on whether it’s higher are).
However, the Prime Minister declined to offer any guarantee that benefits would also rise in line with inflation, despite promises from Boris Johnson’s government.
Ms Truss said the issue is “something the Work and Pensions Secretary is looking into and she will make an announcement in due course, as is usual for the autumn”.
But the Prime Minister argued that reversing the increase in Social Security and supporting businesses’ energy bills would help families.
“I had real fears that companies might go out of business this winter faced with prohibitive energy bills,” she added.
“We launched a business program, we supported households across the country. That cost us money, but it was important that we act quickly.”
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With the latest polls putting Labor more than 30 points ahead of the Conservatives, many backbenchers are worried about the prospect of losing their seats in the next election.
Senior MP Charles Walker said Friday the talk was no longer about winning, but about how much the party was losing as a result.
However, the Prime Minister declined to comment on whether her party was headed for an election defeat, replying that “her focus is 100% on supporting the British public and British businesses through this difficult winter”.