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Liz Truss vows she WON'T cut spending despite '£60bn' black hole

Liz Truss vows she WON’T cut public spending despite ‘£60bn black hole’ in finances, defends mini-Budget after market chaos, and flip-flops on banning no-fault evictions during bruising PMQs

Liz Truss vowed she will ‘absolutely’ not cut public spending as she batted away criticism of the mini-Budget during a bruising PMQs.

In tetchy clashes with Keir Starmer, the premier shrugged off warnings of a £60billion black hole in the public finances amid soaring inflation, tax cuts and the markets meltdown. 

She also insisted that the package unveiled by Kwasi Kwarteng last month – widely blamed for spooking traders – would mean ‘higher growth and lower inflation’.

And Ms Truss stated that plans to ban no-fault evictions will go ahead, despite suggestions only yesterday that the manifesto pledge would be ditched.

The Commons exchanges came on another fast-moving day when:

  • Pension funds are facing fresh pressure as government bonds suffer another hammering after the Bank of England insisted its bailout will end on Friday; 
  • The economy shrank by 0.3 per cent in August – far worse than expected – raising fears that a full-blown recession is inevitable; 
  • Ministers have been accused of U-turning to bring in a windfall tax ‘by the back door’ after announcing a cap on revenues of electricity generators benefiting from soaring energy prices; 
  • Ms Truss is facing the threat of fresh revolts from Tory MPs over fracking and plans to keep the foreign aid budget at a reduced level for another year. 

In tetchy clashes with Keir Starmer, Liz Truss (pictured) shrugged off warnings of a £60billion black hole in the public finances amid soaring inflation, tax cuts and the markets meltdown

Seeking to turn the knife on the government’s woes, Sir Keir challenged Ms Truss to keep her promise not to cut public spending

Seeking to turn the knife on the government’s woes, Sir Keir said: ‘During her leadership contest the Prime Minister said, I quote her exactly, ‘I’m very clear, I’m not planning public spending reductions’. Is she going to stick to that?’

Ms Truss replied: ‘Absolutely. Look, Mr Speaker, we’re spending almost £1 trillion on public spending. We were spending £700 billion back in 2010. 

‘What we will make sure is that over the medium-term the debt is falling. We will do that, not by cutting public spending, but by making sure we spend public money well.

Sir Keir condemned Jacob Rees-Mogg for arguing in interviews this morning that the Bank of England’s failure to cut interest rates fast enough, rather than the mini-Budget, might have sparked the market chaos. 

The PM replied: ‘What we have done is we have taken decisive action … We have taken decisive action to make sure that people are not facing energy bills of £6,000 for two years. And I think we remember the Opposition is only talking about six months.

‘We’ve also taken decisive action to make sure that we are not facing the highest taxes for 70 years in the face of a global economic slowdown.

‘What we are making sure is that we protect our economy at this very difficult time internationally. As a result of our action – and this has been independently corroborated – we will see higher growth and lower inflation.’

Ms Truss said: ‘The fact is that when I came into office, people were facing energy bills of up £6,000. The party opposite are shouting, but he is opposing the very package that we brought in, the energy price guarantee. That was the major part of the mini-budget that we announced.

‘He has refused to confirm whether or not he backs our energy price guarantee for two years, which protects families, not just this winter, but next winter.

‘What we’re seeing is we are seeing interest rates rising globally. We are doing … they are rising globally, in the face of Putin’s appalling war in Ukraine. What we are doing is helping people with lower stamp duty, helping people with their energy costs, reducing inflation with our energy package and keeping taxes low.’

Labour MP Graham Stringer challenged Ms Truss over no-fault evictions.

‘Spooking the markets and increasing the cost of borrowing and increasing the cost of mortgages was almost certainly an act of gross incompetence rather than malovelence,’ he said.

‘But going back on the commitment to end no-fault evictions is an act of extreme callousness.

‘Can the Prime Minister reassure the 11million private renters in this country that she will carry out her commitment to get rid of no-fault evictions?’

Ms Truss replied: ‘I can.’

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