Liz Truss has decided to return fire on Labour this morning, amid renewed attacks from the Opposition on her time as Prime Minister.
One year ago tomorrow is the anniversary of Liz Truss and Kwasi Kwarteng’s ill-fated “mini-budget”, which sought to slash taxes and get Britain growing, only to spook the markets and lead to Ms Truss’s record-breaking 49-day tenure in Downing Street.
One of the reasons the mini-budget sparked such panic in the markets was Ms Truss’s decision to announce the series of tax and spending measures without a formal analysis by the Office for Budget Responsibility (OBR), which scrutinises the Government’s policies on budget days.
Attempting to capitalise on the sour memories among much of the public, Labour today announced a new policy to hand the unelected bureaucrats at the OBR yet more powers and influence over British politics.
Shadow Chancellor Rachel Reeves would allow the office to publish forecasts and analysis alongside any tax and spending changes by the Government – and backed by a new law.
Speaking on the Today Programme this morning, Rachel Reeves said the move would prevent the Tories from “crashing the economy” in future.
She said: “With our new charter for budget responsibility, we will always have a forecast from the OBR when there are significant and permanent changes in tax and spend, because I know stability is absolutely essential.”
Ms Truss hasn’t taken the ongoing barrage lying down, however.
In a statement returning fire this morning, the former PM said Labour’s policy “beggars belief”, and will have yet more power to “bureaucrats in London”.
She said: “The 25-year economic consensus has led to state spending being higher than it’s been for around 50 years, taxes at their highest since WW2 and a debt of over £2.5trillion. This has caused low economic growth.
“It beggars belief that Labour thinks Britain’s problems will be solved by bigger government and even more powers for quangos.
“Hard-working people and businesses – freed from overbearing regulation, tax, and debt – are going to get Britain growing again, not more bureaucrats in London.”
Supporters of Ms Truss have previously also criticised the OBR over the inaccuracy of their forecasts in the first place.
Reacting to inflation news in March, compared to that predicted by the OBR, Simon Clarke MP commented: “One fears that once again, the limitations of OBR modelling are being displayed.”
In July, Ms Truss launched a new project called the Growth Coalition, which aims to advise politicians in the G7 about how to tackle the widespread crisis of declining growth and falling GDP per capita.
One of the group’s jobs will be producing its own modelling, which it says will be more accurate than that produced and used by the current economic establishment like the Treasury and OBR.
They hope that more dynamic modelling of changes to tax and spending at budgets will better project the effects and costs of certain policies five, 10 and 20 years down the line.
For example, a tax rise won’t merely be interpreted as bringing in “x” amount of money to the Treasury coffers, but analyse the wider effect of the policy, and how it may encourage reduced spending, earning and productivity.
