Truss attacks Bank of England’s failure to tackle inflation

Foreign Secretary Liz Truss has said she would tighten ministerial scrutiny of the Bank of England if she won the race to become Britain’s next prime minister, after accusing the Bank of failing to control rising inflation.

Truss, the foreign secretary, told the Sunday Telegraph newspaper that she would “look again” at the central bank’s mandate to “make sure inflation is tough enough”.

The BoE has been operationally independent since 1997. The government has instructed it to aim for an inflation target of 2 percent. Inflation is currently at 9 percent, well above that target.

Truss hinted that she could disrupt the bank’s independence, saying that – as prime minister – she would set a “clear course” for her on monetary policy.

Many Tory MPs have blamed the BoE for losing its grip on prices after insisting that higher inflation would only be temporary and peak at 5 percent – ​​despite the global fuel crisis.

Truss, who struggled in Friday’s first televised leadership debate, is fighting to make it to the last two candidates on a shortlist to be placed – by the end of next week – for Tory membership.

In a bid to appeal to right-wingers, the Foreign Secretary has pledged £30bn in largely unfunded tax cuts and pledged to cut red tape.

The Truss campaign has suggested there is a ‘space’ of around £30bn in public forecasts, with taxes likely to turn out higher than expected. Also Tom Tugendhat, seen as the outsider in the final shortlist of five candidates.

But Paul Johnson, head of the Institute for Fiscal Studies, said that “anyone serious about meeting these[UK tax]targets” would not believe there was £30bn of extra money to spend.

Truss also said she wanted to lift the ban on oil and gas fracking in the UK so that local areas could decide whether they wanted the controversial practice to continue.

Rishi Sunak, meanwhile, tried to emphasize his credentials as a Brexiter, as he pledged to spend his first 100 days as prime minister figuring out which of the 2,400 old EU rules should be abolished. The government is already planning a “bonfire” of old European laws, but Sunak said he would speed up the process.

The former chancellor’s team is baffled by the way Eurosceptic Tory MPs are flocking to Truss – even though she voted for Remain six years ago – and Commerce Secretary Penny Mordaunt.

Sunak pointed out that unlike others, he campaigned for leave despite being warned it would be the death knell for his political career. “As Prime Minister, I would go further and faster in using the freedoms Brexit has given us to reduce the mass of EU regulations and bureaucracy that are holding back our growth,” he said.

Opinion polls by JL Partners showed that Sunak was the overwhelming choice of voters in most major constituencies for the Conservative Party. Of the 365 seats the Tories won in 2019, Sunak was the favorite with 76 percent, with Mordaunt at 5 percent and Truss at zero. Tugendhat came in at 19 percent and Kemi Badenoch, the fifth candidate, came in at zero.

Mordaunt told the BBC on Sunday morning that she wanted to cut the value-added tax on petrol from 20 percent to 10 percent while raising the middle-income tax thresholds. The minister argued that the VAT reduction would be fiscally neutral because additional revenue would come into the treasury from higher fuel sales.

Mordaunt admitted the policy would mean adjustments to government tax revenues, but said there was an urgent need for interventions to help people affected by the rising cost of living.

Dominic Raab, deputy prime minister, sounded skeptical about the claim that halving the VAT on fuel would be self-financing: “I’d like to see some serious analysis of self-financing tax cuts,” he told Sky News.

A Labor official said the claim was “nonsensical” as it implied people would buy twice as much petrol as before. Instead, it would likely cost more than £8 billion, he suggested.

Tugendhat, the most centrist candidate, said he would not drop out for Monday’s third vote, saying: “I’ve never turned down a challenge because the odds were against me.”

Alok Sharma, the minister who led the international climate talks at COP26 in Glasgow last year, said he would not rule out resignation if the new prime minister scrapped the target of cutting carbon dioxide emissions to zero by 2050. Sharma accused some candidates of being “lukewarm” about the climate agenda, telling the Observer newspaper: “Anyone who wants to lead our country must demonstrate that they take this issue incredibly seriously.”

Leave a Comment