It was, I believe, Maya Angelou who said, “If someone shows you who they really are, believe them.” Which brings us very nicely to the first anniversary of Liz Truss becoming prime minister, which she was for a whole 45 days.
It may now just look like an interregnum but it was far more than that. Truss and her trusty chancellor Kwasi Kwarteng let the cat out of the bag. They introduced the policies the rabid, far right, libertarian, swivel-eyed loons of the Tory party really wanted to introduce all along. The ones Truss and Kwarteng told us they would introduce in their booklet Britannia Unchained. They were praised to the skies for doing so by their cheerleaders.
Out went responsible finances or balanced budgets or the control of borrowing; out went economic competence and in came trickle-down economics. Give billions to millionaires and eventually they are bound to spend some of it on things poor people provide.
What we got was a nationwide experiment in this nonsense. It lasted a couple of weeks and then imploded along with Liz Truss’s premiership. Thank God it was short-lived because it really hurt.
To even get his mad plan through the Treasury, Kwarteng had to fire the most experienced and respected civil servant in the department. Then he refused to let the Office for Budget Responsibility, the watchdog set up to check the government’s figures, have a look at his calculations. Those two things alone probably doomed the budget before it was even delivered.
But just to make sure, Kwarteng, urged on by the PM, decided to make it quite certain. The chancellor announced that he planned to:
Bring forward a cut in basic rate taxation, abolish the 45% income tax band for high earners, reverse a rise in National Insurance, reverse the rise in corporation tax, freeze energy bills for two years, which was a massive rise in state spending. All while cutting stamp duty and abolishing limits on bankers’ bonuses
This recipe for disaster was hailed by the right wing press commentators as a work of genius. The Daily Mail’s front page read “At last! A true Tory budget”. The Daily Express said the budget, would put Britain “back on top”. Allister Heath, editor of the Sunday Telegraph, called it “the best budget I have ever heard a British chancellor deliver” and waxed lyrical about how he felt upon hearing it. “The tax cuts were so huge and bold, the language so extraordinary, that at times I had to pinch myself to make sure I wasn’t dreaming, that I hadn’t been transported to a distant land that actually believed in the economics of Milton Friedman and FA Hayek,” he said.
It was, of course, not a dream but a nightmare. The markets took one look at the figures – billions in spending and billions in giveaways and no way of paying for it – and ran for the hills.
Sterling collapsed, interest rates soared and the run on government bonds was so bad it almost brought the pension industry to its knees and the Bank of England had to step in to bail it out with immense guarantees that it would underpin the market.
This was all made worse by Kwasi Kwarteng arrogantly declaring he would cut taxes further as soon as possible.
Well, we all know what happened next. First the chancellor and then the PM were evicted, then the new chancellor and PM had to reverse pretty much the whole budget and swear not to do anything so stupid again.
As for those cheerleaders of this new bright dawn? Well, naturally it turned out this was all a regrettable failure to communicate, bad presentation, just a little too quick.
But the truth is in Truss the Conservative Party finally elected a leader who did exactly what the party’s right wing backers have always wanted it to do, what they have dreamt about for decades. And it was a total, unmitigated disaster that cost Britain around £40 billion.
It nearly bankrupted the country overnight, it almost destroyed the UK’s reputation for sound finance and responsible governance, it would have left future generations saddled with never-ending debt as the rich looked down on the little people and laughed.
But remember the people who support this kind of economic illiteracy are still there. They still believe this madness, because it would make them even richer and it is therefore what they want to hear. They can always find new bright young things to promote it in the press or to join “think tanks” spouting this nonsense; they are patient and they are rich.
But they have also shown us who they are, and we should believe them.
We should thank Liz Truss and Kwasi Kwarteng for that at least, because given another chance they would do exactly the same again.