Liz Truss has hit out at Jeremy Hunt in response to his criticism of her and Kwasi Kwarteng’s mini-budget.
Speaking in front of the Treasury select committee this week, the Chancellor criticised the former prime minister’s economic policy.
He was keen to point out that “mistakes” had been made by his predecessors.
He said: “Yes, there were some mistakes in the mini-Budget, which we had to reverse, and in particular I think it is clear you can’t fund tax cuts through increased borrowing.”
Hunt said that “mistakes” had been made by his predecessors.
Hunt was keen to point out that he had “changed course” on this policy.
During his Spring Budget, Hunt announced that he would be pressing ahead with the planned six per cent rise in corporation tax from 19 per cent to 25 per cent.
The move came just months after Truss’s cabinet had announced it would be scrapping the increase during a Budget that resulted in months of turmoil on the economic markets.
Responding, a spokesman for Truss said that the Chancellor was making a “bad mistake”.
Kwasi Kwarteng's mini-budget threw the UK economy into turmoil
They said: “Liz was always clear that you can’t deliver economic growth and thus reduce borrowing by hiking taxes.
“Raising corporation tax from 19 per cent to 25 per cent looks like a pretty bad mistake right now, when you consider how a firm like AstraZeneca is locating its new plant in Ireland, where corporation tax is half the rate now being levied by the British Government.
“The Treasury looks like it will lose revenue as a result of that decision.”
Priti Patel has also criticised Hunt’s approach, telling the Commons yesterday that the Government was “continuously robbing Peter to pay Paul”.
Priti Patel said the government was "robbing Peter to pay Paul".
She insisted ministers should “think about future-proofing where we go as a country on the economy”.
On corporation tax, she said: “I just don’t believe in increasing taxes and then finding relief to then compensate for that. There are too many risks that come with relief. They can create complexities in the tax system.”
The former communities secretary, Simon Clarke, echoed the concerns of Patel, telling the Commons: “I’ve made no secret of my deep concern about the decisions surrounding the future of our corporation tax increases.
“I do welcome the offsetting benefits of the full expensing which was announced by the Chancellor.
“If that is to work, it is vital that is a permanent decision rather than temporary relief otherwise it will have a distorting effect on business investment.”