Liz Truss doubles down amid prosepect of public sector and benefit cuts

The Chancellor’s mini-budget last Friday caused the London Stock Exchange and value of the pound to take serious hits to their value in recent days, resulting in the Bank of England stepping in to prevent a run on pension funds.

This led to Sir Mark Carney, the Bank’s former governor, accuse the Government of working “cross-purposes” with his successor by having a “partial budget” with no detailed plan to get borrowing back on track.

Yesterday Ms Truss said that the effects seen in the UK were part of a “global phenomenon” of high interest rates, as she struggled to give clear answers in interviews to local radio stations.

The Prime Minister was unable to reassure listeners of BBC Radio Bristol whether their pension would be safe during the emerging crisis.

“The Bank of England do that and they do a very good job of it,” she said.

It came as the German finance minister launched an attack on her fiscal plan as the country unveiled €200bn of support to freeze gas prices this winter.

“Our relief package is effective… we don’t want to follow the UK’s path,” said Christian Lindner.

Meanwhile Kwasi Kwarteng told journalists during a visit to Darlington: “We are sticking to the growth plan and we are going to help people with energy bills. That’s my two top priorities.”

Rachel Reeves, the shadow chancellor said: “The Prime Minister’s interviews this morning have made this disastrous situation even worse. Her failure to answer questions about what will happen with people’s pensions and mortgages will leave families across the country facing huge worry.

“It is disgraceful that the family finances of people across the country are being put on the line simply so the Government can give huge unfunded tax cuts to the richest companies and those earning hundreds of thousands of pounds a year.”

The Prime Minister said yesterday that as a result of the large increase in spending and borrowing, Government departments will be asked to make efficiency savings, after it was confirmed that they will have to work within their existing budgets.

“There are plenty of areas the Government can become more efficient,” said Ms Truss.

Chris Philp, the Chief Secretary to the Treasury, also indicated on Wednesday night that benefits and pensions may not be kept in line with inflation, which would effectively ditch the policy promised by the then-chancellor Rishi Sunak.

This would effectively see a cut to benefit payments, while inflation could continue to rise over the winter and into next year.

Mr Kwarteng, during his visit to Darlington, however, said that the Government was “committed” to maintaining the pensions triple lock, despite inflation rates.

"Suggestions that benefits won't rise with soaring inflation and beleaguered public services are to be squeezed is a terrifying prospect,” said Christina McAnea, UNISON’s general secretary.

“The government ​seems to have no idea of the damage its foolhardy approach is wreaking.

"Essential services need support and investment so they can hold onto experienced staff and deliver for the public. Not cuts that will harm communities irreparably.”