Ever since he was a boy, Kwasi Kwarteng has shown rare skill in wrongfooting opponents. At an interview for a place at Cambridge University, the Etonian heard the tutor confess that this was his first time interviewing entrance candidates. “Don’t worry, sir,” beamed Master Kwarteng. “You did fine.” The cheek paid off. He got in.
After only one week as chancellor, he is now trying a similar strategy against the Labour opposition. In his sights is what he dubs “the same old economic managerialism”, as practised by the Treasury and the Bank of England. While praising his new department as an excellent finance ministry, good at keeping a lid on the deficit, he has instructed staff that their entire focus must “be on growth”.
Keir Starmer and Rachel Reeves can be forgiven some confusion. Isn’t this their language? Ever since John Maynard Keynes criticised “the Treasury view” and its focus on penny-pinching over growing the economy, those on the left have had in their sights those institutions that set economic policy. It was why Harold Wilson put George Brown in charge of a giant new Department for Economic Affairs to circumvent No 11’s influence. And why, in 1995, the then economics editor of the Guardian, Will Hutton, declared in The State We’re In that “reform of the Treasury is one pivot on which national renewal hangs”. It was also the focus of Jeremy Corbyn’s “institutional turn”.
Mr Kwarteng is no Corbynite, nor indeed has he previously evinced much worry about the mindset of the mandarins at Horse Guards Parade. In his maiden speech of 2010, the new MP for Spelthorne blasted Labour for some imagined profligacy while in government. His economic thinking, so far as he ever expressed any, has been rather a rum mixture of hard-right thinktank and Surrey golf club, moaning about red tape, taxes and the supposed idleness of the British worker.
But moving into No 11 when your party is trailing badly in the polls, the next election is looming and the economy is heading into recession does tend to concentrate the mind. Mr Kwarteng and Liz Truss need some alibi for spending money to shore up their vote, and a dash for growth is a plausible cover story. Yet, as previous chancellors can attest, wishing for growth is not the same as achieving it. Nothing Ms Truss said in this summer’s long Tory leadership campaign gives any reason to believe she can help the economy break its dismal record. None of the leaks ahead of next week’s mini-budget indicate it will propose anything apart from a lot of spending to cap energy bills, a few showy tax cuts and a whole heap of debt.
Classic Tory economics, in other words, although unlikely to fuel a burst of growth in the face of a global slowdown. And since the UK is going through a terms-of-trade crisis – in which the stuff we sell abroad is falling in value while the commodities and manufactured goods we import are soaring in price – markets are likely to fret about the sustainability of our financial position. These worries can be allayed, especially with a sovereign central bank, but it helps to have politicians who look and sound serious.
Sadly, Mr Kwarteng’s sacking of Treasury permanent secretary Tom Scholar suggests anything but seriousness. Just as with Mark Sedwill, this has the hallmarks of a Brexit hit job against a very able civil servant. And the anti-Treasury rhetoric also sounds familiar. While not very good in government, today’s Conservatives are extremely adept at passing the blame, whether it is on to judges, would-be asylum seekers or the “woke” left. The latest entrants on the list would appear to be Treasury mandarins.
