Liz Truss’s first speech as prime minister gave her a chance, finally, to speak to the country rather than the party. Ms Truss is no orator. She had no resonant slogan of her own – “aspiration nation” was coined by David Cameron. However, Ms Truss’s address was meant to demonstrate that she was a serious and capable leader. She made it clear that her government would focus on the crises engulfing the economy, energy and the health service. Her premiership is confirmation that the Tory party in office has reached a historic crossroads in the aftermath of unexpected circumstances.
So large is the cost of living crisis that the party is being forced to shed its shibboleths. Ms Truss may have run as the heir to Thatcherism, but ever since the sustained state intervention in response to the pandemic, it has been clear that markets are no longer sacrosanct. The new government will have to institute price controls to curb soaring bills, and with uncertain electricity supplies during the winter it is likely that rationing will be back on the table. Leaks suggest that the freezing of energy bills will be paid for by £90bn of extra borrowing. The government also has ambitions that are likely to be expensive – a world-class health service, levelling up and net zero cannot be done on the cheap.
The Conservative party is moulting, casting off its insistence on lean budgets with tax increases to balance them. Instead, Ms Truss is going further with promises of across-the-board tax cuts, which will disproportionately benefit the rich. She cast herself as the heir to Margaret Thatcher on the campaign trail, even going as far as to dress up as her hero for the Channel 4 leadership debate. Like Thatcher, she takes office with inflation as a priority. Yet Ms Truss’s approach is markedly different to her idol’s. Thatcher aimed to reduce the budget deficit by raising taxes despite high and rising unemployment.
Boris Johnson’s dissembling was a political weapon used to paper over glaring contradictions. The electoral coalition he built faces two ways: to reconcile fiscally responsible Tory voters with “red wall” constituencies opposed to spending cuts needed higher taxes. However, Ms Truss won over the grassroots Tory members by embracing a supply-side idea – popular with activists but with no wider purchase – that low taxes automatically bring growth.
It may be too early to say what Ms Truss will do in office, but a new consensus is emerging that upends previous Conservative thinking: instead of central banks stabilising the economy, fiscal policy will take more of the strain. So far there’s little to suggest this will help Britain. It is also hard to see what ideology will survive such a tumultuous socio-economic episode in British history. However, Ms Truss sold herself as a strong, Thatcherite figure able to win culture wars and fight against trade unions. Cultivating an exaggerated sense of conflict is politically more appealing than facing up to the dire straits the country finds itself in.
She stirred up a “war on woke” on the campaign trail in part to authorise her new economic direction. But Britain’s current troubles began under Thatcher, when the basis of economic growth became rent-seeking via privatisation, the housing market and the explosion in the City’s speculative activities. If Ms Truss wants to deal with the present crises then she must tackle their root causes, not just their symptoms.
