Oxford For Europe
16 October 2022
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I have three priorities for our economy: growth, growth and growth.-Liz Truss
How very long ago that catastrophic conference speech now seems. The only kind of growth that Trussonomics (RIP) ever had a chance of delivering was growth in the national debt, in the cost of mortgages, in evictions, in redundancies and in food banks. Perhaps even she and her ex-Chancellor have now woken up to this fact, despite their continuing denials.
In making her now notorious statement, she was of course flattering Tony Blair by imitation. It was he, after all, who said: “Ask me my three main priorities for government and I tell you: education, education and education“. So on top of being almost uniquely uncharismatic, our prime minister is also unoriginal. Who would have thought Blair, of all people, was her poster boy?
She should’ve been told before giving her speech that, in referring to the ‘anti-growth coalition’, she was giving hostages to fortune. Firstly, she has seriously got up the noses of all those who talk sense about economics by stigmatising them in this way. This includes the civil service, the Bank of England, the IMF, Joe Biden and, as no doubt we will learn, the Office of Budget Responsibility, not to mention anybody who cares about the environment. In addition she has damned herself out of her own mouth, because she is now belatedly advocating policies much more akin to theirs, and indistinguishable from the policies she condemned Sunak for promoting. By her own definition she has joined the anti-growth coalition.
Rabbit in the headlights
Seeing Truss’s unconvincing 8-minute press conference on Friday, I could only think of a rabbit in the headlights. She took only four questions. Despite the fact that she handpicked the questioners, they all asked the same thing, even the first two journalists, from the normally loyal Telegraph and Sun: how can she stay in office after sacking her chancellor for implementing her own policies? Or, to put it as many people are now doing, “after what has happened, what is the point of Liz Truss?“. Answer came there none
The thrill of the Hunt
According to Robert Peston, when Jeremy Hunt took a phone call from “Liz Truss“ offering him a job he assumed it was a prank. The news may have come as a relief to many, but I am sure it was a surprise to all. Is this down to Truss’s shrewdness (highly uncharacteristic for her), courage or desperation?
Please don’t get me wrong. I have no illusions about Jeremy Hunt. He did not shine as health secretary. He showed an almost Coffey-like ability to ignore evidence in his handling of the 2016 junior doctors’ dispute, and he deserves a medal from the Australian health service for the contribution he made to medical emigration to that country. I can say this with Feeling as a doctor who is active in the BMA, and I’ve had the opportunity to tell him so in person. Nonetheless, he showed some competence in his role as Foreign Secretary, which of course may be partly because he will be judged against his predecessor Boris Johnson. He also did a good job as Chair of the Health Select Committee, if you choose to ignore the fact that much of his contribution in that role was to highlight the deficiencies in the NHS which he had left for his successor as Secretary of State. Nonetheless, all in all he can be seen as almost statesmanlike compared with most other Tory MPs and certainly all members of the lickspittle cabinet Truss has chosen to appoint.
The hope is now that Hunt will be seen as a stabilising influence and that the markets will be impressed. Bear in mind that Truss, like all Tories, loves talking about the markets and has a blind faith that they will know best, but at the same time made fiscal decisions which were based on the assumption that the markets did not exist, so she has now had to wake up with a shock and bow to their judgement. Unfortunately for her, early signs are not good and there was if anything a slightly negative response to Friday’s news, perhaps because a U-turn had already been priced in.
So undoubtedly Hunt faces a major challenge. In his favour, aside from his reputation, is the fact that he relates well to people and, even more importantly, that he is in effect unsackable. Four chancellors in four months is more than enough, and Truss knows that if he goes, she goes. He is now by far the most powerful man in the country, and arguably the most powerful individual. He is pragmatic rather than ideology driven, and will work well with the BoE, the OBF and the IMF. There will now be potential for the UK to do what sensible economists have said it should do from the start, the pursuit of sound money or, as the IMF puts it, ‘fiscal policy should not undermine monetary policy’.
“Dear Oh Dear”
Perhaps the new King, in his greeting to Liz Truss at their recent audience, hit the nail on the head. Her position is indescribably awful. She was never popular among her MPs: in the final tally she got the votes of well under one third, and even then many of the votes she did get were thanks to the ill-advised decision by Sunak to lend her some of his votes in order to keep Penny Mordant out of the second spot. She has made things much worse.
Enemies to the left of me, enemies to the right
Since becoming prime minister she has managed to create many many new enemies. The following is only a partial list, I’m sure you can think of many more. Perhaps you need only look in the mirror.
Firstly all the members of the so-called ‘anti-growth coalition’, who will struggle to forgive what she said about them before she joined their number.
Secondly, the extreme right-wing of the Conservative party, who are after all the ones who put her in power, placing ideology before competence. They must feel well and truly betrayed, both by the U-turn and by the appointment of a man as toxic, in their view, as Hunt. They are perhaps less troubled by the wrecking of the UK economy, than by their project, as they see it, being held back by a decade through poor implementation.
Thirdly, Kwasi Kwarteng. He has every right to feel aggrieved that Truss seems to have sacked him for implementing the very policies she went to the hustings promising. That he deserved to be sacked was obvious, but for quite different reasons. She chose, after all, to ignore the arrogance with which he behaved, the contempt he showed for the ‘little people’, the blatant lies about his intentions, the insider dealing of which he has allegedly been guilty, and even his bizarre and disrespectful behaviour at the Queen’s funeral. Whatever the reason for his dismissal, he will no doubt feel the need to get even and he is a man who knows where the bodies are buried.
Fourthly, anyone who has a mortgage. already distressed by the uncontrolled rising fuel prices, something partly of the government’s own making, households are facing an increase of several hundred pounds per month in their interest payments. This is something which will continue until the markets regain their confidence in UK plc, i.e. long long after Liz Truss is history. On top of that, they will know that the rise in the cost of government borrowing will mean that the country will suffer an addition of £10,000,000,000 to its annual deficit, without getting anything in return. Remember that this is about the same sum of money as the UK’s total net contributions to the EU – which the Brexiters tried to make sound so enormous. These costs will have to be paid in the form of increased taxation by our children and grandchildren. The additional interest paid by government is sometimes called an ‘instability bonus’ and, by many in the city a ‘moron bonus’.
Your lies will come back to haunt you
Finally, spare a thought for the hapless Tory MPs who only three weeks ago were having to tell the media and their constituents enthusiastically that the new economic policy was just the thing to encourage growth, even though in their heart of hearts they knew otherwise, but now are having with equal conviction to sell a policy which is diametrically opposite. And – as they must know – this will make it extremely difficult to trust anything they say in the future. They are extremely angry about being put in this position. Without doubt they would have the PM out the door tomorrow if they could agree on a successor and get that person in post without having to give the Tory membership the chance to select the worse of any 2 candidates (sound familiar?).
Respect for Tory honesty has fallen even since Johnson’s day. One of the obvious casualties is the Brexit myth. The growing evidence of Brexit failures comes at the same time as increasing public realisation of incompetence and insincerity at the top. No surprise that the drop in the Tory poll ratings is catastrophic. No surprise that even the deputy editor of the Telegraph is now allowing himself to say that project fear was nothing less than the truth. No surprise that in opinion polls a now significant majority of voters are saying not only that Brexit was a mistake but also that they would favour rejoining the EU. The most recent margin on the latter question is 47% vs 33%.
The Brexit bounce and trickle-down economics are both massive lies. The word that comes to mind is not growth, but gross. That should by now will be obvious to all. Let us not be afraid to say it.
PS I am writing this with a note of caution, as I am well aware that by the time you read this Liz Truss may already have taken the advice of many of her backbenchers and become an ex-PM.
The views expressed here are the author’s own and not necessarily representative of Oxford for Europe
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