“It’s a declaration of Class War”. Guardian commentators have been struggling to encapsulate the iniquity of Liz Truss’s tax-cutting dash for growth. Having spent the past three years claiming that Boris Johnson was spawn of the devil, scribes are having to ransack the register of righteous indignation to characterise someone who is genuinely on the dark side.
It may sound somewhat previous to invoke Ian Bone’s Class War outfit of the 1980’s. But maybe it’s not so daft as it sounds. Truss is a kind of revolutionary, defying the establishment consensus and opting for a kind of market anarchism, or at any rate economic libertarianism.
It is certainly a break with the past, at least in rhetoric. Almost a return to Gladsonian small state liberalism of the 19th Century – except for the big state and the humingous public debt pile. Ms Truss was a Liberal Democrat after all.
The nation is left watching in anxious fascination as the irresistible force of Truss radicalism meets the immovable object of the UK civil service and a hostile media. Not even the Financial Times believes that tax cuts will make the “wealth creators” work harder and create more wealth. But this is about ideology as much as economics
The PM seems determined to take a wrecking ball to she sees as the shibboleths of the “liberal elite”. Scrapping sugar taxes and freezing alcohol duties. Cutting stamp duty and igniting a bonfire of regulations.
She is trolling the left. Doing the reverse of everything that Twitter holds dear. Slashing taxes for the highest earners.Lifting the cap on banker bonuses. Benefit claimants will have to work longer or lose their cash. Drilling for oil in the North Sea and lifting the ban on fracking. Boris Johnson said Green is Good. Liz Truss has reverted to the Gordon Gecko original.
It must now be clear to even the most myopic keyboard warrior that Boris Johnson was closer in policy and ideology to Tony Blair than Liz Truss – just as Rishi Sunak was in reality the heir to a Gordon Brown – though rhe former Labour Chancellor never dared to tax and spend as freely as he has.
Sunak remains adamant that Liz Truss’s unfunded tax cuts will not stimulate growth and will simply load up debt and force the Bank of England to ramp up interest rates. He’s not wrong. Markets are forecasting a deflationary loan rate of 5%. This is the main difference between Kwasi Kwarteng’s dash for growth and Anthony Barber’s in 1972. This dash looks self-limiting since a recession is almost baked into it.
Many have remarked on how the most trenchant criticism of this Tory government comes from former Tory Chancellors. In fact, Labour is in danger of becoming redundant, now the Tories are keeping opposition in their own tent. A revolt even larger than the one that toppled Boris Johnson is imminent if the present collapse of sterling continues as the markets post their verdict on Trussonomics.
Nicola Sturgeon has ritually condemned this latest Tory outrage inflicted on Scotlsnd But she has a problem. The Scottish top rate of income tax is now much higher at 46% than the English rate of 40%. SNP-friendly economists like Professor John Kay say the SNP government will have to follow suit and cut the rate or face a plutocrat dash for the border.
But maybe Truss will be the first to depart. The general election is only 2 years away after all and the polls are dire. This week looks like a last throw of the dice before the Tories lose office. Some believe the PM is trying to wreck Sir Keir Starmer’s government in advance by ramping up debt and limiting his options. I doubt the Tories are capable of anything so devious or so well planned. Anyway, Liz Truss really believes in supply-side Thatcherism. She may be doing Labour a favour by testing it to destruction. It looks like the twilight of the right.