Liz Truss “ignored” warnings from the Treasury orthodoxy meaning the country “paid the consequences” for her disastrous mini-budget, Sajid Javid has said.
The former chancellor said the focus in HMT on “balancing the books in the medium term” was a good thing, and without that the UK “would have constant financial crisis”.
Speaking at an Institute for Government (IfG) event today, Javid, who is stepping down at the next election after over a decade as an MP, said he believes the so-called ‘Treasury orthodoxy’ criticised by ex-PM Truss and former Chancellor Kwasi Kwarteng does exist.
“When people say ‘Treasury orthodoxy it’s often a catch all thing that means they haven’t got what they want – but there can be a good reason for that,” he said.
“If by ‘Treasury orthodoxy, people mean balancing the books in the medium term then I think it’s a good thing.
“Someone has got to look out for that. If it didn’t exist we’d have a constant financial crisis.”
He continued: “I’m certain the Treasury would have told Liz Truss when she was in office that if you go out with a budget that’s going to blow the deficit, without any narrative of laying the groundwork… the markets are not going to like it and you’ll get a massive negative reaction.
“She ignored it and the country paid the consequences.”
Javid also told moderator Dr Hannah White that HMT was the only arm of government responsible for raising, as opposed to spending, money.
“Every other department – including No10 – is a spending department,” he stressed. “The Chancellor is the only person sitting there thinking ‘where is this money coming from?’.”
But he admitted there were areas the Treasury needed to be more “flexible”, especially on investment in areas that posed upfront costs and long term savings, such as new NHS tech.