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Tuesday, July 23, 2024
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HomeDemocracy in DecayIt's all Liz Truss's fault

It’s all Liz Truss’s fault

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IT WAS drearily predictable that government ministers such as Michael Gove would get round to blaming Liz Truss for the disastrous collapse in their electoral support. In doing so, Gove was merely joining legions of other politicians and mainstream media commentators in attributing blame for current economic woes and collapsing public services, despite record high levels of taxation, government borrowing and public expenditure, on a Prime Minister in office for a mere 45 days. A time, moreover, largely taken up with performing duties as a ‘national undertaker’ as her brief administration coincided with the death and state funeral of Queen Elizabeth.

Gove asserted that the Truss administration, and particularly the mini-Budget of her Chancellor Kwasi Kwarteng, had destroyed the Conservative Party’s reputation of being the party for ‘sound economic management’. Nothing to do with the billions wasted on the covid lockdowns, the discredited PPE contracts, paying people to stay at home instead of working and spending their earnings, businesses shut down and the rest of it. Nothing to do with the insane commitment to Net Zero. Nothing to do with the destruction of meritocracy that is the flipside of the obsession with Diversity, Equity and Inclusion. Nothing to do with the own goals of the sanctions imposed on Russia since the invasion of Ukraine which have had an immense impact on energy costs across Europe. Nothing to do with the insupportable level of mass migration during the last few years, placing intolerable burdens on public services including education, housing, transport and health. No, it’s all down to the 45 days of the Truss administration.

I’m not particularly a Truss admirer, but were the measures in the Truss Budget so disastrous, and what did its consequences betray about how the UK is run?

One of the most discussed measures was the decision to keep corporation tax at 19 per cent instead of continuing with plans to increase it to 25 per cent. This was criticised by the ‘commentariat’ with the emphasis on revenue lost rather than any consideration that lower taxes could actually lead to more revenue being raised. By comparison, Ireland has benefited from many international businesses basing themselves in Dublin to take advantage of Ireland’s far lower 12 per cent corporation tax. Might not the UK find more businesses base themselves here if it matched Ireland’s rate or, better still, undercut it? Now there’s a thought.

The measures as a whole were doomed as it became apparent they were being undermined from within. The Office For Budgetary Responsibility, the Bank of England and the Treasury were said to be concerned that the measures in the Truss-Kwarteng Budget were not properly funded or costed. Naturally that caused mayhem across the financial markets and panic set in.

It turned out that those forecasts of disaster were based on inaccurate figures and forecasts. I wonder if that was deliberate or was just the usual incompetence? The Truss tax cuts would have shaved just £25billion from £1,100billion of government receipts in 2026-27, a minuscule difference compared with the economic carnage of the lockdown years. Although we’ll never know the extent of any economic growth they would have generated, we’d surely be in a far better place than we are now.

The Office For Budgetary Responsibility has a track record in getting its forecasts wrong. Indeed it admitted to an error of £9.6billion for one month alone soon after Truss departed. Compared with the lurid headlines at the time of the Budget, this received very little attention. Nobody at the OBR was censured, far less sacked, for this error. Was it was more about ideological opposition to the politics of Truss rather than matters relating purely to taxation and expenditure?

The Bank of England has similar questions to answer over its role at the time of the Truss-Kwarteng Budget. On its watch, it had allowed Liability Driven Investment funds to increase without requiring risks to be properly covered. It’s a very technical issue which is excellently covered in an article in The Critic by Jon Moynihan. After the Budget the Bank belatedly did its job, but the benefits went to Jeremy Hunt, the man Truss was seemingly browbeaten into appointing as Chancellor to replace Kwarteng, and who immediately resumed Treasury economic orthodoxy of the sort the UK has stagnated with for many years.

Having got their man into No 11, the coup to bring down Truss went into overdrive. Other Prime Ministers and Chancellors have survived economic carnage and carried on in government for years. Harold Wilson survived the 1967 devaluation crisis to continue in office until 1970. Jim Callaghan and Denis Healey survived the 1976 run on the pound, requiring International Monetary Fund intervention, limping on until they were brought down in 1979. John Major and Norman Lamont survived Black Wednesday 1992, Major limping on to 1997. Gordon Brown not only survived the disastrous selling of much of the UK’s gold reserves at a knockdown price and his notorious plundering of the UK’s then flourishing private pensions industry in his early years as Chancellor, his reputation actually improved and he didn’t leave office until 2010, having become Prime Minister.

Truss’s difficulty was that her endorsement as party leader came from the members, not the MPs she relied on to be kept in office at Westminster. These MPs, including senior ones who’d been in government such as Sunak, Javid, Gove, Zahawi, Shapps and others, had not gone to the lengths they had to remove Boris Johnson as Prime Minister only to see him replaced by someone not of their choosing such as Liz Truss. Worse, she excluded them and most of their allies from her administration. So her enemies at Westminster moved quickly to exploit the fallout from the Truss-Kwarteng budget to undermine her.

Truss herself has been very open about it in her book Ten Years To Save The West. She has also given interviews to Triggernometry and Connor Tomlinson. The responses have been very revealing. They’ve been more on the lines of ‘How dare she speak to those people?’ especially as her assessment gives away the extent to which the UK political establishment has been captured and shuts out any alternative views, particularly on such ‘sacred cow’ issues as Net Zero, immigration, diversity, the lockdowns, worship of the European Union and Nato, and general ‘Big State’ control of every aspect of our lives.

The entire Westminster and Whitehall establishment were in perfect alignment on the need to remove Truss, along with the mainstream media, the chattering classes and all their associated allies. Truss could not be allowed to succeed and shift the direction of the UK’s political, social and economic travel.

We were laughably told ‘the grown ups are now back in charge’ as cover was provided for the Westminster and Whitehall cabal to carry out their coup. In the decaying final days of probably the most disastrous general election campaign by any sitting government, that absurd tag has the hollowest of rings to it.

This article appeared in Patrick Clarke’s Column on June 26, 2024, and is republished by kind permission. 

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Patrick Clarke
Patrick Clarke
Patrick Clarke was briefly active in politics during the 1970's before leaving to 'get a life'. You can read more articles from Patrick Clarke in his Substack column.

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