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There is a reason Liz Truss is pushing controversial policies now

Ryan Shorthouse is the founder and director of Bright Blue

/ ES local feed
By
22 September 2022
O

ur new PM been constantly underestimated — often mocked — throughout her political career, despite being a clever political operator, being one of the longest serving current Cabinet Ministers and building a distinctive media profile and fan base.

She indulges comparisons with the first female PM. Margaret Thatcher too was belittled by powerful public school men across the establishment, but ultimately enjoyed the last laugh.

There will be little praise for the second female PM, however, who demoted her. They have very different ideological instincts: Theresa May was a communitarian, whereas Liz Truss leans towards libertarianism.

She has a genuine interest in and excitement around the details of public policy, unsurprisingly for a former deputy director of a think tank. But I have found her to be a little narrow and rigid in what she reaches for, almost always tax cuts or deregulation. As PM, she will have to rely on a broader set of policy levers. Admittedly, she has proven herself to be pragmatic, recently pivoting to a policy commitment outside her natural philosophical territory, the ultra-interventionist Energy Price Guarantee.

These are gloomy times needing even bigger government. This will be challenging for Truss since it is counter to her optimistic and individualistic outlook, formed in the feelgood nineties which she came of age in. But there may be some surprise by how fiscally expansionist and economically radical a Truss Government will be, with dramatic tax cuts announced early to signal strongly how determined they are to get money moving to catalyse economic activity.

The strategy is to be surprisingly radical immediately. Politically, this quickly reinvents the Tory brand, tainted by Johnsonian bumbling. It gets the controversial stuff – ending the cap on bankers’ bonuses, permitting fracking – done well in advance of the next election, enough to justify the unfashionable policies as having worked. Economically, it signals to investors that Britain means business.

Balancing the books is now seen as a Treasury fixation that will become secondary to the aim of going for growth. The new Chancellor will borrow big, basically. We will get a super-state to fire a competitive market economy.

There is real risk in all this radicalism. As interest rates rise, the cost of servicing government debt is becoming more expensive. The value of sterling has plummeted. If the historically high borrowing becomes seen as unsustainable, market confidence in Britain will fall and taxpayers will pay a painful price.

This strategy is not particularly conservative; last decade, the Tories were all about fiscal discipline. But, with no qualms about tax cuts that will disproportionately benefit high earners and large companies, this Government is not especially socially democratic either.

After twelve years running the country, the Tories desperately need to establish a record of delivery quickly if they want to cling on to power. She needs to exceed expectations, yet again. Knowing this, she and her Chancellor are going for broke.

Ryan Shorthouse is the Founder and CEO of Bright Blue

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