For the last seven weeks, ConservativeHome has been running a series revisiting Liz Truss’s 50 days in power last year. This was not intended as an extended therapy session for those of us who had to live blog on the mini-Budget or fracking debacle, or an attempt to boost sales of Out of the Blue. Although, if James Heale is reading, he does owe me a pint.
Instead, the point of the series was to remind readers of how the shortest premiership in British history unraveled so quickly and so spectacularly. Even though it is only a year since Truss departed, parts of the Conservative Party have started to forget the lessons of those short, miserable weeks. The Truss experiment was a historic embarrassment, and a farce that should never be repeated.
Truss is unrepentant. It only took four months from her leaving Downing Street for her to be writing in the Sunday Telegraph and talking to Spectator TV about what went wrong. She pins her premiership’s implosion on poor “communications” and the opposition of “left-wing orthodoxy” to her tax-cutting plans. Defending her overall economic analysis, her tone has consistently been one of je ne regrette rien.
As her allies organize to oppose further tax rises – with one eye on any future leadership elections – the same excuses become increasingly common. According to the long marchers, Truss’s diagnosis – our growth is too low and taxes are too high – was correct. But her bold attempts to address it were undermined by bad luck, poor advice, and the concerted opposition of the economic establishment.
As our Editor has suggested, this version of events should go down swimmingly on the other side of the Atlantic, where Truss has happily been plying her trade on the think tank circuit. But readers will not be surprised to hear it is a narrative with which I do not agree. Revisiting Truss’s premiership reminded me only how right I was to predict, last summer, that it would all end in tears.
My central problem with Trussonomics was about spending. For all her attempts to LARP as Margaret Thatcher, Truss’s economic policy had much more in common with Anthony Barber than Geoffrey Howe or Nigel Lawson. Under Thatcher, reducing inflation was the priority, and tax cuts were only introduced following curbs on spending. Truss showed no such interest in fiscal discipline.
She may currently be attempting to pose as a fiscal hawk, but it rings hollow. As Simon Clarke has confirmed, between the leadership contest and the mini-Budget, she dropped plans to reopen the Spending Review. She then “absolutely” refused to cut spending in response to adverse reaction to Kwarteng’s fiscal package. She ignored the advice of her own supporters of the need to match tax cuts with spending ones.
The markets immediately took against Truss’s tax cuts because they were spooked by her apparent disregard for fiscal orthodoxy and basic probity. That includes her refusal to have the Office for Budget Responsibility analyse her plans, her apparent inability to distinguish between temporary emergency spending and day-to-day spending, and her relaxed attitude to having the deficit look after itself.
The flaws with this were obvious. Just at the point when interest rates were finally rising from a decade of being artificially low, Truss decided to embark on the biggest act of fiscal expansion in half a century. Measures like reversing Rishi Sunak’s National Insurance cost £13 billion, all of which Truss put on greater borrowing. With Kwasi Kwarteng promising more cuts to come, the markets balked.
Truss’s defenders would suggest that the markets were worrying unnecessarily, since her tax cuts could have stimulated further growth (along with further hitherto unspecified deregulation). OBR orthodoxy was stale. It was not sufficiently conscious of the benefits of supply-side reform, and wedded to a particular undynamic, high-tax view of the economy.
But as Kate Andrews has pointed out, the OBR’s concerns were hardly unique. The vast majority of forecasters predicted that her tax cuts would not reach the levels of 2.5 per cent growth for which Truss was aiming. She may rail against establishment orthodoxy, but the markets – the Gods of the Copybook Headings – trust them far more than they do her reheated Reaganomics.
What about the LDI pension scare, which Truss has specifically blamed for bringing her premiership “to an abrupt and premature end because of the panic it induced”. In her reading, the Bank of England’s announcement of bond-selling the day before the mini-Budget put pension funds under pressure and created a “very difficult environment” for her proposals to succeed.
It’s true that the LDI problems blindsided the Bank, the regulators, and all the members of that self-same economic establishment. But the pound began plummeting and UK borrowing costs sharply rising only after Kwarteng’s announcement. For something like the pension funds to blow up in that environment was not wholly unexpected. Kwarteng does have a PHD in economic history, after all.
Remaining is the final part of the Trussite trifecta of excuses: that the Seven Week Queen was merely unlucky. Finally, the supply-siders had a committed champion of supply-side reform back in Downing Street. The long marc from Tufton Street was over. But she was undermined by a hostile international environment, the unfortunate timing of the late Queen’s death, and the irreconcilability of her own backbenchers.
Truss was certainly dealt a bad hand. Any Prime Minister entering Downing Street after twelve years in power would be. But she was saddled with a war in Europe, a global energy crisis, and the unwelcome return of stagflation. Yet if there is one theme that best defines Truss’s premiership, it is an unwillingness on the part of its principal actor to trim her ambitions to her circumstances.
In his recent book on leadership, Henry Kissinger identified a crucial quality in successful statesmen and women to be the ability to recognize the reality of their situations, and have the vision, calm, and dexterity to act against an existing consensus. Wherever they wished to reach, the best leaders act within the constraints of events. This was not something Truss ever managed.
Over-confident and under-cautious, Truss consistently acted to undermine her weak position. Previous leaders reached out to their opponents after victory. Thatcher’s first Shadow Cabinet, for example, contained only one or two of her supporters. Truss did the opposite. She sent Rishi Sunak’s allies to the backbenches, forming a Cabinet where, of 31 attendees, 30 had backed her that summer.
Alienating her opponents was fundamentally unwise when already fewer than a third of her own MPs had supported her. Truss compounded that weak position by forcing upon them an agenda for which she had failed to roll the pitch for, that tore up the manifesto upon which they had been elected, and which was overseen by an inexperienced Number 10 team. If she had a bad hand, she played it appallingly.
All of this meant Truss was in the worst possible position when events turned against her. Her failures were not simply ones of communication, but of basic competence. From the refusal to focus group her mini-Budget policies to the final Gotterdamerung of the fracking three-line Whip, Truss failed to reach the fundamental standards of governing ability.
Which leaves only one conclusion. Truss was not unlucky, or ill-advised, or a victim of an establishment stitch-up. She was the author of her own misfortune. Viscount Goderich was rather teary, Lord North lost America, and Anthony Eden bungled Suez. But for the embarrassing farce of her seven short weeks, Truss was simply the worst Prime Minister that Britain has ever had.