Economic policy

Liz Truss’ economic policy “more Ted Heath than Margaret Thatcher”, according to IFS

Liz Truss’ economic policy resembles that of Ted Heath rather than that of Margaret Thatcher, says the director of a leading think tank.

Tory frontrunner plans to cut taxes and increase budget deficit in the face of high inflation – amid warnings it could push prices even higher

Paul Johnson, director of the Institute for Fiscal Studies, said the approach resembled the approach taken by Sir Ted in 1973 – noting that Baroness Thatcher had in fact raised taxes in the early 1980s to manage the inflation.

The comparison is likely to irritate the Truss camp – as the foreign secretary is widely seen as having deliberately aped Britain’s first female prime minister in style, if not substance.

It comes after former Chancellor and leadership rival Rishi Sunak’s campaign warned that Ms Truss’ economic approach could cause an “inflationary spiral” unless she reconsiders her approach.

Mr Sunak has since indicated he may leave Ms Truss’s cabinet unless her policy changes, adding: ‘I think her plan is likely to make everything worse.

Over the weekend, Tory heavyweight Michael Gove also called Ms Truss’ plans a ‘holiday away from reality’.

They were joined on Monday evening by Mr Johnson, who said: “The cutting of taxes and the growing deficit in the face of high inflation clearly echoes Ted Heath in 1973.

“You couldn’t be further from Thatcher who took the very unpopular decision to raise taxes in 1981 to manage the deficit and inflation.”

Polls suggest Ms Truss holds and consolidates a decisive lead in the Tory leadership race, with the latest YouGov poll last week suggesting a 32-point gap between her and Mr Sunak.

But the prospect of her becoming prime minister has yet to resonate outside Conservative Party members, with Labor opening a significant and consistent lead in the polls among pollsters.

A leaked insider Labor member reported by the Guardian suggests, however, that the opposition’s own pollsters believe Ms Truss’ appointment could give the government a fresh wave of support and revive its fortunes.

Ms Truss, however, faces a battle to turn the tide in Conservative support, having previously been criticized for failing to address the cost of living crisis.

Although the Foreign Secretary promised unspecified help to families, she also said she would focus on tax cuts and avoid what she described as “handouts”.

The result of the Conservative leadership election will be announced on Monday, September 5.