Subtlety does not feature large on the short list that is the Liz Truss skill set. She had been campaigning for the Tory leadership long before Boris Johnson was forced to vacate it. In May 2019, as Theresa May sat uncomfortably in No 10, a newspaper profile declared of Truss: “She’s not so much a dark horse as one that has painted itself blue and wrapped itself in flashing neon lights.”
Last weekend she used that same newspaper, the Mail on Sunday, to laud the tax cuts launched on Friday and assure the country she would be “unapologetic” in pursuing a strategy that was already frightening the markets on which its success depends.
Truss’s single-mindedness won her the Tory leadership. Even though a majority of Tory MPs did not favour her, she directed her sledgehammer campaign at that self-selecting small band, Conservative party members, and they rejoiced in her promise of drastic cuts to tax and regulations.
A cleverer politician might then have relished her victory and vowed to moderate the policies that won her that parochial battle and take on the serious business of governing a country with deep-seated problems that have been exacerbated by the twin horrors of the pandemic and war in Europe. Truss, however, was still relentlessly focused on electioneering. Facing a general election before the end of 2024, she opted to pursue a course that she believed would stand the best chance of appealing to enough rightwing voters to deliver her a second term as prime minister, albeit with a hugely reduced majority. Tax cuts delivered, she might have thought she could go to the country early, before it became clear that the economic nirvana she had promised was a mirage.
But she has misread the public mood as well as the markets. Conservative MPs, who would mostly have played along with this cynical strategy if they had thought it would save their seats, are now seriously panicking. It is not only sterling that is being hit by a lack of confidence but the prime minister and her chancellor, for Friday’s bombshell was ignited by them both. She cannot ditch Kwasi Kwarteng or the announcements that he made. In fact, they have already doubled down, promising more tax cuts to come.
Friday’s “fiscal event”, labelled so laughably to try to excuse why such a drastic package of budgetary measures should not be subject to the scrutiny of the Office for Budget Responsibility, has left most economists in a state ranging from bemusement to total horror. It certainly was not the “Treasury orthodoxy” of which Truss is so scathing, but being unorthodox is not of itself a virtue. In fact, when the cost of borrowing, and ever-increasing government borrowing in particular, depends on the confidence of the financial markets, eschewing orthodoxy can be very expensive.
Yet the public reaction to Trussonomics is at a level that the woman herself probably cannot grasp: it is not about the ineptitude but the inequity of the package. The opinion polls taken after Friday’s announcements, but before the markets had delivered their damning verdicts, have shown a substantial swing against the Tories.
It is not that long ago that Conservatives elected a leader pledged to “heal broken Britain”. David Cameron may have gone on to disappoint but, 12 years on since he iterated that ambition, the need to do it is so much more pronounced and one would have to be completely isolated from reality not to grasp that. Many people predisposed to voting Conservative do, but Truss and co clearly do not.
The broad brush approach to capping energy costs could just about be justified on the grounds of needing to act fast and have a simple system, although it will inevitably be benefiting the second home owners who could swallow energy price increases. What is intolerable to many middle-of-the-road, maybe Tory, voters is the bungs to the rich. Even Farrer & Co, renowned for being the late queen’s solicitors, saw fit to put an exclamation mark after its take on the cut on dividend taxes, which it saw as “potentially therefore reducing the tax cost for some using an offshore structure!”.
The financial advisers AJ Bell excitedly told clients that the proposed changes “will save highest earning investors and company directors thousands of pounds each year”.
The “red wall” voters who gave their votes to Johnson because of their disillusionment are so far removed from that bracket that they will not be able to countenance a government that thinks this is an acceptable strategy. They wanted change; they believed in levelling up, but what they have been presented with is a package that is already making them even poorer. The rising cost of money has a huge impact on borrowers. The much vaunted, and needed, infrastructure projects that would set the country on the path to economic growth became very much more expensive this week.
In the meantime, the demands on food banks grow and the levels of poverty among those in work increase. What Truss fails to comprehend is that there are many people who would not consider themselves socialist who find that situation intolerable. It was her bad luck that the Labour conference came just days after her disastrous “fiscal event” and Keir Starmer could make an appeal for a fairer society.
Truss simply doesn’t have the empathy to comprehend that. If a few more Tory MPs realise that, she will be out.
• Patience Wheatcroft is a journalist and crossbench peer (formerly Conservative)