Truss fails to guarantee Brits' pensions are safe after Bank of England steps in to stop risk of funds collapsing
29 September 2022, 14:28 | Updated: 29 September 2022, 15:20
Liz Truss has refused to guarantee that pensions are safe after the Bank of England dramatically intervened to stop them from collapsing.
Listen to this article
Loading audio...
The embattled Prime Minister made a poor showing in her bid to ease fears about the fallout from Kwasi Kwarteng's mini-budget on Friday, which sent the pound tumbling and threw the mortgage market into turmoil.
Wednesday saw the Bank step in to buy up £65bn of Government bonds in a bid to ease markets and it later emerged the intervention was driven by fears some types of pension funds were at risk of collapse.
As she fully backed the mini-budget, she was asked during her media rounds on Thursday whether she could guarantee that Brits' pensions are safe.
"Well, the Bank of England does a very, very good job on delivering financial stability," she said.
After being told by BBC Bristol that was not an answer and getting pressed on the pension issue again, she remarked: "Well, the Bank of England do that and they do a very good job of it."
The financial fallout followed a mini-budget in which Chancellor Kwasi Kwarteng slashed tax, including his abolition of the top rate of income tax, and the cap on bankers' bonuses.
But it was criticised for not setting out how the tax breaks – and subsequent gap in revenue – would be funded, and markets went into turmoil.
The pound slid against the dollar and then the Bank stepped in to buy Government bonds after fears were raised about pension funds.
A collapse in the price of those bonds forced some funds to sell their bonds and assets, which drove down the price, and had that trend carried on the funds could have begun to struggle to pay their debts.
But Ms Truss has defended her policies, saying she wants to "grow the pie" instead of argue about how the existing economy should be divided up.
As Liz Truss defends the mini-budget, James O'Brien urges her to do a 'U-turn'
"I am very clear the Government has done the right thing," she said on Thursday.
"This is the right plan that we've set out."
However, it has emerged that Government departments will need to make cuts.
Ms Truss said: "It is absolutely right that we always need to get value for taxpayers' money. Every pound we take from somebody is a pound we could be spending on their future, on what they need to support themselves."
Mr Kwarteng also dug in his heels on Thursday, insisting during a visit to businesses in Doncaster: "We are sticking to the growth plan and we are going to help people with energy bills. That's my two top priorities."
