There is a misconception about U-turns, that they are inherently bad. This is patently not the case. If you are travelling in the wrong direction, it is perfectly sensible to change course. The same is true in politics.
David Cameron’s premiership, generally considered a successful political project (until, erm, it wasn’t) was famous for jettisoning key policies in the face of backbench opposition. From tax credits to Sunday trading, forced academisation to the sale of the forests, Cameron understood that strategic retreats were sometimes necessary to keep the show on the road.
This is not that. Liz Truss may be about to effectively U-turn on an entire budget. Having already abandoned plans to abolish the 45p rate of income tax, she is now considering reversing the cut to corporation tax, according to The Sun’s Harry Cole.
Yes, the 2012 ‘omnishambles’ budget led to an embarrassing volte-face on pasties. But this was essentially an argument about simplifying the tax treatment of hot takeaway food so that VAT would be charged at 20 per cent. It was not an entire economic agenda.
Truss may well be on the look for a fall guy. But should she pick her chancellor, Kwasi Kwarteng, it would be the first time in recorded history that a prime minister sacked her chancellor because they were *too* aligned on economic policy.
And what of Truss herself? Friend of the newsletter, Tony Blair, frequently described Britain’s choice on leaving the European Union as between a ‘painful’ Brexit or a ‘pointless’ one. The former – and the one we ended up with – involved the hardest possible exit inflicting the most damage to our economy. The latter would have seen Britain remain in the single market and customs union, at which one might ask why we bothered to leave at all.
This is the problem facing Truss. Stick with her policies, and endure more market mayhem, backbench rebellion and unsustainably high borrowing costs. Ditch the tax cuts and growth agenda in favour of Osborne/Sunak/Treasury orthodoxy, and the question quickly becomes, why stick around at all?
Another U-turn would also pose a challenge to Keir Starmer. Labour opposed the 45p abolition and the corporation tax cut too. Given that the party supports the energy support package and the cut to the basic rate of income tax, it is suddenly unclear what Labour would actually have done differently.
It also reduces any future Labour government’s fiscal headroom. You can’t reinstate the 45p rate and increase corporation tax to pay for your spending priorities if they are already in place.
But this is clearly a bigger political headache for the Tories. The irony is that, even before the mini-budget, interest rates in Britain and around the world were rising. Mortgage rates were following suit. But in appearing to act so indifferent to the debt burden, and in doing so alarm the markets, Truss and Kwarteng have managed to convince half the country that the government is solely responsible for higher mortgages rates, much in the way that the previous Labour government was blamed for a global financial crisis. That is more damaging than any individual U-turn.
Elsewhere in the paper, US inflation hit a higher-than-expected 8.2 per cent in September, making it increasingly likely that the Federal Reserve will raise its main interest rate by a further 0.75 percentage points. This will further ramp up the pressure on the Bank of England to order a substantial increase of its own, perhaps even a full percentage point.
In the comment pages, Sarfraz Manzoor can’t stop worrying. He tried to talk to his wife about it, but she was reading a novel and didn’t want to be disturbed. So I’m sure he’d appreciate your time. While Sports Correspondent Matt Majendie shoots the breeze on Emma Raducanu’s five coaches in 15 months. All part of the plan, apparently.
And finally, there is no bar to becoming a Londoner. So knowing which exit to use at Bank station (and more to the point, when the official directions are lying to you), is as close as it gets. And there’s good news for passengers changing trains at Bank, where a new walking route will save you nine minutes on your journey.
