‘Never again’: Shadow Chancellor apologises for Truss’ mini-budget
Shadow Chancellor Mel Stride is set to apologise for the fallout from the 2022 mini-budget, vowing that “never again will the Conservative Party undermine fiscal credibility by making promises we cannot afford.”
In a speech later today, Stride is expected to apologise on behalf of the Tory government for having “put at risk the very stability which Conservatives always said must be carefully protected.”
Despite having “recognised” this mistake and “restoring” stability, the shadow chancellor will acknowledge that “the damage to our credibility is not so easily undone.”
In 2022, in the wake of the pandemic, and the recession that ensued, then-PM Liz Truss and Chancellor Kwasi Kwarteng introduced sweeping tax cuts in an ad-hoc fiscal event. A planned rise in National Insurance was cancelled, basic income tax was slashed by one per cent to 19 per cent while the 45 per cent income tax for those earning more than £150,000 would be scrapped entirely.
This triggered a domestic financial crisis, a run on the pound, and foisted higher mortgage costs for millions, resulting in an intervention by the Bank of England.
In Stride’s words, “the credibility of the UK’s economic framework was undermined by spending billions on subsidising energy bills, and tax cuts, with no proper plan for how this would be paid for.”
Liz Truss resigned in response to mounting criticism after just over a month in office.
At the time, Kwarteng said “we won’t apologise” for prioritising growth.
In defence of the ‘disaster’
In response, Truss accused Stride for having “kowtowed to the failed Treasury Orthodoxy.”
She implied that Stride harbored personal animosity towards her, suggesting he was “set on undermining” Truss’ plans after she “beat his chosen candidate for the party leadership.”
“Even when judged by the OBR’s flawed calculations, my plans were chalked up as costing less than the spending spree Rishi Sunak pursued as Chancellor during the pandemic – yet Mel Stride never took him to task over any of that,” Truss said.
Truss defended her ‘disastrous’ plan as a last resort, and “the only pathway for the Conservatives to avoid a catastrophic defeat at the election.”
The shadow chancellor will also be justifying the budget as a response to “the failure of successive governments to put us on a path back to sustained growth and rising living standards,” and “enduring frustration with stagnation” that persists today.
The New Conservatives
The Labour government has consistently invoked the mini-budget in response to Tory criticism, even when launching attacks at Reform UK.
Last week, Prime Minister Keir Starmer said: “Liz Truss bet the house and lost. £45 billion in unfunded tax cuts, with no means to pay for them. Markets reacted, the economy tanked and we’re all still paying the price for mortgages, rents and bills that spiralled out of control.”
Stride is expected to criticise Chancellor Rachel Reeves for “borrowing hundreds of billions more” than the Conservative government planned for.
Lower taxes must be introduced “responsibly,” through “fiscal discipline,” he will add.
“We must accept that for too long governments of both colours have failed to free us from this malaise,” Stride will say, citing low incomes and a sense that “the system only works for the benefit of others, for large corporations, or people from other countries.”
Stride will vow that the Tories will “show that we are serious about listening to people and creating a better future underpinned by a credible plan,” in order to rebuild trust.
Poor polling
Stride’s address follows the local council elections, which Conservative leader Kemi Badenoch dubbed a “bloodbath” for her party. The insurgent right-wing Reform UK snagged 677 seats, while the Tories lost 676.
Reform constitutes a real threat to the Tories. YouGov polling finds that 33 per cent of those who voted Tory in the 2024 general election would vote Reform today.
The shadow chancellor is expected to take aim at Reform’s growing influence, calling their proposed economic policies “pure populism,” and likening them to the “magic money tree we thought had been banished with Jeremy Corbyn.”
“They would plough ahead with huge additional welfare spending, as well as tax cuts, with no plan for how to pay for any of it,” Stride will add.