Liz Truss was 'right' to argue for lower taxes, Grant Shapps says
Liz Truss was “right” to argue for lower taxes, Grant Shapps has said, after she penned a passionate defence of her time in office which has divided Westminster.
In an exclusive essay for The Telegraph the former prime minister said she was brought down by a powerful left-wing establishment which opposed her economic plans.
She wrote that she was "not given a realistic chance" of seeing her pledges through, criticising Whitehall’s "strength of economic orthodoxy and its influence on the market".
But she also acknowledged that she was not “blameless” for her own downfall, which came after a disastrous mini-budget which sparked chaos in the markets.
Mr Shapps, the Business Secretary, said that the former prime minister was “right about the need for a long-term lower tax” but that hers “clearly wasn’t” the right approach to it.
“Everybody agrees in the Conservative Party, and largely across the country, we don’t want our taxes to be higher than they need to be to pay for our public services and we want to have an economy that’s growing,” he told the BBC.
“In my heart do I think we should have a lower tax economy? The answer is yes, absolutely. She makes the perfectly valid point someone’s got to be agitating for and making the good arguments for the reasons why a lower tax economy in the longer run can be a very successful economy.”
Mr Shapps said that the tax burden in Britain was still lower than in France and Germany but acknowledged that “it’s very high and we do want to see that reduce”.
He said the twin blows of the Covid pandemic and the energy crisis, both of which required the Government to step in with multi-billion pound support packages for the public, meant “we’ve had to spend vast fortunes and of course taxes have had to rise”.
“She’s right about the need for a long-term lower tax but it rubs up against the reality of two or three years of Covid followed by a war and the enormous costs and pressures on energy and inflation,” he said.
“Whilst I agree with the desire to see a lower tax economy, first of all you have to put the building blocks in place. You’ve got to be responsible - that’s innately Conservative, we look after people’s money.
“First of all you’ve got to halve inflation at least from where it is, you’ve got to grow the economy and then you’ve got to deal with the longer term debt picture before you get on with the other priorities of people like the NHS waiting lists and the small boats. So there’s lots of things you’ve got to be able to do on the route to having lower taxes.”
'Do you think Liz Truss's approach [to the economy] was the right one?' asks #BBCLauraK
'Clearly, it wasn't' replies Business Secretary Grant Shapps https://t.co/BTJWcFFnY6 pic.twitter.com/XSrFx1WNNm
— BBC Politics (@BBCPolitics) February 5, 2023
Jake Berry, the former Tory chairman who was a strong backer of Ms Truss, said he “still agrees” that she was right to prioritise bringing down taxes.
He said that her radical economic plan was the right answer for boosting growth in the Red Wall and urged Rishi Sunak to follow suit as soon as he can.
“I still agree with Liz’s diagnosis of the disease that’s facing the country and I think she accepts the prescription we wrote, for which I have to take part of the blame, wasn’t delivered in the correct way,” he said.
“Her point of we need to lower taxes, we need a growing economy, that’s what people want. People understand that they know better how to spend their money than the Government does.
“The reason people voted against the Labour Party in the last General Election is because there’s a feeling that we have a government, whoever is in charge, who doesn’t really understand the problems we face and I think Liz understood that.”
He praised Mr Sunak for making a “good start” by stabilising the economy and politics, but urged him to inject some of the optimism seen under Boris Johnson into his message about the future of the country.
“It is popular with the public to be optimistic to talk about the future of their family to make sure they keep more of their money,” he said.
“If we can get back to those optimistic ways it would unite the Conservative Party behind that low tax, high growth agenda.”
'Labour will build a fairer, greener, more dynamic economy'
Ms Truss’ intervention is likely to ignite a fresh debate within the Tories between those who want lower taxes now and MPs who back the Prime Minister’s more cautious approach.
John Redwood, one of her supporters, blamed the Bank of England for driving up interest rates on the eve of the mini-budget and said its mistakes “should not dictate tax policy”.
“As the Bank of England now forecasts a low future growth rate it should welcome a pro-growth budget with tax cuts to make working and companies investing more worthwhile,” he said.
But he has been panned by opposition parties who said it showed that the Tories lacked contrition for the damage done to the economy by the Truss premiership.
Rachel Reeves, the shadow chancellor, said: “The Conservatives crashed the economy, sank the pound, put pensions in peril and made working people pay the price through higher mortgages for years to come.
“After 13 years of low growth, squeezed wages and higher taxes under the Tories, only Labour offers the leadership and ideas to fix our economy and to get it growing.
“We will build a fairer, greener, more dynamic economy that delivers good jobs and higher living standards for working people.”