Truss attacks the Bank of England’s inability to fight inflation

Foreign Secretary Liz Truss has signaled she will tighten ministerial control of the Bank of England if she wins the race to become Britain’s next prime minister after accusing her of failing to rein in the spiral of inflation.

Truss, the Foreign Secretary, told the Sunday Telegraph newspaper that she would “review” the central bank’s mandate to “ensure it is tough enough against inflation”.

The BoE has been operationally independent since 1997. The government has instructed it to aim for an inflation target of 2%. Inflation is currently 9%, well above this target.

Truss hinted that she could interfere with the bank’s independence, saying she would – as prime minister – want to give it a “clear direction” on monetary policy.

Many Tory MPs have blamed the BoE for losing its grip on prices, after insisting that a rise in inflation would only be temporary and peak at 5%, despite the global fuel crisis.

Truss, who struggled in the first televised leadership debate on Friday, is battling to qualify for the final two candidates on a shortlist which – by the end of next week – will be submitted to Conservative members.

In a bid to appeal to the right, the Foreign Secretary pledged £30billion in largely unfunded tax cuts and promised to cut red tape.

The Truss campaign suggested there was a “margin” of around £30billion in the public forecast, with taxes likely to be higher than expected. The same goes for Tom Tugendhat, considered the outsider in the final list of five candidates.

But Paul Johnson, director of the Institute for Fiscal Studies, said ‘anyone who is serious about achieving these (UK fiscal) goals’ would not believe there is £30billion of spare money to spend.

Truss also said she wanted to lift the ban on fracking for oil and gas in the UK, leaving local areas to decide whether they wanted the contentious practice to continue.

Rishi Sunak, meanwhile, has sought to underline his credentials as a Brexiter by promising to spend his first 100 days as prime minister working out which of the 2,400 rules inherited from the EU should be scrapped. The government is already planning a “bonfire” of old European laws, but Sunak said he would speed up the process.

The former Chancellor’s team were appalled at the way Eurosceptic Tory MPs flocked to Truss – even though she voted for Remain six years ago – and Trade Secretary Penny Mordaunt.

Sunak stressed that he had campaigned for leave, unlike others, despite being warned that it would be the end of his political career. “As Prime Minister, I would go further and faster in using the freedoms Brexit has given us to reduce the mass of European regulations and bureaucracy that are holding back our growth,” he said.

A poll by JL Partners found Sunak to be the overwhelming choice of voters in most of the Conservative Party’s key target constituencies. Of the 365 seats won by the Conservatives in 2019, Sunak was the 76% favorite, with Mordaunt at 5% and Truss at zero. Tugendhat came in at 19% with Kemi Badenoch, the fifth candidate, at zero.

Tugendhat, the most centrist candidate, said he would not give up until Monday’s third ballot, saying: “I have never turned down a challenge because the odds were stacked against me.”

Alok Sharma, the minister who led the international climate talks at last year’s COP26 in Glasgow, said he would not rule out quitting if the new prime minister backs away from the goal of cutting emissions carbon dioxide to net zero by 2050. Sharma has accused some candidates of being ‘lukewarm’ about the climate agenda, telling the Observer newspaper: ‘Anyone who aspires to lead our country must demonstrate that they take this matter extremely seriously.”

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