Liz Truss was economical with interviews during the leadership election, ducking Andrew Neil and Nick Robinson, but she gave one last Sunday to Laura Kuenssberg of the BBC. An answer that she gave to a question stood out.
Confronted with a graph which showed that better-off taxpayers would gain more from her proposed National Insurance tax cut than worse-off ones, Truss could have replied that her plans as a whole will benefit poorer people rather than richer ones.
After all, the NI tax cut will be worth some £12 billion a year – small beer compared to the energy package worth perhaps £100 billion that she is poised to announce.
But rather than concede the premis of the question, she challenged it: “to look at everything through the lens of redistribution I believe is wrong, because what I’m about is about growing the economy and growing the economy benefits everybody.”
Had I been on Kunessberg’s panel, I would have wanted to cheer – and not sarcastically in the manner of her programme’s comedian guest.
For Truss was absolutely right to confront what has been a growing assumption in political debate that distribution is the beginning and the end of public policy and, in particular, tax policy.
After all, it was a New Labour mantra, no less, to balance social justice with economic efficiency. The latter is impossible without competitive tax rates.
Which will sometimes, even often, require tax cuts that mainly benefit better-off taxpayers, who as Truss pointed out pay more tax in any event.
Truss’s answer was part of her broader desire to shift economic debate back to the more right-wing ground where it was set pre-Boris Johnson.
And, yes, any reasonable analysis of his legacy would find it more left-wing in economic terms than the continuum stretching previously from the Coalition through Tony Blair to Margaret Thatcher.
But while I would have wanted to cheer had I been in the studio, I would have been held back not only by decorum, but by doubt about a matter that Truss admittedly understands better than I do: numbers.
For she takes office today committed to a package of tax cuts and spending pledges worth perhaps £60 billion – on top of the £100 billion or more than she will seek to find to fund the energy package.
She won’t want the Bank of England to print money to help fund these commitments, given the inflation challenge. And she has set her face against tax cuts, promising no tax rises whatsoever.
That leaves war bonds-type borrowing for a wartime-type situation. But as I have been arguing since December, there is a question about interest rates.
For if the markets think a Government has lost control of spending, they will start selling sterling in earnest – leading to an inevitable rise in rates, which in turn will confirm, and perhaps intensify, the recession Truss believes is avoidable.
In these circumstances, she and Kwasi Kwarteng would have only one option: further cuts in the rate of public spending – for which Johnson’s boosterist philosophy has left public opinion and Tory MPs unprepared.
We are not there now or at least yet, and hopefully won’t be at all, but the pound has been weakening recently. Gerry Lyons, our columnist and one of Truss’s “three wise economists”, admits the risks today in his column on this site.
Let me put it this way. Britain’s third woman Conservative Prime Minister, as she will soon be, is a bit like a trainer who tells an athlete that he needs to lose weight to run faster (doing so being the equivalent of her support for less tax and regulation).
She’s right, of course – but the runner isn’t just slowing, in this case, because he’s overweight. He’s also wearing shoes and kit that aren’t fit for purpose.
Which is my way of saying that we need to get our skills, infrastucture, localism and, yes, housing right. Truss seemed to me to say less about these during the campaign, though she certainly committed herself to more Northern Powerhouse rail.
But whether or not my reading is fair, we are certainly in the midst of an energy crisis. So Truss will effectively be asking the runner to run faster in the dark – perhaps literally, if there are blackouts and shortages.
I hope she can persuade the markets that her package is coherent, though I suspect the price will be further reductions in spending growth in Kwarteng’s planned public spending statement, if not before.
Truss may think that she can have it all: the delivery of more market economics and more state spending – and on a humongous scale, too; a Cabinet packed with her supporters and the full backing of most Tory MPs…
…A Number Ten which bothers less about the media and is in permanent campaigning mode. A political operation which gains more control over the civil service and operates with fewer SpAds.
Perhaps she can manage all this, but my experience is that government has limited bandwidth at the best of times, let alone in the midst of an economic hurricane.
The new Government will be fortunate to get a grip on matters at the top of Truss’s in-tray: the economy and the NHS, plus the sense that the police are losing control of crime, and the ever-present threat to the Union.
She will have little time to tackle the self-defeating spiral of housing shortages, delayed family life, labour immobility and reduced productivity (and a market crash would not be an ideal way of slowing it, to put the matter mildly).
I also believe that politicians can only project one message at a time. And that there is one that might work for Truss, delivering her a potentially workable majority in 2024, given Keir Starmer’s failure to seal the deal with voters.
Which is as set on this site over the weekend: make a national unity pitch, appoint a broad-based Cabinet, hold energy COBRA meetings daily, make Parliament sit through the conference season and call in opposition leaders on Privy Council terms.
Whatever happens next, Truss is taking office during a fourth Conservative term with fewer Tory MPs having voted for her than her rival, and with the lowest support of MPs of any winning leadership contender under this electoral system.
Furthermore, she won the lowest support among Conservative members, too. So are there any reasons to be cheerful – one, two, three, as Ian Dury used to sing? Perhaps.
For first, expectations are so low that the only way for the new Prime Minister may be up. Second, she wouldn’t have got where she is today were she not a wonderfully alert, mobile and instinctive politician.
So it is that the former Remainer, Liberal Democrat and long-time Minister won the support of Tory leavers, right-wingers and those who want a new kid on the block.
Last, she may find it easier to sell another vast package of state intervention to the Conservative right than Rishi Sunak would. Indeed, he might not have been able to manage it at all.
“Event, dear boy, events”, said Macmillan. But these can bring good news as well as bad, all the more so for being unexpected. After ten years of Coalition, UKIP, Jeremy Corbyn, Theresa May, Brexit, Johnson, Covid and Ukraine, anything can happen next.
The Conservatives need Truss to succeed. Far more importantly, so does Britain. The woman who will kiss hands today lost her bent for republicanism – long ago – but retains her facility with numbers. The question is: do they add up?