Liz Truss warned tax U-turns risk bringing down her Government

Liz Truss grilled by Peston on 'trashing' winning reputation

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Liz Truss and her party have been savaged by a former aide of Margaret Thatcher, who warned the humiliating reversals of UK tax policy are a “terrible sign of weakness” that could ultimately bring down the Conservative Party Government. It has been another day of turmoil in Westminster, with the Prime Minister sacking her Chancellor Kwasi Kwarteng just over a month into his job and replacing him with Jeremy Hunt, while scrapping parts of the planned economic package in a desperate bid to stay in power.

During a Downing Street news conference, Ms Truss said she was scrapping Mr Kwarteng’s commitment to drop the rise in corporation tax from 19 percent to 25 percent – even though it was a central element of her leadership campaign – thus saving the Exchequer £18billion a year.

In his mini-budget on September 23, Mr Kwarteng said this would not be raised where overall, he announced £45billion worth of unfunded tax cuts that quickly plunged financial markets into turmoil.

Earlier this month, the now former Chancellor had announced the Government had changed its mind on scrapping the 45 percent top rate of income tax for the highest earners following a backlash.

But now Nile Gardiner, a foreign policy expert and former aide to Margaret Thatcher, has launched a furious attack and claimed his former boss would have been “appalled” by the U-turns on tax policy.

He warned the humiliating move shows huge weakness and will be “ruthlessly exploited by those who seek to bring this Conservative Govt down”.

Mr Gardiner tweeted: “My former boss Lady Thatcher would be appalled by the U-turns over UK tax policy.

“They are a victory for the Socialists, and a terrible sign of weakness, that will be ruthlessly exploited by those who seek to bring this Conservative Government down.”

Replying to those comments, Peter Fleet, the former Group Vice President of Ford Motor Company and Conservative parliamentary candidate at last year’s Chesham and Amersham by-election, wrote: “Lady Thatcher would never have got us into such a ridiculous mess in the first place.

“She would never have announced unfunded tax cuts. This train wreck has put the legitimate and compelling case for a lower tax take and a flatter tax structure back for a generation.”

During her press conference, Ms Truss confirmed she is abandoning Mr Kwarteng’s commitment to drop the planned rise in corporation tax from 19 percent to 25 percent – despite it being a central plank of her leadership campaign

During the news conference announcing the U-turn on the corporation tax rise, Ms Truss also signalled a new squeeze on public spending which would “grow less rapidly than previously planned”.

The Prime Minister described it as a “down payment” on the medium term fiscal plan on October 31 – the date new Chancellor Mr Hunt will set out his plan to get public finances back on track.

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She suggested further measures to plug the estimated £60 billion black hole created by the mini-budget will have to follow.

Ms Truss admitted: “It is clear that parts of our mini-budget went further and faster than markets were expecting so the way we are delivering our mission right now has to change.

“We will do whatever is necessary to ensure debt is falling as a share of the economy in the medium term.”

But Conservative former Chancellor Lord Hammond said the chaos over the past few weeks has destroyed the party’s reputation for fiscal discipline, leaving the Prime Minister’s growth agenda “in tatters”.

He told BBC Radio 4’s The World at One: “I’m afraid we’ve thrown away years and years of painstaking work to build and maintain a reputation as a party of fiscal discipline and competence in government.

“Many of the arguments that we routinely deploy against the Labour Party around fiscal management will look extremely limp in light of what has happened over the last few weeks.”

Sir John Redwood, the Conservative MP for Wokingham, admitted the new Chancellor and Prime Minister “have a lot of work to do” to try to get the economy back on track.

He told Sky News: “What I want is a good answer for the country, so I hope, now she’s changed chancellors, she and the new Chancellor complete the growth strategy and tell us how it’s going to work.

“They have a lot of work to do. It was a pity they launched the tax part package without the spending part and without the forecasts.

“The sooner they get that information available the better, because I want the party to concentrate on making the economy better and looking after the people we represent rather than a perpetual election machine within the party itself.”

Sir John also reiterated his support for Ms Truss, adding he believes she is the right person to lead the Tories to the next general election. He also urged his fellow Tory MPs to “give every support and some good advice” to her to get to a “winning economic policy as soon as possible”.

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