The markets did not crash yesterday, so there was not a Black Friday in the way some had envisaged. But this certainly was Black Friday for the Tories, a new low in the party’s history, a debacle to rival Black Wednesday but with none of the economic dividends. A new Prime Minister sacks a Chancellor for doing exactly what she told him to, then declares she will implement every single one of the corporation tax rises that she had promised to stop. It now emerges that Liz Truss stood for leader on a false prospectus, promising an agenda she has proved unable to deliver.
She ran for office promising £30bn of unfunded tax cuts – in a government that spends £900bn, this was doable. But at a push. She’d have to prove that the £30bn would be stimulatory and (most of all) transitionary. Like an entrepreneur asking for a massive loan, the investors would need to be persuaded that it was well thought-through and would work.
She’d have had her work cut out to pull off her £30bn package. But in her mini-budget she upped it to an undoable £110bn – via a staggering, unnecessarily expensive £10bn-a-month energy plan. A big-state spending splurge, that was being carried out with language of supply-side tax reform. She then tapped the markets for an extra £60 billion and dared them to defy her – at precisely the time when those markets had started a worldwide, long-delayed rebellion against profligate, borrow-and-spend states. When a storm was raging through world bond markets, Truss made Britain the lightning conductor – running atop the hill and calling it bravery. She went from daring to crazy, then seemed to revel in the craziness, as if the implausibility of her plan was in itself proof of her courage.
The Sunakite campaign criticism was even an £30bn cut in National Insurance was financial suicide. This was overdone. Had she constrained herself to £30bn she may have succeeded. But the energy crisis was her reach for a panicked, ruinously expensive solution which when added to her tax cuts made the whole package unworkable. Not that we ever saw the whole package.
I’m no fan of Trussonomics, and think even the word gives her agenda greater coherence than it ever had. A first-time skier went off-piste, put Bond themes in her headphones, picked up speed then hit a tree quickly. But it’s not just her: this pile-up involves much of the Conservative party. That doesn’t mean it was futile to try to get down from the mountain of big-state conservatism: just that you need a careful plan and a good bit of skill. Truss shouted out ‘who dares wins,’ disappeared over the edge and that was the end of that. Sunak’s refrain – who dares loses – was not much more inspiring.
My own thoughts now haven’t moved on much from The Spectator’s verdict of Truss during the leadership campaign:-
‘The debacle [over the regional pay u-turn] underlines the main criticism of Truss’s campaign: that it all unravels fairly quickly once you begin to ask hard questions. This is why many low-tax Tories worry: if she fails, it risks making a mockery of the idea that there is an alternative to big-state conservatism. [She offers] more triple-lock pension spending, more economic distortion. And more cakeism: promises of tax cuts, without any serious discussion about the painful choices ahead if Britain is to make government more affordable. To attempt reform without a proper plan is to guarantee failure.’
The failure happened in weeks, rather than months or years. She won’t last long in office now: she’s a busted flush, a simulacrum. Jeremy Hunt may end up spending even less time as Chancellor than Kwasi Kwarteng. The Tories will now try to work out what happens next: a unity candidate, or civil war? We’ll see. But don’t things can’t get worse. Adam Smith once observed that ‘there is a lot of ruin left in a nation.’ I suspect the same is true for the Tories. Lucky old Starmer.
