Bellicose and Underinformed

Despite lasting almost​ two months, the process of selecting Britain’s new prime minister has revealed little about what Liz Truss intends to do. Her short victory speech contained pro forma praise for her predecessor and ritual execration of the defeated socialist threat. Her Downing Street speech turned on the Cameron-era cliché about an ‘aspiration nation’. She promised that Britain would ride out the oncoming storm, but gave no indication she grasped its magnitude. The boilerplate for Tory leadership transitions slid into place anyway. The populist right-wing press greeted a new Iron Lady, the Financial Times pleaded for a broad cabinet (to no avail), the liberal press worried about a dangerous, unpredictable ideologue. Dominic Cummings’s observation that Truss was ‘about as close to properly crackers as anybody I’ve met in Parliament’ seemed like yesterday’s news.

Most of those verdicts are built on speculation: Truss enters Number 10 as the least known prime minister since Alec Douglas-Home. It is hard to disentangle campaign sops to the base from serious plans for government, but other sources are also mute. There is little reason to suppose Truss holds much affection for Johnson’s 2019 manifesto: ‘levelling up’ persists for now as a ministerial role but went unmentioned in her speeches. She has shepherded no major piece of legislation or reform into existence; her tenure at the Foreign Office was marked by enthusiastically bellicose if underinformed confrontations with Sergei Lavrov and assaults on the Northern Ireland Protocol. Her reputation in Whitehall is as an ‘inveterate leaker’ hungry for press attention, with a personal photographer always on hand. It would be polite to call the CV thin.

There are some constants. Truss’s fondness for free market ideology, deregulation and tax cuts makes her the most obviously Thatcherite Tory leader of this century. She shares this outlook with Kwasi Kwarteng, her new chancellor and close ally. Both were prominent members of the Free Enterprise Group of MPs; their book Britannia Unchained declared British workers to be ‘among the worst idlers in the world’. Her new cabinet, composed of loyalists and ideological confrères, suggests that her model for government is second-term Thatcher, a cabinet purged of wets and micromanaged from the centre.

Critics point to Truss’s apparent shifts in political position as evidence of inconstancy and opportunism: from student Liberal Democrat to fire-breathing Thatcherite; from Cameroon Remainiac to Brexit true believer. She is an opportunist, as are most successful politicians. But economic liberalism has been her lodestar since her membership of Oxford University’s Hayek Society; her enthusiasm for Europe was that of a market liberal. Her positions, which at times sound explicitly Reaganite, mark a departure from the consensus that has governed British politics since 1997. She put it most clearly in a BBC interview on 4 September, two days before her victory. Confronted with evidence that her tax plans would benefit the wealthiest, she said that ‘to look at everything through the lens of redistribution’ was wrong. Even George Osborne was keen to demonstrate that his cuts benefited – or at least didn’t harm – the poorest, and made a point of showing progressive distribution wherever vaguely plausible. Few expected a full-throated return to trickle-down economics in 2022.

Whenever a new Tory leader takes over, journalists speculate that their predilections may reanimate and reconfigure the party. With some distance, it is less clear how much they matter. It was just about possible to imagine that May might create a Tory version of Christian Democracy, or that Johnson’s claims to be a ‘Brexity Hezza’ might augur some real heft behind levelling up. Both governments were forced towards the Tory mean by a fractious party, crises either exogenous or homemade and, in Johnson’s case, a huge dose of indolence. That doesn’t mean the prime minister’s commitments are immaterial – May’s determination to commit Britain to Net Zero was distinctive – but we should remember that Tories change only glacially, and prize the protection of their members’ (and donors’) interests above all. Chief among these interests, and of particular importance as Britain enters recession, are older and retired propertied voters, landlords and other rentiers as well as business owners and financiers.

Truss comes into office just as Britain’s polycrisis threatens to spiral out of control. When Ofgem announced in August that the domestic energy price cap would rise to £3549 a year, government intervention became inevitable – though Truss declined to acknowledge this while wooing the Tory base. She has already announced plans to cap prices at near current rates across the board, funded by government borrowing, alongside a similar scheme for businesses, which currently pay uncapped rates. She will gain political capital for keeping down bills, avoid the bureaucratic nightmares and bad press resulting from means testing, and probably restrain headline inflation. The intervention will, however, be costly: estimates already hover at £150 billion, a figure that dwarfs Covid furlough spending, once thought to be unimaginably huge. The obvious way to defray this cost would be a windfall tax on the excess profits of energy companies: Truss, in a flash of ideological steel, has ruled this out. Effectively, her scheme steps in as a guarantor of profits for energy companies. With this, and the regressive changes to the tax regime, the government is shifting the cost down the social ladder.

There are other difficulties. The price spike is caused in part by the odd structure of energy markets but reforming that system will take years. Behind this lies a real supply problem, shown up by Putin’s throttling of gas exports. In a market system, at least theoretically, increased prices are supposed to change consumer behaviour and constrain use in line with diminished supply. In the case of energy, however, people will either become ill (or, if vulnerable, die) because their houses are cold, or stop all discretionary spending and go into debt to heat them; energy-intensive businesses will fold. That is why government steps in. But without a price signal, winter demand can outstrip genuinely diminished supply. Truss has ruled out any kind of planning or energy rationing, but it’s hard to imagine this commitment surviving unplanned winter blackouts. Blackouts do not poll well.

Energy prices are likely to remain high for some time, perhaps through most of next year. Price caps are tricky to remove once in place: no politician wants to increase bills. The acute phase of this crisis has obvious roots in the invasion of Ukraine, but wider questions around energy security will shape the next decade, as European societies collide with the end of cheap, imported hydrocarbon energy. The Tory governments of the past decade failed to prepare for this – look at Cameron’s decision to slash subsidies for domestic insulation. There’s no reason to believe Truss will demonstrate greater aptitude for long-term planning. Her sole step thus far has been to lift the ban on fracking. Rightly criticised by environmentalists, it was until Wednesday also rejected by Kwarteng, who saw it as costly, low-yield, unpopular and retrograde when compared with renewable energy. It is an unviable non-solution. The political geography of shale deposits – under a swathe of red wall towns and the Jurassic Weald – make it electorally inept as well.

Energy bills are far from Britain’s only problem. The UK has probably already entered recession. Truss might hold back inflation from its predicted high of 13 per cent, but food price inflation is already here and felt most sharply by the poorest. Tax cuts will do little to alleviate that pain. Meanwhile, government borrowing is becoming increasingly expensive, and the pound is slipping against the dollar towards levels last seen in the mid-1980s. Mortgage-holders will soon start to sweat. International markets and fiscal hawks in her own party are unlikely to cheer a cavalcade of tax cuts alongside a £150 billion intervention in energy.

The second front of the winter crisis is the NHS. Waiting times for primary care, A&E and ambulances are spiralling. GP appointments (let alone NHS dentists) are harder to come by. In June this year, 102,000 people waited more than twelve hours to be seen in A&E, and another 441,000 waited for between four and twelve hours. Social care budgets, which have remained below 2010 levels over the last decade, leave patients who should be discharged stranded in hospital – accounting for up to one in seven NHS beds at any given time. The FT recently reported that of the non-Covid excess deaths since March 2020, 12,000 can be attributed to increased waiting times. There is an especially concerning spike of excess deaths among 30-59-year-olds. This is the state of hospitals before winter flu and possible Covid resurgences. Healthcare is increasingly segregated between middle-class patients who can pay for private care and poorer patients forced to wait for NHS treatment, but collapsing emergency care affects the entire population – including Truss’s voters.

The NHS is the most acute case of impending public sector catastrophe. But other crises, precipitated by long-term wage stagnation and diminishing budgets, are waiting in the wings. Truss has already announced her intention to face down the railway unions, but ballots are due among teachers, nurses and civil servants; strikes among postal workers and lawyers are already underway. This might be a winter where nothing and nobody works. The government paints strikes as cynical ploys for self-enrichment, but they are motivated by workload – intensified as a result of budget cuts – as much as by wages. So far, public sympathy seems on their side: the slogan ‘enough is enough’ resonates well beyond union members.

Truss didn’t create these problems, but after twelve years in government her party bears responsibility for them. Her belief that she will have the cost of living crisis in hand within a hundred days and then sail on to Hayekian utopia already looks delusional. She is hemmed in by her commitments to party members and MPs impatient for tax cuts, unable to broach the Brexit taboo and forced into intellectually alien economic interventions. Elected without a landslide among party members, second favourite among MPs, conscious of enemies swarming the backbenches, much of her time will be devoted to party management. Her only cudgel is the Conservatives’ current parlous polling: she must be praying for a honeymoon bounce. Perhaps her role as national mourner-in-chief at the coming state funeral will propel her upwards in the nation’s affections, but it seems unlikely unless she can polish up her wooden and arrhythmic style.

Her chancellor will have trouble keeping all the plates spinning. Setting out his stall in a pre-appointment editorial, he blamed ‘economic managerialism’ for Britain’s low growth and low productivity, while leaving the phrase undefined. The books published by Kwarteng and the Free Enterprise Group suggest that he has in mind a host of workers’ rights – he blamed them for productivity woes in 2015’s A Time for Choosing – and the very idea of government planning itself.

Britain faces a bleak winter. Successive governments have failed to plan for the future: selling off natural monopolies into private hands, starving the public sphere of funding and choosing to ignore a decade of warnings. It is often said that Britain is a rich country, but this is only partly true. It has a large economy, but average disposable income lags behind comparable economies, while Britain remains much more unequal in both wealth and income. Anyone brandishing growth in itself as a solution to this problem should be asked: for whom?

Listen to James Butler discuss this piece with Florence Sutcliffe-Braithwaite and Thomas Jones on the LRB Podcast.