Officials drop reference to ‘disastrous’ Liz Truss mini-budget

Civil servants have changed documents describing Liz Truss’s mini-budget as “disastrous” after she complained they showed political bias.

Briefing notes on the King’s Speech, published earlier on the government website, said the former PM’s approach had damaged the UK’s financial credibility.

They added that Labour’s plans for mandatory pre-Budget forecasts would ensure “mistakes” by her government “cannot be repeated”.

It comes after Ms Truss, who lost her seat in the election earlier this month, called it a “flagrant breach” of impartiality rules and a “personal and political attack”.

Writing to Simon Case, the UK’s top civil servant, she asked for the material to be removed, with “suitable admonishment for those responsible”.

The Cabinet Office said the documents had now been “corrected and updated”.

A spokesperson added that Mr Case had “responded to Liz Truss and directed for these references to be removed”.

The King’s Speech, delivered by the monarch in Parliament earlier, outlined Labour’s law-making plans for the coming year following the party’s return to power after its landslide election victory earlier this month.

This includes a new “Budget Responsibility Bill” that would make it a legal requirement for the Office for Budget Responsibility (OBR) to produce forecasts of the impact of significant tax and spending decisions.

Ms Truss did not publish such a projection from the watchdog ahead of the mini-budget in September 2022, which announced billions in tax cuts alongside plans for subsidies to reduce domestic and business energy bills.

It meant there was no official assessment of the impact on future government borrowing, a factor widely believed to have influenced the adverse market reaction to the measures, which brought her premiership to an end after just 49 days.

Background briefing notes accompanying the King’s Speech said Labour’s bill would stop Budget measures “being announced without sufficient scrutiny”.

The original document said the move would “prevent those announcements that could resemble the disastrous Liz Truss ‘mini budget’,” adding it had “damaged Britain’s credibility with international lenders”.

It added that Labour’s plans, which it has branded a “fiscal lock”, would “ensure that the mistakes of [the] Liz Truss ‘mini budget’ cannot be repeated”.

In her letter to Mr Case, the former PM argued the description was a “flagrant breach of the Civil Service Code, since such personal and political attacks have no place in a document prepared by civil servants”.

She added it was “an error made all the more egregious” because the description was included in a section headed “key facts”.

She added that the summary was “untrue” and made “no reference” to the “LDI crisis” and “regulatory failures” by the Bank of England.

“LDI crisis” is an allusion to so-called liability-driven investment, believed to have made some pension funds more vulnerable to changes in government borrowing rates.

Ms Truss recently accused the Bank of England of failing to inform the Treasury of the risk it posed to the financial system, adding she had “never even heard” of LDI until after the mini-budget.

The Civil Service Code says officials must maintain “political impartiality” and cannot use official resources “for party political purposes”.

More specific rules on government communication say official documents should “seek to explain the decisions of the government of the day in a balanced and objective way”, without attacking critics.

It adds that civil servants can describe and defend government policies, but should not do so “in party political terms”.

Ms Truss’s letter is the latest salvo in a long-running battle with officialdom.

When running to be Conservative leader in 2022, she regularly blamed “Treasury orthodoxy” for slow economic growth over recent years.

Since leaving Downing Street, she has also accused the OBR of belonging to an “economic establishment” that is too pessimistic about the potential benefits of tax cuts on the economy.