Truss doubles down on plans to cut taxpublished at 09:19 British Summer Time 2 October 2022

09:19 BST 2 October 2022

Ione Wells
Political Correspondent, BBC News

Liz Truss is adamant that she is not concerned about “the optics” and “how things look”.

She’s not fussed about doubling down on her plans to cut the 45% tax rate for the highest earners, while not ruling out cutting spending on public services, and not committing to raise benefits in line with inflation.

She’s also not fussed about the chancellor attending a champagne reception after his mini-budget with hedge fund managers, who may have profited from the falling value of the pound, as reported by the Sunday Times.

Liz Truss has admitted already she’s prepared to be unpopular in pursuing her plans, that she argues will grow the economy.

It feels a stark contrast to her predecessor Boris Johnson, who at times did bow to pressure from his own MPs and the public when it looked like his initial policies were not being well received.

Back to Kuenssberg's panellist Michael Gove - who says the UK should not support Ukraine's bid to join Nato as it would be "too great a risk" for the alliance and says that extending a guarantee to Ukraine that the UK would send ground forces to protect its borders in future conflicts "would be a step too far".

Partial apology but PM blames global factorspublished at 09:16 British Summer Time 2 October 2022

09:16 BST 2 October 2022

Faisal Islam
BBC Economics Editor

The PM has partially apologised for not “laying the ground better” for the mini-budget last week.

It is the first acknowledgement that the announcements made by her chancellor had some impact on government borrowing costs.

She did, however, say she stuck by the contents of the “clear plan” announced, and said most of the blame was with global factors, rooted in the US decision to raise interest rates and the war in Ukraine.

She said she was committed to scrapping the 45p top rate of tax.

Dame Sharon White says even with the energy package you've got people, businesses and households still facing a cost of living squeeze.

"It's what happens next, the fiscal plan, ensuring how the numbers add up," she tells Kuenssberg.

Guardian political editor Pippa Crerar picks up on the fact that Truss was quick to lay responsibility for the top rate of tax cut at Chancellor Kwasi Kwarteng's door.

The "sheer risk" of using borrowed money to fund tax cuts - "that is not Conservative", Gove says.

At a time when people are struggling, to have as your principle decision to cut tax for the wealthiest - that is a display of the wrong values", he says.

Would he be able to vote for these measures, Gove is asked?

"I don't believe it's right," he answers.

Image source, Reuters

Former cabinet minister Michael Gove gives his reaction to what the PM said.

"It was right for her to acknowledge that last Friday's events need to be revisited," he says.

However, "it is still the case there is an inadequate realisation at the top of government of the scale of change that is required... yes, the energy package was the most important thing in the fiscal event but broadly 45% of the money we're borrowing is not to cut energy costs but to finance tax cuts".

"I am profoundly concerned by that," Gove says.

The PM - who was elected after a Tory leadership contest in which only party members took part - is asked: how many people voted for your plan?

"People in 2019 who voted Conservative voted for a successful country where we are levelling up and driving growth and opportunity... we now face an unforeseen situation."

Kuenssberg asks: Do you fear you have put the country on a path it did not ask for and what happens if it doesn't work?

What people voted for in 2019 is a "different future" and "investment into their towns and cities, economic growth" and "I'm confident [my plan] will deliver that".

"We do face a very turbulent and stormy time but I will deliver on the promises we made."

And with that, Truss' interview ends.

Kuenssberg puts it to the prime minister that help with energy bills is being wiped out by mortgages going through the roof.

"I understand people are worried and people are struggling. It's a very difficult time," the PM answers.

"We are facing a world in which interest rates are rising," she says.

But do you accept that people will struggle, the PM is asked.

"We do what we can to help homeowners" with the stamp duty measure "but ultimately interest rates are set by the Bank of England... they are a key factor in mortgage rates and are somewhat dependent on the global market."

Ione Wells
Political Correspondent, BBC News

Liz Truss strongly hints – without wanting to say the words – that real-terms cuts to public spending and welfare benefits could be coming.

She confirmed pensions would go up in line with inflation.

But she refused to say if she would cut funding for public services or not.

And she refused to commit to whether benefits would rise in line with inflation.

Instead she said she wanted “value for the taxpayer” and that to improve the economy the government would be “helping more people get into work”.

We’ll be finding out more about these plans in November, but there are calls from some MPs to bring that forward - a move the PM has just ruled out.

Truss rules out publishing any reports from the government's independent economic forecasters the Office for Budget Responsibility before the planned date of 23 November.

Truss is asked: would she tell the chancellor not to attend other events with financiers?

"I get up every morning as prime minister thinking 'how can we make our country more successful'," Truss says. "That's what I'm focused on and what the chancellor is focused on."

Next Kuenssberg asks the PM about reports Chancellor Kwasi Kwarteng went to a private drinks reception with hedge fund managers at the home of a Conservative donor on the same day he delivered his mini-budget.

"The chancellor meets business people all the time," says Truss, adding: "I do not manage his diary."

"There has been too much focus on the optics of how things look as opposed to the impact they have on our economy," Truss says when questioned on the way the mini-budget announcements have played out over the last week.

"We have committed to making our system more competitive to lower our taxes and to simplify our taxes," Truss says.

"It's never the case on budgets" that they are created by the whole cabinet, she says, adding that "the principles are shared".

Asked about her commitment to scrap the 45p top rate of tax, Truss admits she did not discuss it with the whole cabinet.

"No, no we didn't. It was a decision the chancellor made," she says.

Ione Wells
Political Correspondent, BBC News

This is the first time Liz Truss has really admitted that communication has been an issue for her and her chancellor in the last week, as we set out here.

She tells Laura Kuenssberg that, regarding her tax-cutting budget: “I accept we should have laid the ground better. I have learned the lesson from that.”

The problem is this comes after the event. The markets, some MPs and the public have already cast judgements on the plans.

The question will be whether she can now come back and explain her message and plans in a way that will reassure them.

Truss says that Chancellor Kwasi Kwarteng's medium-term fiscal plan will come with an OBR forecast "but my approach is to help people get through this very difficult winter".

She is asked again whether she will be cutting funding to public services. "I can't exactly set out what is going to be in this plan but what I can promise is we're going to reduce debt in proportion to the GDP... The key thing is to get the economy growing faster, so the pie is bigger and we can afford more money for public services."

Asked if she would cut public spending, Truss does not answer directly but says: "I believe we need to grow the size of the pie - we've had two decades of relatively low growth."

She says she believes in getting "value for money for the tax payer".

She says helping more people get into work saves the government money and contributes to the economy.

"We're not living a perfect world - we're living in a very difficult world... and I believe it was the right choice to increase borrowing," says Truss.

Truss says the UK borrows less than many major economies. "What would be wrong would've been not to act and for families to have faced appalling bills over the winter" which would've led to the UK not being competitive and businesses struggling.

Ione Wells
Political Correspondent, BBC News

“People want reassurance,” former minister Michael Gove tells Laura Kuenssberg.

This summarises how a lot of Conservative MPs – both those who back Liz Truss and those who do not – feel right now.

One MP who backed Liz Truss told me it’s not the "mini-budget" and tax-cutting plans that have made them angry, but the way these plans have been communicated, leaving the public worried rather than reassured.

The big challenge for the prime minister will be to show she can reassure the markets, public and MPs at this conference – that her economic plans will really pay off for them in the long run.