Liz Truss’s controversial comeback defence of her radical economic agenda that caused financial chaos and mortgage misery has deepened splits between senior Conservatives over tax policy.

In her first detailed comments since her disastrous 49-day stint as prime minister, Ms Truss blamed a left-leaning “economic establishment” for the unravelling of her infamous tax-cutting mini-Budget as she insisted her dash for growth was the right approach.

The intervention rallied senior Tories who are calling on Prime Minister Rishi Sunak and Chancellor Jeremy Hunt to drop their opposition to tax cuts in next month’s Budget as they prioritise taming inflation.

But her comments also triggered a backlash, with former Tory chancellor George Osborne deriding her claims as “nonsense”, while Conservative MP for Gloucester Richard Graham branded them a “mistake”. One senior Tory MP said Ms Truss’s 4,000-word essay in The Sunday Telegraph was “arrogant” and showed “cheek”.

“I don’t think anyone is interested,” they told i. “I think the party is saying, ‘don’t come back, we are all in deep therapy and doing rather well to forget you’.”

They also dismissed calls for tax cuts next month, saying: “Really, are we going to try it again? What’s the definition of madness? We didn’t f**k it up quite enough in September, so let’s mega-f**k up February? It’s for the birds.”

However, former party leader Sir Iain Duncan Smith said Ms Truss has in part been a victim of circumstance as he warned that continuing with “austerity” and postponing giveaways would leave the Tories in a “heap of trouble” going into the next election.

Ms Truss’s allies, including ex-Cabinet ministers Sir John Redwood, Sir Jake Berry, Kit Malthouse and Simon Clarke, also sprung to her defence, with the latter claiming the growth impact of tax cuts is underestimated by bodies such as the Office for Budget Responsibility (OBR) fiscal watchdog, which the former PM identified as part of a high-tax, high-spend “orthodoxy”.

It comes amid growing unease among the Tory right at the Government’s plans to sign up to an Organisation for Economic Co-operation and Development-agreed international minimum corporation tax regime via legislation that enacts the Budget and is difficult for the party’s MPs to oppose or amend.

Sir Iain told i: “I think the principles of what [Ms Truss] was talking about, Conservatives believe were right.

“But circumstances and choices that we are making led to that being discredited.”

He added: “When you scratch the surface of the Conservative Party, there is an unease about trying to go from here to the next election with a significant austerity package that means we won’t come out of this recession until, if we’re lucky, 2024.”

A Government source reiterated that tax cuts were not possible due to the state of the public finances, which worsened during Ms Truss’s time in office.

Truss triggers wave of criticism from leading economists

By Ruth Comerford

Liz Truss’s claim that she was never warned about the dangers of her mini-Budget has sparked a wave of criticism from leading economists.

The former prime minister, who lasted only 49 days in office, claimed that the Treasury and her chancellor Kwasi Kwarteng were not warned the mini-Budget threatened the UK’s financial stability.

Mr Kwarteng’s £45bn package of unfunded tax cuts caused the pound to plummet and the markets to lose confidence. Mortgages rates surged and temporarily reached their highest levels since 2010.

Economic historian Charles Read said Ms Truss’s claim that her government was not warned of the risks of the mini-Budget is “highly misleading”.

He claimed he had delivered a lecture to Treasury civil servants and sent an “entire paper on the subject” to Mr Kwarteng personally, warning that “any budget involving a fiscal stimulus that pushed up market interest rates risked financial instability and a financial crisis”.

“I pointed out that the risks in the financial system emerge when interest rates rise too fast and that Britain [’s inflation] was at this point… rising very fast. Any fiscal action that made interest rates rise any faster would spell financial disaster,” he said in a series of Twitter posts.

“I had pension funds and LDI in mind when I pointed out in the letter that the risks posed to the financial system lay outside the formal banking system and that macroprudential regulation would not prevent the next crisis.”

He added that he “explicitly said” great care should be taken so that the measures used to bring inflation under control “do not cause unnecessary financial instability”, warning the government would face “political consequences” if it did not heed his advice.

“Needless to say, the Truss government did not heed this warning, did not take care to avoid financial instability, and faced the political consequences, resulting in the shortest premiership in British history.”

Professor Danny Blanchflower, author and economist, told Sky News that ‘Ttrussonomics’, the term used for Ms Truss’s growth plan, “was an economic delusion”.

And reacting to Ms Truss’s claims that her plans to kickstart economic growth were sabotaged by the “left-wing economic establishment,” he said: “No attempt to resurrect her disastrous premiership will work – fighting the establishment makes no sense as she was a member of cabinet from 2014 [and] voted for it. The lettuce outlasted her.”

He agreed Ms Truss claims about not being warned of the risks of the mini-Budget “are untrue” .

“I warned the markets will react badly to a clueless amateur,” he tweeted, “and dogma hits reality”.

“Additional borrowing for public spending or tax cuts right now will only fuel inflation further, prolonging the pain for everyone,” they said.

Meanwhile, Mr Osborne said he had “sympathy” with Ms Truss’s push for growth and her claim that regulators should have anticipated problems in the pensions market “better than they did”.

“But the rest of it, I’m afraid, is nonsense,” he told Channel 4’s Andrew Neil Show.

“She claims to be a free marketeer – she was brought down by the free market, the free market in government bonds.”

Ms Osborne also criticised “the people who claim to be low-tax Conservatives” because “they are not prepared to do the hard yards of cutting government spending if you want lower taxes”.

He also criticised Ms Truss for firing Treasury permanent secretary Sir Tom Scholar, trying to discredit the Bank of England and refusing to consult the OBR ahead of the mini-Budget.

“So to then turn around and say ‘no one told me’ – well, she went out of her way not to listen.”

For Labour, Shadow Business Secretary Jonathan Reynolds ridiculed the idea that the former PM had been brought down by a “left-wing economic establishment”, saying she had to go because her policies were “incoherent and unsustainable”.