By Stefan Boscia
Liz Truss must end the “schizophrenic” economic policy of slashing taxes and increasing government borrowing, according to former chancellor George Osborne.
Osborne said he was pleased to see Truss acting like a “conviction politician”, but said the government must make spending cuts if it wants to also lower taxes.
Chancellor Kwasi Kwarteng unveiled the largest package of tax cuts in 50 years on Friday, just weeks after Truss entered Number 10.
This includes cuts to Income Tax and National Insurance, while also cancelling a planned Corporation Tax hike.
The tax cuts will be funded by government borrowing, with the Institute for Fiscal Studies (IFS) estimating they will cost around £45bn – roughly equal to the UK’s annual defence budget.
Osborne told Channel 4 that “you can’t just borrow your way to a low-tax economy”.
“Fundamentally, the schizophrenia has to be resolved – you can’t have small-state taxes and big-state spending,” he said.
[The Cabinet has] inherited the big-state spending from the Boris Johnson era and now it’s going for low-spending and small-state taxes. We haven’t yet heard from the Truss government about its attitude towards spending and intervention in the economy.”
He also said it was “pretty refreshing” that Truss and Kwarteng are “doing what they believe in”.
“You’ve got conviction politicians,” he said.
“Unlike arguably the last two couple of Prime Ministers, you’ve got a Prime Minister who has a set of views about what they want to see as Prime Minister rather than just wanting to be Prime Minister.”
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