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The past week was a newsy one in the UK.
We had Boris’s hearing before the Privileges Committee and Matt Hancock being stung by a fake consultancy.
However, it all began on Monday, March 20, and continued on Wednesday with the approval of the Stormont Brake Statutory Instrument of the Windsor Framework for Northern Ireland.
The Windsor Framework replaces the Brexit Northern Ireland Protocol, which everyone knew was imperfect and this new framework replaces it. According to the Government, it renders the Northern Ireland Protocol Bill unnecessary.
However, it seems to Northern Ireland’s Democratic Unionist Party (DUP) that it goes too far in favouring the EU. Who can forget the beaming smile on Ursula von der Leyen’s face when she signed it alongside Rishi Sunak at the end of February? She knew she had the cat by the tail. Unfortunately, Rishi is still in the dark, as is most of Parliament:
The only vote on it in Parliament was on Wednesday, March 22, 2023. It should be emphasised that was not a vote on the Framework as a whole but only on one statutory instrument (SI) of it, the Stormont Brake.
Rishi overly promoted the Stormont Brake, which, in principle, grants a veto to the Northern Ireland Assembly via the UK Government of new EU acts or rules that it disagrees with.
I cannot see it working as smoothly as specified below. The EU holds the better hand of cards here.
This Twitter thread comes via Jess Sargeant, senior researcher at the Institute for Government, beginning with the flowchart:
The Northern Ireland Assembly, once it reconvenes (the DUP are resisting for the time being), will have a new Windsor Framework Democratic Scrutiny Committee to inform MLAs’ (assembly members’) decisions on pulling the Brake:
The Brake can be triggered by 30 MLAs from two parties. The Secretary of State (SoS) for Northern Ireland, who sits in Parliament, then reviews the proposed trigger. If the SoS finds it valid, he then liaises with the EU:
In principle, any resolution must have ‘cross-community’ support in Northern Ireland before being implemented, unless there are exceptional circumstances:
The DUP oppose it as do members of the ERG (Parliament’s European Research Group), but it has majority support among MPs:
On Tuesday, March 21, the ERG interviewed the SoS for Northern Ireland, Chris Heaton-Harris MP, a 90-minute session available on parliamentlive.tv. Heaton-Harris could barely look the MPs in the eye as he maintained that voting on the SI (Stormont Brake) was but one of many votes. Perhaps inconveniently for him, a civil servant sitting next to him said that Downing Street would consider a majority vote on the SI proof that MPs approved of the Windsor Framework.
Here is some background on that session from Monday, March 20. Heaton-Harris is on the left of the photo with the ERG’s Sir Bill Cash MP on the right:
Guido Fawkes tells us that the ERG wanted to interview Rishi Sunak rather than Heaton-Harris (emphases in the original):
Northern Ireland Secretary Chris Heaton-Harris will appear in front of the European Scrutiny Committee tomorrow afternoon, just a day before MPs vote on the Stormont Brake element of the Windsor Framework Brexit deal in the House of Commons. The Committee’s chair, Sir Bill Cash, had previously invited Rishi Sunak, with Cash accusing the PM of dodging scrutiny by repeatedly skipped the invitation. As a compromise, he’s sent Heaton-Harris as his loyal lieutenant…
With the DUP voting against the deal, and the ERG expected to announce their own verdict tomorrow – also not looking positive – it won’t be smooth sailing for wise-cracking Heaton-Harris. Stay tuned…
More background from the morning of Tuesday, March 21 follows. The ERG session with Heaton-Harris took place in the afternoon.
A small but vocal opposition bloc was building. Pictured below are Sir Bill Cash, DUP leader Sir Jeffrey Donaldson and Rishi:
Guido’s post said, in part:
Tory MPs speaking to Guido say they nonetheless expect the Tory rebellion to be “soft“, and “they’ll have to have uncovered something pretty bad for a lot of people to vote against it”. The Telegraph has heard similarly, with one MP saying the group were “genuinely torn”…
The ERG’s Legal Advisory Committee’s review of the Windsor Framework can be found here. Although it is 137 pages long, the first 28 pages are the immediately relevant ones. As opponents of the Windsor Framework point out, the Green (customs) lane won’t become greener as Rishi said, but rather pinker, as the report states on page 13 (purple emphases mine):
Before coming to the specifics of how the “green lane“ would operate as regards movements of goods which would fall within it, it should first be pointed out that there will continue to be many goods moving from Great Britain to Northern Ireland which will fall outside the scope of the “green lane“ arrangements and will therefore be subject to the full panoply of EU external border checks, even though those goods are not going to be exported into the Republic or elsewhere in the EU. Businesses within Northern Ireland acquiring goods from Great Britain which intend to sell their products within Northern Ireland, elsewhere in the United Kingdom or to the rest of the world will continue to be damaged by these controls and duties while receiving no conceivable benefit from the NI Protocol arrangements.
The general position will remain that, outside the specific accommodations, EU customs laws will apply to the movement of goods from Great Britain to Northern Ireland (this internal movement is treated as an “importation“26) and to importations of goods from the rest of the world. In other words, there is a customs border, within UK territory, across the Irish Sea, and the EU‘s rather than the UK‘s external customs duties will apply to imports from the rest of the world. Importantly, goods which are to be used by businesses in Northern Ireland for “commercial processing“ will be subject to EU customs duties, unless the business or the type of processing falls within a specific exemption.
This is why, since Brexit, most British businesses will not ship to Northern Ireland. Big corporations, such as supermarkets, do and will continue to do so, but even British retail chains (e.g. department stores) are not willing to put up with the paperwork and specific knowledge required to ship to Northern Ireland. It’s just too much hassle.
For that and many other reasons, the ERG chair Mark Francois called the Framework’s Stormont Brake ‘practically useless’:
Commercial Chancery Barrister Steven Barrett explains why the Stormont Brake could result in ‘huge and ongoing fines’ for the UK:
The EU can calculate any perceived industry losses if the Brake is applied:
The fines could extend from year to year:
Therefore, the Brake might never be applied:
The ERG’s Mark Francois stated:
The star chamber’s [the aforementioned report’s] principal findings are: that EU law will still be supreme in Northern Ireland; the rights of its people under the 1800 Act of Union are not restored; the green lane is not really a green lane at all; the Stormont brake is practically useless and the framework itself has no exit, other than through a highly complex legal process.’
Thought so.
That evening, another prominent Brexit supporter, Jacob Rees-Mogg, said on his GB News show that he would not be supporting the Government in the vote on the Stormont Brake on the afternoon of Wednesday, March 22:
This was his Moggologue that evening, and the transcript:
Rees-Mogg said that the Government’s view, based on a very short summary of the Framework, differs to the ERG’s report, which comes much closer to the EU-focused reality:
… everybody has to look through it in detail and that’s what’s been done by the committee set up by Mark Francois, the chairman of the European Research Group, which went to really strong legal advisers to see.
What was actually happening and what they came up with was not the same as the view given by His Majesty’s government.
Indeed, it was closer to the view that was in fact given by the European Commission.
So the Government claimed that 1700 pages of EU laws are disapplied.
The report found no EU laws will be disapplied or removed from Northern Ireland.
We were told that the jurisdiction of the European Court would be disapplied.
The report found Northern Ireland will remain subject to the European Commission and the European Court of Justice, as was said to me by a very senior member of the DUP, European Union law remains a major part of Northern Ireland’s settlement and in certain areas outranks UK law.
So we were told that the deal would restore Northern Ireland’s place in the Union and safeguard sovereignty. Because this is what it’s about. We voted to leave as one United Kingdom, not as Great Britain, and then separately.
Northern Ireland and we are one people.
Under the Act of Union of 1800, we were told that there would be green lanes and you know what a green lane is.
When you come back from your holidays, you go through a green lane and nobody stops you.
But the green lane to Northern Ireland requires 21 pieces of information to be given.
So what was it at that line in Macbeth that may apply to the Windsor framework, the multitudinous Irish Sea and Canadine?
The green one is made red. And last of all, the Stormont brake, which is what we’re actually voting on tomorrow, is said to be hard to use.
But even then we’ve been told that though the vote technically is on the brake, we’re actually voting on the whole of the protocol. So even if the brake is good, we’re being asked to vote on the bits that are not good.
And the Guardian angels of unionism, the DUP, have said that it’s not good enough. So that’s the position we’re in. We are facing a vote tomorrow.
I will not find it possible to support His Majesty’s Government in this vote …
Rees-Mogg then interviewed a KC (King’s Counsel) who is a specialist in EU law. He said much the same thing …
… as did former Conservative Home Secretary and former Brexit Party MEP Anne Widdecombe:
On the morning of Wednesday, March 22, The Telegraph reported that Boris Johnson MP would vote against the Stormont Brake SI:
The former prime minister said in a statement to this newspaper that the proposals would keep the province “captured by the EU legal order” and were “not acceptable”.
Mr Johnson is expected to interrupt his appearance during the House of Commons Privileges Committee hearing on partygate to vote when the division bell rings …
Mr Johnson told The Telegraph: “The proposed arrangements would mean either that Northern Ireland remained captured by the EU legal order – and was increasingly divergent from the rest of the UK – or they would mean that the whole of the UK was unable properly to diverge and take advantage of Brexit.
“That is not acceptable. I will be voting against the proposed arrangements today. Instead, the best course of action is to proceed with the Northern Ireland Protocol Bill, and make sure that we take back control.”
The decision sees Mr Johnson reprise the role he adopted during the final year of Theresa May’s premiership, when he put himself at the front of a group of Tory MPs voting against her Brexit proposals.
A few hours later, Liz Truss said she would also be voting against the SI:
That afternoon, MPs divided — voted — on the SI, which won over nearly all of the Commons. Only 29 MPs voted No, among them the nine DUP MPs:
MPs had very little time to consider the Windsor Framework. There was Rishi’s speech to Parliament after it had been agreed, so, 90 minutes. Then there was the 90-minute debate about the SI, which, in reality, was Downing Street’s way of approving the whole Framework. Ergo, three hours of discussion about our national sovereignty with regard to Northern Ireland.
On Thursday, March 23, former DUP leader, Arlene — now Baroness — Foster wrote about this parlous state of affairs for The Express:
The Prime Minister promised a vote on the Windsor Framework deal, and this was it – all 90 minutes of it.
The Stormont brake is the central selling point of the agreement between the Government and the European Union to remedy the defects of the NI Protocol.
The idea is that if the Assembly activates the Stormont Brake, then the Government will decide whether to veto whichever new European law has been foisted on the people of Northern Ireland without their say so.
The chances of the Government actually vetoing new European law is next to negligible. As pointed out by the legal opinion of the ERG the Stormont brake is worse than useless because the bar has been set so high and there must be a willingness by the Government to actually trigger the veto – not likely on current experience.
The Government has shown itself in fear of the European Union starting a trade war regardless of how unlikely that is and so they continue to appease the EU’s outrageous demands.
It is plain as the nose on your face that the Windsor Agreement was oversold as something it was not.
It was an improvement on the NI protocol, I absolutely acknowledge that, but it falls short of dealing with all the problems. And the Prime Minister and his cheerleaders would have been far better suited to have been honest with us all instead of trying to spin us into the willing suspension of disbelief.
We were told by the PM that the Irish sea border has gone – it clearly hasn’t – but this claim in the latest Government infographic has been downgraded to… wait for it… “ removes any sense of a border in the Irish sea”… You really couldn’t make it up.
How refreshing it would have been if the Prime Minister had announced his deal by saying, “I have moved the negotiations forward, I have made some wins. I recognise it doesn’t deal with all the problems, but I will keep working with European colleagues to monitor the issues”.
Instead we were treated to spin on a scale not seen since the justification of the Iraq war!
Let’s have a look at the reality of the deal:
Firstly, the Stormont Brake is not a veto, no matter what the hapless NI Secretary of State says. The current version is an attempt to put a veneer of consent on the fact that European law will still apply in my part of the United Kingdom.
The mechanism could be strengthened by the Government, because after all Parliament is sovereign, but my guess is that they will not want to upset Brussels.
The Windsor Framework does not deal with the recent decision of the Supreme Court which stated that the Protocol suspended the internal UK trade element of the Acts of Union.
Again, the Government could remedy this element by passing a simple piece of legislation as the later law will take precedence – will they do that? – it would go a long way to dealing with the constitutional aspects of the Protocol.
Another of the elements of the Windsor Framework was the construction of green lanes and red lanes. Sounds good you may think – anything going to NI for final destination from GB will go through the green lane and anything transiting through to the Republic of Ireland will go through the red lane.
However, it is not that simple as there are still forms to be completed to go through the green lane and there is still not full clarity about what goes through the green lanes.
One of the hauliers in NI has described the green lane under the Windsor Framework as not really green but pink, i.e. a lighter version of the red lane!
And what about those manufacturers in NI who only serve the UK market – do they have to abide by EU rules even though their goods are not going to the EU?
As you can see there are many important questions still to be answered and dealt with, but it appears the Prime Minister just wants to push on and prioritise good relations in Europe over internal constitutional issues.
Many who supported Brexit see this Framework as a gateway back into the EU.
Alex Story explained in his article for The Express, ‘Sunak capitulated — this is step one to UK’s craven re-joining of the EU’:
Sunak’s Windsor Framework breaks up the United Kingdom. It creates a border that did not exist and that no one wanted.
In effect, Sunak chose subjugation and humiliation.
He didn’t kick the can into the long grass so much as build a framework for our eventual and full capitulation.
Accepting no divergence between the United Kingdom and a sclerotic European Union is tantamount to climbing back onto the Titanic to hear the band strike up a tune one last time.
A country unable to pass her own laws to serve her own people according to their needs is not sovereign.
In the short term, given the mess that is the Conservative Party and the duplicity of the Labour Party, there is little doubt that the Government will get its way – by hook or by crook.
Accepting humiliation once, however, is a sure way of guaranteeing we will suffer more indignities at ever decreasing time intervals until, in the end, our heads bowed, we will be forced to re-join on extraordinarily onerous terms. The French will have it no other way.
By choosing short term expediency instead of solid principles, the Government is telling us that our country no longer matters to it.
If this sounds like an exaggeration, it is worth remembering that beyond the empty rhetoric and the torrent of dishonesties we hear daily lies a graveyard of broken promises and discarded pledges.
The jam is always promised for tomorrow.
Our borders are none existent; Our children are under attack in their schools and in their towns; Our police are no longer concerned about real crimes such as burglaries, assaults, and grooming.
Our Government no longer knows how to govern and is desperate to delegate the arduous task to a non-democratic body beyond our shores …
And a country unable to govern itself cannot long survive …
Sunak, to his very small electorate, promised competence.
From the point of view of a marketing exercise, the Windsor Framework and the deception it carried had a certain panache.
But, what the big print giveth, the small print taketh.
In this case, the small print points to one of the greatest acts of abject surrender to a foreign power we have ever witnessed.
Sunak is ensuring the constant interference of the European Union into our internal affairs.
And, lo, so he has.
On Friday, March 24, Foreign Secretary James Cleverly and European Commission Vice President Maros Sefcovic formally adopted the Windsor Framework:
Guido’s post says:
Sefcovic is in London today to formally adopt the agreement, after MPs voted in favour of the Stormont Brake element on Wednesday. The one and only time they’ll get to do so…
Speaking just before rubberstamping the deal, Cleverly said:
By formally approving the Windsor Framework, we are delivering on our commitment to provide stability and certainty for Northern Ireland. The Framework is the best deal for Northern Ireland, safeguarding its place in the Union and protecting the Belfast (Good Friday) Agreement. I look forward to further effective cooperation with the EU on key issues, such as security and energy.
DUP leader Sir Jeffrey Donaldson is still vowing not to return to power-sharing in Northern Ireland though…
Good for him and the DUP.
This will end up being as divisive as Brexit, because the other main parties in Stormont are ready to resume power-sharing.
On Wednesday, March 8, I went out for a leisurely lunch.
I thought I could avoid the parliamentary debate, which inevitably becomes party political. As it did … on Thursday afternoon, while I was preparing dinner.
Looking back at Wednesday, Guido Fawkes’s Christian Calgie gallantly wished British women a happy day. Pictured are all the British political parties that, at one time or another, have had an elected female leader. All, that is, except for — wait for it — Labour:
Guido’s post says (emphases his):
On today’s International Women’s Day, Guido thought it was time to celebrate the first female leaders of significant political parties in the UK. The timeline of trailblazers is:
-
- Conservative Party, Margaret Thatcher, 1975
- Green Party, Jean Lambert, 1992
- Welsh Nationalists, Leanne Wood, 2012
- Scottish Nationalists, Nicola Sturgeon, 2014
- Democratic Unionist Party, Arlene Foster, 2015
- UKIP, Diane James, 2016
- Liberal Democrats, Jo Swinson, 2019
- [Labour Party, NA, NA]
Unless Sir Keir has a big announcement to make, sadly the Labour Party can’t yet properly participate in this list…
Guido and his team reinforced the message about Labour’s lack of elected lady leaders:
A Labour group later tweeted about diversity on this day. Look closely at the photos. What do you see?
A cross-dressing career comedian who hopes to be a Labour candidate in the next election is pictured in the second row from the bottom, second photo from the right. His name is Eddie Izzard. This week, he declared that he would like to be known as Suzy.
Labour make themselves out to be the progressive choice. Yet, one of their MPs, Lloyd Russell-Moyle, did a bit of mansplaining to a doctor on the BBC’s Politics Live about the importance of using gender-neutral language when describing medical conditions that women have. Recently, he tried to intimidate a female Conservative MP during a debate in the Commons:
The Shadow Health Minister, Labour’s Wes Streeting, has form when it comes to names for women:
Perhaps he has since repented. After all, the tweets Guido captured (more here) are well over 10 years old.
Before marking the next general election ballot for Labour, British women might want to imagine themselves in a hospital bed and having Mr Streeting visit their bedside as Secretary of State for Health and Social Care in a few years’ time. What would he call them: ‘old bag’, ‘cow’ or ‘tart’?
Elsewhere, a Conservative MP, Theresa Villiers, appeared on GB News and sent Guido a photo of the channel’s gender-neutral loos:
Guido tells us that GB News has nothing to do with the loos. They come with the building:
Chipping Barnet MP Theresa Villiers was on GB News and sent Guido this picture of the gender-neutral toilets at their Paddington studio – she was most disconcerted to find men coming in whilst she was touching-up her make-up. Opining that “This doesn’t seem entirely consistent with their apparent enthusiasm for fighting culture wars” …
The private sector seems to be solving the fellas-in-frocks in the same washroom as teenage girls problem with single cubicle washrooms. It is obviously more expensive to build single-person washrooms, the higher costs are less controversial than the alternative. Expect to see more of these in the future…
Returning to Labour, Shadow Chancellor Rachel Reeves gave the Evening Standard an incredible piece of misinformation on Wednesday:
Ms Reeves began her career at the Bank of England, where the court of directors has 13 men and just three women …
“I want it to change,” Ms Reeves told the Standard.
“I have worked at some of those institutions. The Bank has never had a female governor. There has never been a woman chancellor in 800 years. I want to see change.
“When I started at the Bank of England my graduate intake was 37 and only six of us women.”
Ms Reeves began at the Bank 23 years ago, in the same graduate intake as former Health Secretary Matt Hancock.
She’s right, but she’s also very wrong. An MP should know better.
I read that article on the train home from lunch yesterday and nearly went ballistic.
Here’s why.
Every now and then, a photographer manages to get the part of the door to No. 10 on which there is a brass plate above the doorknob that reads:
FIRST LORD OF THE TREASURY
Perhaps Ms Reeves needs to look at more photos of that famous door.
The First Lord of the Treasury is a title that the Prime Minister holds.
To whom does the Chancellor report? The Prime Minister.
We have had three female First Lords of the Treasury — thanks to the Conservatives. They are Margaret Thatcher, Theresa May and Liz Truss. The inscription is just above the letterbox slot:
That’s three more female Party leaders and Prime Ministers than Labour have had.
The UK is doing well as far as women in leadership positions go. Well done, Conservatives.
My post last Friday was about Liz Truss’s 4,000 word essay in The Telegraph, her 49-day premiership and the support her mandate for growth subsequently received.
There is still tension among conservative and Conservative voters about the direction of Rishi Sunak’s premiership, especially with Jeremy Hunt installed as Chancellor in the last days of Truss’s time in No. 10. Jeremy Hunt is a man no Conservative Party member ever wanted to see in either No. 10 or No. 11 Downing Street. Since October 2022, he seems to be running the country.
Even worse, Conservative Party members were denied a vote for Truss’s successor. The Parliamentary Conservative Party elected Sunak and were delighted to crown their man without input from people they consider as plebs. That said, not every Conservative MP was happy with the new Prime Minister.
Public sentiment is not in Sunak’s favour, as this poll from December 19 shows. Liz had far higher ratings in September:
Guido Fawkes wrote (red emphases his):
New polling from Ipsos MORI continues to show the dire state of Rishi Sunak’s party. The poll puts Labour’s lead at 26%, up 7% on November, with the Conservatives’ trust on the economy falling. On public trust to secure economic growth specifically, Rishi’s ratings are now significantly lower than Liz Truss managed. Liz had a lead of 15% over Labour, Rishi is level.
Economic statistics paint a similar picture. The economy outperformed other months in October, registering 0.5% growth in the one month Liz was PM. It seems the public had good reason to initially back Liz’s pro-growth message.
This might seem like ancient history, but Jeremy Hunt’s Spring Budget is due in March. He presented his Autumn statement in November.
On November 19, Liz Truss’s favourite economist Patrick Minford wrote an analysis of Hunt’s budget for The Telegraph. The opening and closing paragraphs follow:
Jeremy Hunt’s Autumn Statement has presented us with big tax rises and spending cuts in order to avoid a large “fiscal hole” created by the need to have the debt-to-GDP ratio falling by 2027-28 – the new “fiscal rule”. But it will worsen the recession and ironically will also wreck the public finances.
In short, the Autumn Statement is a wrecking ball – worsening recession, damaging growth, degrading the long-run public finances and even raising inflationary wage costs. Commons amendments are needed to restore sanity to these plans.
He had a much better critique for non-economists on November 5. While he disapproved of Truss’s and Kwasi Kwarteng’s mini-Budget delivery, he wrote (purple emphases mine):
The danger now is serious. Sunak and Hunt are set on a course that will turn a stagnant economy into a shrinking one, with unemployment rising, firms folding and the quality of public services declining even more.
The whole notion of a growth agenda has tragically been rendered toxic. The track we are now on – fiscal tightening (tax rises and spending cuts) plus monetary tightening (high interest and mortgage payments) – has been tried before and invariably leads us further on to the scorched earth of more tax rises, more spending cuts and a slump in living standards.
Politically, for the Conservatives, the outlook is grim. If Sunak and Hunt press ahead in the November 17 Autumn Statement with their triple whammy of tax rises, spending cuts and higher mortgage rates, the country is unlikely to forgive them.
That same day, The Telegraph released results of an Ipsos UK poll showing that voters were deeply unhappy with Hunt’s tax increases:
Tory MPs have told The Telegraph that the decision by Jeremy Hunt, the Chancellor, to raise Britain’s tax burden to the highest level since the Second World War on Thursday was the “economics of a madhouse” that has made the party “more Labour than Labour”.
Polling conducted for The Telegraph by Ipsos UK shows the statement has also failed to reassure voters, with almost half of the public reporting they feel more concerned about the economy and their personal finances than they did beforehand …
In the wake of the Autumn Statement, three Conservative MPs told The Telegraph they had visited constituency associations and been met with hostility from members about the tax increases.
“I had an association dinner the day after the Kwasi and Liz mini-Budget – everybody was full of enthusiasm, they were excited again, they could see Conservative policies coming over the hill and they were cheering,” said one backbencher. In contrast, the atmosphere at a dinner following Mr Hunt’s statement was “unbelievably subdued”, they said.
Jacob Rees-Mogg, the former business secretary, said: “Conservative members are fretful, I think it’s fair to say. They are loyal but fretful.
“They want to support Rishi [Sunak] and they want him to do well, but they are concerned about where we are on the economy.”
Sir Bill Cash, the veteran Tory MP, said there was a “sense of bewilderment by some people at seeing things brought forward that are not at all Conservative economically or politically”.
Another senior Tory MP said the party’s supporters were “furious” about the statement, which they described as “the economics of a madhouse”.
“Our voters feel as if frankly we’ve abandoned them and that we’ve become more Labour than Labour,” they said.
On November 20, Liam Halligan, GB News’s economics editor who also writes for The Telegraph, wrote, ‘The Chancellor is taking us for fools with his cynical stealth budget’:
This Autumn Statement was based on a false premise: that the UK is on the brink of fiscal implosion and set to be shut out of international bond markets.
As a result, Chancellor Hunt is imposing very substantial tax rises at precisely the wrong time, which risks driving an already shrinking economy deeper into recession and undermining our public finances even more.
Hours before Jeremy Hunt stood up in the House of Commons on Thursday, the 10-year gilt yield – the annual interest the Government must pay on a new decade-long loan – was 3.14pc.
Ahead of the now notorious mini-Budget in late September, that same yield was 3.49pc – considerably higher.
It’s not as if Britain is so much more indebted than other comparable countries. While our national debt stands at 97pc of GDP, the figures in France, Canada and the US are 115pc, 116pc and 132pc respectively. Across the G7, only Germany has less public debt than the UK.
But prior to the measures proposed by then Prime Minister Liz Truss and her Chancellor Kwasi Kwarteng, no-one was seriously questioning the UK Government’s solvency.
They weren’t before this Autumn Statement either, as illustrated by the fact that – partly because of measures Hunt already implemented since becoming Chancellor – gilt yields had fallen by a third in little more than a month.
As such, was it really necessary, in the midst of a cost-of-living crisis, to drive the tax burden even higher? Government revenue as a share of GDP – 33.1pc as recently as 2019 – is now heading for 37.1pc, the highest sustained level since World War Two.
… no other major economy is imposing sharp tax rises in the face of a slowdown.
The UK is heading “into a storm”, as Hunt said. But while he attempted to come across as humane – the word “compassion” appeared five times in a speech lasting less than an hour – the Chancellor came across as rather cynical …
It’s as if he thinks we are fools and won’t notice we’re paying much more if most headline tax rates stay put.
When Nigel Lawson introduced the 40p rate of tax in 1988, it was paid by only the highest earning 1.7 million workers. Now, those paying income tax at 40pc or more will soon number almost 8 million – a fifth of the workforce …
This is the kind of fiscal management typically associated with Labour, not the Tories. And that could turn out to be ironic – given the voter anger that will be generated as this Autumn Statement sinks in.
Meanwhile, on another front, Rishi Sunak was undoing Truss’s plan for a streamlined, more controlled No. 10. ‘SpAds’ below means ‘special advisers’. I note that Sunak’s welcome into No. 10 was much more muted than Liz Truss’s:
Sunak also rejected Truss’s plan for more affordable childcare.
On New Year’s Day 2023, The Telegraph reported:
Rishi Sunak has shelved plans for a major overhaul of the childcare system aimed at saving parents money and helping them back into work.
Liz Truss had been looking at increasing free childcare support by 20 hours a week and ending mandated staff-child ratios in what her team described as a “big bang” shake-up of the system.
But The Telegraph understands that the policy drive has been postponed indefinitely, with the scale of reforms now being considered expected to be much smaller. Any proposed changes to the rules around childcare provision are not expected for months – a much later timescale than Ms Truss’s push for announcements before Christmas …
The cost of childcare is often named by MPs as a major concern for constituents, with backers of reform arguing that better, cheaper provision would allow more parents to return to work, boosting the economy.
A stark drop in the number of facilities offering childcare has been a trend for years, with an overall fall of 10,600 providers since August 2019 in England – a 14 per cent drop.
Two days later, The Times reported, ‘Don’t ditch my childcare reforms, Liz Truss tells Rishi Sunak’.
Here we see Conservative MP Simon Clarke appearing. He will be a Trussite force with which to be reckoned this year. He was also a Treasury minister when Sunak was Chancellor:
Liz Truss has warned Rishi Sunak not to scrap her childcare reforms amid growing frustration from Tory MPs over the “unaffordable” costs facing parents …
Supporters of Truss, including Simon Clarke, the former levelling up secretary, are among those who have publicly criticised Sunak’s plans.
Truss herself is understood to disapprove of the prime minister’s reluctance to embrace significant reform.
A source close to Truss told The Times: “Excessive bureaucracy is making childcare in England increasingly unaffordable for many parents. The system needs to be reformed in order to boost growth and opportunity. Junking Liz’s plans for this critical policy area seems economically and politically counterproductive.”
Kit Malthouse, the education secretary under Truss, urged Sunak to “push the go button as soon as possible”.
“The current system is a complicated Heath-Robinson affair that means no one, parents or providers, is happy. It’s fundamental for economic growth that parents are supported in work and my team and I had formed up a ‘Childcare Big Bang’ plan to do just that,” he said …
Amid concerns from Tory MPs over the spiralling costs of childcare, the education select committee will launch an inquiry into the problem.
On January 5, The Times‘s Katy Balls told us more about Simon Clarke’s mobilisation of Trussite MPs:
Shortly before Christmas, in a darkly lit Chinese restaurant near the Home Office, a scene played out that would alarm any government whip. There, in a corner of Ma La Sichuan, was Liz Truss, dining with three of her allies. Simon Clarke, her one-time levelling up secretary, and Ranil Jayawardena, her environment secretary, were present. They were joined by her former parliamentary private secretary Rob Butler. None of them have prospered under Rishi Sunak.
… Clarke has already opened hostilities with Rishi Sunak, pushing to overturn the ban on new onshore wind farms. He’s backed by Truss and Boris Johnson. He’s also setting up a new group of Tories dedicated to that Trussite watchword: growth …
The less-than-edifying circumstances of Truss’s ejection from Downing Street mean that both she and members of her cabinet have been keeping largely quiet …
But as the Trussites emerge from a period of reflection, they could pose the bigger threat in an ideological fight. They did, after all, triumph over Sunak in the argument with Tory members. “These MPs haven’t suddenly changed their worldview,” says a former adviser to Truss. As Clarke put it in an interview with The Spectator this week, “There is a real risk that with Liz’s eclipse comes the wider rejection of an entire school of Tory thinking.” He warns that “a battle for the soul of the Tory party is underway”.
The good news for Sunak is that as things stand, a large chunk of these MPs don’t want to throw another prime minister out of Downing Street. Free market Tories in marginal seats, such as Clarke and Jacob Rees-Mogg, will be nervous about more leader volatility ahead of the next election. But they also don’t want to sit back and do nothing for two years. Instead, they want to see Sunak expand his ambitions for growth across housing, childcare and work …
Clarke’s new outfit — Next Generation Tories — is aimed at bringing younger voters to the party, a cause few would disagree with. But it is ultimately free market with a focus on housebuilding and planning.
Truss could join the fray next. She has hired a press chief and there are talks about the possibility of her fronting or taking a role with a think tank. Not everyone thinks it is such a great idea. “I think silence is undervalued,” says a former aide …
The Truss project didn’t survive long enough for her to publish her growth plan, but a draft of the eight-page document offers a taste of the kind of policies this group is likely to advocate. They include mobile phone planning reform (relaxing planning regulations to extend 5G coverage across the country) which aides predicted would cause a parliamentary row over the digging required for new cabling. On childcare, easing restrictions for childminders; on farming, slowing cuts to subsidies to give the average farmer an extra £7,000 over two years; and on immigration, removing students and temporary workers from the net migration statistics as part of a looser policy to bolster the economy.
… while some MPs undoubtedly backed Truss for careerist reasons, plenty more regard her reform pitch as the right one. “If they pick their fight well, they’ll start a debate on direction,” says an MP who backed Sunak.
Katy Balls, who also writes for The Spectator, revealed Truss’s growth plan in the magazine on February 9. It is eminently sensible and achievable. Truss planned for much of it to be achieved in 2023. Readers may peruse it at their leisure, as there are several tables to examine.
Returning to January 2023, the Financial Times took issue with Conservative efforts to reduce the deficit. They really have moved ever leftward over the years:
It also became clear that Truss wasn’t such a bad PM after all. The UK’s GDP results for November 2022 were better than expected:
On January 31, The Telegraph‘s Tim Stanley wrote that the IMF owes Liz Truss an apology. He reminded us of their previous critique in light of their new forecast:
Conservative Greg Clark made one very good point: this is only a forecast. The IMF has been known to get those wrong.
Moreover, it’s the same clever-clogs IMF that advised us not to cut tax last year that now tells us our economy is in a nosedive because we raised taxes. Somebody owes Liz Truss an apology.
The Telegraph should apologise, too, for putting words in Truss’s mouth when headlining her 4,000-word essay of February 4, their grand exclusive. The problem is that people who didn’t read the essay, probably among them Andrew Neil, repeated the headline:
The day after Truss’s essay appeared, her Conservative Party chairman, Red Wall MP Jake Berry, told the BBC that voters in the North had enough of the status quo and wanted a new way forward, i.e. Truss’s policies. Guido Fawkes has the video:
That day, Grant Shapps told the BBC that Truss’s instinct to lower taxes was correct in principle, but she collided with reality. A Twitter user pointed out Shapps’s error. Truss’s policies would have kept the UK second only to Germany in debt-to-GDP ratio of the G7 nations:
James Dyson, the vacuum cleaner mogul, would strongly disagree with Shapps. On January 19, The Guardian recapped an article he wrote for The Telegraph in which he criticised the lack of UK growth:
The founder of the eponymous vacuum cleaner firm said “growth has become a dirty word” under the current leadership and that on current trends, the average British family will be poorer than their Polish counterpart by 2030.
Dyson, a prominent supporter of Brexit, criticised the government’s “ever higher tax bills” for the private sector and regulations, saying it is imposing “tax upon tax on companies in the belief that penalising the private sector is a free win at the ballot box”.
“This is as shortsighted as it is stupid,” Dyson wrote in the Telegraph on Thursday. “In the global economy, companies will simply choose to transfer jobs and invest elsewhere. Our country has an illustrious history of enterprise and innovation, born of a culture which we are in the process of extinguishing. We have got through the worst of Covid, but risk wasting the recovery.”
Dyson said the government’s failure to get workers back to the office after the pandemic had “badly damaged the country’s work ethic”, arguing face-to-face interaction was important, including for the training of new and young employees. He also claimed the growth of his business, which makes vacuum cleaners, fans and hairdryers, had happened largely “despite government, rather than because of it”.
However, he concluded that “it is not too late for Britain to shake off its Covid inertia” if the government acts fast. “Starting with the spring budget in March, it must incentivise private innovation and demonstrate its ambition for growth,” Dyson wrote.
The government is under pressure to reduce taxes for households and businesses in the spring budget to avoid a damaging and long-lasting recession.
On Sunday, February 12, John Redwood, who has been an MP since the Thatcher years, made an appeal on Sky News for more tax cuts, beginning with corporation tax (Guido has the video):
The following day, he wrote more about it in his online diary, pointing out that high corporation tax has caused AstraZeneca to renege on future expansion in the UK. Instead, the company will be moving to Ireland:
The decision by Astra Zeneca to put a major new investment into Ireland where they charge 15% business tax compared to our new rate of 25% shows just how stupid our high tax policy is. Instead of getting 15% of a good stream of profits over many years alongside income tax and VAT on all the well paid ,jobs they bring, the UK has settled not to have any of it. 25% of nothing is nothing.
The same folly is evident in the North Sea. In a rush to get a bit more revenue this year with high and erratic windfall taxes, the government has delayed or lost important investments in new gas and oil fields. Instead of generating more well paid jobs and plenty of tax revenue on the output over the next decade or two, we opt to import and to pay huge taxes away to foreign governments on all the imports. Just one of the fields not currently going ahead would generate a gross £25bn over its life, with a lot of that passing directly to the Treasury in taxes.
Ireland makes my case perfectly. With a much lower rate of business tax than us Ireland enjoys a much higher proportion of its revenues from business tax because so many businesses go there to set up an HQ and to invest in plants and offices. Ireland has a much higher per capita national income than us thanks to all the foreign investors congregating there to create jobs and spend money. The UK should copy them with a 15% tax rate as Jeremy Hunt himself proposed last summer. We too would get more revenue and have higher per capita average incomes. Enthusiasts for the EU are always urging us to align more with our Irish neighbours. This would be a great way of doing just that.
When Margaret Thatcher and her Chancellors cut higher rate income tax from 83% to 60% and then to 40% the amount of income tax paid by the better off rose in cash terms, rose in real terms, and rose as a proportion of total income tax. What’s not to like for all involved? When George Osborne drove UK corporation tax down gradually to 19%, the take from company tax went up, not down. So why do OBR and Treasury models tell Ministers any cut in tax rates will lead to a reduction in tax revenue we cannot afford? History and modern experience suggests otherwise.
Last week, economic growth continued to be a hot topic. On February 24, The Telegraph published two letters from their readers on the subject.
One reads:
SIR – For many years we have believed that we live in a rich country – one that can afford top-class services such as the NHS, social support and good roads, railways and other infrastructure, and can buy whatever food it needs from abroad rather than growing it.
Sadly this is no longer the case. Britain does not generate enough wealth to support its needs, and has been borrowing ever more to make up the shortfall. Unless we make a fundamental change and start to grow our economy, we will not be able to afford the things we think we are entitled to.
The other says:
SIR – When will the Chancellor and Prime Minister remember that taxation discourages whatever it falls on, and that, in many cases, raising tax rates leads to lower overall receipts?
… we have ended in the grotesque chaos of a Conservative government – a Conservative government – scuttling around raising corporation tax at precisely the moment it should be lowering it in order to encourage businesses to set up and invest in our economy.
Meanwhile, the wagons have been circling from both the Sunak and the pro-Boris camps.
On the Sunak side, Lee Anderson is now the Deputy Chairman of the Conservative Party and, on February 21, another Red Wall MP, Brendan Clarke-Smith, was appointed to succeed Anderson as leader of the Blue Collar Conservatives. While both will do brilliantly, is it just a cynical move from Sunak to keep Red Wall voters onside with no policy changes from Downing Street?
On the pro-Boris/Liz side of the equation, David Campbell-Bannerman, a former Conservative MEP and head of the new Conservative Democratic Organisation, says that Conservative associations across England are prepared to de-select MPs who resigned when Boris was PM so that he was himself forced to stand down. They are also angry that they voted for Liz Truss and found her similarly deposed within a few weeks.
On February 23, The Telegraph‘s Christopher Hope reported:
Members are particularly irked that they chose both Mr Johnson and Ms Truss, only for MPs to force out both and eventually appoint Rishi Sunak as Prime Minister. During the Conservative leadership campaign last summer, members voted by 57.4 per cent to 42.6 per cent for Ms Truss over Mr Sunak.
Last weekend Damian Green, the former de facto deputy Prime Minister under Theresa May, was not selected to fight the Weald of Kent seat at the next general election. There were reports that this was because of anger at his criticism of Mr Johnson when he was prime minister, although this was disputed by friends of Mr Green.
Scores of MPs are facing votes on whether they will stand at the next election before July 23 – known as “vesting day” in Conservative Central Office – because of a shake-up of constituency boundaries.
There were suggestions in Westminster that Sir Richard Graham, who was critical of Mr Johnson, might not be readopted by his party at a meeting of local Tories in Gloucester on Friday. Sir Richard urged Conservative colleagues to focus on defeating Labour rather than party disunity …
Mr Campbell-Bannerman, a former Conservative MEP, told The Telegraph’s Chopper’s Politics podcast: “I get the feel of a reckoning – MPs being held to account. MPs have caused this chaos by bringing down Boris.
“There were about 60 MPs who signed letters or resigned or said Boris should go. There’s more than that, maybe 150, who didn’t want Boris. I’m not saying Boris was flawless. He certainly wasn’t. But look at the disaster that has followed getting rid of him. Surely they should have toughed it out, got him to improve performance?”
He added that “potentially” dozens of these MPs could now find that they are not adopted as candidates by their local parties, adding: “A lot of MPs will be coming up for selection and they will be held to account.
“I’m not advocating it, but what I’m advocating is the members have the right and the power to do this. Central Office should back off and they should be allowed to make their decisions.
“We don’t have a hit list or a target list. We’re not operating like that. But we support members and I think we’ve empowered members to take back control, to say hang on, this isn’t good enough. We’re not getting a good enough choice here. We want to do it our way.”
He said MPs were “being held to account for plunging the party into crisis”, pointing out that the Tories had plummeted in the polls.
“We’ve really gone down badly, due to the chaos. And you can point fingers at Liz Truss, but Liz Truss would not have been there if they had kept Boris and Rishi wouldn’t be there if they had kept Boris,” he added.
Good! Well said!
Liz Truss stood by Boris all the way until the end. Her South West Norfolk Conservative association awarded her with reselection for the next general election:
An indirect compliment came Liz’s way from Labour’s Keir Starmer. Imitation is the sincerest form of flattery. He, too, is touting a growth-led economy — for now, at least:
An exciting year lies ahead, one that will make or break either the Conservatives or Labour ahead of 2024’s general election.
On February 4, 2023, Liz Truss wrote an exclusive 4,000 word article for The Telegraph: ‘I assumed upon entering Downing Street my mandate would be respected. How wrong I was’.
The date matters as it had been around 100 days since she left office as Prime Minister.
Excerpts follow, emphases mine.
She reflected on where she was at this point in 2022. February 24, the date of this post, is the first anniversary of the Russia-Ukraine conflict:
One year ago this week, I went to Moscow as foreign secretary to warn my Russian counterpart of the grave consequences that would result from any invasion of Ukraine. Had anyone told me then that, 12 months later, I would be a backbench MP following a 49-day term as prime minister, I would not have believed it.
Since my departure from Downing Street just over 100 days ago, I’ve spent many hours reflecting on what happened during my time there, what went wrong and what I might have done differently. This soul-searching has not been easy.
Now I want to set out, from my perspective, what happened and what I have learned.
Urgency
When Boris stood down as Conservative Party leader on July 7, Truss was in Bali at a G20 meeting of foreign ministers:
I watched his speech live in my hotel room. It struck me as crazy to be deposing a leader who had secured an 80-seat Commons majority for the Conservative Party less than three years ago.
I had always assumed that Boris would fight the next general election in 2024. Standing for the leadership myself was a faraway prospect and, as a result, I didn’t have any kind of infrastructure in place for the contest on which the starting gun had just been fired.
All I had in that hotel room, nearly 8,000 miles from Westminster, was a series of messages urging me to return to London – including one from a fellow foreign minister that simply read: “Get back home woman and start hustling.”
That’s what I felt compelled to do.
She thought that boldness was the way forward:
I feared the consequences of high energy prices, high taxes and a slowing global economy without bold action. What we really needed was a change in policy direction and mindset in order to kick-start a return to sustainable economic growth.
As it was, the Government’s economic policy platform included raising National Insurance (imposing the so-called Health and Social Care Levy) and increasing corporation tax to the same level as France – positions which I had vigorously challenged around the Cabinet table. Meanwhile, I sensed increasing resistance within the Government to the essential proposals to diverge from EU rules.
Sounds familiar, doesn’t it, under Rishi Sunak and Jeremy Hunt? No wonder she had to go.
She felt a sense of urgency:
As I started piecing together my nascent leadership campaign, I was struck – not for the last time – with a sense that there was a vast amount to do and very little time in which to do it …
My party agreed that we needed to stop drifting in the direction of a higher-tax, higher-spend economy being choked by ever more regulation, which was causing sluggish growth, low productivity and a dampening of enterprise and innovation. My plan to get Britain back on the right trajectory was popular.
Her husband warned her about throwing her hat into the ring:
… my husband warned me that it would be awful – I could not duck the challenge. I knew that if I didn’t step up, I would regret it …
The leadership campaign turned out to be as brutal as my husband had feared. I was called everything from immoral to insane – and that was just some of the “friendly fire” I encountered.
As Prime Minister:
Instinctively, I was determined to act with maximum speed. I knew this risked mistakes being made, but the normal pace of the Whitehall machine would be nowhere near sufficient to tackle the immediate emergencies we were facing, let alone to attempt to get the British economy onto a path to growth with barely two years left until the next election.
As a matter of urgency, I dealt with the issue of energy bills, which were projected to rise as high as an annual £6,000 for British families as a consequence of Vladimir Putin’s invasion of Ukraine.
Designing a targeted scheme was impossible given the urgency of the situation, so it had to be universal. Families and businesses would not be able to cope for much longer without assistance. I was also working on ways of mitigating the costs, in particular by signing up to longer-term energy supply agreements as well as through enabling more North Sea production, fracking and renewable energy. We urgently needed to move away from the short-termist approach that had left the UK dependent on global energy prices and vulnerable to the actions of a hostile state with strategic energy interests.
The benefits to the economy of the package were clear: it was set to reduce peak inflation by five per cent and contribute to our primary economic objective of boosting trend growth to 2.5 per cent. It’s no exaggeration to say that there are firms which remain in business today only because of the action we took. This intervention prevented a major economic crisis. The markets welcomed my intervention, reducing the sky-high levels of uncertainty and anxiety.
The mini-Budget
The Queen’s death and the consequent suspension of Parliament for two weeks did not help Truss’s time in Downing Street.
Still, she had to press on, regardless:
… because of the expected size of the energy package (albeit dwarfed by the money spent on Covid-19 pandemic measures), it was going to be necessary for us to make a fiscal statement very soon.
The date of what inevitably became known as the mini-Budget was set for Sept 23. In hindsight, perhaps we could have delayed it for a few days. However, much longer than that would have meant not sticking to our commitments.
There were concerns in some quarters that the announcement would not be accompanied by forecasts from the Office for Budget Responsibility (OBR). However, the OBR’s core purpose is to produce twice-yearly forecasts on whether the Government is on track to meet its fiscal targets. Commissioning a report at that juncture would not have been appropriate, given that the forecast would have been unable to take into consideration the future spending decisions we planned to outline in the Medium Term Fiscal Plan a few weeks later.
It’s also worth recalling that no OBR forecast has accompanied many other fiscal announcements, not least the Covid-19 furlough scheme, which cost £70 billion.
As I had spelled out during the leadership campaign, I wanted to go for growth by reversing the proposed rises to corporation tax and National Insurance and implementing a programme of economic reform in order to prevent recession and stagnation and put the UK on a positive path.
Treasury opposition
She described how the civil servants at the Treasury think:
I saw first-hand during my two years as chief secretary to the Treasury that pessimism and scepticism about the growth potential of the British economy are sadly endemic at the Treasury: serious planning reform was dismissed as not politically deliverable; discussing monetary policy was a taboo; deregulation of financial services and other industries was viewed as undermining the prospects of a deal with the EU; and Brexit was seen as a damage-limitation exercise rather than a once-in-a-generation opportunity.
Instead, the focus from the Treasury was on micro, top-down tinkering such as productivity initiatives trying to encourage firms to become more efficient, along with government intervention.
Favourable reception
Truss called our attention to the favourable reception of the mini-Budget:
Following the announcement on Sept 23, the National Institute of Economic and Social Research came out and forecast that our energy support guarantee, coupled with the tax cuts announced, would lead to positive GDP growth in the fourth quarter of 2022, shortening the recession and raising annual GDP growth to around two per cent over 2023-24.
There were positive reactions from many quarters. Kitty Ussher, a Treasury minister in Gordon Brown’s government and now chief economist at the Institute of Directors, declared it “a good news day for British business”, adding that “in a time of low confidence and economic uncertainty, the new chancellor’s emphasis on going for growth will be very welcome to firms of all sizes across the UK”.
Tony Danker, director-general of the Confederation of British Industry (CBI), hailed it as “a turning point for our economy” and “day one of a new UK growth approach”, recognising that “a simpler, smarter approach to tax can pay dividends”.
There were some concerns about the abolition of the 45p tax rate, a small measure and virtually the only one I had not trailed during the leadership campaign. We were simply returning to the top rate that was in place for the vast majority of the 1997-2010 Labour government, although clearly the political sands had shifted.
Nonetheless, as the chancellor and I travelled to Kent to visit a factory that afternoon, we were positive that we had done the right thing for the country and felt optimistic about the future.
Pensions debacle a surprise
Truss explained why she was unaware of the effect of the mini-Budget on pension funds:
At no point during any of the preparations for the mini-Budget had any concerns about liability-driven investments (LDIs) and the risk they posed to bond markets been mentioned at all to me, the chancellor or any of our teams by officials at the Treasury. But then, late on the Sunday night, came the jitters from the Asian markets as they opened. I was alerted to this on the Monday morning, at which point the Bank of England governor was wanting to make a statement on LDIs.
Readers will not be surprised that, given their impact on events, since leaving office I have spent some time looking into LDIs. I was shocked by what I discovered.
In the early 2000s, pension funds were heavily underfunded. To increase their returns, they used LDIs – which use bond derivatives – freeing up cash for the pension funds to invest in other assets. This works when markets are calm but becomes problematic when the price of government bonds falls within a short timeframe. As LDIs entered the financial mainstream, with The Pensions Regulator seemingly encouraging their uptake, warnings started to be issued on the risks they could pose to financial markets – all unbeknownst to me at the time.
Astonishingly, it turns out that the value of total assets in LDI strategies is equivalent to around 60 per cent of the UK’s GDP.
The day before the mini-Budget, the Bank of England raised interest rates by 0.5 per cent, whereas the US Federal Reserve had just announced a third successive rate rise of 0.75 per cent. In addition, the Bank simultaneously confirmed plans for a bond-selling programme. Bond prices fell sharply, putting pension funds under pressure.
Dramatic movements in the bond market had already begun, meaning the mini-Budget faced a very difficult environment. Only now can I appreciate what a delicate tinderbox we were dealing with in respect of the LDIs.
Admitting mistakes
In retrospect, Truss admitted that she made mistakes:
Regrettably, the Government became a useful scapegoat for problems that had been brewing over a number of months. Interest rates had been rising internationally and mortgage costs had been forecast to go up for some time.
I fully admit that our communication could have been better. As I said during the leadership campaign, I am not the slickest communicator. In addition, we did not have a system that was enthusiastic about communicating messages contrary to its orthodoxy and, so early in my premiership, I had not established the infrastructure inside No 10 to best explain all that we were doing.
In hindsight, maybe I should not have headed to New York after the late Queen’s funeral to attend the UN General Assembly and instead supervised the final preparation of our announcements more closely.
Knowing what I know now, undoubtedly I would have handled things differently. I underestimated the extent to which the market was on edge and, like many others, was not aware of how fragile our system had become.
But, frankly, we were also pushing water uphill. Large parts of the media and the wider public sphere had become unfamiliar with key arguments about tax and economic policy and over time sentiment had shifted Left-wards. This is partly because we Conservatives had failed to make these arguments enough since 2010 – instead triangulating with Labour policy. It was also clear that, internal disagreements within my own party aside, there was a broader consensus in favour of raising taxes.
How the system operates
Truss explained how the system operates and how it fails long-term economic vision:
The process operates at arms-length, based on models which rely on a wide range of assumptions, including on the delivery of policies. In my view, this static modelling tends to undervalue the benefits of low taxes and supply-side reforms for economic growth, and overvalue the benefits of public spending. This inevitably puts pressure on a higher-tax and higher-spend outcome – hence the inexorable tax rises we are now seeing.
In the medium term, I believed my policies would have increased growth and therefore reduced debt.
Five-year forecasts are treated as accurate predictions and therefore filling the “gap” becomes the imperative of government policy. This leads to policies being adjusted to fit those forecasts, only for those forecasts to be revised with each new iteration of the figures, forcing further policy change down the line.
As a result, the Government is forced to make economically detrimental decisions, such as raising corporation tax, based on uncertain forecasts that may not come to fruition. For example, in September the energy package was set to cost £60 billion and by November it was forecast to be £43 billion, yet the latest projections are considerably lower.
Global opposition
With Truss at the helm, the UK was out of step with the rest of the Western nations. Conservative Party members might have liked her policies, but TPTB clearly did not:
We were also swimming against the international tide. There was a concerted effort by international actors to challenge our Plan for Growth. The IMF commented on distributional aspects rather than market stability which it is hard to conclude was anything but politically motivated.
Then there was the intervention from President Biden, who publicly voiced his disagreement with our economic policy, stating: “I wasn’t the only one that thought it was a mistake.”
These interventions were, sadly, in tune with growing efforts on the world stage to limit competition between G7 economies, as evidenced by the proposed global minimum tax rates.
Facing the headwinds we did, I could not allow the markets – backed by this economic consensus – to keep betting against the UK. Before long, I was given the starkest of warnings by senior officials that further market turmoil could leave the UK unable to fund its own debt. This is why I reluctantly concluded I had no option but to remove the chancellor and change the policy.
I was deeply disturbed by having to do this. Kwasi Kwarteng had put together a brave package that was genuinely transformative – he is an original thinker and a great advocate for Conservative ideas. But at this point, it was clear that the policy agenda could not survive and my priority had to be avoiding a serious meltdown for the UK. I still believe that seeking to deliver the original policy prescription on which I had fought the leadership election was the right thing to do, but the forces against it were too great.
I am very pleased that elements of it did survive – the reversal of the National Insurance rise and the cuts to stamp duty – and those measures have eased the burden a little on hard-working families and those buying their own home. But it was obviously going to be difficult to remain as prime minister after abandoning the thrust of the platform on which I had been elected, and it was already clear that elements of the parliamentary party were not prepared to allow me to stay.
I am not claiming to be blameless in what happened, but fundamentally I was not given a realistic chance to enact my policies by a very powerful economic establishment, coupled with a lack of political support.
Party opposition
Both Truss and Conservative Party members learned something about their MPs:
I underestimated the resistance inside the Conservative parliamentary party to move to a lower-tax, less-regulated economy. The furore over the reduction of the top rate of income tax was testament to this. In the overall package of measures, it was – in fiscal terms – little more than a rounding error, equivalent to 0.2 per cent of government spending. Even though the measure was economically sound, I underestimated the political backlash I would face, which focused almost entirely on the “optics” …
As a result:
We have ended up in a situation as a country where fiscal policy is in a straitjacket. Moreover, there is a worrying economic consensus – both at a national and, increasingly, international level – that is preventing economic dynamism and growth.
Median incomes here in the UK are now well below those in the US, Switzerland or Norway and the average in developed countries. If we are to succeed in putting our country on a path to high growth, rising wages and becoming internationally more competitive, things need to change.
We have not done enough over the past decade to make the arguments for a lower-tax, more deregulated economy, which meant that the groundwork had not been laid for what I sought to do …
And while I saw the power of “the blob of vested interests” within many a Whitehall department during my more than 10 years in ministerial office, I seriously underestimated the strength of the economic orthodoxy and its influence on the market.
Nonetheless, the average Joe and Jane are on Truss’s side:
I have lost track of how many people have written to me or approached me since leaving Downing Street to say that they believe my diagnosis of the problems causing our country’s economic lethargy was correct and that they shared my enthusiasm for the solutions I was proposing.
Ultimately, she still has hope that the UK can turn itself around. Millions of us hope so.
Pundits’ views
On February 6, The Telegraph‘s Tim Stanley concluded that ‘undemocratic forces prevailed’.
He says that she was not given a chance, whereas Theresa May was:
Theresa May nearly lost an election and bungled Brexit, yet the Tories stuck with her for three years. In 2023, by contrast, we got through three PMs in one year.
Was this really the reason May survived and Truss did not?
That’s because our economy and society were upended by a pandemic that stoked demands for more government while injecting wild anxiety into our political culture.
Perhaps it was.
The most pathological thing is that the IMF is now advocating Trussonomics:
… last week the IMF said British recovery would be limited by its tax rises. And that, you silly people, was Truss’s entire point.
CapX‘s Jon Moynihan says that the Bank of England was at least partly responsible for Truss’s fall. He notes that no one has bothered to investigate their role in what happened in late September 2022 (green emphases his):
The Bank of England’s Governor, Andrew Bailey, offered a classic of the ‘not me guv’ genre of explanations, telling the Treasury Committee that the movement in gilt rates had been ‘outside historical experience’. But this was no bolt from the blue: the movement was a self-feeding one, caused by the leverage that regulators had permitted. Moreover, there are plenty of ‘historical experiences’ of industries with risky financial structures provoking market chaos. Remarkably, Bailey also claimed the Bank’s later bond sales didn’t move the markets. That’s an odd claim, given that their promise to purchase £65bn of bonds was responsible for stopping the gilts rout: both claims can’t be correct.
Of course, it suits the Bank to blame politicians for its own failings, particularly when the relationship between Bailey and Truss was never a particularly warm one to begin with. But there’s a much broader failure here of the regulatory system to do anything about LDI funds – one that cannot plausibly be laid at Truss or Kwarteng’s door.
Equally striking, however, is how little political scrutiny we’ve had of the whole affair. The consensus view that ‘the mini budget blew up the bond market’ seems to have been swallowed whole. But Parliament, via the Treasury and Work and Pensions committees, should be asking a long list of questions about why this situation was allowed to develop, what regulators did and didn’t know, why there seemed to be such pervasive ignorance of LDIs and how the Bank misjudged its calls on interest rates and the jump to QT immediately before the mini budget.
This is not just about identifying the mistakes of the past, however. There are still huge questions about the state of the UK’s pensions funds that we need to get to the bottom of. At the very least, we should be told the state of the funds that have not recovered from September’s rout and how big the overall hole is (Bailey told the Treasury Committee he didn’t know the answer to that question). There is also the question of which players in the market aggressively sold this high-risk strategy to pension funds, and whether they deserve sanction.
There is a separate but important set of questions about the Bank’s management of its own £5bn pension pot, which until June was 100% invested in a single Blackrock LDI fund (it was subsequently reduced to 82%).
Given the reports that this Blackrock fund took a hammering last September, we ought to know what the status of the Bank’s own pension scheme now is. The Blackrock fund was reportedly under unsustainable pressure during the bond rout, and at one point was alleged to have lost an amount in the high tens of billions of pounds, threatening complete collapse. The Bank’s Pension Fund’s share of that loss was, some claim, around £1.5bn (out of its original £5bn).
If so, all of the bank’s employees, from Andrew Bailey down, were under threat of losing much of the value of their gold-plated pensions. And imagine if the loss had not been recovered, it would have meant the Bank either reneging on its vast pension obligations to its employees, or finding £1.5bn from elsewhere, most likely you and me, the taxpayers. All of which suggests a serious potential conflict of interest concerning the Bank’s interventions in the bond markets and of its own employees’ pensions.
Yet so far we’ve had no real investigation of what the position of the Bank’s fund is, whether the money has been recovered or how much is needed to return its members to fully funded status. Likewise, there has been no discussion of whether members of the Bank’s Employee Pension Board (some on the Court of the Bank) are going to receive any criticism, sanction or blame for having acceded to what now appears an extremely naïve and dangerous investment strategy. (Indeed, today the FT reports that pension schemes are being told to sell their holdings in LDI funds, particularly Blackrock).
Former Brexit Party MEP and property developer Ben Habib blames the Bank of England — as well as Conservative MPs and the Treasury. On February 6, The Express reported their interview with him:
“Tory socialists, Michael Gove leading the charge, immediately moved to bring her down. The Treasury openly undermined her thesis. And even the Bank of England briefed and acted against her.”
The day before former Chancellor Kwasi Kwarteng’s now-infamous mini-budget, the BoE had forecast a recession, Mr Habib said.
He added: “It had been selling government bonds already putting pressure on their value. As values fell, pension funds, which had overleveraged themselves buying this rubbish were forced to dump it in order to remain solvent.
“The markets smelt a collapse and capitalised on the opportunity. Sterling was shorted. Having set-off these collapses, the Bank of England and all those who feast on state largesse laid the blame at Truss’s door.”
Within days Ms Truss had been ousted and replaced with Mr Sunak, “someone it could trust not to unsettle the status quo”, Mr Habib argued.
He continued: “Sunak (supported fully by the Bank of England) is the man responsible for increasing national debt by a whopping £500 billion, or 33 percent in just two years.
“He has borrowed more money than any Chancellor in history but the establishment saw fit to give him the keys to the country.
“The new Prime Minister is not short of self-confidence. He believes he knows best how to spend our money. To him, those of us who think otherwise are idiots.
“Liz Truss offered the nation an opportunity to reverse our managed decline. Instead, failed orthodoxy prevailed.”
Political commentator Tom Harwood also blames the Bank of England and says that Trussonomics was never tried:
In reality Truss implemented virtually none of her pro-agenda. In fact she had barely announced any of it before the men in grey suits came knocking.
But didn’t she cost us £65 billion? So say reputable sources like the Have I Got News For You twitter account, French TV’s ‘Mr Europe’, and Afghan dog rescue enthusiast Dominic Dyer. In reality, however £65 billion was not lost due to the mini budget. That was the amount that the Bank of England said it was willing to commit to stabilise the gilt market. As the independent economist Julian Jessop notes, in reality about £19 billion was spent by the bank, which – crucially – ended up delivering a profit of about £4 billion. But again, this was all before anyone had even got to the real point of Trussism.
The framework of what could have been is found throughout a document that the Rishi Sunak promptly ripped to shreds upon entering number ten. And no, it’s not all about tax cuts. In fact, the most important parts – the most interesting bits too – are the other areas of supply side reform. Cheap or free to do, and potentially transformational. It was all laid out, albeit not in full detail, in The Growth Plan.
Harwood contends that the IMF was criticising Truss’s blanket energy support plan, not the rest of her economic policy (green emphasis his):
It might be useful to explore what the IMF actually said in its press statement, the primary focus of which regarded the UK’s “aims at helping families and businesses deal with the energy shock”, going on to say that “we do not recommend large and untargeted fiscal packages at this juncture”. It’s talking about the energy price freeze. The least controversial part of the mini budget, pushed for by Labour – that free market think tanks like the Institute of Economic Affairs heavily criticised.
The IMF rightly points out that the energy price freeze would increase inequality – the plan devised by Labour and implemented by the Tories subsidises those who use more energy more than those who use less. Millionaires heating their swimming pools receive more taxpayer support than low income families in small houses or flats. And yet there was almost absolute political consensus on this enormous untargeted intervention.
Indeed, reading the IMF’s press statement in full, before any mention of tax cuts, the primary concern is clearly the energy package. A package that could have cost up to £200 billion. As the numerate will recognise, hundreds of billions of pounds is a larger amount than £8 billion. Perhaps it makes sense that this is what the IMF’s statement focussed on, ahead of new tax cuts.
Ultimately, Truss implemented a Labour plan for energy bills:
The biggest problem with the mini budget – other than a perceived disrespect for institutions like the Office for Budget Responsibility in delaying its report until months after the mini-budget – was the extra and uncertain spending the government committed to. The energy price guarantee was estimated to cost anywhere between 100bn and 200bn, although these estimates were in and of themselves guesses, as the guarantee committed the state to cover the cost of energy above a guaranteed unit price, however high it got. This was a functionally limitless commitment, made at a time of uncertainty in the international energy market. A decision clearly far more dangerous than the reversal of a handful of recent tax rises.
It was bad policy, and it was in no way free market. This element of government’s plan – pushed for by all opposition parties – was the opposite of a libertarian experiment. It was socialist.
If Conservative MPs should be angry about the Truss administration for anything, it was its capitulation to the Labour Party’s policy team and their ill thought through, indiscriminate, untargeted intervention that cost far more than the entirity of furlough.
Even the Labourite magazine The New Statesman said that Truss was not to blame for ‘crashing the economy’, something the Party’s MPs still repeat with nauseating regularity:
Too much anger about Truss’s time at No 10 has focused on the “unhappy” rather than the “brief”. There are reasonably hard limits as to what even a determined wrecker of civilisation can achieve in 49 days, particularly in an economy as large and complex as the UK’s.
To do truly lasting damage you need more time – perhaps a decade, which is roughly how long we were subjected to the fiscal insanity of austerity. The social consequences of this are too obvious to ignore: the queues at the food banks, the rough sleepers, the crumbling schools, the collapsing National Health Service. Average life expectancy, for the first time since 1900, has stalled.
But the economic impacts have been more subtle, and too little discussed. By draining demand out of the economy, spending cuts depressed growth. By slashing government investment, they undermined future productivity. The combination of both together is the primary cause of the UK’s economic malaise – more so than Brexit, and far more so than Truss.
… it wasn’t ideologues such as Truss or Kwasi Kwarteng that condemned the UK to this fate. It was dead-eyed Sensibles like George Osborne who calmly shredded our prosperity, and affable former bureaucrats who justified those decisions. As a BBC review found last week, we suffer from a corps of political journalists who lack an understanding of “basic economics”, relying instead on a limited selection of assumed authorities who, in turn, never deviate far from the Treasury view. The result was what the Confederation of British Industry head Tony Danker has called a “doom loop”: as austerity failed, its failures justified more austerity to deal with the failures. Jeremy Hunt’s response to Truss’s implosion was to insist on a new round of spending cuts, was another crank of the handle.
Did Truss cause harm while she was in office? Yes, of course. The combination of radicalism and ineptitude in the mini-Budget led to a spike in government borrowing costs, triggering unexploded bombs in our pension funds, and rising mortgage rates. But the removal of Kwarteng as chancellor and then the prime minister herself rapidly (if not quite entirely) unwound that financial damage, leaving us much as we would have been without Truss – that is to say, in dire economic straits …
Truss is a sideshow. The more we focus on her, the less attention we are paying to the primary causes of our unmistakable economic decline – which means, above all, the austerity programme of the 2010s. Britain’s economic woes have not been caused by its messiahs, but by its managers. The problem isn’t the [libertarian] Institute of Economic Affairs. It’s the Institute for Fiscal Studies.
There are several other commentators along with Conservative MPs who think that Trussonomics is not quite yet dead.
More on them next week.
Readers who missed them might wish to read Parts 1 and 2 in this series on Scotland’s First Minister, Nicola Sturgeon, who announced her resignation as SNP leader on Wednesday, February 15, 2023.
She will remain First Minister until the SNP membership elect a new leader. Afterwards, she will remain an MSP for Govanhill in Glasgow, which you can view in the first 11 minutes of this video:
The saga about her last few years in office continues.
Independence
Scotland held an indepence referendum in September 2014. Alex Salmond was First Minister at the time. A slim majority of Scots voted to remain part of the UK.
At the time, the SNP said that it would be a ‘once in a lifetime’ referendum. However, since then, it quickly became apparent that the Party hoped to increase the momentum for Yes in the years that followed.
Neither Salmond nor Sturgeon, who succeeded him in 2014 post-referendum, ever put forward a detailed, phased plan of how independence would actually work.
A Reddit thread from May 9, 2021 illustrates that independence would raise complicated issues and future arrangements. Three contributors’ comments follow:
1/ … the plan is to use the pound for several years which, I’m not sure is a great plan.
2/ Weird question but what qualifies as an asset? Sometimes, some independent supporters like to say that if we have a clean break, we’d have no assets but we’d also have no debts but aren’t some assets inevitable like the Scottish Parliament building, public infrastructure and all the Crown Territories etc?
3/ There will absolutely not be a clean break. HMRC will almost certainly have to collect tax on our behalf for a number of years.
I also expect us to remain part of the UK single market and customs Union immediately after independence, until something is sorted out with regards to the EU.
The first day of independence will be all about making everything exactly the same as the day before, not one thing should change, that doesn’t absolutely have to. Then there should be a gradual parting of the ways over several years, where it is beneficial to do so.
Four months later, on September 9 that year, The Express reported that Sturgeon was keen on another referendum with a ‘detailed prospectus’ beforehand, even though polling showed that Scots weren’t that interested:
The First Minister used her Programme for Government statement on Tuesday to re-pledge her desire to have a second vote on leaving the UK by the end of 2023. Ms Sturgeon argued “at this juncture in history, it is essential that we consider the kind of country we want to be, and how best to secure it”.
Putting independence at the heart of her government, she ordered work to once again begin of a “detailed prospectus” outlining the case for going it alone.
But a Survation poll found only 38 percent of voters believe there should be another referendum within two years.
In another damning blow to the SNP’s independence dreams, the survey also found support for remaining in the UK stood at 57 percent, with 43 percent backing independence.
The findings are in stark contrast to last December when support for quitting the UK was supported by a record high of 58 percent of Scots.
Just over a year ago, on February 10, 2022, The Spectator pointed out the difficulty with State pensions in the event of independence (emphases mine):
In an interview last night with ITV’s Representing Borders programme, the First Minister said that, while she accepts ‘on an ongoing basis it will be for the Scottish government to fund Scottish pensions’ … she believes that ‘historic assets and liabilities’ will be a ‘matter for negotiation.’ Unfortunately, there are no historic assets and liabilities in the pensions system; the state pension is not some great historic pot but rather paid from current taxation.
Sturgeon claims such a negotiation would take account of ‘the historical position in terms of National Insurance contributions, paid by Scots.’ But the truth is that there is no collective National Insurance ‘fund’: it’s effectively a convenient government myth to raise taxes by the back door. There is no legal claim on an NI fund, with no-one paying in and nothing to pay into. Is Sturgeon trying to deliberately conflate pensions with other assets and liabilities to try to trick the electorate? Or is she herself unaware about how the state pension system actually operates?
Here is a clip from the programme:
The Bow Group think tank crunched numbers for Scotland a few weeks later. On February 28, 2022, The Scottish Daily Express reported that the results were dire:
Scotland would be poorer than countries like Romania and the Czech Republic if the nation separated from the UK, a leading political expert has warned.
… Ben-Harris Quinney, chairman of the Bow Group think tank, says Scotland’s economy would take a massive hit.
In the event of separation from the UK, Scotland would need to take on its share of the UK’s national debt while other assets and liabilities would need to be divided.
Speaking to the Express.co.uk, Mr Quinney said: “The costs of Scotland having its own currency, splitting assets, and having a trade border with the UK is impossible to predict with any specific accuracy because the variables are too great.
“It is likely however that the costs of these shifts to the Scottish economy will be very high.
“Scotland, separated from the UK, is a relatively poor country based on its economic performance.
“Twenty per cent of Scottish citizens are considered to be living in poverty, and its total national economy of £150 billion is worth less than a quarter of London’s economy.
“As an individual nation it would likely be poorer than countries like Romania or the Czech Republic.”
In 2020, Romania was only the 18th richest European country with its economy valued at £182billion, contracting by just 3.9 percent and recovering strongly at 6.5 percent in the first half of 2021.
Mr Quinney also warned Scotland could be left footing a bill worth hundreds of billions of pounds if it decides to become an independent country, as it would have to take on a large chunk of the UK high national debt.
While the UK is set to pay the EU nearly £40billion over a number of years as part of a Brexit divorce settlement, Scotland could be left footing a much higher bill.
Mr Harris-Quinney further warned: “Scotland has a significant share of UK national debt, and there are several major UK assets in Scottish territory like North Sea oil and gas, military bases, and Crown territory.
“At a minimum there would have to be a negotiation on ownership of property and payments in either direction to unbind these areas.
“Scotland would likely want to keep tariff free trade with the UK, and a liberal border arrangement with the UK.
“It would rely heavily on imported goods, the majority of which coming from the UK initially, and perhaps for the foreseeable future.”
Russia’s invasion of Ukraine began on February 24, 2022.
On March 18, a poll found that 59% wanted independence talks halted because of the situation in Ukraine. Boris Johnson was the first world leader to step up to the plate in that regard:
On June 28, Sturgeon announced the next referendum date would be October 19, 2023. Deputy SNP leader John Swinney is walking with her at Holyrood:
The Scots were not interested. This time, rather than Ukraine, they said that the parlous state of the NHS and the police service were a national priority.
On June 30, The Times reported:
Nicola Sturgeon has been accused of neglecting Scotland’s NHS and police force with her push for independence as new polls showed voters do not want another referendum on her timetable.
Surveys by YouGov and Savanta ComRes both found that more than half of people asked were against another constitutional ballot taking place on October 19, 2023 …
The Savanta ComRes poll for The Scotsman found that 53 per cent of people did not believe a referendum should take place next October, while 40 per cent said it should and the remainder were undecided.
It also found that 44 per cent of those questioned supported independence, while 46 per cent were opposed, both down one point from a survey last month. Ten per cent were undecided, which was up three percentage points.
The YouGov research, for the Scotland In Union, the anti-independence group, found that 55 per cent of people did not think a referendum should be held before the end of 2023, with 34 per cent in favour and 11 per cent unsure.
The same survey found that voters ranked it fifth in their list of priorities, with 20 per cent of people putting in the top three issues they believed the Scottish government should prioritise over the next two years.
This put a referendum behind the NHS (59 per cent), the economy (57 per cent), education (23 per cent) and climate change and the environment (21 per cent).
On July 20, Sturgeon’s new prospectus for independence appeared online. Unfortunately, its cover showed an English wind farm. Admittedly, it was soon changed to a Scottish one, but, considering how the SNP despise the English, the irony was not lost on those of us south of the border:
The Conservative Party leadership contest was in full swing in July and August. Liz Truss called Nicola Sturgeon ‘attention-seeking’, and, as such, best left ignored.
GB News’s Dan Wootton asked The Telegraph‘s Scottish Editor Alan Cochrane if Truss’s remark would damage independence hopes. He said that the SNP was already in enough trouble already:
On Tuesday, August 9, The Express reported that Scotland’s Advocate General, a Law Officer of the Crown who advises on Scots law:
submitted the UK Government‘s argument that constitutional matters are reserved for Westminster and a referendum on Scotland’s future cannot be held without the consent of Westminster.
It comes after the SNP-led Holyrood Government claimed last month that its plans for IndyRef2 fall within the scope of its powers as the ballot would be “advisory” and have no legal effect on the union. A full hearing on the case is set to be heard by the Supreme Court in October.
UK law officers have argued that the constitution is reserved to Westminster.
Last month, the Scottish government published its case, stating the referendum is “advisory” and would have no legal effect on the union.
A spokeswoman for the UK government said: “People across Scotland want both their governments to be working together on the issues that matter to them and their families, not talking about another independence referendum.
“We have today submitted our written case to the Supreme Court, in accordance with its timetable …”
The hearing is set to take place on October 11 and 12 in London.
In the submission last month, the Scottish government said any referendum would not be “self-executing”, meaning it would be advisory and only used as a way to discover the views of the Scottish people.
On Thursday, August 25, GB News reported that Sturgeon appeared at an Edinburgh Fringe venue to talk and tell the audience that an independent Scotland would remain at the heart of the British Isles:
Nicola Sturgeon has told an audience in Edinburgh that still considers herself to be British, despite the long-running campaign for Scottish independence …
Speaking at ‘In Conversation with Nicola Sturgeon’ at the Fringe, she said: “So, this might surprise people, but do you know I consider myself British as well as Scottish.
“British is an identity that comes from being part of the British Isles.
“We’ll still be part of the British Isles. An independent Scotland would still be part of the British–Irish Council that I go to right now as First Minister.
“Identity is a complex thing. Many people live in Scotland, are as Scottish as I am, but will have a very proud Pakistani or Indian or African identity.”
Speaking at a hustings in Perth on Tuesday, Ms Truss told Tory members she would “not allow” another vote on independence if she was elected as prime minister on September 5.
But former chancellor Rishi Sunak – Ms Truss’s opponent in the leadership race – was less steadfast in his rejection of another vote, saying he accepted the union was “by consent” but saying he did not think “now or any time in the near future” was the time to consider another vote.
On Wednesday, November 23, The Guardian reported that the UK’s Supreme Court blocked a new Scottish independence referendum:
The Scottish parliament cannot hold a second independence referendum without Westminster approval, the UK supreme court has ruled, in a unanimous judgment likely to anger Scottish nationalists who say the country’s future is for Scottish voters to decide.
The first minister, Nicola Sturgeon, said immediately after the ruling: “Scottish democracy will not be denied.”
She said: “Today’s ruling blocks one route to Scotland’s voice being heard on independence – but in a democracy our voice cannot and will not be silenced.”
Sturgeon said she respected the ruling, but accused Westminster of showing “contempt” for Scotland’s democratic will.
“This ruling confirms that the notion of the UK as a voluntary partnership of nations, if it ever was a reality, is no longer a reality,” she told a news conference.
Sturgeon said her government would look to use the next general election as a “de facto referendum” on separating from the rest of the UK after more than 300 years.
Insisting that the SNP “is not abandoning the referendum route, Westminster is blocking it”, she said: “We must and we will find another democratic, lawful and constitutional means by which the Scottish people can express their will. In my view, that can only be an election.”
What an unending bore-a-thon.
Scottish ’embassies’
Did you know that Scotland has notional embassies in Canada, China, America, France, Ireland, Germany, Belgium and Denmark?
On August 27, 2022, The Times told us:
Offices include a £2.5 million base in Brussels, the heart of the European Union, which employs about 20 people.
Scottish government officials said hubs increase visibility for Scotland and create new economic and trading opportunities. However, the Scottish Conservatives have accused the first minister of being “caught asleep at the country’s wheel while rubbish is piling up on [our] streets”.
A Scottish government spokesman said: “The first minister is visiting Denmark for a series of trade, investment and policy engagements, including meeting representatives of the Danish government” …
However, that visit did not go quite as planned.
Sturgeon planned to meet the new Danish prime minister, Mette Frederiksen, who arranged a meeting for her with Denmark’s foreign minister Jeppe Kofod, instead. Good for Ms Frederiksen.
The Times said:
The pair “discussed how Scotland and Denmark can work together on issues such as the cost of living crisis, energy and the climate emergency,” according to the Scottish government.
Sturgeon has been criticised for travelling to open the “Nordic Office” — which is based inside the UK embassy — with waste piling up on Scotland’s streets and workers across the public sector threatening to strike …
Oh, dear. She got the early breakfast slot with Kofod:
Sturgeon met Kofod around 7am before hosting a roundtable with State of Green, a group pushing for a transition towards renewables, business and energy leaders to discuss “how Scotland and the Nordic region can work together to accelerate decarbonisation and share expertise”.
That said, afterwards, there was time for Sturgeon to go fully international:
She then visited a Unicef supply warehouse in Copenhagen this afternoon to see how it is supporting children impacted by the war in Ukraine before opening the office with an official reception.
Watch for a global post for her sometime in the future.
Meanwhile, it should be noted that:
Foreign affairs are reserved powers with the UK government, but the Scottish government spends about £6 million a year on a network of overseas offices.
Thank goodness Nicola Sturgeon will no longer be First Minister. It is understood that the leadership contest will be brief.
Scotland should have a new leader by this time in March 2023, if not before.
End of series
My most recent post discussed Liz Truss’s commitment to libertarianism and the part she played in her own downfall.
At the end, I mused whether she would still be in office were she a man. Having thought about it some more, I do believe that would have been the case. Truss has better morals than Boris Johnson and more integrity than Rishi Sunak. Furthermore, she is far more trustworthy than our de facto Prime Minister, Chancellor Jeremy Hunt. She has flaws. They have flaws.
It is curious that all of them, men, are given a pass. Truss, an honest woman, was not afforded that opportunity.
Let us look at who was out to finish Liz Truss’s premiership.
The media
During the summer Conservative Party leadership campaign, most papers — right and left — came out in favour of Rishi Sunak.
Only the Daily Mail and The Telegraph consistently supported Truss. Truss also saw The Sun as a friendly paper, particularly its political editor Harry Cole.
Broadcast media also largely favoured Sunak. Only GB News supported Truss for the most part.
Why that was is unclear.
One could point to Truss’s U-turns, evident as soon as the leadership campaign for Party members’ votes started, but most of the media — print and broadcast — were already in the tank for Sunak when Conservative MPs were still voting in July.
On November 16, veteran columnist Andrew Gimson wrote about the media outlets covering Parliament, known as the ‘lobby’: ‘Lobby journalism holds power to account. But it’s often cruel, trivial — and unfair’.
Guido Fawkes liked what he had to say:
Gimson’s article for ConservativeHome discussed the attacks on other Conservative ministers in Rishi Sunak’s Cabinet. Suella Braverman, Home Secretary once again, is one of them and Justice Secretary/Deputy Prime Minister Dominic Raab is another.
Gimson says that journalists find their witch hunts as exhiliarating as blood sports (emphases mine):
Hunting is reckoned to improve the health of the fox population.
That is not, however, why people want to hunt them. They yearn to do so because it is a wonderful, exhilarating sport.
Forget for a moment any impulse to moralise. High-minded theories are all very well. Politics as actually practised is a blood sport.
Dominic Raab, Gavin Williamson and Suella Braverman are or were the most recent quarry, closely preceded by Liz Truss and Kwasi Kwarteng, before which a blond beast rampaged across the political landscape for three years with excited members of the Westminster lobby in close pursuit.
Four of the six were hunted down, while Raab and Braverman have so far (with intermissions) survived, but might at any moment find themselves once more in mortal danger.
The lobby is trained and ready at a moment’s notice to follow any scent, no matter how faint, rival correspondents for different newspapers acting as a pack of hounds, each leaping at whichever politician is the hunted animal, drawing blood and emboldening the others to fresh frenzies of aggression …
It is impossible, if one is a lobby correspondent at Westminster, to stand aside from the full-blown crisis which rages, and any case, few experiences are more exhilarating than to be in at the death of a Prime Minister.
Every journalist, indeed everyone in the slightest bit interested in politics, will remember the first time he or she witnessed such a drama: in my case I was lucky enough in November 1990 to be in the Press Gallery to watch the fatal resignation speech delivered by Sir Geoffrey Howe, and 19 days later was in the crammed Committee Corridor on the evening it was announced amid almost unbearable excitement that Margaret Thatcher had fallen four votes – four votes! – short of beating Michael Heseltine by the necessary margin in the first round.
Such crises becomes all-consuming. You surrender yourself to the experience, and nothing else seems to matter. If you are a reporter, your news editor and editor demand constant reports from the front, and you want to distinguish yourself by revealing dramatic new charges, whether solid or flimsy, against the embattled minister, rather than just repeating what your rivals have said.
Such work requires the ruthless expertise to spot in an instant the two or three words in some dreary speech or answer which can be held to constitute a new development. The lobby are brilliant at this: they see the new angle, the incriminating admission, where a normal person would notice nothing.
News becomes an artificial commodity, an esoteric language only comprehensible to highly intelligent and practised correspondents, who translate it into the latest thrilling episode of a story which is intelligible to the dimmest of us, for it is as old as history: will the ruler live or die?
This question of life and death simplifies everything, and lends it a personal flavour. Does one like the look of whichever minister is just then being hunted, and hope he or she will get away? Or would one much rather see him or her bumped off?
The tyranny of the story extends to the comment pages. Leading articles and columns are written for or against the hunted person, most likely against, for it is much easier to write a vivid piece denouncing a politician for being disreputable than to compose a vivid defence.
In order to purify public life, the offending minister must be drummed out of it. Nothing which might serve this noble end is too cruel to be said; too piffling to be taken down and repeated.
Let the victim and his or her family cope as best they can. It would be wrong to spare them the full blast of public disgust. We find ourselves in a primitive world where human sacrifice is demanded; not in a rational one where events can be weighed and assigned their due importance, or unimportance …
There is a deep satisfaction to be derived from getting rid of a Prime Minister, so deep that we have in recent years got rid of three. For a short time, very short in the case of Liz Truss, we allow them to triumph, before restoring equality, for which all democracies have a deep yearning, by dragging them down with brutal abruptness to our own level …
What the lobby does, or helps Conservative politicians to do, is the modern version of an ancient and savage tradition. All else is forgotten while the tribe slays its chief.
And no tribe is better at slaying its chiefs than the Conservative Party.
Afterwards, some enemies of the prey express their empathy for the slain, such as Jenny Murray did for Truss on October 27 in The Mail. Murray’s headline read ‘I never expected to feel sorry for Liz Truss’ and, upon closer inspection, she doesn’t really feel sorry at all. She uses the piece to lick her own wounds after retiring from the BBC at the age of 70:
I was not sorry to see her go. Her short time in power was a disaster.
I’d known her professionally for a good few years and had often found her a bit weird with her oddly truncated speech patterns, bizarre facial expressions and apparent lack of emotional intelligence. She was no public speaker and I certainly never saw her as Prime Ministerial material.
In that I was right, but despite her self-serving, unapologetic final speech and her typically arrogant and selfish, ‘Well at least I’ve been Prime Minister!’ goodbye, I can’t help sympathising with what she has to face next.
As an ordinary constituency MP, she’ll join what I have dubbed, from bitter personal experience, the ‘Once I Was Hot, But Now I’m Not,’ club. I know she’ll be asking herself, ‘Who am I now?’
It’s two years since I left the job that defined me for 33 years. I was Jenni Murray, presenter of Radio 4’s Woman’s Hour.
It had been my greatest ambition since childhood. I’d presented Newsnight and Today, but the moment I heard the announcer first say on Monday, September 14, 1987, ‘And now Woman’s Hour, with Jenni Murray’ remains the most thrilling of my life.
I loved every minute of those 33 years and, unlike Liz Truss, I was not forced out of my position (though even when you leave a top job of your own volition, it doesn’t stop others speculating). I made the choice to leave as my 70th birthday came and went.
So, nothing like Liz Truss after all. The rest of Murray’s lengthy column is all about herself. Sickening.
On a positive note, I was surprised to read that Andrew Neil, normally a supporter of the status quo, supported Truss and Kwarteng’s mini-budget just after it was announced in Parliament:
After 12 years of Tory government we finally get a Tory budget. Yesterday’s not-so-mini-budget was a watershed event, taking the country in a new economic direction and creating clear blue water between government and opposition.
The Tory faithful couldn’t quite believe it. Labour struggled to grapple with its implications. The political dividing lines will now be starker and fiercer than they’ve been for a generation.
No more tax rises by stealth (or, more recently, in plain sight). Or endless, futile tinkering with the minutiae of spending and taxation to give voters a false impression of constructive activity. Or the relentless doling out of taxpayers’ dosh to whatever fashionable vested interests managed to catch ministers’ attention.
Instead, Prime Minister Liz Truss and her Chancellor, Kwasi Kwarteng, junked all of that in favour of one overriding economic priority: higher economic growth. Many of the verities of Britain’s economic establishment have been slaughtered in the process …
Scrapping next April’s planned rise in corporation tax (on businesses’ profits) won’t win any popularity contests outside company boardrooms. But an essential part of Britain’s post-Brexit future is surely to be a magnet for foreign investment. Whacking up the country’s key business tax was a strange way of going about it …
New ways require new justifications. The Treasury estimates that abolishing the 45 per cent top rate of income tax will cost £2 billion a year.
This is a typically static official calculation. If it results in more top earners declaring their income in Britain, then it could soon more than pay for itself.
Ditto bankers’ bonuses. The cap is a relic of EU regulation. Banks simply increased pay to compensate for reduced bonuses, thereby making their compensation costs more fixed and less flexible.
Frankfurt, Paris and Amsterdam have tried hard to lure our financial services away from the City since Brexit, with only limited success. Bonuses in those centres are still capped. London now has the advantage.
And, remember, with the new top rate of tax at an internationally competitive 40 per cent, every £1 million banker’s bonus is £400,000 more for schools and hospitals …
… for more than a decade now I’ve watched chancellors take tough, painful decisions on tax and spending based on OBR borrowing forecasts that turned out to be huge over-estimates, so much so that in retrospect neither the tax rises nor spending cuts were necessary.
Indeed, as Truss attempts to take the country in a new, less orthodox direction, I’d argue that it’s a blessing that she’s been able to do so unencumbered by the OBR’s dubious forecasting.
We’ll get the OBR’s latest workings in two months anyway, when it might have a better idea of what 2023 will look like. Nor are we entirely in the dark. The Treasury says the tax cuts and energy price cap measures will increase borrowing this year from £162 billion to £234 billion — an extra £72 billion.
The IFS thinks we’ll still be borrowing £100 billion a year through the middle years of the decade.
These figures have spooked the markets. The pound continued its decline against the dollar after Kwarteng’s statement and the yield (or interest rate) on short-term government debt rose to close to 4 per cent, making it a lot more expensive to borrow than only two years ago, when it was 0.4 per cent.
These are real constraints on the Government’s ability to borrow even more. A falling pound merely fuels inflation, especially when it comes to imported energy, which is priced in dollars.
Interest rates are already rising. If excessive government borrowing forces them even higher, that will merely choke off the economic growth the Government so desperately seeks.
There’s another factor at work here. The global currency and debt markets have had a ‘down’ on Britain for some time. It’s not clear why. Britain’s debt-to-GDP ratio is among the lowest in the G7 club of big economies. Our budget deficit is on a par with many other major economies. Economic growth is anaemic — as it is everywhere, from the Eurozone to America to China.
I suspect it’s a Brexit hangover. The publications global market players read most closely include the New York Times, the Economist, the Financial Times and leading European papers such as Le Monde and the Frankfurter Allgemeine Zeitung. All — and others like them — have been relentlessly negative about Britain since the 2016 referendum …
It is said she’s taking a great gamble. That’s true. But sticking with the failed policies of the recent past was probably an even a bigger gamble. The stakes are certainly high.
If by this time next year the economy is still in the doldrums, then it’s not just Truss who will be finished. So will any prospect of the Tories winning the next election.
Read it and weep. We are back to square one.
There is much that the media didn’t tell us about the global picture of economic pandemonium.
Early in the week following Kwarteng’s mini-budget, US mortgage rates went up to 7%:
The EU’s average deficit is worse than the UK’s:
At the end of October, by which time Truss had gone, inflation in the Euro zone increased to 10.7% as growth slowed:
At the beginning of November, a Fed hike caused sterling to trade below £1.13 against the dollar:
And, finally, within three weeks of becoming Prime Minister, Rishi Sunak made new spending commitments, pledging billions to the world. This graphic appeared on November 7:
Objection from the media came none.
Conservative MPs
On October 20, in the immediate aftermath of Truss’s stoic resignation, The Sun gave us the reaction from three Conservative MPs:
Responding to today’s bombshell announcement, former minister and Red Wall poster boy Neil O’Brien tweeted: “The next PM must return to the national conservatism represented by our election winning 2019 manifesto and put us back on the side of normal working people.”
If anyone was going to have done that, it would have been Truss, for whom Party members voted in the majority. Sunak and Hunt certainly aren’t on the side of ‘normal working people’: tax ’em until the pips squeak.
Next up was Steve Baker, now an apologetic Northern Ireland Minister:
Brexit hardman Steve Baker urged colleagues that whatever the result, “we must accept and back the new Prime Minister”.
Millions of us wish he had shown the same allegiance towards Truss.
The only one to say anything complimentary was Greg Hands, who served as an International Trade Minister:
He said:
A dignified exit as Prime Minister from Liz Truss. A difficult day for the country, the Party and for Liz personally.
She wasn’t long as PM, but served at the Cabinet table longer than any of her three predecessors. She has long served the country – and I wish her very well.
At least Truss wasn’t removed from the top table Chinese-style:
On October 27, one week after Truss’s resignation, The Telegraph‘s Matthew Lynn said that backbench Conservatives just could not bring themselves to support Truss’s economic plan, which Kwasi Kwarteng fronted.
In other words, Conservative MPs shy away from libertarianism, even though I think it would do the UK a lot of good:
The timing, to put it mildly, was unfortunate. It was a difficult transformation to pull off at the best of times, but against the backdrop of rising inflation and an out-of-control dollar, it was doubly difficult.
Truss’s programme did not have the necessary support within the Parliamentary Conservative Party either. Massive opposition from Labour, the Scottish Nationalists, and the Twitter mob was to be expected.
But very few MPs were willing to support the plan, and without that backing it was always going to be hard to push through. Even before it got on to the genuinely difficult stuff – investment zones, planning reform, the green belt – the opposition was overwhelming.
The Bank of England
Matthew Lynn points the finger of blame at the Bank of England (BoE):
… the real failure of Trussonmics may well have been the fault of the Bank of England. As Narayana Kocherlakota, a former President of the Minneapolis Fed, and now Professor of Economics at New York’s Rochester University, argued in an opinion piece for Bloomberg this week, it was the Bank’s failure to support the gilt market that killed the plan.
“The way the Truss government collapsed should concern all who support democracy,” he warned.
In his Bloomberg article of October 26, Narayana Kocherlakota defended Truss and criticised the BoE:
Markets didn’t oust Truss, the Bank of England did — through poor financial regulation and highly subjective crisis management.
… Truss won the leadership of the Conservative Party, which the UK electorate had voted into power, by promising a range of deep tax cuts and government spending increases. Whatever one might think of her policies, they were her mandate. I agree with the many observers who expected them to lead to higher inflation, higher interest rates and quite possibly higher unemployment. But such adverse outcomes take months and years to play out. Her government fell in a matter of weeks. How could this happen?
The common wisdom is that financial markets “punished” Truss’s government for its fiscal profligacy. But the chastisement was far from universal. Over the three days starting Sept. 23, when the Truss government announced its mini-budget, the pound fell by 2.2% relative to the euro, and the FTSE 100 stock index declined by 2.2% — notable movements, but hardly enough to bring a government to its knees.
The big change came in the price of 30-year UK government bonds, also known as gilts, which experienced a shocking 23% drop. Most of this decline had nothing to do with rational investors revising their beliefs about the UK’s long-run prospects. Rather, it stemmed from financial regulators’ failure to limit leverage in UK pension funds. These funds had bought long-term gilts with borrowed money and entered derivative contracts to the same effect — positions that generated huge collateral demands when prices fell and yields rose. To raise the necessary cash, they had to sell more gilts, creating a doom loop in which declining prices and forced selling compounded one another.
The Bank of England, as the entity responsible for overseeing the financial system, bears at least part of the blame for this catastrophe. As a result of its regulatory failure, it was forced into an emergency intervention, buying gilts to put a floor on prices. But it refused to extend its support beyond Oct. 14 — even though its purchases of long-term government bonds were fully indemnified by the Treasury. It’s hard to see how that decision aligned with the central bank’s financial-stability mandate, and easy to see how it contributed to the government’s demise.
The way the Truss government collapsed should concern all who support democracy. The prime minister was seeking to fulfill her campaign promises. She was thwarted not by markets, but by a hole in financial regulation — a hole that the Bank of England proved strangely unwilling to plug.
Two days before Truss resigned, Daniel Lacalle wrote an article for Mises Wire: ‘The Bank of England Made Liz Truss a Scapegoat’.
Lacalle points out that economic turmoil was worldwide, something not reported widely in the British media. No surprise there:
I find it astonishing that not one of the so-called experts that have immediately placed the cause of the British market volatility on Liz Truss’s budget have said anything about the collapse of the yen and the need for Bank of Japan intervention, which has been ongoing for two weeks.
Why did so many people assume the Truss minibudget was the cause of volatility when the euro, the yen, the Norwegian krone, and most emerging market currencies have suffered a similar or worse depreciation versus the US dollar this year? What about the bond market? This is the worst year since 1931 for bonds all over the world, and the collapse in prices of sovereign and private bonds in developed and emerging market economies is strikingly similar as those of the UK fixed income peers.
He blames British pension funds’ liability-driven investing (LDI) strategies on the abuse of quantitative easing (QE) over the years. Who was in charge of that? The BoE.
Lacalle wrote while Truss was still Prime Minister:
British pension funds are not selling sovereign bonds because of lack of trust in this or another government’s budget. They are selling negative-yielding sovereign bonds because they jumped wholeheartedly into the debt bubble created by artificially cheap money believing that central banks would keep fixed income prices elevated with constant repurchases.
British pension funds’ unfunded liabilities are not a problem caused by the mini budget nor solely a UK problem. It was an enormous problem in 2019–20 disguised by insane currency printing. Unfunded global liabilities for state pension funds in the US were already $783 billion in 2021 and rose to $1.3 trillion in 2022 according to Reason Foundation. The funded ratio of state pensions was just 85 percent in 2021 and has fallen below 75 percent in 2022.
What happened in the years of negative rates and massive currency printing? Pension funds used liability-driven investing (LDI) strategies. Most LDI mandates used derivatives to hedge inflation and interest rate risk. And what happens when inflation kicks in and rates rise? “As interest rates have risen, the notional value of some of the derivatives held in LDI portfolios has fallen. The result: increased collateral calls. The speed at which rates have risen means some pension plans have had to liquidate portfolios to meet collateral calls” according to the Investment Association’s latest report in September and Brian Croce at Pensions and Investment.
The total assets in LDI strategies almost quadrupled to £1.6 trillion ($1.8 trillion) in the ten years through 2021. Nearly two-thirds of Britain’s defined benefit pension schemes use LDI funds, according to TPR and Reuters. Liz Truss and Kwasi Kwarteng are not to blame for this insanity. The policy of negative real rates and massive liquidity injection of the Bank of England is. Kwarteng and Truss are only to blame for believing that the party of policies of spending and printing defended by almost all mainstream Keynesian economists should work even when the music stopped …
Liz Truss and Kwasi Kwarteng are not to blame for the insanity of the past years or Rishi Sunak’s ultra-Keynesian budgets. They are only to blame for believing that another dose of Keynesian deficit insanity would not harm.
Mr. Kwarteng’s demise is just a casualty delivered by the modern monetary theory crowd and the monetary laughing gas city to justify that the problem was a ludicrous tax cut not years of currency printing and deficit increases.
What has happened in the UK or Japan is likely to happen soon in the eurozone, which accumulated more than twelve billion euro of negative-yielding bonds in the years of cheap money and reckless stimulus plans.
Liz Truss is not to blame for twenty years of monetary insanity and fiscal irresponsibility. She is to blame for a budget that increases spending without cutting unnecessary expenses.
The irony of it all is that the defenders of monster deficits and borrowing if it comes from bloating the size of government feel vindicated. It was the evil tax cuts!
The political analysis of the mini budget is astonishing. No one in the UK parliament sees any need to cut spending it seems, yet those expenses are consolidated and annualized, which means that any change in the economic cycle leads to larger fiscal imbalances as receipts are cyclical and, with it, more currency printing. The assumption that raising taxes will generate perennial annual increases in receipts no matter what happens to the economic cycle can only be defended by a bureaucrat.
Well, Rishi Sunak and Jeremy Hunt are those bureaucrats.
There are global players in pension fund management, BlackRock being one of them, as The Conservative Woman revealed on October 27:
BlackRock is heavily involved in the charity sector, managing over £4.5billion for more than 3,000 UK charities alone. ‘Sustainability’, food security and renewable energy rank very highly in their priorities in that sector.
The role of BlackRock in the recent selling off of derivatives by UK pension funds, said to be behind the triggering of a fall in sterling following the ill-fated Kwasi Kwarteng mini-Budget, is an intriguing one. BlackRock executives would defend their actions by stating they were merely protecting clients who were financially overcommitted in that sector and that pension fund managers ought to have known the risks involved in leveraged investment strategies in the first place, and that there is far more to that type of riskier investment than just following trends. Either way the political fallout was profound, triggering a chain of events which led to the fall of Prime Minister Liz Truss. BlackRock executive defends pensions strategy that fuelled UK crisis
Interestingly, Jeremy Hunt has appointed a BlackRock executive who is pro-Net Zero and anti-Brexit as one of his chief advisers:
A business with the financial resources of BlackRock will naturally attract well-connected people to its payroll. People such as Rupert Harrison, chief of staff to Chancellor George Osborne from 2006 to 2015. An opponent of Brexit, he tweeted in July 2017 that ‘the rest of Europe is booming and we’re not’.
Intriguingly, Harrison is now one of new Chancellor Jeremy Hunt’s most senior advisers. On the surface, Hunt seemed to have been parachuted in from nowhere, having failed in two leadership elections and spending more than two years on the back benches, yet from the moment he was appointed he already had a highly expert team, including Harrison, ready to start at once and acting promptly with great self-assurance as though he knew he already had the backing of those who really matter.
However, Conservative Party members are unhappy with Hunt and Sunak’s economic policy based on higher taxes, which are, in reality, much higher than they read on paper. This poll is from November 29:
Guido Fawkes wrote (emphases his):
The Tory membership doesn’t support their own government’s economic policy, according to the latest Conservative Home panel poll. Opposition stands at 48.78% and support at 41.87%. 9.35% don’t know.
It can’t come as much surprise. As Rishi’s supporters point out, he was warning of the consequences of Liz Truss’s policies during the summer contest, and the membership still voted for Liz’s low tax package. Support at 41.87 is actually 0.8% lower than Rishi received from the members during the summer…
Let us return to the BoE.
In the December 2022/January 2023 issue of The Critic, Jon Moynihan published ‘How the Bank broke the Government’, which refers to Narayana Kocherlakota’s aforementioned article for Bloomberg and expands on the use of LDIs in pension fund management:
Kocherlakota’s view was that the Bank of England was responsible for the crisis, through “poor financial regulation and highly subjective crisis management”. Outside the UK chatterati, this view is widely supported.
The beef against the mini-budget was that it spooked the market. But virtually all of the policy announcements made by Kwasi Kwarteng on the day were not new; they had been pledged during the Truss campaign or — in the case of the energy price guarantee — confirmed shortly after her arrival in Downing Street.
Sure, the mini-budget stated that clarifying how all the spending/lowered tax revenue would be paid for was to be put off until the later financial statement, due some weeks later. But the only new thing was the change to the top rate of income tax from 45 per cent to 40 per cent.
Given the well-known dynamic impact of lowered tax rates, this change would arguably have been revenue neutral or even beneficial; even without any dynamic benefit, it could have cost at most £2 billion in tax revenue. That is a rounding error compared to the amounts already absorbed by the market and a fraction of the costs Rishi Sunak has accepted at COP 27 — to which the markets have reacted entirely complacently. It is just not credible to blame the mini-budget for the market turmoil.
Moynihan explains more about how LDIs work:
The prime obligation of a pension fund is to match its assets (the money it uses to make payments) to its liabilities (the payments it expects make to its pensioners over the years). For a fund to be as sure as it can that it will be able to pay its future pension liabilities, it buys assets whose coupons and maturity match its (actuarially expected) future pension payments.
So far, all well and good. The problem is with LDI funds. These, like so many pension funds these days, use gilts to accomplish that matching (in a popular meme of the past couple of decades, “gentlemen prefer bonds”). However, in addition the idea has been sold that they can goose up their returns a bit, to compensate for the low yields they are getting on their gilts.
This little bit of extra profit is accomplished by borrowing some further money, short-term, and with it buying long, higher-yielding assets — either real assets, or derivatives. It’s a well-known and always risky bet on interest rate movements; in some markets it’s known as the “Carry Trade”; in the Japanese markets it’s known as the “Widow Maker”. It’s entirely inappropriate for “safe” pension funds.
If rates move against the bet, the bet sours. To cover the risk they are taking, the funds are required to give over their other assets (the gilts) as collateral to the bank that lent them the money.
When the bet sours, the bank that lent them the money “calls the collateral”, selling off the gilts in order to repay the borrowing … a wave of such sales can destabilise the gilts market and create a disorderly environment, as happened in late September 2022.
Some would say that the Bank of England should have known all of this and not allowed such risk to be taken by this huge market in LDI funds. Some would raise an eyebrow at the news that until the middle of 2022, the Bank of England itself held 100 per cent of its £5 billion pension fund in just one single LDI Fund, and therefore blithely seemed to believe it was OK for such risks to be taken (their 100 per cent recently was reduced to a scarcely less concerning 82 per cent).
For whatever reason, the Bank and other regulators did allow LDI funds to become more and more the fashion … The total value of liabilities hedged with LDI strategies was $1.8 trillion in 2021, around half of the total of LDI funds in the world, a sure sign that the Bank Of England had been far too lenient in allowing LDIs to flourish in the UK. That is Strike One.
Why then did the LDI funds start collapsing specifically in late September? It starts with the rapid appearance this year of inflation, caused in no small part — as the Bank has finally admitted — by the bank’s excessive growth of the money supply in recent years. As inflation consequently shot up, so, all year, did gilt yields rise, putting increasing pressure on those rickety LDI funds. That is Strike Two against the BoE for its role in worsening inflation in the UK, leading to this instability.
Two days before Kwarteng delivered his mini-budget, Saxo Bank and Deutsche Bank correctly predicted a fall in sterling.
Saxo predicted:
“If the BoE fails to hike 75 basis points, let’s shield our eyes for what is going to happen to the pound here.” (They were predicting a fall in sterling, which duly happened. Low sterling leads to higher inflation leads to higher gilt yields.)
Deutsche Bank said that the BoE needed a ‘hawkish response’. It never materialised.
In the end:
Both Deutsche and Saxo were right. Only days after the Bank failed to step up to the 75 basis points mark, sterling momentarily dropped to $1.04, just as Deutsche had predicted — yet for reasons that remain to be explained, the drop was blamed on the mini-budget, not on the Bank’s failure to sufficiently raise rates. The failure to raise rates enough, two days before the mini-budget, is Strike Three.
In addition, the BoE announced a fortnight-long programme of selling £40 billion of gilts, which ended in mid-October.
In other words, it moved from QE to QT, quantitative tightening.
Reuters noted the BoE was the first central bank to do that, at least in recent years. Bloomberg called the move ‘historic’ for the same reason:
In 2013, all it had taken was the Fed to announce it was doing less QE — not stopping, just doing less — for the markets to go into a “Taper Tantrum”.
Ever since, most central banks have been cautious not to move too fast in shutting down their QE. But not the BoE. Why did it see itself as in a position to be the first in the world to take this very risky step, aware as they were that the mini-budget was about to be announced?
Not surprisingly, the markets responded:
… market participants move fast to get ahead: they quickly sell their own bonds before their value is hammered by the BoE sales. Yields immediately go up and the price of bonds immediately falls. Which is why it was — Strike Four — stupid for the central bank to announce its moves ahead of time: it’s like the time that Gordon Brown announced he was selling all our gold, and the price collapsed so he made much less from the sale. But now the LDI pension funds started to get really hammered: as the market moved to dump gilts, the price of gilts fell and fell — this is still before the mini-budget — and collateral calls began to come thick and fast on the LDI funds.
The doom loop began:
And even more collateral calls then came in, and we were in an accelerating doom loop. All this was happening as the mini-budget was announced, and the lazy financial press, not seeing what had happened earlier, blamed the rout in the gilts market on the mini-budget. But it was started by the Bank of England’s earlier decision to go full tonto QT. Strike Five.
Cue the headlines that Liz Truss ‘crashed the economy’, to borrow Labour’s words, which they are still using in Parliament:
The Prime Minister is accused the following day of destroying the economy.
The BoE backtracked immediately, announcing it would move from QT back to QE:
The Bank of England, of course, immediately announces that it is not after all going to sell £40 billion of gilts — it is going to buy £60 billion of them — back from QT to QE in a blink of the eye.
Of course, by then, it was too late for Truss and Kwarteng. Their collective goose was well and truly cooked:
… by now the gods of havoc have been unleashed. Truss’s enemies in the Conservative party get to work, using the mini-budget narrative to undo the mini-budget, to oust the Chancellor, and finally to oust the Prime Minister herself. Job Done.
The BoE defended its actions:
The post-mortem speech by the Bank’s director for financial stability, entitled “Risks from leverage: how did a small corner of the financial industry threaten financial stability?” makes for interesting reading; in this telling, the Bank staved off a crisis from what, for anyone, would have been an unexpected direction, dealing more than adequately with the non-bank sector. If anything, the director claims, the UK was ahead of the curve!
As for the current Sunak-Hunt government, Jon Moynihan has also noted the presence of David Cameron’s Chancellor and the former BlackRock executive:
George Osborne and Rupert Harrison, late of BlackRock, the UK’s second largest provider of LDI funds, are now advising the new government.
Moynihan ends his article by pointing out that the BoE’s governor, Andrew Bailey, has the nickname of ‘Lullaby’ because he tended to doze off during meetings in a prior position:
As head of the Financial Conduct Authority from 2016 to 2020, he saw first-hand the sort of shenanigans firms and funds will get up to if, pressed by smooth talking salesmen, they are given the freedom to act as they will.
It has been alleged that while in that role, Bailey “dozed off” during meetings over a pensions scandal. Now, the organisation he runs is accused of being asleep at the wheel on LDI pension funds, not to mention on inflation, the currency, the stability of markets.
It looks like the BoE’s laxity led to the fall of a government:
All that led to the end of a government, in a way that will continue to reverberate, to the detriment of many people’s view of democracy in this country, for decades to come.
What the British think
Only last week, on November 23, IPSOS published a poll saying that politicians are the least trustworthy of working Britons. Pictured alongside Rishi is a very young Piers Morgan when he edited The Mirror. Journalists have a trustworthiness rating of 29%, compared to politicians in general at 12%:
Guido has the full chart of occupations participants were asked to rank in order of trustworthiness:
Hardly unsurprisingly, public trust in politicians to tell the truth has fallen to its lowest level ever, according to the latest Ipsos poll. Just 12% of the public now trusts politicians to tell the truth, lower than advertising executives (14%) and government ministers (16%).
Unfortunately for journalists they don’t fare much better, at just 29% – one percent above estate agents…
Nurses and doctors ranked the highest at 89% and 85%, respectively.
Television news readers ranked at 58%, above clergy/priests and the man in the street, both of which tied on 55%.
Conclusion
On November 22, roughly one month after Truss resigned, Dan Wootton did a follow up on GB News.
Nigel Farage told him:
Hunt was the coup. Sunak is little more than a puppet.
Wootton also interviewed Ranil Jayawardena, who served as Secretary of State for DEFRA, the Department of Environment, Food and Rural Affairs. He was very gracious and didn’t want to get into any controversies. Wootton, who was a big Truss supporter, wanted to know how both of them were faring. He said that they were fine.
I’m including the nine-minute interview here just so you can hear Ranil Jayawardena’s voice. He should record audio books in his retirement. Someone in the comments to the video said that he sounds like Boris. He sounds a thousand times better than Boris. This is received pronunciation, rarely heard today in such mellifluous tones:
The Liz Truss saga ends here.
I fear the worst, for the Conservative Party and for the British.
End of series
Yesterday’s post discussed Liz Truss’s dogged determination.
Today’s entry looks at how determined she was to bring a refreshing libertarianism to Government.
On September 28, 2022, Jeremy Cliffe wrote a fascinating profile of Truss’s love of free markets in the New Statesman: ‘Liz Truss and the rise of the libertarian right’.
Of Kwasi Kwarteng’s mini-budget of September 23, Cliffe points out (emphases mine):
… nothing in Truss’s past was fundamentally incompatible with her proclaimed ideological commitment to a small-state, free-market model. And now, just three weeks into her tenure in No 10, it has been comprehensively buried. The unofficial Budget from her like-minded Chancellor, Kwasi Kwarteng, on 23 September, removed any remaining doubt by ushering in the biggest package of tax cuts since the Conservative chancellor Anthony Barber’s expansionary “dash for growth” in 1972, and by targeting the benefit of those cuts overwhelmingly on the richest.
Far from popularity-chasing opportunism, this amounts to a huge experiment that, as the Conservative commentator Tim Montgomerie has put it, effectively treats Britain as a giant “laboratory” for economically libertarian ideas. The success or failure of that experiment will make or break Truss’s government. Say what you like about the wisdom of this approach – and the markets have had their say – but it is absolutely not the method of a flip-flopper. Rather, it is that of a convinced member of a deep-rooted network of ideas, institutions and thinkers born on the shores of Lake Geneva over 75 years ago. It is impossible to understand the ideological zeal with which Truss and Kwarteng are pushing Britain towards the economic brink without understanding that network.
Cliffe goes on to present a summary of Friedrich Hayek’s economic vision. I learned a lot, so am sharing that below.
Hayek and the Mont Pelerin Society
Over the centuries, many wonderful things originated in Switzerland. Libertarianism was no exception.
In 1947, in the aftermath of the Second World War, Friedrich Hayek invited a group of 39 economists, historians and philosophers to promote classical liberalism, which has nothing to do with left wing politics. In fact, what became the Mont Pelerin Society was — and is — actively opposed to Marxist and Keynesian economic policies promoted globally at that time.
The group met at the Hotel du Parc, now the Pelerin Palace, in the village of Le Mont-Pèlerin, which overlooks Lake Geneva. I have been to that part of the world, and it is sublime.
The Mont Pelerin Society still meets regularly, annually for regional meetings and every two years for a general meeting. In 1997, they met at the village’s stunning Le Mirador Resort and Spa. In October 2022, they met in Oslo.
Cliffe describes the Society’s goal:
Inspired by Hayek’s warnings of a “road to serfdom” – as set forth in his 1944 book of that name – they were united in concern at the apparent march of international collectivism, in both its totalitarian (Soviet) and democratic (social democrat and New Deal) forms.
Afterwards, libertarian think tanks were founded in the United Kingdom and the United States which influenced the thinking of Margaret Thatcher and Ronald Reagan:
Over the subsequent decades members and associates of this group established successive generations of influential think tanks advancing anti-collectivist economics. In 1955, Antony Fisher founded the Institute of Economic Affairs in London (IEA). This would help inspire a second wave in the 1970s, including the Cato Institute and the Heritage Foundation in Washington DC and, in London, the Centre for Policy Studies (CPS) and the Adam Smith Institute (ASI). As the historian Daniel Stedman Jones puts it in his book Masters of the Universe: Hayek, Friedman, and the Birth of Neoliberal Politics, these transatlantic “ideological entrepreneurs” provided both a long-term incubator for such ideas and a bridge from high economic theory to applied policy practice. Both Reaganomics and Thatcherism would have been unthinkable without them.
Not all of these think tanks think alike. Some are socially conservative, while others are not. Some are geared towards academia, others towards politics. However, they agree on economic policy:
From the 1980s to the early 2000s came the next wave of more public-facing bodies such as Americans for Tax Reform and the TaxPayers’ Alliance (TPA). Matthew Elliott, who worked at the former before returning to his native UK to found the latter in 2004, would also go on to help establish and lead the Vote Leave campaign in the run-up to the 2016 Brexit referendum.
These bodies are not homogeneous. Cato, for example, is classically libertarian on social issues like LGBT+ rights, whereas Heritage is hard-line conservative. There are also differences of approach. Mark Littlewood, the director of the IEA [Institute of Economic Affairs], who has known Truss since their student days – they both attended Oxford in the 1990s – differentiates between more “upstream” think tanks like his own, which are closer to academia and concentrate on disseminating ideas among opinion-forming elites, and more “downstream” organisations, which are focused on government policymaking (like the CPS) and shaping debate in the mass media (like the TPA).
One of Truss’s tutors at Oxford, Marc Stears, says:
“Hayek’s ideas are really important because of the underlying spirit that animates them: that there is no such thing as collective intelligence; the state does not know things and only individuals can really know things. That faith in the wisdom of the crowd, as expressed in price mechanisms, is very deeply ingrained.”
He also points to a shared tendency to be patient, citing the Marxist philosopher GA Cohen’s observation that the supply-side right has succeeded at “keeping the fires burning” even through periods in the political wilderness.
Stears himself leads a libertarian think tank:
Marc Stears tutored Truss when she was a PPE student at Oxford and today leads the Policy Lab at University College London. He notes that the more theoretical “upstream” parts of the libertarian think-tank spectrum have grown in significance as academia has tilted leftwards. “There are fewer centres in the big universities where these thinkers cluster,” he told me. “So that makes the role of think tanks more important.”
Cliffe points out the geographical proximity of think tanks in London and Washington DC:
The majority of these think tanks are clustered around Tufton Street, a Georgian terrace in Westminster, and Massachusetts Avenue, a long boulevard in Washington DC (a distinction being that “Mass Ave” is also home to think tanks of various other intellectual outlooks).
These two worlds have long been linked by transatlantic personalities criss-crossing between them. Prominent examples include Fisher (who founded the Atlas Network, a Washington-based umbrella organisation of international free-market think tanks), Edwin Feulner (a former IEA intern who co-founded Heritage) and Eamonn Butler (an ally of Feulner’s who co-founded the ASI in London). Today they number Ryan Bourne – a Truss ally, formerly of the IEA and now at Cato; Daniel Hannan – a Brexiteer former MEP and founder of the Initiative for Free Trade (IFT); and Nile Gardiner – head of the Margaret Thatcher Center for Freedom at Heritage.
Today’s economic libertarianism
The current Conservative government, whether under Boris Johnson, Liz Truss or Rishi Sunak, has some commitment to economic libertarianism. Sunak promoted freeports in 2019, which are slowly coming to fruition. Truss advocated investment zones, which are still going ahead, although they will be more focused on research.
Cliffe says:
Ideologically, the institutions and thinkers of this world share a common commitment to a low-tax, low-regulation, Anglo-Saxon social model, distinct from the social democratic “European” one. They tend to favour mechanisms for advancing that model, such as free-trade deals, “levelling down” state intervention, and demarcated zones pioneering extremely small-state government (variously referred to as “freeports”, “investment zones” or “charter cities”). They instinctively prefer market-led solutions to collective problems, such as climate change, over state-led ones. Perhaps not unrelatedly, many of them draw on opaque funding from big private-sector interests. Cato, for instance, has received backing from corporations such as FedEx and Google, and, in the past, from the tobacco industry – which has also been a source of funding for both the IEA and ASI.
In the Britain of 2022 these instincts express themselves in a particular analysis of the state of the country. This, as Truss-ite thinkers explain, starts from the argument that British governments since Margaret Thatcher – Conservative as well as Labour – have become much too sentimental about the distribution and moral character of growth, and too little focused on raising the overall growth level. As Bourne puts it: “Liz Truss would not consider it a failure if she got the growth rate up significantly but not equally across regions.”
It is not a politics of pursuing what is popular per se, but of letting “what works” (defined as whatever lifts the growth rate) speak for itself. “They won’t be transactional about policies,” Bourne says of Truss and Kwarteng. “It’s the whole string of things. Incrementally, the patient might not like the medicine, but overall they will feel healthier and revived.”
Truss’s brand of libertarianism
I had no idea that Truss worked for a British think tank or that she had speaking engagements at the American ones.
Her interest began at Oxford, then continued in London:
Even during her student years in Oxford, recalls Marc Stears, Truss prided herself on defying intellectual convention. “Her primary characteristic was a love of controversy, quirkiness and idiosyncrasy… Her thinking was always intriguing and contrarian, if not always fully worked through.” A brief flirtation with the Lib Dems is not entirely inconsistent with right-wing libertarianism (the party’s Orange Book tendency has links with this world too, and as a student Truss was also a member of the Hayek Society). “She definitely sat outside the prevailing social democratic orthodoxy even then,” Stears says.
Truss worked in think-tank land herself before her election to parliament, serving as deputy director of Reform from 2008 to 2010, a period when the organisation was laying some of the intellectual foundations of the spending cuts and market-led approach to public services that would be introduced under David Cameron and George Osborne. “Cameron and Osborne may have been more Thatcherite where Truss is more Reaganite,” notes Tim Bale of Queen Mary University of London, a historian of the Conservative Party. “But they shared the basic belief that the market should be the main force in economic life, the state as small as possible and the individual as large as possible.”
Truss’s Thatcherite tendencies became more apparent once she entered Parliament in 2010. However, Thatcherism means different things to different people:
Shared beliefs, yes, but with different degrees of intensity. In 2010, Truss typified a romantically Thatcherite intake of new Tory MPs who thought Cameron and Osborne were being too cautious about slashing the state.
“When you think that people’s politicisation tends to take place in their teens and early twenties, it is perfectly understandable that MPs who had come of age around 1997 would equate past Conservative election victories with what they saw as Margaret Thatcher’s uncompromising free-market ideology, rather than her more compromising reality,” Bale says.
Truss rapidly became a figurehead for this generation. “Liz was the first convenor of the Free Enterprise Group,” recalls Littlewood, referring to the establishment in 2011 of a cluster of like-minded Conservative MPs – which was effectively the IEA’s parliamentary branch. “And Kwasi Kwarteng was the second.”
Cliffe says there are other Conservative MPs committed to the free market, Priti Patel and Dominic Raab among them.
In 2017, Truss became Chief Secretary to the Treasury.
The following year, she began giving speeches in the United States:
A particularly notable speech was delivered at the Cato Institute in Washington in 2018. In it, Truss called for a new, small-state “Anglo-American dream” driven by an emergent generation of “market millennials” used to the freedoms of the app economy – “Uber-riding, Airbnb-ing, Deliveroo-eating freedom fighters”, as she put it elsewhere. “Free enterprise is a hymn to individuality and non-conformity,” she proclaimed to her Cato audience. “It’s what allows the young to flower and the anti-establishment to flourish.”
Bourne helped set up the speech. I put it to him that her argument ignores strong youth support for the likes of Jeremy Corbyn and Bernie Sanders. “It’s a case of stated preference versus revealed preference,” he said. “Liz’s essential argument is that, in their actions, young people in both countries are very entrepreneurial, independent, and enjoy the fruits of a liberal, dynamic economy. She thinks there is a latent enthusiasm for markets if we can reform things in a direction that enables these people to fulfil their wants and needs, like starting companies and buying homes.”
Her visits to the US engaged her interest in the Reagan years:
It was around this time that she became engrossed in books by the American historian Rick Perlstein on the making of the Reagan revolution.
Fast-forwarding to her appointment as Foreign Secretary in 2021, her commitment to libertarian ideals ran deeply:
… her ideology, rooted in the school of thought founded at Mont Pelerin, was long-established. “Her ideological disposition is towards the likes of Robert Mundell, Alan Reynolds and Arthur Laffer,” says Bourne, “the original supply-side thinkers in the US who influenced the underpinnings of the Reagan administration. The basic idea is that monetary policy deals with inflation and that fiscal and especially tax policy has to deliver incentives for long-run growth.”
Another inspiration is “Rogernomics” in 1980s New Zealand, when the Labour government’s finance minister Roger Douglas slashed trade tariffs and non-tariff barriers and pioneered monetary policy targeting. (The legacy of that neoliberal experiment remains deeply divisive on the New Zealand left.)
Liz’s libertarian allies
Cliffe discusses Prime Minister Truss’s Cabinet and think tank allies:
… now she is Prime Minister, the supposed free-market outriders are finding themselves being outridden by the sitting government. Littlewood of the IEA marvels at the scope of the unofficial Budget. “I have long tried to fine-tune out criticism of Conservative governments for not being radical enough; now they’re being more radical than even we are requesting.” He cites the government’s commitment to scrap all remaining EU law as an example. Even when the IEA and Truss disagreed, the closeness was evident; its criticism of her energy price cap promptly elicited an explanatory call from No 10.
Old Tuftonians hold many of the senior jobs in her government. “Matt Sinclair is the standout example,” says Littlewood of Truss’s chief economic adviser, formerly of the TPA. “He is steeped in this world.” Ruth Porter, deputy chief of staff, is an IEA alumna. Sophie Jarvis, No 10’s political secretary, was formerly at the ASI. “She will have hired and appointed people who are on board with her ideologically,” agrees Bourne. With Kwarteng as Chancellor, as well as James Cleverly as Foreign Secretary and Jacob Rees-Mogg as Business Secretary, the major cabinet roles are held by true believers.
Free-market think tanks, like the IEA, that have long considered themselves to be outside the broad British consensus have used provocation and controversy to catch attention, shake things up and try to shift debates. Truss, observes Marc Stears of his former student, is now bringing that approach into government. “She loves this idea that the action is in the reaction, prodding and provoking people. The unofficial Budget was like going to a slightly mad libertarian think-tank report launch.”
Stears said that Truss:
“actually wants to destabilise things. She thinks the prevailing order is wrong and there is a need to break things to rebuild.”
Ryan Bourne and Mark Littlewood say that she would have wanted to increase personal freedoms by reducing the nanny state:
Bourne cites childcare, infrastructure, energy and housing (street votes on city planning decisions, for example) as possible focuses, as well as farming (“where there might be a quid pro quo where they scale back government support but relax regulations”). “And I expect this philosophy to apply to lifestyle freedoms, too,” adds Littlewood. “Deregulating ads for sugary drinks, McDonald’s advertising on the London Underground, that sort of thing.”
Oh, if only she’d been allowed to do all those things.
Bourne had more to say:
“Her broad view is ‘We have to show, not tell’,” says Bourne. “We have to get on with free-market reforms and when they create results they create a baseline, and that wins hearts and minds.” There are echoes of the Prime Minister’s vision of “market millennials” here: that young people will come to recognise their small-state instincts when they feel the benefit of such politics put into action.
Cliffe has a message for his Labourite New Statesman readers and suggests how Labour can oppose Truss’s ideas:
So far, her environment policies seem designed to serve the interests of big polluters rather than market insurgents in the green-energy sector; her deregulation push appears tailored to the interests of existing market insiders with big lobbying budgets; and her proposed tax cuts will certainly benefit the already rich, rather than the worst off. None of this is a “hymn to individuality and non-conformity”. It is corporatism.
The challenge now for Liz Truss’s opponents, both inside the Conservative family and on the left, is to engage with these tensions and use them to expose the contradictions of the great unruly experiment being rolled out from Downing Street. Because to do so is to contest what is really driving it; to have a chance of changing the public debate and building a solid foundation for a different and better national project. Bad ideas make a much more obvious and persuasive target than bad intentions.
I would say that has already been done. Sunak’s government is very different to Truss’s, especially with Chancellor Jeremy Hunt as de facto Prime Minister.
‘Weird’ Liz Truss
Shortly after Truss resigned as Prime Minister, The Guardian had an excellent profile of her: ‘From fighter to quitter: the “weird” rise and fall of Liz Truss’.
Truth telling?
It would appear that Truss was somewhat economical with the truth about her education and that of previous Prime Ministers:
At her recent party conference, she spoke of herself as “the first prime minister of our country to have gone to a comprehensive school”. The claim has been disproved by those who note that both Gordon Brown and Theresa May went to comprehensive schools. In any case, Truss has said that Roundhay School in Leeds “let down” children by teaching them “about racism and sexism” with “too little time spent making sure everybody could read and write”.
Again, the notion that Roundhay, a consistently “outstanding” school, was unacademic has been strenuously contested, as has Truss’s claim that her comfortable middle-class neighbourhood in Leeds was “at the heart of the red wall”. Truss is not the first politician to massage her biography but she’s unusual in attempting to establish her rightwing credentials by making her formative years seem more underprivileged than they were.
Political ‘dynamo’ at Oxford
The IEA’s Mark Littlewood was complimentary about her commitment to politics at Oxford:
She became president of the university Liberal Democrats, and a member of the national executive committee of the party’s youth and student wing. Also at Oxford and another Lib Dem activist was Mark Littlewood, now director general of the free market thinktank most associated with Truss’s political outlook, the Institute for Economic Affairs (IEA). He remembers her as a “dynamo who exploded on to the political scene” …
“If you spent any more than three minutes in her company, you had no doubt at all about what she thought of the particular topic you might be discussing,” Littlewood says.
Unlike her U-turning days as PM, she was sure of her convictions as a student:
For others, like Neil Fawcett, a fellow committee member of the Lib Dems’ student national executive, this trait of certitude came across as dogmatic and unbending. “She always had very strong views on everything,” he recalls. “Sometimes they were based on knowledge or experience but quite often they weren’t. My main memory is that if she came up with something that simply wasn’t going to work, and I was in a position where I had the experience to know that it wasn’t going to work, she would still argue the case anyway.
“She was absolutely not for turning, whatever the evidence. I thought of that when I read about Treasury civil servants who have been completely ignored because she knew better.”
She was more interested in debating and protesting than in canvassing:
She was more concerned to make a splash, he says, than to get things done. Littlewood suggests, in her defence, that Truss was not much interested in “delivering leaflets”. Instead she spoke out against the monarchy at a Lib Dem conference, and protested against the BNP in Tower Hamlets.
Mark Littlewood says that Truss found the Liberal Democrats of the 1990s more libertarian than the Conservatives of that era:
Littlewood insists that the Lib Dems made more sense at the time to Truss because the Conservatives were authoritarian on civil liberties and Truss was primarily interested in personal freedom. This, he says, has been the constant in her political career.
“People say she was a Liberal Democrat and now she’s a Tory. She was a remainer and became a Brexiter. She was a republican and she’s a monarchist. But actually her overarching view of the world has always been a classical liberal one, that the state is too big and interfering in our lives,” he says.
She joined the Conservatives in 1996 – when the “back to basics” morality campaign was still alive, if not very well – and 13 years later, it was her local Tory party that wanted to interfere in her life.
That would have been after her affair with a fellow sitting MP at the time. Some local Conservative association members wanted her deselected from her rural Norfolk seat, although that did not happen:
Several constituency association members, dubbed the “Turnip Taliban”, objected, arguing that Truss had not disclosed the extramarital affair she had had with the Conservative MP Mark Field. A motion to cancel her candidature was defeated after the then-leader David Cameron came to Truss’s aid.
‘Weird’
Some of Truss’s detractors told The Guardian that her interpersonal skills are ‘weird’:
The knowledge of the affair with Field has hung around Truss in a way that it probably would not have done with a male politician. There is a welter of parliamentary gossip and tall stories concerning Truss that MPs routinely refer to, off-the-record, although no one can ever name a source or witness. “She flirted with every man she comes across,” says one (female) former Tory minister. “She almost even flirted with women.” At the same time, so many of her colleagues and former colleagues – including the one who speaks of her flirting – report that she was unapproachable and, as another put it, “she doesn’t have great interpersonal skills”.
What most MPs agree that she has always had is ambition. Four years after entering parliament in 2010, she joined the cabinet as environment secretary. The most attention she received in the post came with a bizarrely emphatic speech she gave to the Tory party conference.
“We import two-thirds of our cheese,” she told a bemused hall, “that is a disgrace.” She spoke the last half of the sentence as if there were full-stops between each word, an oratorical choice that cemented the “weird” reputation.
When Theresa May became leader, she replaced Michael Gove with Truss as justice secretary and Lord Chancellor, making her the first woman to hold either post. One insider says that it was obvious that “she was an entirely unsuitable appointment for the job” …
Also:
When asked to describe Truss, two former Conservative government ministers both used the same word: weird. “She doesn’t have any friends. She’s just weird,” one said. “She sits far too close to you,” said another. “And when she talks to you, she keeps repeating your name. It’s weird.”
As Prime Minister:
While Truss may appear to possess an unshakeable self-confidence, many of her appointments spoke of insecurity, as well as debts that required paying. “Never forget that only 50 MPs voted for her in the first round of the leadership election,” says one former minister, who puts Truss’s ultimate triumph down to the fact that “she wasn’t Rishi Sunak” …
“Oh, she’s very clever,” the former minister acknowledges, admonishing those who think otherwise. “She may not be great at understanding nuance, and her political antenna is not very good, but her political skill is in being a survivor.”
A libertarian perspective: ‘shambolic’
The IEA’s Mark Littlewood did not seem to approve of the Truss-Kwarteng mini-budget:
Whatever is said of Truss, there can be no doubt that she inherited a difficult political and economic situation, with a cost of living crisis, the war in Ukraine, a huge national debt following the pandemic, and the forecast of a major recession.
But, says Littlewood, she played a bad hand badly. He remains bewildered about why she staked so much political capital on reducing the top rate of income tax. “Why select that as the hill you want to die on?”
Similarly, he doesn’t understand why, if she was looking for tax reductions, she didn’t cut VAT, which he argues would have been counter-inflationary and broadly progressive. He puts her undoing down to her tendency to rely on just a handful of trusted advisers, which may have worked when she was trade secretary, but not as PM. “That’s when you need squadrons of very senior and experienced people advising you,” he says.
Of course, squadrons of experienced people did advise her not to cut taxes – perhaps that’s why she didn’t consult them.
“I was utterly amazed by the complete inability to politically execute anything,” Littlewood adds. “It was totally shambolic.”
It makes you wonder what went on in all those IEA meetings, if Littlewood was taken so thoroughly by surprise.
The article notes the irony in a free-marketeer being brought down by market forces:
Whatever unfolds from here, hers has been a tale of almost classical hubris. In thrall for so many years to free enterprise, she seemed to expect as prime minister that the compliment would be repaid. Instead, she received from the hedge fund managers and bond traders she lionised an ignominious lesson in the most basic rule of capitalism: you can’t buck the market.
‘Weird’ and friendless
According to Harry Cole and James Heale’s Truss biography Out of the Blue, even she admitted that she was lacking.
On November 1, The Telegraph‘s Tim Stanley got a look at the book as it was a month ago, before publication:
… Harry Cole, political editor of the Sun, and James Heale, diary editor of the Spectator, have proven that hacks do our best work under pressure, adding two chapters on her 44-day premiership and cleverly turning a story of surprise victory into a well-researched tragedy of warnings ignored.
Even Ms Truss had her doubts about her suitability for No 10. I think I’d make a great PM, she once told a visitor to her office, the only problems are: “I am weird and I don’t have any friends.”
Others agreed with that assessment:
One special advisor recalled her “weird manner, where she has a glint in her eye and she thinks she’s being edgy or naughty”.
At the end of her premiership, she was pragmatic. And she does have some friends, after all:
“Politics is a blood sport,” she told friends, “and I am the fox.”
The ‘pork markets’ speech
In The Times, on Saturday, November 5, Cole and Heale gave us a preview of the book by discussing Truss’s pork markets speech, which went viral this year, even though it didn’t raise any eyebrows at the time. David Cameron was Prime Minister back then:
While Liz Truss was becoming more astute in Whitehall management, there is no escaping that her early days at Defra — the Department for Environment, Food and Rural Affairs — will be remembered for one thing only: the speech about apples, pork markets and cheese. The 2014 Conservative Party conference in Birmingham was the last chance for the faithful to gather before the widely expected election the following year.
With the polls pointing to a hung parliament, and fears of years more of coalition, it was red meat galore. George Osborne put the £100 billion annual benefits bill on notice, while David Cameron basked in some rare warmth from the membership after seeing off Alex Salmond and co in September’s Scottish referendum. That week Truss picked a fight on two fronts. First, she declared war on the Hunting Act, and then she turned fire on her least favourite pudding: Angel Delight.
… it was the 1970s dessert that drew the minister’s ire in a bizarre pre-conference intervention, most notably in The Times where she blamed the “new-fangled” instant pudding for the decline of Britain’s orchards. “Apples are a symbol of a wider failure to take pride in and cultivate our own food,” she wrote. Citing the fact that two thirds of UK orchards had been “ripped up in the past 60 years” and that Britain was importing “65 per cent of the apples we eat”, Truss was on the warpath: “Consumers reach for easily made, new-fangled products such as Angel Delight or Instant Whip rather than make an apple crumble.”
She continued the crusade from the podium in Birmingham, in her first speech to a conference as a cabinet minister: “At the moment, we import two-thirds of all of our apples. We import nine tenths of all of our pears. We import two thirds of our cheese.” She continued, with now infamous emphasis: “That . . . is . . . a . . . dis . . . grace! From the apples that dropped on Isaac Newton’s head to the orchards of nursery rhymes, this fruit has always been part of Britain, it’s been part of our country. I want our children to grow up knowing the taste of a British apple, of Cornish sardines, of Herefordshire pears, of Norfolk turkey, of Melton Mowbray pork pies and, of course, of black pudding . . . I will not rest until the British apple is back at the top of the tree.”
With only a few newspaper mentions, her speech went largely unnoticed.
However, she also mentioned ‘pork markets’, at which point her face strangely lit up, suggesting something more that wasn’t there. By the end of the week, the BBC’s satirical quiz show, Have I Got News For You (HIGNIFY), picked up the video:
Jennifer Saunders, the programme’s host, mocked the environment secretary’s facial gestures; responding to Truss’s promise that, “In December, I’ll be in Beijing opening up new pork markets”, Paul Merton quipped: “She likes to enjoy herself on holiday, doesn’t she?” Truss’s least radical conference speech would become her most famous — as a meme and as a gif — and “that is a disgrace” a punchline of political jokes for years to come.
Recently, Truss said:
To be honest I didn’t think it would get that much attention. So basically I hammed it up a bit too much.
Those who knew her at the time said that Truss’s awkward delivery was a product of media training gone wrong:
Truss’s friends would later confess she had been on a crash course for “corporate management presentational training” shortly before the speech. Reflecting on it eight years later, Kirsty Buchanan, a former adviser to Truss, told the BBC such training “plays into the worst elements of Liz’s communication because it makes her more stilted — over-pronunciation and pausing is not her problem, it’s the exact opposite. You need to loosen her up in speeches and get her to relax. In private when she’s relaxed, she’s articulate, sharp, witty, funny, engaging. Put her in front of a camera, until recently when she’s grown in terms of confidence, she kind of clams up.”
According to Matt Kilcoyne of the Adam Smith Institute think tank: “At the time in CCHQ [Conservative campaign headquarters] and No 10, they were doing training for ministers, trying to train them in a certain way. You saw that with the weird stance that they all took, standing with their legs apart.”
A leading Tory sympathetic to Truss notes the difficulty in delivering a modern conference speech: “Addressing a conference hall while being told to address a headshot camera and speak to viewers at home: it’s a difficult balancing act to get right, with speakers attempting to build a rapport with delegates while trying to deliver carefully crafted lines more suited to a party political broadcast or social media clip.”
Nevertheless:
The reference to “pork markets” nevertheless raised eyebrows. One special adviser then working in another department says: “I think she was trying to be suggestive, it’s all part of the whole naughty and weird act. I think because I’ve seen her be suggestive so many times, I assumed it was deliberate but it might just have been accidental.”
Following the speech, allies admit Truss undertook more training to avoid a repeat of the mockery. Buchanan says: “There has clearly been a lot more work done on bringing the voice down and slowing down the pace of delivery.”
Kwasi Kwarteng said:
I think it was a bit unfair . . . it was weird, the delivery people thought was a bit strange. The point she made was a fair point. But again she bounced back. She’s totally resilient, totally focused and she learnt from Defra, she learnt from that experience.
She didn’t let poor delivery deter her:
Undaunted, Truss threw herself back into her departmental work. An aide recalls: “There’s a sort of delightfully Terminator quality to her: she just keeps going. And you know if you combine that with a very thick skin this will lead to this almost relentless optimism. It’s quite a powerful force in politics.”
Truss can laugh at ‘pork markets’ now:
One cabinet colleague notes that Truss can at least laugh about the speech: “The number of times that I’ve been in meetings with her and she’s gone, ‘That is a disgrace’ and everyone chuckles because we all know what the reference is and she laughs along with us like, ‘What the f*** was I doing?’” Truss says: “My daughter loves it, though, she plays it all the time.”
Scottish Secretary helped Truss become PM
Perhaps one of the biggest revelations of Out of the Blue is that Alister Jack, the Scottish Secretary, helped Truss become PM.
On November 13, The Sunday Times featured a synopsis of how Jack dissuaded Truss from resigning as a Cabinet minister in September 2021.
Truss found out about a rise in National Insurance and told Boris Johnson about it. Then a newspaper report about the rise appeared from an unnamed Cabinet minister. The article quoted the minister as saying the rise would be:
morally, economically and politically wrong.
Boris did not want Truss to resign, so he enlisted Alister Jack’s support in keeping her in place:
As a result one of the authors argues that she was able to spend a year at a senior level of the government positioned as the alternative to Rishi Sunak if Johnson lost his job …
Jack had become increasingly close to Johnson and was advising him on a cabinet reshuffle. The book says the Scottish MP contacted Truss to tip her off that she was in line for a significant promotion.
Jack told her to keep quiet about the National Insurance rise:
Jack called her and said: “Look Liz you’re gonna get a massive job in two weeks’ time, a massive job. You would be well advised to shut the f*** up.”
Despite going on to raise concerns in cabinet, she did not comment publicly and, according to a Downing Street official “then sucked it up”.
Truss then became Foreign Secretary:
With Truss duly being promoted shortly afterwards to the prestigious foreign secretary post, the authors say: “Perhaps Alister Jack’s plan had worked after all; Truss did not resign.”
Cole told The Sunday Times: “For fans of alternative history, the role Alister Jack played in the rise of Liz Truss is fascinating.
“Had he not convinced her to temper her attacks on Johnson and Sunak’s national insurance rise in September 2021, perhaps she would have resigned. Or perhaps Boris would never have promoted her to foreign secretary to clip Sunak’s wings and set up the battle to replace him a year later. Keeping her on board made her a contender as she spent a year basically being the alternative to Rishi if Boris did go down so it was clearly a key milestone in her tilt for the top job — and all that followed.”
Currently, rumours have been circulating that Alister Jack will be in line for a peerage, perhaps from Liz Truss. Every Prime Minister is allowed a list of nominees for the House of Lords and Truss is no exception.
The end
After Truss resigned, Harry Cole gave an interview to Times Radio, summarising Truss’s final week as Prime Minister. Too many things had gone wrong. She had to go. He ended by saying she was remarkably ‘zen’ about it all:
That fateful Wednesday of Suella Braverman’s resignation coupled with the bungled vote on fracking and no Chief Whip brought Truss and her husband to a serious conversation that night, as the October 23 edition of the Mail on Sunday reported:
When Liz Truss finally accepted that her premiership was over, late on Wednesday evening, she went to the fridge in the No 10 flat and pulled out a bottle of sauvignon blanc to share with her husband Hugh.
She had just endured a torrid night in the Commons, where more than 40 of her MPs had failed to back her in a vote on fracking – leading to the astonishing sight of ministers pulling wavering Tories into the voting lobbies.
As she nibbled on a pork pie, the couple agreed that it was a matter of when, not if, she resigned.
One of the main considerations was the impact of the growing turmoil on their two teenage daughters.
Ms Truss then slept fitfully until 4.30am, when she started messaging aides for advice.
Later that morning, No 10 asked Sir Graham Brady, chairman of the 1922 Committee, to come in to see the Prime Minister.
When she asked if the situation was retrievable, he replied: ‘I don’t think so, Prime Minister.’ The game was up …
Downing Street staff were in tears as Ms Truss prepared her resignation but she reassured them: ‘Don’t worry, I’m relieved it’s over,’ before adding, ‘At least I’ve been Prime Minister.’
While newspaper reporters were putting together Truss stories, she was spending her final weekend as Prime Minister at Chequers, in leafy Buckinghamshire.
The Sunday Times reported that she held back-to-back parties:
Truss, 47, held a farewell party for ministers last night, and will thank close aides and their partners tonight …
Prime ministers are required to cover the cost of any private entertainment or party business they host at the residence.
A Times2 article told us what she allegedly served to guests:
One of Liz Truss’s many leaving parties at Chequers this weekend featured a menu including bruschetta, pigs in blankets and smoked salmon pinwheels and that, right there, sums up this whole sorry mess.
Anyone who inflicts canapé carnage like that is quite obviously unfit for high office. Smoked salmon followed by a mini sausage followed by bruschetta is a recipe for digestive disaster.
It sounds pretty good to me.
The Mail on Sunday reported more Truss controversy to come involving:
a row over whether Ms Truss should be entitled to the annual £115,000 allowance afforded to ex-PMs after her stint in office lasted only six weeks.
She is also due to receive a £18,860 pay-out for her historically short time in office.
Her aforementioned adviser Kirsty Buchanan stuck the knife in:
Kirsty Buchanan, who was a special adviser to Ms Truss at the Ministry of Justice and who also worked in Downing Street under Theresa May, claimed the PM’s reputation was ‘in tatters’.
‘The seeds of destruction were sown early as she shut out all but her closest allies and cocooned herself with those who shared her views,’ Ms Buchanan wrote in the Sunday Times.
‘With experience and institutional knowledge gone, dangerous groupthink and staggering naivety took hold at No 10.
‘Hubris went unchecked when humility was required from an administration that did not earn its majority but inherited it.
‘Politics was baked in a Petri dish, away from the political reality of the world outside.’
Ms Truss’s former aide said it would take ‘every ounce of her famed resilience’ for the PM to ‘bounce back from this humiliation’.
‘I suspect, though, that it will be the humbling in the eyes of her daughters, of whom she is fiercely proud, which may hit Truss hardest,’ she added.
Oh, dear. I hope Ms Buchanan was not one of Truss’s guests at Chequers.
I still think that, had Truss been male, most people in power would have tolerated her mistakes and been supportive.
Tomorrow’s post looks at the role the Bank of England and the media played in her downfall.
Yesterday’s post looked at the new biography of Liz Truss, Out of the Blue.
Her life has been a fascinating one in many ways.
On Saturday, September 3, 2022, shortly before Conservative Party members elected Liz Truss as their leader, The Times published an excellent article complete with photos, ‘Just where is Liz Truss from? Her incredible journey spans three countries and two continents’.
Excerpts follow, emphases mine.
Early years
Mary Elizabeth Truss was born in Oxford in 1975 to a couple who lived in Cowley, known for the Anglican religious order, the Cowley Fathers, and car making:
The Truss odyssey begins amid the rackety student townhouses of James Street in Cowley, Oxford. She was born on July 26, 1975 at the nearby John Radcliffe Hospital, the second of five children, to Priscilla, a nurse and teacher and John, a mathematics professor. Their first child, Matthew, died when he was a baby. James Street today is inhabited by a mixture of posh students and local families, with a dash of Cowley seediness thrown in.
Like many of the places where Truss grew up, the area is middle class, left-leaning and studenty, home to a variety of public sector workers and professionals on a budget.
A series of moves followed, all connected with John Truss’s work:
When her father’s junior research fellowship at Oxford University ended, he spent a couple of years as a teacher at King Charles I High School in Kidderminster [Worcestershire], where Truss’s younger brother Chris was born in 1978. After that, he found employment at Paisley College of Technology in Renfrewshire, and in 1979 took the family on the long journey up the M6 to Glasgow. Truss was four at the time.
Handsome civic buildings aside, Paisley is a fairly down-at-heel town, its high street a parade of betting shops, tattoo parlours and discount stores. But leafy Low Road, where the Truss family lived, is a bourgeois haven of Range Rovers and birdsong nestled among council estates and main roads. The Trusses lived in two different houses on the street, one a capacious detached villa, the other a sturdy semi-detached. Her other two brothers, Patrick and Francis, were born in this period.
Liz attended West Primary School and once drew the short straw in having to play Margaret Thatcher in a mock election. Most Scots detest Conservatives, especially in the western half of the country:
“I ended up with zero votes,” she recalled. “I didn’t even vote for myself. Even at that age, we knew it was simply unpopular to be a Tory in the west of Scotland.”
In her spare time, young Liz embraced her parents’ left-wing politics and attended protests:
It was in Paisley that Truss’s mother first introduced her to political activism, taking her on Campaign for Nuclear Disarmament marches with the local CND chapter, including the famous Greenham Common protests, which she attended as a seven-year-old. A picture from the Paisley Daily Express on October 23, 1985 shows a 10-year-old Liz with her mother and brother Chris proudly holding aloft a new Paisley CND banner, ahead of a planned protest trip to London. The article recounts how the family spent two weeks painstakingly making the flag.
Truss has recalled the DIY nature of her family’s 1980s radicalism. “We did a number of things like marches, protests,” she told an interviewer in 2014. “On one occasion when we went down to London in a bus we had made some nuclear bombs made out of carpet rolls — ours didn’t quite work because it had floral wallpaper on it.”
In 1987, John Truss got a new job as a visiting professor at Simon Fraser University in British Columbia. The year the family spent in Canada transformed Liz’s life:
In July she posted a picture on Instagram of her class at Parkcrest Elementary School in Burnaby, a suburb of Vancouver, which also boasts the actor Michael J Fox as an alumnus. The caption read: “30 years ago I spent a year in Canada that changed my outlook on life #pioneerspirit #optimism.”
Moving 6,000 miles across the world would be a challenge to any 12-year-old, but the wide-open spaces and artless optimism of western Canada appear to have invigorated Truss.
The Times was able to find a Canadian classmate of hers, Brenda Montagano, who now teaches at the school both women attended:
“I remember her accent and I remember her being very smart,” Montagano recalled. “Now that I’m a teacher, I recognise that it’s no small feat to change schools, never mind countries, at that age. She came in and was confident, chatty, tried to get to know everyone. She made her mark.”
Upon returning to England, the Trusses settled in Roundhay, a suburb of Leeds:
the closest thing Truss and her brothers had to a permanent family home. It was a household of music lessons and political debate, books and board games, the latter of which Truss “had to win”, her brother Francis once told Radio 4.
Roundhay was an affluent area in the 1980s and remains so now, with the villas that overlook the park selling for more than £1 million. As a teenager, Truss would play tennis here with her brothers and drink cider with schoolfriends. Although the constituency of Leeds East was still Conservative when the Trusses first moved there, Roundhay today is solidly middle-class Labour, with the tapas bars and bookshops to prove it.
Liz was highly critical of Roundhay on the campaign trail during the summer, denouncing its Labour element. The Roundhay ward is part of Leeds City Council, so perhaps that was what she referred to. She was also critical of Roundhay School, which she attended:
“All of my parents’ friends worked in public sector jobs,” Truss has recalled. “The teachers at my school were quite often card-carrying members of the Labour Party and it just was not part of the culture to approve of what the government was doing.”
Truss is profoundly unpopular in Roundhay today. Beyond her politics, locals were outraged when she made disparaging remarks about Roundhay School, which is now a successful comprehensive (motto: “Courtesy, co-operation and commitment”), situated in a handsome redbrick building by the park.
“The reason I am a Conservative is that I saw kids at my school being let down in Leeds,” Truss said during a debate with Rishi Sunak in July.
It’s true that Roundhay was not a particularly good school in the late 1980s. “The fabric of the school was crap, really awful,” said one Roundhay teacher who overlapped with Truss. “There were ceilings collapsing, water leaks, gas leaks. The GCSE pass rate would have been 40 per cent A-C.”
It is possible that Truss thinks that more effort should have been made across the board. She was clearly a gifted student:
… the school improved markedly for sixth form and Truss reportedly received extra tuition along with other Oxbridge applicants, which helped her gain acceptance to Merton College, Oxford, to study philosophy, politics and economics (PPE).
Her years in Roundhay might not have been her best with regard to friendships:
On Ingledew Crescent, neighbours of John Truss, whose politics diverge considerably from his daughter’s, have been asked to keep their views to themselves. Some are too furious to hold back though. “She’s a lying b***h,” said Louise, a long-time neighbour. “She told lies about our local school. She told lies about the assistance she was given. I despise the woman and I feel sorry for her father. It’s not his fault”…
One pupil at Roundhay remembered Truss as “aloof” and a “loner”.
The Oxford years
Going up to Oxford probably came as a relief for Liz Truss:
Like many bumptious high-achievers, it seems she found a more comfortable groove when she went to university in 1993. Even among Oxford colleges, the secluded, introspective Merton has a reputation for academic excellence. “For those of us from regional comprehensives, we’d often had to hide how clever we were,” said one contemporary from her year at Merton. “But at Merton you could meet all these amazing people with similar interests. It was very liberating.”
Oxford was a bastion of Conservatism in those days:
“I met Tories and [found] these people don’t have two heads and they don’t eat babies,” she said of this experience.
That said, she joined the Liberal Democrats:
Unlike most of her Merton contemporaries, though, Truss threw herself into life outside the college, joining the university Liberal Democrat society and becoming its president in the spring term of 1995. Student politics seems to have provided the stage she had been looking for.
Truss’s politics in the Oxford years were a typical Lib Dem mishmash. On social issues she still espoused the left-wing radicalism of her parents. During her speech to the Lib Dem party conference in 1994, made while she was still an Oxford student, she made an impassioned plea to abolish the monarchy.
Roger Crouch, who became president of the Lib Dem society the year after Truss, met her at a freshers’ fair in which she was determined to carpet the party’s entire stall with entreaties to legalise cannabis.
“Even at the time she was determined and willing to pick a fight and stand her ground,” Crouch recalled. “She knew what she thought and was willing to defend it. She was determined, slightly eccentric and challenging. She had an acerbic sense of humour, which I think is why we got on.”
The termcard for Truss’s presidency of the society included events on the legalisation of drugs and prostitution. “She liked to challenge the orthodoxy, often a male orthodoxy,” said Crouch, who is now a teacher.
Even so, she was too libertarian to remain a Liberal Democrat for long:
“Liz was always quite a libertarian Liberal Democrat,” he says. Truss was also involved with the free-market Hayek Society at the university and Crouch recalls one particular discussion in which she advocated for the privatisation of lampposts. “I didn’t see her as someone with a longer-term future in the Lib Dems,” he said. “I think she would have found us quite annoying.”
Liz and her boyfriends made the fringe student newspaper columns, one of which said:
Liz had mad ideas.
Her acceptance of a job with Shell also garnered criticism in the student gossip columns.
Life in London
Liz completed her studies in 1996 when John Major was Prime Minister, one year before Tony Blair’s Labour landslide:
Truss migrated to London after college and the not-quite-northerner became an entrenched southerner. She worked as an economist for Shell and then Cable and Wireless, but she was quickly captivated by the siren call of Tory politics, baffling some of her university peers.
“We came out of Oxford and it was the summer of Euro 96 and Britpop,” said her Merton contemporary. “Then Tony Blair got in. It was a breath of fresh air. The country was full of optimism. To then go and join the Conservative Party, I was like: ‘How does that happen?’ It was really perplexing.”
It was at this time that politics took hold of Liz, even if she was not an immediate success. However, her tenacity saw her through:
In 1998, aged 23, Truss ran for a seat on Greenwich council, a Labour-leaning borough. She lost, and it would be a 12-year political slog before she eventually became MP for South West Norfolk.
Running alongside her in 1998 was Douglas Ellison, who later won a seat on the council. “She was definitely resilient,” he recalled. “I don’t know how many selection processes she went through. There was this enormous self-belief to keep on getting up in front of these audiences and voters to eventually try and get that break. She was a sucker for punishment.”
Ellison wouldn’t necessarily have expected her to become prime minister, but noticed her obvious political skill. “Her manner could be a bit matronly, but she was very good at working people,” he said. “She’s been very lucky in a sense. Sometimes it can be better to be lucky than talented.”
Even though she never got a seat on Greenwich council, she settled in the borough, marrying her accountant husband Hugh O’Leary in 2000, at St Alfege church in Greenwich, just half a mile walk from their current home.
Her Oxford classmate Roger Crouch attended the reception:
It must have been a good one, because I can’t really remember it.
The couple have two daughters:
Frances, 16, and Liberty, 13, who she says is looking forward to hosting sleepovers in Downing Street.
I hope Liberty acted quickly.
Hugh O’Leary
On Tuesday, September 6, after Liz became Prime Minister that day, the Daily Mail told us more about Hugh O’Leary, complete with lots of photos:
Liz Truss‘ ‘true blue’ husband watched proudly as the Tory leader was crowned Britain’s third female Prime Minister.
Hugh O’Leary listened on as Ms Truss delivered her first Downing Street address on Tuesday, vowing to to create an ‘aspiration nation’ during her reign as the nation’s 56th Prime Minister …
Mr O’Leary was also by her side when she won Tory leadership on Monday, marking the first high-profile joint appearance by a hitherto private couple.
Ms Truss, 47, described her ‘dry-witted’ accountant spouse as the ‘love of my life’ on Valentine’s Day three years ago. She met Mr O’Leary at the Tory Party Conference in 1997 and said of their first date: ‘I invited him ice skating and he sprained his ankle.’
Mr O’Leary was born in 1974 and grew up in Allerton, Liverpool, before his family moved to Heswall, Wirral.
A former neighbour said ‘Hugh was much more serious’ than his two younger siblings and that ‘he was very earnest and very quiet but a lovely boy,’ the Times reported last week.
O’Leary, 48, became a chartered accountant after studying econometrics and mathematical economics at the London School of Economics (LSE).
The couple started dating and married three years later, settling in Greenwich, South-East London. They have two daughters, Frances and Liberty. O’Leary has worked from home as a house-husband.
A close family friend, cookery writer Mallika Basu, said: ‘They are a great team. Both are keen cooks and very good cooks. She does lovely roasts, he does a good curry.’
There was only one dark period, when Liz had an affair with a fellow Conservative MP. Fortunately, her marriage withstood the strain:
Only once has their relationship been rocked. In 2006, it was revealed Truss had been having an affair with married Tory MP Mark Field. Her marriage survived; his ended.
The only damaging moment came when Tory members in her Norfolk constituency complained they had been kept in the dark about the affair and tried to oust her.
But they were defeated and Truss triumphed.
‘I remember when the tabloid furore was roaring … both times, her friends locally rallied around,’ a source told The Times.
‘There were a number of occasions when the two of them came to various parties and it was quite good to see that people were sympathising and rallying round, particularly when it was over her selection in 2009. It was extremely unfair the way that came up.
‘I don’t really know much about what went on but from my impression, they [O’Leary and Truss] have always been a really strong couple and I have never seen any real sign that it’s had much of an impact.’
What her family think
The article said that Liz’s father John was sad and furious about his daughter’s Conservatism — and probably her ascent to No. 10:
Truss’ left-wing academic father was apparently ‘so saddened’ at her metamorphosis from an anti-monarchist Lib Dem to a Tory that he finds it difficult to talk about it, according to reports.
A former neighbour of maths professor John Truss claims he was ‘sometimes furious’ and could ‘barely bring himself to speak about’ her being a Conservative candidate when she first stood in 2005.
His college, the University of Leeds, has also reportedly banned his colleagues from speaking about Truss as well, The Times reports …
In July, the Daily Express also alleged that the Foreign Secretary’s relationship with her father has been impacted by her ‘conversion to extreme right-wing politics’ and he is really ‘appalled’ by it, a colleague said.
Another university source said: ‘John is distraught at the policies his daughter is advocating in her bid to become PM.’
Also:
Another report claimed Professor Truss was ‘so appalled’ by his child’s ‘conversion to extreme Right-wing politics’ that it had impacted their relationship.
We understand that this is considerably wide of the mark. It may be coincidence but we understand Prof Truss has spent part of the time that his daughter has been campaigning abroad in Finland.
‘I think it’s fair to say there is a diplomatic element to this,’ says a source. Family figures have indicated to us that the move was almost certainly to avoid being a distraction to his daughter.
But if he has been dismayed by her transformation from the spirited girl in whom he proudly instilled a strong social conscience into the standard bearer for the Tory Right, he is not saying.
All the same it is worth noting Prof Truss, whose colleagues at Leeds have been ordered not to give interviews about him, declined to campaign for his daughter when she first stood for election in 2001. (Again it may be a coincidence but she was standing in a strongly Labour-supporting constituency.) An indication of how this must have been testing family bonds comes from Prof Truss’s older brother Richard, a retired Church of England vicar who officiated when his niece married accountant, Hugh O’Leary, 22 years ago.
The Truss family, he said, had liberalism ‘in its blood’ adding: ‘It must still be in her blood as well.’
He last saw his niece in March at a party to mark his 80th birthday.
He was, he says, ‘touched’ that the Foreign Secretary had flown in from overseas in order to be there. Of the family politics, he explained: ‘My grandfather lived and died quite young but he used to turn up and campaign for the Liberals before the First World War, so it’s kind of in our genes.’
His understanding of liberal, he says, is of being ‘open and concerned for those who are in need’.
It is also why he hopes the girl he remembers as ‘fun, very bright… questioning and determined’ will do something to heal ‘the division between people in poverty’ as well as changing the Government’s approach to immigration and refugees. ‘I hope she might do something on both fronts,’ he says.
Fortunately, Priscilla Truss supports her daughter:
The former neighbour also said that Truss’ mother, nurse and teacher, Priscilla – who he spoke to before she was selected as a Tory candidate in 2005 – is backing her daughter.
‘She said she was quite torn. She’d agonised over whether to support her because she was her daughter, or not to support her because she was a Tory,’ he told The Times. ‘In the end, she decided that family ties should win out.’
Liz’s three brothers also support her:
Paradoxically for all this apparent family dissent, there is also considerable support for a politician whose list of jobs in government reads like a cut-out-and-keep guide to becoming PM: Under-secretary of state for childcare and education; Environment, Food and Rural Affairs Secretary; Justice Secretary and Lord Chancellor; Chief Secretary to the Treasury, International Trade Secretary; and finally heading the Foreign and Commonwealth Office.
Her three brothers, Chris, Patrick and Francis, turned out to support her at the final hustings at Wembley on Wednesday evening. As for her mother Priscilla, she has been a near constant presence as her daughter has criss-crossed the country seeking support.
‘For the children, Priscilla has always been there for them,’ says a family friend. ‘They always knew that if they needed her she would be there.
‘The fact is Liz is proud of her politics but she is also proud of her mother’s political views, too.’
The article says that her mother’s family’s politics have been pivotal in shaping Liz’s worldview:
If anything, it is from her mother’s side of the family that we find the crucible of Liz Truss’s convictions.
The roots of the Grasby family, Priscilla’s maiden name, are deep in the rural landscape around Driffield, East Yorkshire. Priscilla’s grandfather George fought in the Great War with the East Yorkshire regiment and lost a leg at the Battle of Passchendaele.
After the war, he married Mary and became a cobbler on Adelphi Street. Mike Kennie, who lived next door, said the old soldier’s disability was no handicap and that he would ‘often be climbing ladders outside the building.’
His father William was a shepherd and inn keeper. Today the pub he ran, The Ship Inn at Langtoft, is still in business. But the link came as a shock to the current publican Martin Weaver.
‘Can you repeat that? Liz Truss, our probable next Prime Minister, is connected to this pub. I’m astonished.
‘In fact I’m shocked. This has been a pub since the days of Queen Victoria but I never knew that Truss’s great-grandfather was brought up here as a boy. I can’t wait to tell the locals.’
The local Tory MP, Sir Greg Knight, looks forward to having a drink with Miss Truss in her great-grandfather’s former home as a matter of urgency.
I hope he hurried.
Anyway:
‘Why not? It’s a great part of the countryside and I am pleased to learn of the family connection.’ It was George who laid the foundation for the socially-upward Truss family. His son, also George, won a place to read classics at Queen’s College, Oxford.
During World War II he served with the Army in India in an intelligence role. After the war he became a teacher, later a head of classics at Bolton School for 25 years. His daughter, Liz’s mother, was one of his pupils.
According to one former pupil, the pipe-smoking Mr Grasby was very much a ‘post-Second World War socialist’. It was into this Left-leaning family tradition that Miss Truss was born in 1975. An older brother Matthew died in infancy the previous year. Three brothers followed her.
Here’s something we didn’t know:
When Liz was two, they moved to Poland and then, when she was three to Paisley, where her father had been appointed a maths lecturer at Paisley College of Technology. She started at the West Primary School, where she recalls, discipline was still imposed with the leather strap for miscreants.
Liz’s brothers talked about what it was like growing up with her. Let’s begin with a neighbour’s reminiscence:
… she revelled in her position as the only girl in a family of boys. ‘Her brothers were very sporty and her parents active so there was always something going on,’ says a Roundhay neighbour.
Youngest brother Francis said it was a very musical home: ‘We’d do music practice every night because my dad’s a very keen musician, and that was sort of enforced.’ Recalling playing board games such as Cluedo and Monopoly, Francis said of his sister: ‘My dad would say she cheated to win. She was someone who had to win. She created a special system to work out how she could win, and then if she was losing she might sort of disappear rather than lose.’
What her friends say
The paper reported that Liz’s friends were on board with her candidacy as Party leader and had every confidence in her:
We have spoken to family, friends, foes and even former romantic partners. They all agree on one thing: the Liz Truss they know is brighter and far more intelligent than some of her leaden appearances on hustings and in interviews might have suggested.
There is, too, something of a chameleon character to her that manages to identify her with practically everyone. That, of course, may be her skill as a politician — she is after all the longest-serving Cabinet minister in recent times.
But as a one-time ally says: ‘The key to understanding her is that she actually says what she believes.’ What perhaps is even more bizarre is the contempt she has these days for liberal group-think.
The paper caught up with friends of hers from Roundhay:
While still at school she joined the youth branch of the Lib Dems. A fellow student was Kiron Reid and the two were photographed holding a party flag at a mass trespass at Twyford Down, Hampshire, in protest at then Home Secretary Michael Howard’s Criminal Justice Bill clamping down on illegal raves.
Reid was also a friend of her then boyfriend, Wyn Evans, another Lib Dem supporter who was at Leeds Polytechnic.
Reid, who is still a party activist, told us: ‘Liz always had a liberal social and economic view of the world. Am I surprised she’s now a Tory?
‘Well, even back then she was a huge fan of Mrs Thatcher which was not a commonly held position in the North of England. She regarded her as a strong woman leader.
‘It was a long time ago and I was often drunk or hung over at Lib Dem conferences but she always argued her position strongly.
‘Wyn and Liz went out with each other for at least a year, maybe 18 months or more.’
Mr Evans is clearly no longer a fan of his former girlfriend, tweeting in April: ‘Biggest war in Europe for 75 years and our Foreign Secretary, in a major speech, can barely utter the word Europe. This is a speech of an isolated, detached nation still carrying notions of being a global power. Depressingly sad and woefully dangerous.’
A professor speaks
The Mail‘s article ends with the words of one of Liz’s lecturers at Oxford:
Perhaps Marc Stears, one of her Oxford lecturers, offers the most intriguing insight on our next PM.
‘That Truss appears to be on the cusp of becoming Prime Minister, rather than those candidates from central casting of PPE at Oxford, shows not only that I grossly underestimated her 25 years ago but also that the qualities our politics rewards have changed beyond recognition,’ he says.
‘Truss lacks the media elan of Tony Blair and David Cameron. She lacks the dogged determination of Gordon Brown or the patient, long-term vision of Margaret Thatcher.’
Then again, he will not be the first person to have underestimated Mary Elizabeth Truss.
Maybe the prof nailed it in saying she lacked a patient, long-term vision. Then again, with the Conservatives having lost two years’ worth of policy making to the pandemic, time was against her.
Tomorrow’s post looks at the New Statesman‘s fascinating profile of Liz Truss’s brand of politics and The Guardian‘s analysis of her time in Parliament as well as Downing Street.
My most recent post on Liz Truss left off with the beginning of the end in her final week as Conservative Party leader.
Friday, October 14
Her sacking of Kwasi Kwarteng and installation of Jeremy Hunt as Chancellor on Friday, October 14, meant only one thing — her end was nigh:
Liz Truss’s first Chancellor Kwasi Kwarteng: what he expected, what he got instead (October 13, 14)
Liz Truss and Kwasi Kwarteng illustrate that one DAY is a long time in politics (October 13, 14)
The Times‘s headline on the morning of the 14th said that Conservative MPs were already plotting to install Rishi Sunak and Penny Mordaunt in Truss’s place. One of them would be Prime Minister and the other would be Chancellor or Foreign Secretary:
The article also said (purple emphases mine):
Truss and Kwasi Kwarteng, the chancellor, are expected within days to make a humiliating climbdown over corporation tax in an effort to calm the markets and see off a mounting revolt.
Indeed, that is what Truss announced at her disastrous press conference that afternoon. By then, Jeremy Hunt was already Chancellor:
It was hard to believe, especially as Ireland’s corporation tax is half that: 12.5%. What is to stop businesses in Northern Ireland from moving south of the border?
Liz prefaced the announcement with:
This is difficult.
Guido Fawkes has the video and another quote preceding her announcement about corporation tax:
It is clear that parts of our mini-Budget went further and faster than markets were expecting… so the way we are delivering has to change…
He concluded (emphases his):
The mother of all U-turns…
Later in the afternoon, Wendy Morton, the Chief Whip, summoned Conservative MPs to an online call with the Deputy Prime Minister Thérèse Coffey.
One hundred of them dialled in. Coffey allegedly kept staring at her notes:
Saturday, October 15
Saturday’s papers were scathing.
The Daily Mail asked, ‘How much more can she (and the rest of us) take?’
The i paper led with ‘Tory MPs tell Truss: “It’s over”‘:
The Telegraph‘s Tom Harris wrote about the symbiotic relationship between the Prime Minister and the Chancellor from Margaret Thatcher’s time to Truss’s.
When that relationship goes wrong in a big way, it’s nearly always bad news for the PM, although there are exceptions:
When a prime minister loses a long-serving chancellor and ally – as Margaret Thatcher did when Nigel Lawson walked out of her government in 1989 – the political ramifications are enormous. In Thatcher’s case, that event signalled the beginning of her long defeat. When a prime minister loses a friend too, it becomes, as Liz Truss stated in her press conference, “not an easy” personal moment.
Their closeness also makes it impossible for Truss to distance herself from the mess left at the Treasury. It is not clear which policy Kwarteng implemented that the prime minister was so unhappy with that she had to fire him. In 1989, Lawson resigned over his objection to the prime minister’s reliance on her economic adviser, Sir Alan Walters, but there were already disagreements between Numbers 10 and 11 over whether Britain should join the European Exchange Rate Mechanism.
[John Major’s Norman] Lamont was fired over his handling of Britain’s departure from the same institution. Javid resigned over personnel issues. Rishi Sunak’s reasons for resigning were similar, though in his case the personnel issue involved the then prime minister himself.
In Jeremy Hunt, Liz Truss might be given a chance to form the kind of reassuring, mutually supportive – and, crucially, stable – relationship with her chancellor that good government demands. It would be foolish, however, to assume that when such a relationship breaks down, it is always the chancellor who is next to go.
The Telegraph‘s Camilla Tominey looked at the backbench Conservative MPs, wondering how Conservative they actually were. I was glad to see that she mentioned Alicia Kearns, who does not seem very Conservative to me.
Tominey’s article shows that a significant number of Conservative backbenchers do not hold traditional Conservative Party values:
Never underestimate the Conservative Party’s unparalleled ability to turn the gun on itself when coming under enemy fire. As the pot shots continued to rain thick and fast on Liz Truss’s troubled premiership, what did the Tories decide to do? With Labour’s help, they elected Alicia Kearns as chair of the Foreign Affairs Select Committee.
For those unfamiliar with Ms Kearns, she is the former Amnesty International activist who led the so-called “Pork Pie Plot” to oust Boris Johnson over partygate. Despite having been an MP for all of five minutes, the 34-year-old, who won the safe seat of Rutland and Melton in 2019 (hence the pork pie theme) decided that the Conservatives’ wisest move was to remove the man who secured the party’s biggest election win since 1987. Well, dip me in jellied pork stock and cover me in hot-crust pastry, that went swimmingly!
Having declared last year that she came into Parliament with “one legislative change I wanted to deliver, which was to ban conversion therapy”, inexperienced Kearns now occupies one of the most influential posts in the House of Commons.
Her first intervention? Following hot on the heels of her fellow chair, Mel Stride, of outspoken Treasury select committee fame, she used a radio interview on Thursday night to urge the Prime Minister to reverse the tax-cutting measures in the mini-Budget.
I’ve got nothing personally against Ms Kearns – she is clearly a thoughtful and intelligent woman. But if she isn’t for cutting tax, then what on earth is she doing in the Tory party, let alone now apparently in the running to enter a future Conservative Cabinet?
One former minister was this week quoted as saying: “Everything [the Government] are doing is everything that I don’t believe in.” Why, then, is that senior politician – apparently so opposed to spending controls and economic growth – not currently residing on Sir Keir Starmer’s shadow front bench or drinking Remaineraid with Sir Ed Davey?
As former Brexit negotiator Lord Frost put it on Thursday: “There are too many … social democrats operating under Conservative cover.”
It is one thing to be a broad church, but the Tories are currently taking on the mantle of a Blue Labour cult.
Not only are many of them perfectly comfortable with taxing people more, despite the tax burden being at its highest in 70 years, but they are also apparently as opposed to fracking as Ed Miliband. They seem to love the status quo and appear happy to watch Britain slowly sink into decline – along with their own party.
Tominey says that Liz Truss’s platform was clasically Conservative, and so was the one upon which Alicia Kearns was elected.
These are the MPs who will determine the outcome of Brexit and the next election. Both are in peril.
Tominey rightly lays the blame at the feet of former PM David Cameron, a wet who wanted a different type of Conservative MP:
David Cameron’s decision to introduce open primaries in the late 2000s, which saw wannabe MPs selected by non-members as well as members, was perhaps the most obvious mistake. The Conservatives ended up with “yellow” Tories in its ranks, such as Sarah Wollaston, who later defected to the Liberal Democrats.
Funnily enough, Sarah Wollaston is no longer an MP. Others like her, most of whom had the whip removed, were defeated or chose not to run in 2019.
This is the issue:
But more broadly, by inviting people with no background in Conservative politics to stand for Parliament, they ended up with people with no Tory backbone either. Holding successive snap elections only made the selection process less rigorous and open to people high on ambition and low on ideology.
This is a problem for the next general election. GEs depend upon local activists — party members — who are willing to canvass door-to-door:
We now have the Sunak squadders, calling for people to keep less of their wages, for businesses to pay more in corporation tax and for benefits to be linked to inflation, Corbyn-style …
Conservatives have become so detached from reality that they actually believe this will help them to win the next general election – even though it promises to prompt a mass walkout by the very grass-roots activists they rely on to run a campaign.
However, Tominey says that Rishi Sunak’s coronavirus handouts have also altered the public perception of the role of the state. We can but see how this will play in 2024 or early 2025 when the next GE comes along.
Monday, October 17
On Monday, October 17, Leader of the House Penny Mordaunt had to stand in for Truss during a debate. Opposition MPs accused Truss of hiding under a desk.
Mordaunt had to deny that more than once, saying that Truss had a ‘very genuine reason’ for not being present.
I don’t often feel sorry for Penny Mordaunt, but I did that day:
However, one Labour MP, Andrew Gwynne, tweeted that Liz Truss was the victim of a ‘coup’ — his word — and that Jeremy Hunt was the acting PM:
On Tuesday, October 18, The Times explained why Truss did not turn up at the despatch box the day before:
For much of the day Truss was conspicuous by her absence. She refused to respond to a question by Sir Keir Starmer in the Commons, prompting accusations from Labour that she was “frit”. Penny Mordaunt, the leader of the Commons, answered questions in her stead. She said that the prime minister had “a very good reason” for her absence but refused to explain further, prompting misplaced speculation that Truss had resigned.
That reason for her absence turned out to be a meeting with Sir Graham Brady, the chairman of the backbench 1922 Committee. Sources said that the meeting was routine and had been arranged before Kwarteng’s dismissal. But the issue of her leadership, and a potential revolt by Tory MPs, was said to have been discussed.
One source on the committee said there were a “number of views” on the way ahead but that there were concerns that an immediate move to defenestrate the prime minister could further destabilise the markets.
“The question is whether it is more damaging to create further uncertainty by getting rid of the prime minister when the chancellor [Hunt] appears to have settled the markets,” said an MP on the committee.
Some Tory MPs believe that with the unravelling of her tax-cutting agenda and signature energy policy she is finished politically. Sir Charles Walker became the fifth Conservative MP to publicly call for her to go, saying her position was “untenable”.
A senior Conservative source added: “It’s the biggest unforced humiliation for a British government since Suez. Eden did the decent thing and resigned.”
“The trouble is there is no consensus for who should replace her,” said one former backer of Rishi Sunak. “And the last thing we need now is to be seen to be causing more uncertainty on the financial markets.”
Monday night was grim.
On the subject of a coup, Nigel Farage agreed that Jeremy Hunt was in charge, and that this was a ‘globalist coup’:
On his GB News show that night, Dan Wootton also said that there had been a coup. He agreed that the unpopular Hunt was in charge and that no one liked him, except for the Establishment. He said that if the Conservatives allowed this to continue, then they deserve to lose the next GE:
Truss surfaced to give an interview to the BBC’s Chris Mason, wherein she apologised for the mini-budget. She said:
First of all, I do want to accept responsibility and say sorry for the mistakes that have been made. I wanted to act, to help people with their energy bills, to deal with the issue of high taxes, but we went too far and too fast. I have acknowledged that.
Tuesday, October 18
Tuesday’s headlines were deeply discouraging for her. Nearly all had photos of her alongside Hunt:
The new biography of Truss, Out of the Blue, was not even ready for publication. Someone photoshopped the cover with a remainder sticker on it, saying, ‘Reduced for quick sale — please just take it’:
The Sun‘s political editor, Harry Cole, one of the book’s co-authors, posted an article about the MPs plotting against her:
TORY plotters dubbed the “Balti Bandits” carved up Liz Truss’s future last night over a korma and bhuna feast, The Sun reveals.
Leading rebel Mel Stride hosted more than a dozen “miserable” Conservative MPs in his large House of Commons office for an Indian takeaway – with the PM’s fate also on the table.
Ex-Ministers John Glen, Nick Gibb, Mark Garnier and Shailesh Vara tucked into “lashings of curry and naan” ordered in by Mr Stride, alongside outspoken backbencher Simon Hoare.
2019 intake MPs Angela Richardson and Simon Baynes were also said to have joined the “poppadum plot” – but sources say the meeting ended with “no credible solution” to their woes …
Contenders include ex-Chancellor Rishi Sunak, Defence Secretary Ben Wallace, new Chancellor Jeremy Hunt and Commons Leader Penny Mordaunt – but given the party is deeply split, the plotters admitted the chances of a rapid “coronation” of a new PM were “almost zero.”
One attendee told The Sun: “the vast majority of attendees were Rishi Sunak supporters, but there were Penny people too. It was not a Rishi thing.”
On Tuesday evening, Truss had another group angry with her — her own supporters in the European Research Group, the pro-Brexit group of backbench Conservative MPs.
The Telegraph‘s Tim Stanley wrote about it, as he was there in the corridor for Truss’s meeting with them:
Liz Truss launched her fightback at 6pm in Committee Room 11. The meeting was actually set for 5pm; Commons voting ran late so Mark Francois advised us hacks to go away and come back later, but I hung around on the suspicion that the moment we left, Liz would slip out of her hiding place in the roof of the lift and jog, unseen, into the Room …
These are the true believers: if they’re angry at Liz for anything, it’s for not keeping the mini-Budget …
What we saw of her on TV on Monday night, interviewed by Chris Mason, did not spark confidence as she uttered that dread word “sorry”, thus accepting personal responsibility for blunders past and future. It is the mark of an “honest politician”, she said, to admit mistakes. That’s true, but it’s also a dead giveaway for a not-very-good one, trying to turn a repeated error into a display of moral virtue. As Samuel Johnson might have said, “Honesty is the last refuge of the incompetent”.
… She bobbed into view in a dark blue dress and black tights – fresh-faced, one suspects, from a good night’s sleep. Instinctively, I stood: she might be a PM, but she’s still a lady. I earnt a cheeky nod. Those who can’t fathom the rise of Ms Truss haven’t met her. She has a way of compromising you, of making you think you’re on her side, and it’s the most fun side of the room to be on.
The ERG roared as she entered. She entertained them behind a closed door for about 45 minutes. Then she left, followed by Mr Francois who told us it was “a very positive meeting”.
The PM evidently spoke about Northern Ireland and her commitment to raising defence spending by the end of the decade, which is ambitious for a woman who could be out of office by Friday. And he noted that David Canzini, the clever political operative, was with her, an eminence so grise, none of us had noticed he’d gone in.
No 10 confirmed it: he was hired as of that morning.
Too little too late. That might have been Canzini’s shortest job.
Wednesday, October 19
On Wednesday, October 19, Guido Fawkes posted that the Reform Party — formerly the Brexit Party — was climbing in the polls. The photo shows their chairman, businessman Richard Tice:
Guido’s post said, in part:
Guido can reveal that in the 48 hours before close of play yesterday afternoon, the old Brexit Party received almost 1000 new £25 membership sign-ups. That new five-figure cash boost was joined by 300 members registering a new interest in standing as a party candidate at the next election. The first time the Tories dipped below Labour in the polls – September 2021 – Reform saw one in 10 Tory voters switching to them. Can they continue capitalising on Liz’s woes? …
It’s not just Reform benefitting from the dire state of No. 10. Last night the LibDems revealed five new donors, each giving £50,000 to the party, one of whom is a former Tory donor. While the last 36 hours have been calmer for Truss, it does feel like the ship has sprung one too many leaks to be repaired by a strong PMQs performance…
Wednesday was another fateful day. Home Secretary Suella Braverman resigned, then a confusing scene took place in the voting lobby over a division (vote) on fracking, which resulted in more chaos when it was unclear whether Wendy Morton had resigned as Chief Whip:
Liz Truss’s final 24 hours: Suella Braverman’s resignation, question over Whips’ resignations (October 19)
Truss appointed Grant Shapps, former Transport Secretary, in Braverman’s place:
Holy mole, guacamole!
Nigel Farage repeated ‘coup’ in his tweet about the news:
As with Hunt, Truss had to scrape the barrel.
The Telegraph reported that, like Hunt, Shapps was not a Truss supporter:
It is a remarkable turnaround for Mr Shapps, the transport secretary under Boris Johnson who went on to become a prominent supporter of Ms Truss’s leadership rival Rishi Sunak.
Only on Monday night, Mr Shapps was telling a theatre audience that he believed Ms Truss had a “Mount Everest to climb” to remain in power.
“I don’t think there’s any secret she has a mountain, a Mount Everest to climb,” he told Matt Forde’s podcast. “What she needs to do is like threading the eye of a needle with the lights off.”
Now he is one of her most senior ministers – and another example of the way a weakened Ms Truss is being forced to offer olive branches to the Sunak supporters she had previously shunned.
Not only was Mr Shapps questioning her chances of success until as early as this week – he was working proactively to get rid of her.
Mr Shapps has been viewed in Westminster as one of the leaders of the opposition to Truss’s libertarian policies.
He spoke up at the Tory party conference in Birmingham earlier this month against her plans to scrap the 45p rate of income tax, and warned that Ms Truss had “10 days” to turn things around or MPs “might as well roll the dice and elect a new leader”.
This is what the aforementioned Camilla Tominey was lamenting in Conservative MPs. Some of the recent ones have no appreciation of or allegiance to Conservative values. Shapps was a Cameronian MP.
The article also discussed Shapps’s famous spreadsheets which appear to work as well as the 1922 Committee in making or breaking a Prime Minister:
The veteran MP – known by some as the “Duracell Bunny” for his enthusiasm – is also well-known for his “Star Wars” spreadsheet, with which he has spent the past few weeks recording the views of MPs on Ms Truss and her plans.
Mr Shapps used an earlier version of his famous spreadsheet to lead a rebellion against Theresa May, and also utilised its information to help guide Boris Johnson into Downing Street.
The spreadsheet is said to contain more than 6,000 historical “data points” from previous conversations with MPs.
It was rumoured that he had been in contact with Mr Johnson and Mr Sunak to see if they would join an effort to oust Ms Truss. And some rebel MPs claimed he had even offered himself up as a caretaker prime minister.
Let us not forget that Shapps himself is hardly a paragon of virtue:
… unfortunately for Mr Shapps, some elements of his past may make a shot at No 10 less than likely – not least the Michael Green saga.
This was an alter-ego he employed to enable him to run a series of get-rich-quick schemes on the internet while he was an MP.
Mr Shapps originally denied he had a second job, and threatened legal action against a constituent who said he had. But he was forced to admit practising business under a pseudonym in March 2015.
All this happened while he was Tory chairman, in charge of David Cameron’s efforts to win the 2015 election.
He was demoted soon after to aid minister, and resigned from that role after claims he had ignored repeated allegations of bullying involving the Tories’ youth organiser. It was said the alleged bullying, which took place on the party’s RoadTrip 2015 campaign, may have caused one party member to commit suicide.
On Wednesday evening, Camilla Tominey reprised her warning about un-Conservative MPs and their takeover of the Government. She, too, used the word ‘coup’:
… the departure of Suella Braverman as home secretary speaks to a bigger problem for Liz Truss than sheer optics.
In sacking two key allies on the Right, only for them to be replaced by opponents more to the Left of the party, the Prime Minister is increasingly looking like the victim of a Conservative coup.
It is certainly ironic that the former home secretary, in post for just 43 days, first used that word to describe those who plotted against Ms Truss’s original plan to link benefit to wages rather than inflation.
With that, and most of her mini-Budget up in flames thanks to a rebellion by the moderates, Jeremy Hunt now appears to be the de facto Prime Minister.
He will now be joined by his fellow Sunakite Grant Shapps, who despite being rejected from Ms Truss’s original cabinet, has now been appointed to replace Mrs Braverman at the Home Office.
Braverman, at one point, had headed the aforementioned European Research Group:
… her swift exit from one of the highest posts in public office will anger her European Research Group supporters.
It was only on Tuesday evening that Ms Truss was said to have charmed the backbench group of Eurosceptics with her honest, straight-talking approach.
They are unlikely to take kindly to their former chairman, a darling of the grassroots, being ejected in such unseemly fashion.
Mrs Braverman, a Conservative leadership candidate herself over the summer, received the longest standing ovation at the Tory Party conference two weeks ago.
Fortunately, Rishi Sunak re-appointed Braverman as Home Secretary. He probably realised he had to, in order to keep Party members on side.
Returning to Wednesday, October 19, The Telegraph posted an article stating that Conservative backbenchers were asking Labour for help in ousting Truss. Unbelievable:
Rebel Tories have been asking Labour MPs to help them overthrow Liz Truss, The Telegraph has been told.
Conservative backbenchers are growing increasingly frustrated with the Prime Minister’s leadership, but currently lack any mechanisms to remove her given the one-year immunity she has from a no confidence vote.
As things stand, the only way to oust Ms Truss would be to change the rules – which is a decision that only the executive of the 1922 committee of backbenchers can make – or if she resigns of her own volition.
One Labour MP told The Telegraph: “Tories are speaking to us saying ‘this is a complete nightmare and there is no way out’. We are being asked ‘can’t you do something about her?’”
The MP, who said their colleagues have reported similar experiences, said they were approached by one Red Wall MP whose constituency was in the north and another MP who is a member of the One Nation group of moderates …
A Labour source said: “There is very little Labour can do. Even a vote of no confidence doesn’t have the constitutional standing that it used to. The Tory party are the ones that elected her, they need to get rid of her.”
The paper’s Michael Deacon wrote that Conservative MPs were entirely to blame for the mess. Furthermore, he said, they risked angering Party members, the campaigning activists, if they pushed ahead with a rule change saying that the members would no longer be able to vote for future Party leaders. The members elected Truss over Sunak in August:
This week, The Telegraph reported that Tory MPs want to bar members from voting in future leadership elections. Supposedly the reason is to speed up the process of choosing a leader. But this is blatantly a smokescreen. Quite plainly, MPs just want to prevent the members from landing them with another turkey like Truss.
Many members are appalled by this suggestion. And so they should be. Such a plan is not just arrogant and undemocratic, it’s delusional. Because party members aren’t to blame for the current mess.
Tory MPs are.
After all, who put Truss on the ballot paper in the first place? Tory MPs. No fewer than 113 of them, in fact. A third of the parliamentary party. Out of an initial field of 11 candidates for the leadership, Truss was the MPs’ second favourite.
Unlike the MPs, however, the party members weren’t allowed to choose between the initial field of 11. If they had been, it’s extremely unlikely that they would have chosen Truss. They’d have been far more likely to choose Penny Mordaunt or Kemi Badenoch, to name just two. In fact, if the MPs had deigned to ask them, I suspect that the greatest number of members would have wanted their leader to be Boris Johnson – the person they chose to be leader in the first place.
The truth is, the members voted for Truss simply because they didn’t want to vote for Rishi Sunak. In leadership contests, they’re only ever given two candidates to choose from. And why? Because Tory MPs don’t trust them. They fear that, if presented with a wide-open field, party members will choose the “wrong” candidate. Funny how things turn out.
All things considered, then, it seems clear that, if anyone should be barred from voting in leadership contests, it should be Tory MPs. In future, just leave it to the wiser judgment of the members instead.
That night, The Telegraph posted an article by Lord Frost saying that the Party was moving towards a status quo, if not anti-Brexit, stance, going all the way back to David Cameron’s time as Prime Minister, with George Osborne as Chancellor and Philip Hammond in the same post under Theresa May:
… the Government is implementing neither the programme Liz Truss originally advocated nor the 2019 manifesto. It is going in a completely different direction. We are back to Osbornomics, the continuity Hammond view of the world. There is no shred of a mandate for this. It’s only happening because the Truss Government messed things up more badly than anyone could have imagined, and enabled a hostile takeover by its opponents …
… the correct account of the past few weeks is the simplest. Truss tried to deliver worthwhile reforms and set the country onto a much-needed new direction. I supported this policy direction and still do. But it was rushed and bungled. The markets were spooked. The mistakes were opportunistically seized on by her opponents to undermine her leadership, to blame Brexit, and to stop the party getting out of the social democratic tractor beam of the past few years. And now, under pressure, the Prime Minister has reversed tack completely.
The risk now is that we lose for a generation the opportunity to do anything better. Every time the PM defends her approach, she denounces the policies on which she was chosen. The danger is that necessary and correct reforms are discredited.
Frost held that Truss was ultimately responsible for her own downfall.
As such, she had to go:
We are where we are. I am very sorry about it, because I had such high hopes. Whatever happens to her ministers or the stability of the Government in the next few days, Truss just can’t stay in office for one very obvious reason: she campaigned against the policies she is now implementing. However masterfully she now implements them – and it doesn’t seem that it will be very masterfully – it just won’t do. She said she wouldn’t U-turn, and then she did. Her fate is to be the Henry VI of modern politics – a weak figurehead, unable to control the forces around her, occasionally humiliated, and disposed of when she has become inconvenient. Better to go now.
As for her successor and the Party:
Then the party must do two things: avoid making the economic situation even worse by repeating the policies of the Cameron government in totally different circumstances; and recover some political legitimacy for carrying on – because in our system legitimacy does matter.
Thursday, October 20
After 44 days, Liz Truss resigned as Conservative Party leader on Thursday, October 20.
She served as Prime Minister for 50 days, beating George Canning’s record of 118 days. Also a Conservative, he died of tuberculosis in 1827.
She remained PM until Rishi Sunak succeeded her:
Liz Truss’s final 24 hours: Suella Braverman’s resignation, question over Whips’ resignations (October 19)
Liz Truss’s final 24 hours: fallout over Braverman and Morton, no tears in exit speech (October 19, 20)
Rishi Sunak becomes Prime Minister: a momentous morning of historic significance (October 24, 25)
How Rishi Sunak won the Conservative Party leadership contest — part 1 (October 20, 21, 25)
How Rishi Sunak won the Conservative Party leadership contest — part 2 (October 21, 26, 27)
How Rishi Sunak won the Conservative Party leadership contest — part 3 (October 22-24, 27, 28)
On Thursday morning, The Telegraph posted a Planet Normal podcast in which Lord Frost said he could see Brexit being reversed:
In the wide-ranging discussion, Lord Frost also said that he could see a future where Brexit is reversed.
“Brexit was about giving us the power to do things ourselves and to give responsibility back to British ministers, British governments. And they’ve shown that many of them are not up to the job in the last year or two.”
“I can easily see a situation where Keir Starmer gets in. We drift back closer into the single market and go back into the Customs Union. And then everyone says why are we in these things where we don’t get a say in them? Wouldn’t it be better to be a member? So I can easily see how it could happen. And the way you stop it happening is to prove, while we have the levers of power, that we can do things differently and better. And at the moment we’re not making a very good job of that, unfortunately.”
Little did Truss know that, the day before, she had stood at the despatch box for her last PMQs:
She resigned early on Thursday afternoon. Thankfully, she didn’t cry, unlike Theresa May, who broke down at the podium (Guido has the video):
Sterling began surging the second Truss finished her announcement:
In less than 24 hours, the Conservative Party website deleted her presence from their home page (Guido has the before and after screenshots):
It was a sad ending to a sad episode of British parliamentary history.
Next week, I will look at who, besides Truss herself, was also responsible for it.
Truss is currently spending time in her own constituency and has not yet appeared on the backbenches, an alien place for someone who had been a minister of state for most of her career.
My most recent post on Liz Truss examined her first two weeks in office as Conservative Party leader and Prime Minister, from September 6th through the 16th.
Things had started out so well. Ironically, Jeremy Hunt, who is now Chancellor, told ITV’s political editor Robert Peston on September 7 that Truss would be ‘formidable’. An amazing endorsement from someone who was her natural ally:
Hmm. Did he know anything at that point? We’ll probably never know.
On September 20, The Sun‘s political editor Harry Cole was delighted to announce his and James Heale’s book on Truss, Out of the Blue, which later had to have hastily written chapters added to it:
Yes, it is still coming out by Christmas — November 24, to be precise:
King Charles and COP27
Liz saw King Charles on Sunday, September 18, the day before the Queen’s funeral. It was not their usual day to meet, but the Royal Family went into private mourning until the end of September:
On Saturday, October 1, The Times reported that Liz had asked the King not to attend COP27, which ran between November 6 and 18, despite an invitation from the organisers.
This was a good move, in my opinion, as climate change, or whatever it’s being called this week, has turned highly political.
The article said (emphases mine):
The King, a passionate environmental campaigner, has abandoned plans to attend next month’s Cop27 climate change summit after Liz Truss told him to stay away.
He had intended to deliver a speech at the meeting of world leaders in Egypt.
Had she remained PM, Liz would not have attended, either:
Truss, who is also unlikely to attend the Sharm el-Sheikh gathering, objected to the King’s plans during a personal audience at Buckingham Palace last month.
There were no hard feelings between the Palace and No. 10:
… a Downing Street source claimed the audience had been cordial and there had “not been a row”.
No doubt he was expecting it:
A senior royal source said: “It is no mystery that the King was invited to go there. He had to think very carefully about what steps to take for his first overseas tour, and he is not going to be attending Cop.”
They said the decision was made on the government’s advice and was “entirely in the spirit of being ever-mindful as King that he acts on government advice”.
In the end, the King held a reception at Buckingham Palace for world leaders before they flew to the summit. In light of that, this was rather interesting:
Charles is still determined to make his presence felt there, and how he will do that is “under active discussion”. A senior royal source said: “Just because he is not in physical attendance, that doesn’t mean His Majesty won’t find other ways to support it.”
A source who knows Charles said he would be “personally disappointed” to miss it and was “all lined up to go”, with several engagements planned around his Sustainable Markets Initiative (SMI) which aims to persuade businesses to invest in environmentally friendly initiatives.
Public v parliamentary opinion
In late September, a poll showed that Truss was ahead of Labour’s Keir Starmer in Red Wall seats, boosting the Conservatives by eight points:
Admittedly, that was before Kwasi Kwarteng’s fiscal event, or mini-budget, of Friday, September 23.
That said, I will go out on a limb and say that most conservative voters thought that Kwarteng’s — Truss’s — plan was the right one. My better half and I thought it was refreshingly libertarian.
However, Conservative MPs vehemently disagreed with the public and started writing in to Sir Graham Brady, the chairman of the 1922 Committee, the all-powerful group that Margaret Thatcher dubbed ‘the men in grey suits’.
On September 26, the Northern Echo reported:
A former Tory minister MP has told Sky News the new Prime Minister is “f*****” and the party are already looking to bring her down following Friday’s mini-budget.
The MP said: “They are already putting letters in as they think she will crash the economy. The tax cuts don’t matter as all noise anyway – mainly reversing back to the status quo this year …
Another Tory MP told the broadcaster that Friday’s announcement – which included reversing a 1.25% hike in National Insurance – had been a “s***show”.
Note that MPs were siding with the Bank of England. Very establishmentarian of them:
“The issue is government fiscal policy is opposite to Bank of England monetary policy – so they are fighting each other. What Kwasi [Kwarteng] gives, the Bank takes away.”
The mood among Conservative ‘wets’, to borrow Thatcher’s name for such weaklings, only escalated.
At Liz’s one — and only — appearance before the 1922 Committee on Thursday, October 13, Robert Halfon, a wet, told Truss she had ‘trashed the past ten years’.
Liz Truss was accused by a senior MP of trashing “the last ten years” of Conservative government as her party turned on its new leader over the mini-budget.
Robert Halfon, a former minister who chairs the education select committee, unleashed a furious attack on her financial measures, saying they disproportionately benefited the wealthy and meant she had abandoned “workers’ conservatism”.
Anything but, however:
According to an MP present, Halfon told Truss in a meeting of the 1922 Committee of backbenchers — her first as prime minister — that “in the last ten years we had the living wage, a focus on apprenticeships and skills”, contrasting that with “bankers’ bonuses, benefits cuts and now cuts to affordable housing targets”.
His intervention came after Truss tried to assuage Conservative MPs by saying she had “shielded families and businesses from bills of up to £6,000 this winter and for the winter ahead, while Labour has no plan beyond the next six months”.
The meeting did not go well. Halfon seemed to voice other MPs’ concerns:
… a Tory MP who has been in the Commons for more than a decade said: “It was the worst 1922 I’ve ever been to.” They added: “With each tough question she looked like she’d had the wind knocked out of her — the 31st of October could finish her off on the basis of the reception she got in that room.”
Halloween — who schedules these things? — was supposed to be the day Kwasi was going to set out more detail behind his fiscal event. Liz’s friend and neighbour in Greenwich was on hand to support her:
Thérèse Coffey, the deputy prime minister, told reporters outside the 1922 meeting that the chancellor would meet MPs before presenting his medium-term plan on Halloween, stressing that engagement was key.
In the event, Truss had to sack Kwarteng and appoint (ahem) the aforementioned Jeremy Hunt as Chancellor. He delivered his shocking budget on Thursday, November 17, to Prime Minister Rishi Sunak’s approval. Sunak nodded several times during the presentation.
Returning to The Times‘s article of October 13, what other wets said presaged the future:
Even those who back the prime minister expect some sort of climbdown. One MP said: “She will have to unwind everything fiscal in the statement. They have to backtrack. There is no alternative. They’ve done it on the 45p and they’ll have to do it on the rest.
“Then if we are still 20 points behind in the polls we will have to change leader. We are cold-blooded like that.”
Another admitted there was “definitely still a big split between her and the Rishi [Sunak] side of the party”. Asked if Truss would have to perform another U-turn, they said: “Ultimately, I suppose it depends if she’s leveraged into that position by our own party, but it’s all by those with 20,000 majorities.”
Hmm … Hmm.
However, one Rishi Sunak supporter — Esther McVey — is deeply unhappy over his Chancellor’s budget:
On Tuesday, November 22, McVey rightly tore the budget apart in ConservativeHome, saying that Hunt’s tax rises are ‘socialist measures’ that are ‘punishing Conservative voters’:
… It wasn’t helped by the Chancellor’s statement being such a pendulum swing from the Liz Truss / Kwasi Kwarteng mini budget. People went from thinking they were getting their taxes cut to seeing them hiked.
The Autumn Statement was clearly an over-correction to that mini-budget. Going from one extreme to the other is hardly reassuring for people. A middle ground was needed: an acceptance of Conservative principles, with a costed plan and the accompanying narrative to reassure the markets.
Instead, Hunt delivered his statement with a doom and gloom that would have appropriate were the country on the brink of financial collapse. However, despite some serious challenges, things are not so dire that we had to have such excessive medicine.
For instance, the ten-year gilt yield – the interest rate the Government must pay on a new decade-long loan – was 3.14 per cent, whereas, even before the notorious mini-Budget in late September, that same yield was much higher at 3.49 per cent.
Britain is no more indebted than other comparable countries. Our national debt (albeit too high) stands at 97 per cent of GDP, whereas France, Canada and the US stands at 115 per cent, 116 per cent and 132 per cent respectively. Across the G7, only Germany has lower levels of government debt than the UK.
So when I stood up in the House of Commons at PMQs the day before the budget and said –
Given that we have the highest burden of taxation in living memory, it is clear that the Government’s financial difficulties are caused by overspending and not due to undertakings. Does the Deputy Prime Minster therefore agree, if the government has got enough money to proceed with HS2 at any cost then it has sufficient money not to increase taxes, if however, it has so little money it has to increase taxes (which is the last thing for a conservative government to do) then it doesn’t have sufficient money for HS2 [High Speed Rail 2]?
So can I gently urge the Deputy Prime Minister not to ask Conservative MPs to support any tax rises, unless and until, this unnecessary vanity project is scrapped, because I for one won’t support them.
– it was to remind everyone there are better choices for our Conservative government than hiking up taxes.
In fact, given that unprecedented tax burden, any self-respecting Conservative would instinctively know that the answer is to spend less. Dropping HS2 – an out-of-date white elephant, costing north of £150 billion which (as Andrew Gilligan revealed on my show on GB News) the Ministers themselves know will deliver less economic benefit than the cost of it – would have been an ideal place to start. That would certainly have been more desirable than increasing taxes on hard-working families who are already feeling the severe pain of higher energy prices and increased mortgage payments.
If a Conservative government with a sizeable majority – in a time of financial pressure – won’t cut public expenditure to start living within our means, then when on earth will that ever happen? …
Parliament is debating Jeremy Hunt’s budget this week. In Monday’s proceedings, a number of Conservative MPs spoke out against it.
Liz’s U-turn on windfall tax
On October 12, two days before she sacked her friend and neighbour Kwasi Kwarteng, she appeared to do a U-turn on ‘no new taxes’ by allowing an announcement for a new levy on green energy firms.
Her ally, then-Business (BEIS) Secretary Jacob Rees-Mogg, defended the move and claimed it was not a windfall tax:
Guido Fawkes reported (emphases his):
The government has announced a new plan to impose a multi-billion pound levy on green energy firms to fund support to consumers. Renewable and nuclear electricity generators in England and Wales will now have their revenues capped after windfall tax-hating Liz Truss seemingly bowed to pressure to limit profits. The announcement came from BEIS last night, which is calling the new policy a “Cost-Plus-Revenue Limit” and spinning that it isn’t in any way a windfall tax “as it will be applied to ‘excess revenues’ as opposed to profits”. If it walks like a tax, swims like a tax and quacks like a tax…
The latest backtracking on free market values by the government comes just 41 days after Liz Truss told party members at the London husting that they could read her lips, and there would be no new taxes under her leadership …
On Today this morning, Rees-Mogg tried performing a Jedi mind trick, saying “this is not a windfall tax…this is rationalising the market”…
Despite the government’s denial that the new revenue limit is a tax, the boss of RWE – the third biggest renewable power generator in Britain – has told The Times the move “is a de facto ‘windfall tax’ on low-carbon generators that, if not designed and implemented correctly, could have severe negative consequences for investment in the renewable and wider energy market and so for the energy transition.”
Guido warned that Labour’s support for the new levy is not a good sign:
Ed Miliband welcoming the policy with open arms should give the government sufficient pause for thought before it buys its own spin…
The mystery of Liz signing UK up to EU’s PESCO
Early in October, Liz did a strange thing, considering she is a staunch Brexit supporter.
She attended the first ever meeting of the European Political Community in Prague. The European Political Community is Emmanuel Macron’s brainchild.
This group is made up of EU member countries, yet, somehow Liz got an invitation. No one knows for certain.
However, she went.
She met with Macron on Thursday, October 6, in an effort to get the Channel dinghy crossing issue resolved.
GB News reported:
Liz Truss hailed Emmanuel Macron as a “friend” on Thursday, as the two countries signalled that a new agreement could be close to tackle small-boat crossings in the Channel.
The pair met at the first summit of the European Political Community in Prague, a gathering pushed for by the French president.
There, the pair said they looked forward to “an ambitious package of measures this autumn” to address issue of migration across the Channel.
And in a sign that Ms Truss hopes to improve relations with Mr Macron, she had no hesitation in labelling him a “friend”, just weeks after refusing to do so …
Mr Macron later suggested it was a “problem” if Britain could not call itself a friend of France.
But Prime Minister Ms Truss adopted a different tone ahead of a meeting with Mr Macron in Prague on Thursday.
She told broadcasters: “I work very, very closely with President Macron and the French government and what we’re talking about is how the UK and France can work more closely together to build more nuclear power stations and to make sure that both countries have energy security in the future.
“We’re both very clear the foe is Vladimir Putin, who has through his appalling war in Ukraine threatened freedom and democracy in Europe and pushed up energy prices which we’re now all having to deal with.”
Asked if he was then a friend, Ms Truss said: “He is a friend.”
The bi-lateral meeting between the two leaders, which took place towards the end of the day, appeared to signal some progress on the issues of migration and energy, both areas Ms Truss had raised as priorities ahead of the summit.
“Thank you for being here,” Mr Macron told the PM when they met.
It also emerged that the two countries have agreed to hold a joint summit next year to “take forward a renewed bilateral agenda”, in a further sign of the desire for warmer relations between the two countries.
On migration, a joint statement said the leaders “agreed to deepen cooperation on illegal migration within the bounds of international law, to tackle criminal groups trafficking people across Europe, ending in dangerous journeys across the Channel”.
But the big, and secret, news was that Liz had signed the UK up to the EU’s PESCO — Permanent Structured Co-operation — which is a military initiative.
Nigel Farage announced the move on his GB News show as soon as he had heard.
On Friday, October 7, The Express said that the move could affect British armed forces by dragging them into an EU army:
The Prime Minister has been warned not to allow the UK to be dragged into an EU Army by accident after she signed a military deal this week at Emmanuel Macron’s European Political Community (EPC) summit in Prague. The decision to go into part of the PESCO has alarmed some Brexiteers who fear it could undermine the UK’s sovereignty.
Former defence minister Sir Gerald Howarth, a leading Brexiteer has led the campaign to resist joining PESCO for many years.
He said: “This is very serious and we must be very careful. The issue around PESCO is that the structures are permanent.
“We must not sign up to anything which undermines our sovereignty and where we do not have a veto.
“Second, we must not do anything that undermines NATO. If we have learnt anything over the last few months is that we need NATO for the defence of western values and Europe against our enemies which at the moment is clearly Russia.”
Even if this has to do with Ukraine, and enables us to move troops and military equipment more easily, it still raises questions:
At the EPC meeting on Thursday, the EU member states voted unanimously to allow the UK to join the the mobility project that would allow the UK to move troops and military equipment more quickly.
The UK Government decided to enter the strand in case Britain is called upon as a NATO ally to defend the Baltic states from a Russian invasion.
However, staunch Brexiteer Mark Francois MP was relaxed about it:
One senior Brexiteer, former Armed Forces Minister, Mark Francois, who now chairs the powerful group of Tory Brexiteers the European Research Group (ERG), said he believes that the move was the right one.
He said: “As we are outside the EU, we can opt in to individual PESCO projects if they have merit and looking at how we could speed up reinforcing the Baltic States from the UK, across internal EU borders, may well have military advantages.
“However, it is NATO that remains the bedrock of our security, especially in deterring further Russian adventurism and we should never forget that.”
On October 9, David Kurten, a former London Assembly member and founder of the Heritage Party, said that signing the UK up to PESCO was a betrayal of Brexit:
One month ago, the aforementioned Sir George Howarth appeared on Farage to say that we still do not know what part of PESCO Liz signed us up to. He was clearly concerned, saying that the implications could be important, especially as none of the countries involved has a veto. The EU calls all the shots:
Today, one month on, we are none the wiser about our involvement in PESCO.
Someone must know what’s going on. In fact, a lot of people probably do know.
Liz’s final week
All of Liz’s opponents, whether on the right or the left, told us that Liz and Kwasi, joined at the hip politically, had to go.
Project Fear started as soon as Kwasi delivered his mini-budget on September 23.
On September 27, Bloomberg told us that UK markets had lost $500 billion in combined value since Liz Truss became PM. Really?
‘Investor confidence’ means international markets, ergo part of the Establishment.
Also at that time, former Conservative Chancellor George Osborne, who served under David Cameron, stuck the boot in.
On September 29, a comment from an UnHerd reader appeared in response to one of their articles, beginning with ‘Is this the end for Liz Truss?’:
Osborne features heavily in it. The reader quotes him saying, ‘The markets are punishing Liz Truss for failing to balance her budget’.
The UnHerd reader says:
Right.
Of all people, George Osborne knows full well that is not what is happening. We can be sure he knows this — and is therefore engaging in a bout of very useful political lying — because Mr Osborne also dropped higher rate taxes [the 50% rate], on a backdrop of media squealing … and yet the tax receipts after making those cuts … went up.
So Mr Osborne is a classic shill of the modern era …
As to whether Liz would have to go, the reader supplies the answer at the top of his message:
… well, if the globalists and left-leaning power brokers who’ve comfortably controlled global affairs for the past few decades still retain control, then yes … it is the end for Truss …
… It doesn’t matter if that thing is related to tax, or to immigration, or to fracking … that’s not the point. The chattering and Davos classes are used to being in charge and controlling the direction of travel no matter who we elect.
Speaking of such people, on Wednesday, October 12, King Charles greeted Liz with, ‘Dear, oh dear’, while the press were still there to record it for posterity:
What did he know and when?
The beginning of the end came two days later on Friday, October 14, when Liz sacked Kwasi and appointed (ahem) Jeremy Hunt as Chancellor. This was the shortest and most painful press conference — she only took four questions — in living memory. She looked like a rabbit in the headlamps or a hostage being forced at gunpoint to read out a message:
As soon as she announced it, we knew Hunt was, at that point, the de facto Prime Minister.
Hours later, The Telegraph reported:
Mr Hunt, a former foreign secretary, took the helm at the Treasury following the sacking of Kwasi Kwarteng over the mini-Budget fiasco. Ms Truss turned to him even though the pair have strongly disagreed on economic policy.
Mr Hunt, also an ex-health secretary, endorsed Rishi Sunak for the Tory leadership after being voted out of the race in July, saying: “This is the wrong time for populist crowd-pleasing and the right time for honesty.”
He will hold huge power over a weakened Prime Minister, raising the likelihood that much of her growth plan will now be axed. Allies said that he would act as her “chief executive”.
Mr Hunt ran for the Conservative leadership on a platform of slashing corporation tax to 15 per cent to boost growth but also opposed cuts to personal levies such National Insurance and income tax, with which Ms Truss still intends to press ahead.
His appointment was announced moments before the Prime Minister unveiled her U-turn on corporation tax at a press conference. She ditched what had been a core leadership pledge, meaning the rate companies pay on their profits will go up from 19 to 25 per cent in April. It means she has reverted to the plan put in place by Mr Sunak when he was chancellor.
Quelle surprise!
Conservative Party members had voted Liz Truss in largely on her economic policy.
The elites took out her Chancellor. Soon afterwards, they came for her in the form of Conservative MPs and the 1922 Committee. It was a grand game of political chess, not seen since Margaret Thatcher was removed from office in 1990.
To be continued on Friday.
Churchmouse Campanologist 