This article is taken from the October 2023 issue of The Critic. To get the full magazine why not subscribe? Right now we’re offering five issues for just £10.
There’s a door that separates the Cabinet Office from Number 10. A few days after Liz Truss gave her farewell speech, those of us still left in the building were shoved through it: feeling a little bruised, quietly resentful, leaving behind unrealised plans. Sir Humphrey would have been proud.
Yet just seven weeks earlier we were thrilled. Liz Truss had just won the Conservative leadership campaign. She promised to be the low tax, freedom-loving, “go for growth” prime minister we believed could shake Britain out of stagnation.
It was because of her ideological consistency that she quickly drew in a team. Throughout her career, Truss pursued an agenda that was unapologetically free-market and socially liberal. Developing her platform was straightforward, driven by policy rather than polling.
When I knew she was entering the race, I called one of her special advisers and joined the campaign on day one. My job? Write the manifesto, please. Early on, a hodge-podge of us worked from a kitchen table in Lord North Street. Sunak’s team were in a much grander building around the corner, on our route to Pret.
Truss, of course, won and as a member of the team drafted in to a “streamlined” Number 10 under her, I am often asked: what went wrong?
Cutting the number of appointed officials, which she promised during the campaign, was a mistake.
SpAds — largely derided by the civil service, resented as self-serving gatekeepers — are an essential part of modern government. Good SpAds keep the sludge moving though ministers’ boxes, focus the Government’s agenda, and serve as lookouts for political bombshells in labyrinthine departments.
Truss has been criticised for being too top-down on policy. Her Policy Unit, which did not include her separate economics team, was staffed by experienced policy operatives who were largely respected and effective in triaging political issues and implementing her campaign promises.
Yet the process that produced the medium-term fiscal plan — the mini-budget — was held extremely tightly by Truss, the Chancellor Kwasi Kwarteng and a handful of hand-picked economic advisers. That no one appeared to understand the political landmine left by Gordon Brown in the proposed cut to the 45 per cent tax rate, or could contextualise its impact for the Prime Minister, did us all a disservice.
Not only does the rate bring in a tiny proportion of income taxation revenue — less than £10 billion — it was directly at odds with the narrative that fairness in taxation meant giving everyone a similar tax cut. We were already dealing with the bankers’ bonus issue that had only just begun to be understood by the public as an EU hangover that was hammering London as companies and capital flocked to New York.
In this case, Truss was let down by her people
In this case, Truss was let down by her people. No one in any strategic role, save for those in her “economics unit”, saw the mini-budget until hours before its release. As a major announcement from a new PM, not running a political filter over it was disastrous.
That morning, I read the words “additional tax rate” in the Treasury-produced briefing document, looked up at my colleague, and rushed to a side room knowing it was probably already too late to do anything about it. Not that it was particularly bad policy — rather, that it would become the distraction that defined the whole show. The announcement was in three hours.
Whether Liz Truss would have remained Prime Minister beyond Christmas but for the abolition of the 45 per cent tax rate is up for debate. It allowed the Sunak-backing Michael Gove to coin the “holiday from reality” tag and resulted in the embarrassing U-turn at Party Conference, where many outside the bubble first saw the cracks.
Maybe the tax bracket bungle was not a necessary condition for the other key moments that led to her resignation — such as Suella Braverman’s resignation as Home Secretary for a ministerial code infringement, the Energy and Net Zero minister Graham Stuart’s confusing directions over the fracking bill which caused Commons chaos, or the hopeless whips led by Wendy Morton.
But what is clear is that Britain lost a leader who, for the first time since perhaps Tony Blair or certainly Margaret Thatcher, was less concerned with upsetting entrenched interests than seeking the reforms that the country desperately needs.
One year on, pundits are focused on the Tory party chaos that Truss has come to represent. This is a shame. The country would be richer, taxes would be lower, and we would have a prime minister with a clearer sense of purpose. Like any alternate history, a “what if” is fraught with danger and speculation: but where might we be, if we were now 12 months into a Truss administration?
For a start, April’s rise in corporation tax would have been scrapped. At 19 per cent, the United Kingdom’s corporate tax rate stood at a respectable equal 8th among the 38 OECD countries. At 25 per cent, we are now at the back of the pack — equal 25th with Spain and Belgium.
Interestingly, the tax rate in Poland, which is on course to be wealthier than the UK by 2030, remains at 19 per cent. Correlation isn’t causation, of course, but Poland seized the opportunity to go for growth 20 years ago by slashing corporation tax from 27 to 19 per cent. It has become a European success story.
Truss assumed the public understood the dire state of the British economy and what that would mean for services in the future if drastic changes weren’t made quickly. We would have seen greater emphasis on building trade deals with like-minded countries. It was thanks to Truss that deals with Australia, Japan, and New Zealand were signed so soon. On her watch, the UK was seeking deals with the United States on a state-by-state basis.
She was committed to these deals having an impact for business and everyday people. Trade for Truss meant better value food in shops and lower barriers for businesses looking for new markets or sources of talent. She singled out fast- growing regions and countries such as India, the Gulf states, and Indonesia as key targets.
Her mooted New Commonwealth Deal would have created a trade template for Commonwealth countries without existing deals to fast-track the development of tailored bilateral agreements and increase this figure dramatically.
Strengthening the rules-based international order and building a “Global Britain” was a baked-in priority to her trade ambitions. It was not lost on Truss that the Commonwealth controls about 30 per cent of votes at the United Nations and is home to 30 per cent of the world’s population.
Its population is increasingly moving into the middle classes and its elites are targeted by China and other authoritarian interests. Truss was upfront that trade represented a cornerstone of her efforts to counter China’s economic coercion and interference abroad.
At home, Truss would have focused on slashing red tape in agriculture, housing, tourism, and finance. Another challenge was her “bonfire” of EU regulation, which survived in the form of Kemi Badenoch’s watered-down plans to remove around 600 pieces of regulation.
Truss planned to draft in experts to steer reform. Her intended triage was simple: does this EU-derived law support UK growth? If not, on the pile it goes, and we’ll work with industry to draft a better approach. Other regulatory reform would have focused on supply-side issues like Solvency II and MiFID regulations. She saw these as huge barriers to investment in British business and City competitiveness.
Trussonomics was bigger than tax cuts
Trussonomics was bigger than tax cuts. She spoke passionately about unlocking the ability of pension funds to invest and generate greater returns and we would by now be seeing the first steps to reassess the oversight role of the Financial Conduct Authority and the Prudential Regulation Authority. Another pet project was the re-introduction of VAT refunds for tourists spending on goods in British stores. Scrapped while Rishi Sunak was Chancellor, it saved about £400 million in tax receipts, but by some estimates sent billions in lost tourism revenue abroad and dented the high-end fashion industry.
Delivering low-tax low-regulation Investment Zones, scrapping Whitehall-imposed housing targets, and seeing through transport projects such as Northern Powerhouse Rail were key to her levelling-up agenda. Some of her policy initiatives have survived.
But instead of all this, the Truss premiership will be associated for years to come with chaos. You can’t deny her government’s impact on pensions and the acceleration of the Conservative Party’s decline. But while Rishi Sunak tinkers at the edges, Truss had a clear vision for Britain. Lower taxes and a forward-looking economy where growth “lifts all boats”.
That was the plan. Shame about the execution.
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