finance

Tory favourite straining at the leash to shake things up


In days gone by, Conservatives used to be in favour of conserving things. Liz Truss, whose political identity was formed during the tumult of Margaret Thatcher’s premiership, is in a hurry to challenge orthodoxies, overhaul institutions, and generally shake things up.

“There are things I very much care about conserving,” the foreign secretary said, looking out over the City of London skyline to the Surrey hills beyond. “The natural environment we have — protecting endangered species.”

A Truss premiership might offer the prospect of a quiet life for great crested newts, but the minister whom Boris Johnson calls “the human hand grenade” is primed to detonate at the pinnacle of British politics.

More than 150,000 Conservative party members will soon begin choosing the new Tory leader and the UK’s next prime minister. So far it looks like they favour the ideological edge offered by Truss over the smooth managerialism of her rival, the former chancellor Rishi Sunak.

In an interview with the Financial Times, Truss was uncompromising in her determination to overturn what she believes is the failed economic orthodoxy of the Treasury and the Bank of England.

Truss, speaking at the London headquarters of the Aviva insurance group, talked about cutting taxes, “getting growth levels in this country up, unleashing investments”, and lifting regulatory shackles from the City.

For Truss, the Thatcher era was a template for her kind of Britain. “We were one of the first countries to really reform regulation and create privatised utilities — we did great things in the 1980s,” she said.

“But many other countries have since caught up with us and, in fact, have overtaken us in terms of the simplicity of their regulatory system, the tax system. We can’t allow our system to be frozen in aspic.”

Truss holds the Treasury partly to blame. Indeed, it is a convenient scapegoat for Britain’s economic ills since Sunak was in charge there until he resigned as chancellor last month.

Truss worked at 1 Horseguards Road for two years as Treasury chief secretary, but now regards her former colleagues as having a beancounter mentality and being insufficiently focused on growth.

She said the Treasury represents a way of thinking across Whitehall. “There’s a desire to complicate things . . . I’m somebody who is prepared to take on that orthodoxy, sometimes the risk aversion — and I think there is a risk aversion in parts of Whitehall — to be able to get things done.”

Few doubt that Truss, if she becomes prime minister, will do things. But some doubt whether some of the promises she is making to the Tory membership will survive their first contact with political reality when the interests of the other 99.7 per cent of the UK electorate come into play.

Truss is focused on cutting corporate taxes, removing old EU legislation from the statute book, and boosting domestic energy supplies. But if she becomes prime minister on September 5 she will face an inflationary crisis that will put her under immediate pressure to find billions of pounds to protect vulnerable households and teetering public services.

Truss claimed in the interview that Sunak’s tax rises had pushed Britain towards recession and she wants to reverse that trend. She spoke about wanting to focus on tax cuts and always being “on the side of people who work hard”.

But there was no mention of those people — not heavily represented in the Tory membership — who are unable to work, are too poor to pay tax and face severe hardship this winter.

Truss said she does not favour “handouts” as a way of resolving the cost of living crunch — preferring tax cuts — but Torsten Bell, head of the Resolution Foundation think-tank, said her line cannot hold.

“Whatever people think in the summer, in the winter they will end up providing more support for poorer households,” he added. “Tax cuts cannot target support to those most at risk.”

Truss also sometimes gives the impression of wanting to take on institutions without being able explain exactly why. Her promise to review the mandate of the Bank of England is a case in point.

“I want to look at best practice around the world and make sure we have the best possible mandate,” she said, adding the framework set in the late 1990s by the then Labour chancellor Gordon Brown was ripe for review. But she declined to say which country she regards as embodying best practice.

She had previously mentioned the Bank of Japan, but that central bank made extensive use of quantitative easing — a loose monetary policy which she appears to dislike — and has been battling deflation for years.

There are limits to Truss’ free market zeal. She had previously advocated building 1mn homes on the greenbelt, but has now backtracked, saying that she wants to leave development decisions to local communities.

But Truss does have the zeal of the convert when it comes to Brexit, talking about seizing the “opportunities” of Britain’s departure from the EU, including in deregulating the City.

The former Remainer has won the backing of Tory Eurosceptics and has vowed to press ahead with controversial legislation to override Boris Johnson’s Brexit deal in relation to trading arrangements in Northern Ireland, to the fury of Brussels.

Truss said that scrapping parts of the Northern Ireland protocol was needed to end the boycott of the Stormont assembly by the Democratic Unionist party, which objects to a trade barrier being erected between the region and the rest of the UK.

“I want to have a positive relationship with the EU, I’m happy to engage with the EU,” she said. “But what I’m not happy to do is compromise on the fundamental issue of restoring the Belfast Good Friday Agreement.”

Given the grim economic outlook, if Truss becomes prime minister on September 5, her honeymoon could be very short indeed.

“Our 2019 manifesto was very clear that we are going to unleash Britain’s potential and level up the country,” she said. “That’s exactly what my economic reforms are designed to achieve.”



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