We face extraordinary challenges in the aftermath of Covid and Vladimir Putin’s brutal assault on Ukraine. Families and businesses are feeling the impact across the United Kingdom and the world. In response, we have to be bold. That is what Liz Truss will be if elected as leader of the Conservative party and prime minister of the UK.
The government she would lead will have two urgent responsibilities. First, to help people with the severe price shocks that the twin issues of the pandemic and Putin’s war have brought about. We know households are worried, and decisive action is needed to get families and businesses through this winter and the next. They need certainty.
Second, the new administration will look longer term and take responsibility for the enduring health and wealth of our economy and country. The work must be done now to make us more resilient to crises like this in the future, and to boost growth rates which will improve living standards for everyone.
As prime minister, Liz will take immediate action if elected that will help people with the challenges we face in the coming months, and lay the groundwork for the change we need in the long term. This means cutting taxes, putting money back into people’s pockets and unshackling our businesses from burdensome taxes and unsuitable regulations.
Given the severity of the crisis we face, there will need to be some fiscal loosening to help people through the winter. That is absolutely the right thing to do in these exceptionally difficult times.
The UK’s ratio of debt to gross domestic product is lower than any other G7 country except Germany, so we do not need excessive fiscal tightening. The OECD has said that the current government policy is contractionary, which will only send us into a negative spiral when the aim should be to do the opposite. But I want to provide reassurance that this will be done in a fiscally responsible way. Liz is committed to a lean state and, as the immediate shock subsides, we will work to reduce the debt-to-GDP ratio over time.
We also remain fully committed to the independence of the Bank of England and the important job they have in the months ahead to bring down inflation. We believe co-ordination across monetary policy and fiscal policy is crucial.
Economic growth is the key to sound public finances and a strong economy. Liz is clear that we must be unashamedly pro-growth. That is why we will create the conditions for business investment and innovation to flourish, which in turn will provide jobs and wealth to all of our citizens, and reduce our debt-to-GDP ratio in the long term.
If we want sustainable public services and a better, more prosperous future for our children, economic growth is key. It creates the tax revenues that a government relies on to support its people. Without doing anything about our growth rate, our resources will only be stretched thinner and thinner.
We do not have to appease the voices of decline. The same old economic managerialism has left us with a stagnating economy and anaemic growth, with labour productivity growing at just 0.4 per cent a year since the financial crisis. Taxes are now at their highest in 70 years. This toxic combination needs to be urgently addressed.
We need to be decisive and do things differently. That is what Liz plans. Instead of managing one short-term shock after another, ducking or delaying the difficult reforms needed for lasting economic growth, as prime minister she will take bold action to change things for good.
That means focusing on how we unlock investment and growth, rather than how we tax and spend. It is about growing the size of the UK economy, not burying our heads in a redistributive fight over what is left.
Economic growth is the key to delivering for the British people and unlocking opportunity across the country. And it will be Liz’s top priority. She will make it her aim to get us to 2.5 per cent trend growth, which will deliver higher wages, more vibrant high streets and exciting opportunities here in the UK for our children and grandchildren. And ultimately, higher tax revenues.
It is the only genuinely sustainable way to get the kind of tax base necessary to fund our public services, including the NHS in the long run.
Forecasts are not destiny. The coming months will be difficult, there is no question. But a Truss government has the right plan to guide our country through the storm, and boost our prospects in the long term, in a responsible way. She will reject the failed consensus and deliver opportunity, prosperity and hope for the future to put the UK’s best days ahead of us.
The writer (Kwasi Kwarteng) is UK business secretary
