UK's Truss Vows to Listen 10/04 06:14
BIRMINGHAM, England (AP) -- U.K. Prime Minister Liz Truss has insisted she
is leading "a listening government" that learns from its mistakes, as she tries
to restore her shaky authority and reassure financial markets spooked by her
government's see-sawing economic pledges.
Truss told the BBC in an interview that was broadcast Tuesday that she and
her ministers were determined to "reflect on how we could have done things
"Is everything the government (has) done absolutely perfect? No it's not,"
she said. "I fully acknowledge that. And we have learned from the feedback
That "feedback" has been dramatic: Truss' four weeks in office have seen the
pound plunge to record lows against the dollar, the Bank of England take
emergency action and the opposition Labour Party surge to record highs against
her Conservatives in opinion polls.
Now Truss also faces a battle with her party over her economic plans, with
some lawmakers warning they will oppose any attempt to slash welfare benefits
to help pay for lower taxes. Truss said "no decision has been made yet" on
whether to cut benefits in real terms by raising them by less than inflation.
Truss is on a mission to reshape Britain's economy through tax cuts and
deregulation in a bid to end years of sluggish growth. But she is trying to
ride out a series of U-turns over her first big policy: a stimulus package that
includes 45 billion pounds ($50 billion) in tax cuts, to be paid for by
government borrowing. Its announcement on Sept. 23 sent the pound tumbling to a
record low against the dollar and increased the cost of government borrowing.
The Bank of England was forced to intervene to prop up the bond market and
stop a wider economic crisis. Fears that the bank will soon hike interest rates
caused mortgage lenders to withdraw their cheapest deals, causing turmoil for
Under political and financial pressure, the government on Monday scrapped
the most unpopular part of its budget package, a tax cut on earnings above
150,000 pounds ($167,000) a year.
"It was becoming a distraction -- that is why we immediately changed that
policy and that is the kind of government we are," Truss said Tuesday as she
visited a construction site in the central England city of Birmingham. "We do
respond when there are concerns and we act quickly."
Abandoning the top-rate tax cut will save about 2 billion pounds, a small
share of the government's 45 billion-pound tax-cutting plan -- and it's unclear
how the rest will be paid for.
Treasury chief Kwasi Kwarteng has also promised to publish a fully costed
fiscal plan, alongside an economic forecast from the independent Office for
Budget Responsibility. Initially that was due to come Nov. 23, but mounting
pressure means it's likely to arrive weeks sooner.
What Kwarteng on Monday called the "hullabaloo" over the government's plans
has cast a shadow over the Conservatives' annual conference in Birmingham,
where many delegates express fears that the party, in power since 2010, is
headed for defeat in the next election.
Truss is due to make a speech to conference delegates on Wednesday, and the
recent turmoil has turned what should have been a triumphant welcome for a new
leader into a moment of peril.
The party has a commanding majority in Parliament but is fractious after
three years of scandal under former Prime Minister Boris Johnson, followed by a
divisive leadership contest between Truss and former Treasury chief Rishi
Sunak. Sunak warned during his losing campaign that Truss' plan to fund tax
cuts through borrowing would undermine both the government's economic
credibility and the nation's finances.
Truss says her policies will bring economic growth, higher wages and
eventually more tax revenue for the government to spend. But critics say the
plans do little to help millions of people who are struggling right now with a
cost-of-living crisis fueled by soaring energy prices.
Truss said she was "very committed to supporting the most vulnerable,"
pointing to a cap on energy prices that took effect Oct. 1.
However, she refused to promise benefits and state pensions would increase
in line with inflation, which has been the practice for years.
"We are going to have to make decisions about how we bring down debt as a
proportion of GDP in the medium term," Truss said. "We have to be fiscally
Conservative lawmakers -- including government ministers -- warned Truss
that they oppose a real-terms cut in welfare benefits and could vote against it
in Parliament -- something that might topple the government.
"I have always supported, whether it's pensions, whether it's our welfare
system, keeping pace with inflation. It makes sense to do so," said Penny
Mordaunt, the leader of the House of Commons.
"That's what I voted for before and so have a lot of my colleagues,"
Mordaunt told Times Radio.