Tory leadership race live: Liz Truss blames Treasury’s ‘economic orthodoxy’ for UK’s stunted growth

Good morning. Liz Truss, the foreign secretary, is now favourite in the contest to be next Tory leader and prime minister and she has just given her first proper broadcast interview of the campaign, to Nick Robinson on the Today programme.

The main division between Truss and Rishi Sunak, the former chancellor and the only other candidate left in the Tory leadership contest, is that Truss is demanding huge, immediate tax cuts now. She says they are needed to jumpstart the economy and avoid recession. Sunak says tax cuts now would be inflationary, and that they should only be implemented when affordable.

What was interesting about Truss’s interview is that she doubled down on her argument, claiming that her approach was needed because the economic orthodoxy accepted by governments of both parties over the past 20 years was wrong. She told Robinson:

The fact is we’ve had economic policy – not just under this government, for the past two decades – there’s been a consensus on our economic policy, and it hasn’t delivered economic growth ….

We have had a consensus of the Treasury, of economists, of the Financial Times, of other outlets, peddling a particular type of economic policy for the last 20 years. And it hasn’t delivered growth …

What I know about the Treasury from having worked there is they do have an economic orthodoxy and they do resist change. And what people in Britain desperately need now is change.

Truss accepted that her plans for tax cuts would cost roughly £38bn a year. But she said they were affordable within the government’s current fiscal rules and, when Robinson challenged her to name a single economist who did not think tax cuts now would be inflationary, she cited one, Patrick Minford. She said she agreed with Minford’s argument, which is that tax cuts would be good for the supply side of the economy (people would have more incentive to work, or set up a business), and that this would reduce inflation.

In her attack on Treasury thinking, Truss was reflecting what Boris Johnson told MPs yesterday as he ended PMQs with advice for his successor.

But she also seems to be following another economic thinker less popular in Tory circles. Robinson put it to her that, if she favoured a big increase in borrowing to revive the economy, she should have voted for Jeremy Corbyn. Truss did not address his point directly, but last night John McDonnell, Corbyn’s shadow chancellor, suggested he agreed with the analysis. He told ITV’s Peston show:

I was then told this idea of borrowing to grow the economy then let it pay for itself is ludicrous … What have we just heard [from the Tory leadership contest is] let’s borrow to grow the economy.

It’s extraordinary they’re repeating my agenda but at the same time, doing it in a way which, to be frank, I think is completely unrelated to the real world we’re living in which is the immediate crisis of the cost of living and climate change.

There was a lot more in Truss’s Today interview. I will post a full summary shortly.

Here is the agenda for the day.

9.30am: The Office for National Statistics publishes the latest crime figures for England and Wales.

Morning: Liz Truss and Rishi Sunak hold a private hustings with Conservative councillors from the Local Government Association.

11.30am: Downing Street holds a lobby briefing.

Afternoon: Truss is expected to hold a campaign event outside London.

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