“You do not need to choose either a strong economy or good public services. With the Conservatives, and only with the Conservatives, you get both,” Hunt told the Commons, with a straight face. As he well knows, public services are buckling under the strain of a decade of austerity. Meanwhile, the OBR expects our weak economic growth to facilitate the cratering of household disposable incomes by the largest amount since records began in the mid-Fifties, yanking them back to where they were nearly 10 years ago.

In another life, Hunt was the longest-serving Health Secretary in history, who hung on in post against Theresa May’s wishes until he received a £20 billion additional “birthday present” spending commitment for the NHS. Now that Hunt is on the other side of the negotiating table, holding the purse strings, there will be no such profligate gift-giving.

“This government has forced our economy into a doom loop where low growth leads to higher taxes, lower investment and squeezed wages, with a running down of public services — all of which hits economic growth again,” Shadow Chancellor Rachel Reeves replied. Her diagnosis is absolutely correct — atrophy of growth has led to necrosis of public services. Hunt may claim that the Tories offer both a strong economy and public services, but they self-evidently offer neither.

For a statement that mentioned the word “growth” 28 times, Hunt’s plan to achieve it was remarkably unambitious and involved little self-reflection, citing energy, infrastructure and innovation as his three priorities. This is a huge red flag. While these matter, they pale in comparison to the economic damage wrought by a planning system that prevents the building of homes in our most productive regions, thereby strangling the supply of ambitious, productive workers to productive jobs and businesses.

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Not that this should be a surprise; this outlook mirrors that of his boss, Rishi Sunak, who said earlier this year, in a lecture on growth, that growth required merely “a new culture of enterprise”, leaving supply-side reforms to planning and housing unmentioned. Those reforms might be worth upwards of 30% of GDP — but why trouble yourself with that? While Hunt paid lip service to the motivations of Liz Truss and Kwasi Kwarteng’s disastrous September mini-budget, if he is not prepared to take on what Truss rightly identified as the anti-growth coalition, he will surely fail in his mission to make Britain a better country. The supply-side baby must not be thrown out with the unfunded tax cuts bathwater.

It’s easy to blame our economic and fiscal headwinds on the mini-budget. But the seeds of this crisis were sown long before Truss and Kwarteng drove a truckload of fertiliser to the farm to encourage growth, only to accidentally blow it up before it reached the fields.

Reputation for economic competence is built over decades, but can be lost in minutes. And the Conservative Party is now finding out how it feels to have an economic narrative set up by their opponents. Much as Labour was blamed for the financial crisis by the Tories, despite its global nature, the Conservatives are being painted by their opponents as being responsible for rising interest rates, the increase in the cost of living ,and the impact of the recession we’ve just entered.

“At the very least, he could have offered an apology but, no, instead he says his predecessor was correct in his analysis at the mini-Budget that put our economy into free fall,” Reeves taunted from the Opposition despatch box. But none of the pain we are going through has its origin in Kwarteng’s mini-budget. While it certainly didn’t help things, as soaring government gilt yields showed, most of Kwarteng’s economic, if not political, impact was essentially wiped clean by Hunt’s scrapping of almost all the mini-budget measures. The cost of government borrowing is back to where it was before that touchpaper was lit.

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Rather, the war in Ukraine and the resultant sanctions and European diversification from Russian gas are a far larger source of inflation than those now-reversed spending commitments. We are also still wading through the backwash of the inflationary monetary and fiscal stimuli introduced to combat Covid-19, which unleashed unintended inflation. Supply chains are also still being disrupted by the pandemic, increasing the cost of services and manufactured goods — goods which are even harder to source given the ongoing lockdowns in China that are holding back the Chinese economy.

Sailors famously do not choose the weather, but they can choose not to sail straight into the storm. And this is precisely what the Conservative Party has done. By building a political economy that relies on the votes of the anti-growth coalition of home-owning pensioners, it finds itself unable to reform the economy to deliver either growth or public servicesit finds itself unable to reform the economy to deliver either growth or public services — public services that same coalition of elderly voters is becoming increasingly reliant on as health and social care needs rise with age, leaving them ever more disgruntled.

These increasingly bitter choices, worsening living standards and dilapidated public services are the price we pay for actively choosing to reject economic growth. “Anyone who says there are easy answers is not being straight with the British people,” Hunt said yesterday. Economically, the answer is very easy — take your foot off the brake by building. But politically, Hunt is right: the challenge is totemic.

William Hague said of the euro that it represented a “burning building with no exit”. Well, our burning building has exits. We could choose to build more, and stop placating the anti-growth coalition — but we would have to walk through the fire to do so. Does the Conservative party have the stomach for it? Of course not. If you needed an indication of how likely the party is to face down its elderly voters, the triple lock on pensions was maintained in this Autumn Statement. Pensions will grow with inflation, while workers suffer real-terms pay cuts. And we wonder why there’s no growth. ‘Twas ever thus.

Liz Truss and Kwasi Kwarteng took what they believed were good decisions. Their massive energy price subsidy would protect people from the cost of living crisis. They thought that cutting taxes would boost growth and prosperity for everyone. It is easy for people to sneer at the latter after the event. But the plain fact is that no-one has discovered a sure fire plan to deliver economic growth. If they had, running the economy would be easy.

As we now know, the markets took fright at the further proposed increases in government debt. Interest rates on the debt soared and the pound collapsed. The Truss government was wrecked. This had always been a risk, ever since in 2019 the government piled up massive amounts of public debt with the furlough scheme. At some point as government debt rises, confidence really drops and interest rates really do double, or even more. But this point is inherently unknowable in advance. It bears little connection with the objective facts.

For example, interest rates were in the 6-8% range in several Mediterranean Eurozone countries in the mid-2010s. But the amount of government debt relative to the size of the economy in, say, Spain, was lower than it is now in the UK. Even now, the UK’s debt position is much better than that, say, of Italy. But it was the UK which the markets attacked and not Italy.

Many commentators on the Left maintain that all this was obvious in advance, that the Truss-Kwarteng policy was bound to end in rapid and ignominious failure. But we might reasonably ask, if this is the case, why these same commentators are not now enormously rich, having used their insight to short UK government bonds.

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All this was anticipated by Keynes, a much more subtle economist than many of his followers grasp. In his magnum opus, the General Theory of Employment, he championed the idea that extra government spending could help keep an economy out of recession. But he qualified this with two key points. When government deficits rise as a result of increased spending, Keynes wrote that: “The method of financing the policy may have the effect of increasing the rate of interest and so retarding investment in other areas.” He went on to suggest that the psychological effect on “confidence” might also depress private sector spending. The psychology, he asserted, was often “confused”, by which he meant it could move in ways entirely contrary to what a rational assessment of the evidence would suggest.

The second example is much less grand, but all the more telling. Intentions and outcomes can differ even on a small scale. To great fanfare, in 2018 Nicola Sturgeon announced a policy of a minimum price on a unit of alcohol. Scotland has a serious alcohol problem, and this seemed a good idea. The policy was praised by the World Health Organisation. Yet the hard-core older drinkers who were the real targets of the policy seemed to have continued drinking. They paid for it by cutting back the amounts their families spent on food and heating — even before the cost of living became the issue which it is now.

Young people in particular do seem to have cut back on high alcohol drinks. They switched to cheap street drugs instead. These are often unreliable and dangerous products, and the drug-related death rate in Scotland is now four times higher than in England. Sturgeon and the SNP intended to do good with their policy, but the outcome seems to have worsened the situation.

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Why Truss's gamble failed

By Aris Roussinos

If detailed planning really worked, the Soviet Union would have been a great success and not a catastrophic failure. Of course, both governments and firms have to set a vision, a view of where they want to be. But they must never fall into the trap of thinking that the plan is reality. Most of the time, outcomes are different to the intent in the plan. The main risk is that focusing too much on the plan might lead a government or firm to reduce its flexibility, its capacity to respond to surprises, both good and bad. In the old Soviet Union, everything was planned with great precision. No individual enterprise was allowed to fail. But, eventually, the whole system collapsed in catastrophic failure. In the West, individual firms fail all the time, but the system as a whole delivers the goods.

There are worrying signs that, as a result of the furlough scheme, the same Soviet-type mentality is starting to pervade Britain. If a company is in difficulty, some scheme should be contacted so that it is kept alive by taxpayers’ money. The industrial structure should be pickled in aspic. The intention of any such policy would be to do good. The risk is that it simply leads to an economy populated by zombie, low productivity firms.

Sometimes outcomes can be much better than expected. A classic example is Windows. The first releases basically tanked. Microsoft announced that development would stop after the release of version 3.0. In the meantime, they had partnered to develop OS/2 with IBM, the “operating system of the future”. Windows 3.0 sold millions of copies in the first few months and the rest is history.

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How science has been corrupted

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Coca-Cola spent vast amounts of research testing how people would feel about New Coke, which they launched in the mid-Eighties. The plan said it would be a great success. But it met with a disastrous reception in the real world. Coca-Cola abandoned the product within a few weeks despite the huge sums spent on it. Their actions show the value of flexibility and willingness to discard plans in the face of new evidence. The UK government’s reaction to the emergence of Covid in early 2020 shows the danger of inflexibility. The early data from China suggested that the death rate might be of the order of 3-4%. So it was reasonable to have an initial lockdown to try and assess the situation.

But it rapidly became clear that the death rate was in fact much lower. More importantly, at least 95% of all deaths were in two groups which were small compared to the size of the overall population: the over 85s and those with chronic conditions such as heart disease caused by obesity. For the bulk of the population, there was little serious risk to health. Despite this new information emerging quickly, the government seemed to double down on its plan of lockdown and its message of fear.

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Covid was liberalism's endgame

By Matthew Crawford

The complexity of the world does not mean that nothing can be done, that outcomes are random. But it does mean that governments and firms must be flexible. A further implication is that, as far as possible, decisions should be devolved. The closer to a problem you are, the more likely there is to be local, tacit knowledge which is hard to capture in formal documentation and rules.

In fact, successful institutions evolve organically, indicating that excessive government intervention may be both unnecessary and counterproductive. Consider Greater Manchester. The Mayor and the GM combined authority have relatively few legal powers. These in general still reside with the ten individual boroughs. But the combined authority has evolved “convening powers”. This is soft, informal power. A complex system of interconnected organisations and committees has developed and is continuing to develop. And it seems to work. A genuine, connected city-region is coming into being.

The economy and society are essentially more like a biological system than a complicated machine. No matter how complex, a machine can be programmed and controlled. The economy evolves, often in unpredictable ways. Policy-makers, including the new Prime Minister, need to shed the tick-box mentality and recognise this fundamental feature of reality.

Yet we should be wary of resorting to the simplistic narrative of events which would have us believe that Truss and Kwarteng’s attempts to push through a “fiscally irresponsible” tax-cutting free-market agenda spooked financial markets, “crashed the economy”, and ultimately forced them to admit defeat and back down. Things are a little more complicated.

On one level, this is a story about the influence of neo-Thatcherite think tanks. The Adam Smith Institute and the Institute for Economic Affairs (IEA) have both found fertile ground for their ideas among certain Tories in recent years, after being relegated for so long to the fringes of political discourse.

A number of these organisations provided much of the inspiration for Truss and Kwarteng’s agenda — especially with regard to their proposed cuts to high-income and corporation taxes. Mark Littlewood, director general of the IEA, has described how he worked “hand in glove” with Truss to help her set up in 2011 the Free Enterprise Group, a faction of Tory MPs committed to radical free-market economics. Kwarteng was an early member. According to Littlewood, Truss has spoken at more IEA events than “any other politician over the past 12 years”, while her economic advisor and senior special advisor both have ties to the organisation.

But their influence isn’t the whole story. The truth is that Conservative MPs and party members, who are disproportionately middle or upper-class men from the wealthier postcodes in the south of England, tend to hold rather liberal views when it comes to the economy. They’re the ones who voted for Truss over the more interventionist Rishi Sunak.

The problem for the party is that this refurbished brand of free-market economics — or “Trussonomics” — was unpopular among all voters, and especially among the working-class, low-income and northern constituencies that three years ago voted Conservative. These are the ones who voted Tory for the first time in 2019: to get Brexit done, take back control of Britain’s borders, and level-up the country — not to roll back the state, slash taxes on the rich, and cut back public services.

The more controversial measures in Truss’s mini-budget were deeply unpopular: only 12% of voters supported scrapping the cap on bankers’ bonuses; only 11% supported abolishing the top rate of income tax for high-earners; and only 19% thought it was a good idea to cancel the planned increase in the corporation tax.

It suggests the Tory leadership completely underestimated the extent to which their voter base has shifted to the “Left” on economics. One recent poll, for example, shows that a majority of Conservative voters support public ownership of key services and utilities — including water, energy, rail, Royal Mail, and the NHS. Hoping to compensate for unpopular economic policies with a bit of faux nationalism and cultural conservatism isn’t going to cut it.

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The Tories were destined for civil war

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So aside from all the conjectures about who really influenced Truss, her downfall highlights a much more fundamental problem: the disconnect between the party’s membership and the sensibilities of the majority of their voters, especially in light of the Brexit realignment. In many ways, the party has become the victim of its own internal logic, much as Labour’s own contradictions — the overwhelmingly cosmopolitan outlook of its members — ultimately prevented Corbyn from adopting a coherent Brexit strategy.

But the sighs of relief and the smug commentaries, especially on the Left, about Truss’s attempted and failed “free-market coup” ignore an equally important development: that Truss’s political project, as unpopular as it may have been, wasn’t defeated by the people — but by the establishment.

The truth is that Truss and Kwarteng, and their free-market ideologues, were also waging their personal battle against economic orthodoxy and its technocratic gatekeepers — the Bank of England, the Treasury and the Office of Budget Responsibility. These hugely powerful and largely unaccountable institutions have always been the guardians of fiscal orthodoxy. First, they helped successive Conservative governments enforce a decade of devastating austerity. And then, ever since the end of the pandemic, they have been calling for a return to austerity in order for the UK to “balance the books”.

Truss and Kwarteng, for all their faults, dared to challenge the orthodox austerity narrative. Echoing Keynes of all people, they hit out at “Treasury thinking” — that is, the obsessions for balanced budgets and fiscal discipline — and spoke of the need to review the Bank of England’s remit. When asked about how the government was going to tackle the growing debt, shortly after Truss’s election, Julian Jessop, an IEA fellow and one of Truss’s economic advisors, explained: “The Treasury has been too quick to believe you need to start paying the debt down by raising taxes, both personal and corporate taxes,” he said. “Far better to let the deficit take the strain. If tax cuts do mean more borrowing in the short term, I’m completely relaxed about that.”

This approach was made clear as soon as Kwarteng arrived at the Treasury: his first decision was to sack its top official, Tom Scholar, who was considered to be too fiscally conservative and deferential towards the Bank of England. The message was clear: the new government expected civil servants — and indeed the Bank of England itself — to work for the executive, not against it.

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Presumably, our free-marketeers Truss and Kwarteng railed against the orthodoxy so that they could cut taxes for the wealthy without having to worry about a rising deficit. And, in principle — and even though morally it’s contemptible — they were absolutely right: an advanced country such as the UK that issues its own currency should have no reason to worry about a rising deficit or debt.

They were also absolutely right, in principle, in reaffirming the primacy of politics over technocracy. Indeed, these are preconditions for the pursuit of truly democratic and economically progressive policies, especially when they threaten powerful vested interests in society. After all, it’s Truss and Kwarteng’s relaxed approach to deficit-spending that allowed them to approve a two-year energy price guarantee worth £60 billion, by far the biggest commitment in the mini-budget.

Challenging the economic orthodoxy, and the technocratic apparatuses that wield the true power in our societies, was the real Truss/Kwarteng sin. This — not the tax cuts, which were trivial from a macroeconomic perspective — is ultimately what brought down the wrath of the entire Transatlantic establishment: not only the Bank of England, the media and legions of orthodox economists, but also, and highly unusually, the IMF and even the US Treasury Secretary, Janet Yellen. There’s nothing more anathema to the establishment than the idea that democratically elected governments should have the final say over economic policy, not unaccountable institutions where decisions are taken behind closed doors.

But despite all the hysteria, the reality is that the British economy never “crashed”; there was a small drop in the value of the pound and rise in bond yields — the result of financial markets attempting to profit from the chaos — that was rapidly reversed to pre-panic levels by the Bank of England’s intervention. If anything, the problem was the Bank of England’s announcement that the intervention would be short-lived — possibly to put pressure on the Government.

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Ultimately, the government wasn’t taken down by “the markets”, but by its own weakness, since neither Truss nor Kwarteng possessed the intellectual and political tools, nor the popular support, to ignore the hysteria and stick to their guns. While their political project might have seemed cruel, especially from an economically progressive perspective, there’s no reason to rejoice in its defeat, insofar as it has led to a complete restoration of the economic orthodoxy and technocratic rule, symbolised by Kwarteng’s replacement by Jeremy Hunt — or “Jeremy Draghi”, as his admirers have already dubbed him in honour of Mario Draghi — and then by the Second Coming of Sunak.

The fact that Hunt’s first decision was to completely overhaul the mini-budget’s main proposal — the energy price freeze — by reducing the measure’s duration from two years to six months, while announcing more budget cuts in the near future, which will cause millions to suffer even more than they would have under the previous plan, should cause everyone on the Left to reflect on the wisdom of joining in on the Kwarteng-bashing.

The consequences will be felt for a long time to come, in the form of an established wisdom that democracy ultimately has to conform to what the markets say — or else. We are already seeing this narrative crystallising in claims that the Tories should vote for Sunak because he’s “the man the markets trust”. This line of thinking is the death of democracy. Which is why the decision to support this bloodless coup will come back to haunt Labour: even if they win the next election (which seems likely), it’ll be the markets and technocratic establishment calling the shots. Not because they’re omnipotent, but because Labour has helped convince everyone that they are.

Other people’s dreams are rarely very interesting, so I’ll keep this brief. I had a towering pile of columns to file, but had failed to start work on any of them. The former Chancellor of the Exchequer, now working as a kind of journalistic bailiff, was pursuing me through a series of oddly blank rooms. In a twist not unfamiliar in dreams, he was not merely himself, he was also the Judge, the gigantic and terrifying personification of evil in Cormac McCarthy’s Blood Meridian. There is no escaping the Judge; and in my dream, there was no escaping Kwarteng.

That was bad enough. But the following night, Kwarteng visited me again. This time, in a surprising new departure, he had organised a mano a mano poetry competition in Leeds, in which he and I were due to read our own verses. Disastrously, I had forgotten all about it, and only remembered when it was far too late to catch the train. In desperation, I scribbled a few lines and posted them on Twitter, hoping they would mollify the poetry-fanciers of West Yorkshire. But then — another disaster! The ex-Chancellor immediately retweeted them, mocking my slapdash efforts and pointing out that the first two lines ended with the same word. Shame and ignominy engulfed me; I knew I could never show my face again.

Nightmares about public failure are very common. There can be few readers who haven’t dreamed about turning up to an exam entirely unprepared, or about walking onstage having neglected to learn the lines. Anecdotal evidence suggests that the more you care about such things, the more likely they are to haunt you, which is why they’re so common among academic high-achievers. So perhaps Kwarteng himself, whose academic credentials are second to none, has had such dreams. And if he did, here’s the twist. His nightmares came true.

What happened to Kwarteng on Friday — and again yesterday, when Jeremy Hunt ripped up his mini-budget, poured petrol on the debris and set the whole thing alight — was more than your standard political sacking. It was a humiliation on the grandest possible scale, as the Chancellor was forced to fly back early from Washington, with some 6,000 people gleefully tracking his flight, before Liz Truss delivered the inevitable bullet. He had been in command at the Treasury for just 38 days, saved only from a post-war record by Iain Macleod’s heart attack in July 1970.

It’s hard to think of many British political figures with such a catastrophic trajectory. Kwarteng had been Boris Johnson’s Business Secretary since January 2021, but it’s a safe bet most ordinary punters had never heard of him. Then, suddenly, he was Chancellor, with a breathtakingly radical plan to defy the markets and turbo-charge a new era of growth. Then, equally suddenly, he became the most unpopular Chancellor in the history of the Ipsos-Mori poll, with even less public support than Denis Healey after the International Monetary Fund bailout in 1976 or Norman Lamont after Black Wednesday in 1992. And then he was gone, and it was all over. What a career!

You might assume from all this that Kwarteng is a fool. But he really isn’t a fool. Giving school talks, I’ve twice come across people who taught him, and both told me he was the cleverest boy they’d ever known. Were they wrong? Obviously not, for when you look at his biography, it’s a proud parent’s dream. At prep school he won a national history prize; at Eton he was a King’s Scholar and won the Newcastle Scholarship for philosophy, a competition examined by Stephen Sykes, Bishop of Ely and former Regius Professor of Divinity at Cambridge.

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Kwarteng himself went to Cambridge, where he got a double first, twice won the Browne Medal for Latin and Greek poetry and even won University Challenge. He was a Kennedy Scholar at Harvard. He did a PhD on William III’s attempt to reform the coinage in the 1690s. And he’s written history books — two of which I reviewed at the time. “Well-researched and crisply written, Kwarteng’s book is a lot better than most MPs’ efforts,” I wrote of Ghosts of Empire, which examined the legacy of Britain’s rule overseas. “A politician with a sense of nuance: whatever next?”

For much of his gilded life, then, Kwarteng knew only success. And when he looked forward, he could reasonably expect more in the future. When he daydreamed, he surely imagined himself as a titanic reforming Chancellor to rank alongside William Gladstone or Sir Geoffrey Howe — and perhaps even as Prime Minister. And now? He’s the answer to a quiz question, the 38-day Chancellor whose tax bombshell exploded in his own face. To put that another way, if he were an England football manager, he’d be the love child of Steve McClaren and Sam Allardyce.

Omnium consensu capax imperii nisi imperasset. “All would have agreed that he was capable of being emperor, if only he had never been it.” So wrote Tacitus of the short-lived Roman emperor Galba — who, in fairness, lasted almost seven times longer in his top job than Kwarteng did at the Treasury. It’s a line that often recurs in British political commentary. I’ve seen it applied to Prime Ministers as diverse as Lord Rosebery, Arthur Balfour, Sir Anthony Eden, Harold Wilson, Gordon Brown and Boris Johnson. Perhaps that tells you something about the job — an office in which, one way or another, failure is almost guaranteed. But it’s also very revealing about a quality those men had in common. Like Kwarteng, they were all very clever.

Wilson, for example, was described by his Oxford tutor as the brightest student he had ever taught, and reputedly got one of the highest economics marks in the university’s history. There’s a gloriously bleak irony here, since Wilson presided over the devaluation of sterling in 1967 and retired nine years later with the pound in freefall, inflation in double digits and the humiliating IMF bailout only months away. His government was arguably the cleverest in Britain’s modern history, boasting former Oxford dons such as Richard Crossman and Anthony Crosland as well as self-consciously intelligent, civilised men such as Denis Healey and Roy Jenkins. Yet they left office exhausted by endless fiascos and disappointments, with Britain’s international standing at what was then an all-time low. So much, then, for cleverness.

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But the Wilson government wasn’t an aberration, for political history is littered with examples of people being found out, often in the most embarrassing possible circumstances. Now that he’s remembered as a byword for complacent failure, it’s easy to forget that David Cameron was a straight-A student who won an exhibition to Brasenose College, Oxford and was described by his tutor, Professor Vernon Bogdanor, as “one of the ablest” students he’d ever taught. (By now you should have spotted a theme.)  An even more glaring example, however, comes from across the Atlantic.

Google “Michael Ignatieff” and you wonder if it was really legal for one man to have enjoyed so many blessings. Everything the Canadian intellectual touched turned to gold. At boarding school in Toronto in the Sixties he was captain of the soccer team and editor of the yearbook. He taught at Oxford and the London School of Economics. He presented The Late Show for the BBC and wrote columns for the Observer. His documentaries won awards; his biography of Isaiah Berlin was shortlisted for some of the world’s most prestigious non-fiction prizes; his novel was even shortlisted for the Booker Prize. He was awarded a professorial chair at Harvard, then another at Toronto. And when his friends in the Canadian Liberal Party invited him to make a bid for the leadership, further glory seemed inevitable.

What happened next, however, makes Kwarteng’s stewardship of the Treasury look like a triumph. In 2011 Ignatieff led the Liberals to the worst defeat in their history, finishing third with just 34 seats. What was worse, he even lost his own seat in Etobicoke–Lakeshore, the first Canadian opposition leader to do so since 1900. His staff were in tears, the world was watching, and all those book prizes must have seemed an awfully long way away. In the cruellest twist imaginable, the man who always came top in exams had failed the most public exam of all.

So is the lesson that clever people shouldn’t go into politics? Obviously not. We need clever politicians; it’s no coincidence that probably the two least impressive pre-Truss party leaders in my lifetime, Iain Duncan Smith and Jeremy Corbyn, were titanically stupid. But there are different kinds of cleverness, and cleverness is just one asset among others. Above all, it has to be leavened by humility: a recognition that nobody knows everything, that we all make mistakes and that clever, self-confident people often make the worst mistakes of all. In profiles of Kwarteng, the word “arrogant” comes up again and again. He’s paid a high price for it now.

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But aren’t we all terrified, deep down, of becoming Kwasi Kwarteng? Isn’t there a little bit of us that dreads the inevitable day when, on the grandest stage, our boastful pretensions are stripped away, and our ignorance and incompetence laid bare for all to see? Isn’t that the nightmare that haunts all vaguely accomplished people — the Naomi Wolf moment, when the BBC radio presenter gently points out that your entire doctoral thesis is based on a colossally sloppy misunderstanding?

In his excellent book The Death of Consensus, the journalist Phil Tinline argues that nightmares are a good way of understanding British politics since the war — nightmarish memories of the Depression or a fascist dictatorship giving way to equally terrifying fears of trade unions or runaway inflation. But perhaps the ultimate personal nightmare, the dread of catastrophic public humiliation, is a good way to understand why some politicians succeed, and some don’t.

We’re told that Liz Truss is a very confident person, and that she models herself on Margaret Thatcher. But Thatcher wasn’t a very confident person; in private she sometimes wept when the pressure became too much, and her staff often noticed that she became jittery before big international summits or major speeches. “Do you get nervous sometimes?” asked an interviewer from the News of the World in 1980. “Oh yes,” said Thatcher. “Of course you do, you never get rid of it.” She sometimes struggled to sleep, she admitted, because she worried so much.

That’s not the fantasy Thatcher, the Iron Lady of Truss and Kwarteng’s imaginings. But perhaps that’s the difference. Somewhere, deep down, she knew what she didn’t know. She was frightened of being found out, and that meant she wasn’t. But they slept too soundly. And now, in a twist of cosmic proportions, they’re living the worst professional nightmare of all.

A few weeks ago, a police officer tried to arrest a man carrying a blank placard who might have written something offensive to the King on it. Perhaps this heralds a whole new category of crime, namely those which you haven’t committed and don’t even intend to, but always might. People going for a quiet run in the park might suddenly dash into a bank and rob it. We’re going to need a lot more prisons.

Most liberals and leftists look on power with suspicion. But this is because when they hear the word they instinctively think of dominant power, and look for some kind of resistance to it. But resistance is itself a form of power; not all power is oppressive. There are productive forms of it as well as despotic ones. It all depends on who has it for what purposes in which circumstances. Only those with enough power already can afford to be sniffy about it, just as there are millionaires who fix their thoughts on spiritual matters and despise the rest of us for our crass materialism.

The only thing worse than having too much power is having too little. Democracy isn’t the opposite of power but a particular form of it. You need power to free yourself from slavery or Vladimir Putin. The same is true of authority, not all of which is to be derided.

The Met police, for instance, are in trouble partly because becoming a police officer is an attractive prospect to a lot of natural-born bullies and rednecks, who wouldn’t otherwise have the chance to kick other people around or make obscenely sexist remarks in the knowledge that their mates would be alarmed if they didn’t. Trying to root out police bigotry thus has its limits, like trying to root out aspiring entertainers who enjoy being applauded.

But there is also the authority of a Nelson Mandela, which is a question not of rank but of wisdom and experience. Knowledge without wisdom is impoverished. So is knowledge without knowing how to apply it. There is such a thing as tacit knowledge, meaning something you know but can’t formulate. Try teaching someone how to whistle “Hey Jude”.

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Poverty is not inevitable

By Terry Eagleton

Noam Chomsky once made an interesting comment on the flyblown old cliché “speaking truth to power”. He pointed out that power (of the dominant kind) knows the truth already. Only the excessively charitable see it as a clumsy but well-intentioned giant, blundering witlessly around the place and trampling on people like a rogue elephant without even noticing. On this theory, power is born of ignorance. If only it were aware of the havoc it wreaks, it would change its ways. If only the tobacco companies had known long ago about the lethal effects of smoking, they would have shifted over into producing cheese-and-onion crisps. If the logging companies are deaf to the danger of destroying the rainforests, let’s just tell them again, and then again. While we’re at it, let’s draw the attention of the gambling industry to the suicides whose blood they have on their hands.

Power, however, is far from witless. On the contrary, it makes use of highly specialised forms of knowledge all the time. Knowledge is itself a mode of power, rather as universities have become service stations for the capitalist economy. Power knows what’s going on in the most literal of senses, given its global networks of surveillance. It is perfectly conscious of its own darker machinations, but either doesn’t care or believes that they are unavoidable. What sustains it is not ignorance but self-interest. It isn’t schooling it needs, but restraining. This is also true at the individual level. There are people to whom one should no more give power than one would give a bowie knife to a toddler. The problem is that one usually finds out who they are when it’s too late.

It isn’t power, then, that needs the truth, which means that intellectuals will have to find some other high-minded justification for their salaries. It’s those whose lives power makes miserable. To be free, you need what is traditionally known as emancipatory knowledge — a grasp of your situation as a whole, one which involves not just a new view of the world but a new self-understanding. And this transformed self-understanding is itself an active force for change. If a process of political liberation is to be judged successful, those who emerge at the end of it aren’t quite the people they were when they started out.

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By James Sean Dickson

David Hume, perhaps the greatest of British philosophers, writes rather surprisingly that power always lies with the governed. He’s not speaking of democracy, which hardly existed at the time, but of the fact that sovereignty ultimately rests on popular agreement. You can imprison some of the people all of the time, but you can’t imprison all of the people all of the time. Any form of rule which doesn’t engage the partial consent of the masses is unlikely to endure.

Without that consent, as Sigmund Freud remarks, it would be impossible to understand how so many civilisations have survived for so long despite the justifiable hostility of the common people. There must be enough people who are complicit in their own subjection — enough people on benefits, for example, who are rather taken with that nice Mr Kwarteng and think he is doing a great job. It’s true that consent needn’t mean affection: most governments have been tolerated rather than admired. Power is what we have to put up with. But people, being properly self-interested, will only submit to it as long as there is something in it for them.

What that is, of course, may be pathetically meagre. It may mean having the secret police search your flat only once a month rather than twice a week. Those who are subject to power are usually reluctant to revolt against it — not necessarily because they have any particular relish for it, but because of the dangers involved in confronting its violence, the lack of any obvious alternative, and the fact that they have too much to do without chaining themselves to each other for days on end. On the other hand, the moment citizens realise that there simply isn’t enough in it for them anymore, they will rebel as surely as night follows day. It is rational to do so, and human beings are somewhat rational creatures. When any alternative becomes better than what you have, the days of your rulers are numbered. This may be partly because there is no longer much in it for them either.

The great theorist of political consent is Edmund Burke. In his treatise on aesthetics, Burke tries to square the fact that the law must be feared with the need for it to be loved. If the former evokes the image of the father, the latter has a more maternal flavour. The authority of the father, Burke argues, “hinders us from having that entire love for him that we have for our mothers, where the parental authority is almost melted down into the mother’s fondness and indulgence”. The problem is that only love will bind us to the law, but this love is likely to weaken its force and inspire in us a benign contempt. Desperate to resolve this contradiction, Burke offers us the figure of the grandfather — male, to be sure, but tempered by old age with a certain gentleness of spirit. It is unlikely that this will provide much guidance for Liz Truss.

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Freud, by contrast, sees no final solution to this dilemma. In his language, the law becomes the superego or source of punitive discipline; and since it is installed inside us all, its power is all the more draconian. To transgress it feels like violating ourselves. The law works as well as it does because we reap an obscene delight from being oppressed by it; and this is because being punished relieves us of our guilt. Yet we then feel guilty about our delight, which leads us to want more punishment. We revere the law, then, but our reverence is ambivalent: we never entirely submit to its coercion, and rejoice in seeing it brought low. No Tory government is going to work that one out.

The most authentic form of power, so we learn from King Lear, is one which maintains a pact with weakness and failure. The most elusive aspect of power is the exercise of it for its own sake. There is something excessive about this faculty, which tends to outstrip its practical goals and revel in itself. It wasn’t a burning desire to spread social sweetness and light which kept Boris Johnson hanging on to office like a burr to the seat of one’s pants. In this respect, power is as irrational as love.

Such power is not likely to disappear anytime soon, and this is good news for those who need to fight injustice. But we will know that genuine change has happened when the word no longer means quite what it means at present — when not only the power-situation, but the very concept of power, has been transformed almost out of recognition.

As soon as it was made public, on September 23, Kwarteng’s “mini-budget” prompted a massive sell-off of “gilts” — UK government bonds — and also saw the pound fall to an all-time low against the dollar. Then, all hell broke loose: some analysts even went as far as saying that Britain was heading for a full-blown “currency crisis” and was starting to look like an “emerging market country”.

The reaction from international quarters was just as hysterical. The IMF launched a biting attack on the UK government, while Larry Summers, former US Treasury secretary, called the policy “utterly irresponsible”. Speaking for many, Jason Furman, former economic adviser to Barack Obama, wrote: “I can’t remember a more uniformly negative reaction to any policy announcement by both economists and financial markets than the UK’s policy.”

Was all the fuss justified? Is the UK really in danger of becoming the next Argentina or Zimbabwe? And was Kwarteng’s U-turn yesterday really necessary?

The mini-budget in question consists of a series of deficit-financed economic measures aimed at cushioning the effects of the energy crisis and boosting growth — namely a freeze on energy bills and various tax cuts, for a total cost of around £160 billion. Most of the criticism aimed at Kwarteng reflected the opinion of orthodox economists: that cutting taxes is the wrong policy when unemployment is low and there is little spare capacity in the economy for additional non-inflationary growth.

Yet for all the uproar, by far the biggest commitment in the mini-budget was found elsewhere: the energy price freeze, which is expected to cost around £60 billion. According to the Bruegel think tank, the UK is already the country that has allocated the most funding to shield households and businesses from the energy crisis — 7% of GDP. While more can and should be done, that’s more than double the EU average (only Germany has announced a measure of similar scope).

Now, one can debate whether capping the price of energy — which essentially amounts to a publicly funded subsidy for the profits of energy giants — is the best way to address the crisis, but if the alternative is hanging household and businesses out to dry, which is what most EU countries are likely to end up doing, the British approach is clearly far better.

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As for the revenue-side measure of the mini-budget, the biggest measures aren’t actual “tax cuts” but non-rises in National Insurance and corporation tax (for a total of £40 billion). Compared to these figures, the actual tax cuts, such as the scrapping of the higher rate of income tax, were rather trivial — just above £10 billion. All of which means that while the tax cuts were bad from a distributional perspective, since they would have mostly benefited the wealthy, from a macroeconomic perspective their impact would have been negligible, and the decision to reverse them will be just as negligible.

Even without the tax cuts, the energy price freeze will still entail a larger deficit. Rather than the tax cuts being at fault, then, it was probably the increase in the deficit itself that freaked everyone out. There seems to be a genuine concern among orthodox economists and financial institutions that the mini-budget will threaten Britain’s “fiscal sustainability” and possibly even cause the country to default.

But the notion that an increased deficit puts the British state at the risk of insolvency is ludicrous. Like all currency-issuing nations, the UK effectively spends by creating money out of thin air. This means that it can never “run out of money” or become insolvent. The fact that fiscal deficits are usually associated with the issuance of bonds, and that these are usually bought by the private financial sector, gives the impression that the latter are able to exercise control over government spending, by refusing to buy the bonds or demanding higher interest rates. However, this is not the case — because the central bank can always step in to buy the bonds itself, setting the yield at whatever level it wants.

Ever since the financial crisis, and especially throughout the pandemic, this has become standard practice. Indeed, virtually all the new bonds issued to support the economy throughout the pandemic were bought by the Bank of England itself. This is paradigmatic of the way in which modern states self-finance; and of the fact that “bond vigilantes” hold no power whatsoever over currency-issuing governments.

So overall, a widening deficit doesn’t represent a problem for the UK. In fact, it’s a good thing, insofar as it will help cushion the British economy from the effects of the energy and cost-of-living crisis. There’s also no reason to believe that larger deficits, even if “monetised” by the central bank, will further stoke inflation. Quite the opposite: if the government borrows money to cut domestic energy, that will likely reduce inflation. Injecting such large sums of money into the economy should also be expected to have a positive effect on growth.

The problem is that all this completely defies the economic orthodoxy, which is probably why mainstream economists are attacking the Government’s plan so vehemently. As Adam Tooze writes: “What the critics of the UK are performing is the role of gatekeepers, a function, which is at the heart of elite economic policy discourse.” This wouldn’t be so much of a problem if it weren’t for the fact that the flawed orthodox view is also shared by people who, unlike economists, have a direct impact on the economy — financial traders. And this can lead them to make some very bad decisions.

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The recent gilt sell-off is a perfect case in point. While some traders might have actually been motivated to unload their gilt holdings through fears of an imminent default, much of the sell-off was actually an attempt to profit from the panic through a practice known as short selling — which consists in selling a financial asset in the expectation that its price will fall, thus generating a profit to the seller.

This is ultimately what economics textbooks say should have happened: a higher deficit will automatically lead to higher yields (and therefore lower prices), and scaring the government through a sell-off will convince policymakers to raise interest rates even more. Unfortunately for the traders, this is not how things work in the real world. In the latter, betting against central banks is always a losing game. They know that very well in Japan, where it’s known as the “widow maker” trade.

Which is why traders were completely caught off-guard when, on September 28, the Bank of England announced that it would be buying up a potentially limitless number of government bonds in order to ease market tensions. This immediately caused yields to fall and stabilise at the level they were at before all the mini-budget hoo-ha — thus thwarting the speculators’ plans.

It’s been said that the BoE’s intervention “saved” the Government from the consequences of its reckless decisions. This is also nonsense. The BoE was simply fulfilling its mandate — acting as a lender of last resort. Moreover, in a democracy, it’s perfectly normal for the central bank to accommodate the budgetary decisions of government. The alternative is the situation in the Eurozone — where democratically elected governments are expected to do what unelected technocrats and central bankers tell them to.

There has been much talk of the fact that the BoE was forced to intervene to save pension funds that would otherwise have faced “mass defaults”. This all sounds rather scary, and has been weaponised to attack the mini-budget — by implying that the Government’s actions risked sending the savings of millions up in smoke. In fact, the pension funds’ quasi-meltdown is entirely a consequence of the way pension systems, like everything else, have become hyper-financialised.

Simply put, today pension funds use safe assets such as gilts to raise large amounts of cash through complex financial instruments, which they then use to pursue high-risk investment strategies. The problem is that if the value of the gilts falls too sharply, the pension funds risk going bust — which is what happened last week following the gilt panic. The problem’s not the mini-budget — the problem’s the way in which we’ve allowed pension funds to gamble with people’s savings.

A similarly doom-laden tone accompanied warnings about a “currency crisis” in which the pound will supposedly keep sliding further and further down until it becomes so worthless that the UK will be forced to go cap-in-hand to the IMF. But this was never likely to happen. Countries that float their exchange rate, such as the UK, cannot experience a currency crisis in the traditional understanding of the term — unless they have large external liabilities in a foreign currency. As Paul Krugman observed, that was the story for Asia in the Nineties, the Argentine crisis 2001, and is part of the problem in Turkey now. But this doesn’t apply to the UK, whose external liabilities are overwhelmingly sterling-denominated. And this is why, following the Bank of England’s intervention, the value of the pound has already bounced back to the level it was before the panic.

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Why did the pound fall in the first place? This was due to much the same reasons as the gilt sell-off: unfounded fears over the deficit, attempts to pressure the government into backtracking, and, first and foremost, speculators in the City and elsewhere hoping to profit by shorting the pound. As one trader said: “We were absolutely sure the pound was going to crash. Of course we are going to short the pound. This is what we do.”

The problem is that, unlike bond markets, the government’s options are more limited when it comes to quelling future currency speculation. One option would be for the Bank of England to prop up the pound by buying it on foreign-exchange markets, but that requires large amounts of foreign reserves, which the UK doesn’t have.

Another option would be to raise interest rates. After all, part of sterling’s weakness is simply the result of rising interest differentials vis-à-vis the US, which is hiking up interest rates in an irresponsible manner that is causing problems for the rest of the world, as central banks are forced to raise interest rates to stem the outflow of capital. However, raising interest rates won’t reduce inflation that is entirely driven by supply-side factors — namely the energy crisis and supply-chain bottlenecks — but will almost certainly cause huge pain to the economy, especially to the housing market, which is already in trouble. (Even the UN is now calling on central banks to halt interest rate increases.)

So, it’s a good thing that the Bank of England is still refusing to hike interest rates. After all, the pound has been sliding against the dollar for more than a year, indicating that this part of a longer-term adjustment which could actually help Britain move towards a less import-dependent and more self-reliant economy.

In the end, the best option for the UK’s authorities might to be accept there’s little they can do, in the short term, to rein in inflation that is largely supply side-driven, stop attempting to prevent the pound from falling in the name of some misconceived “strong pound” policy (which is what led to the government’s flawed response to the 1976 crisis) — and focus instead on protecting people and businesses through increased government spending.

This may or may not be inflationary. But the alternative — giving in to market pressure to raise interest rates and rein in the deficit — is almost certainly bound to be worse.

“The tax cuts and reforms I’ve announced today — the biggest package in generations — send a clear signal that growth is our priority,” Kwarteng said, shining a bright light on Britain’s anaemic economic record. It would appear, however, that investors do not hold the same breezy confidence in their plans to achieve 2.5% growth per annum. The market has made its mind up: this is Liz Truss’s equivalent of Theresa May’s 2017 election gamble.

And it certainly is a gamble. Should the roulette ball fall on black, Liz Truss will go down in the history books as the swashbuckling, visionary prime minister who broke Britain free from its post-financial crash shackles. Should it fall on red, Britain’s youth will be lumped with yet more debt, and Kwarteng will see his name added to the inauspicious list of chancellors who engineered huge booms, only to later be stung by the bust that followed.

Kwarteng will be only too aware of the fate of fellow Tory chancellor Anthony Barber, who, under weak growth and, with an election only a few years away and Labour breathing down his neck, engineered the “dash for growth” with his hugely expansionary 1972 budget. After Barber turned on all the taps, inflation ran riot, peaking at 24.5%, which ultimately precipitated the February 1974 election loss for the Conservatives. Barber chose not to stand in the subsequent election and retired from frontline politics.

But scary as the Barber comparison and the financial market grumblings are, don’t take them as evidence Kwarteng’s approach is certain to fail. If we were to follow the advice of the markets and the technocrats, we wouldn’t change course from nearly two decades of abject failure. And if market prices were always right, there would be no such thing as a hedge fund — fair value would always be known and exploited, closing any arbitrage gap.

Likewise, economists, for all their preening certainty, are a fickle, quarrelsome bunch. Geoffrey Howe famously had his anti-inflationary 1981 budget excoriated by 346 economists in a letter to The Times. Each was then forced to dine on a healthy portion of humble pie as the reforms of the Thatcher government began to bear fruit, stabilising inflation and building a firm foundation for sustained economic growth.

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More importantly, despite its nervous reception, there is much to be praised in this budget. Even stating that economic growth should be the top priority of government is a welcome change from the status quo — where the deficit, Brexit, and then Covid-19 took centre stage, distracting the country from its slow-motion growth crisis. With the next election looming, growth is finally being given the attention it duly deserves.

Among the measures intended to boost growth is a doubling of the stamp duty threshold from £125,000 to £250,000. First time buyers, meanwhile, will pay no stamp duty until £425,000, up from £300,000. Plenty will write this off as yet another distraction from the desperate need to actually build some houses. But in a housing supply crisis, with a limited stock of homes, the distribution of existing stock becomes even more important. As a transaction tax, stamp duty is an active impediment to older people in large family homes downsizing, and passing on a larger house with spare bedrooms to young couples with children that need them.

Other positive measures include permanently setting the rate of Annual Investment Allowance for businesses at £1 million, rather than reverting it back to £200,000 in April 2023 as had been planned. Britain’s total investment as a percentage of GDP lags well behind comparable rich nations, and encouraging growth-spurring research and development through the tax system — including suspending the planned hike in corporation tax — should be welcomed.

But perhaps the biggest danger of all with this budget is that the country simply spins its wheels in the mud. Howe’s controversial 1981 programme was not a “Thatcherite” tax-cutting budget — in fact, it substantially increased taxation to counter inflation. The economic reforms that defined the Thatcher governments and led to a stable footing for expansion were not yet complete. You cannot have your dessert until you have finished your vegetables. And yet here we are, teeth sticky with sugary tax cuts.

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If growth were easy and it isn’t we would have already solved the problem. The good news is that we are not at the “growth frontier”, where more productivity can only come from cutting edge technological, medical or scientific innovation. We can steal productivity and technological improvements and catch up with economies host to greater productivity than our own. Taking best practice from abroad and implementing it at home is a tried-and-tested method for easy, cheap growth, for everything from tax structure to pedagogy.

The bad news is that much of Britain is perfectly prepared not to borrow these productivity gains and to make choices that run counter to economic growth and resultant improvements in living standards, and Truss will have to do battle with this instinct. For example, the country voted to leave the EU in 2016, leading to us departing the single market and customs union, increasing the costs of trade with our neighbours — and yet Britain now chooses to suppress net migration, running counter to the needs of sectors with worker shortages.

Happily settled baby boomers in their fully paid-off detached houses still vote in great numbers against anyone in favour of local “overdevelopment”. National infrastructure projects like new water reservoirs, airport expansions and new train lines are delayed, cut back and cancelled. It might not matter if the burden of these choices was shared equally by all, but the impact is highly unequally distributed — in favour of baby boomers. Those self-same boomers’ sons, daughters and grandchildren pay the price of these decisions in higher living costs, and lower growth.

But so does the country — high housing costs in our most productive regions and cities prevent people from moving to more productive jobs, and shovels good money into stationary and unproductive bricks and mortar. Too often this turns into an attack on the idea of London: why do you feel entitled to have affordable housing in the most productive city in the country? The only thing such pettiness leads to is lower productivity in Britain’s growth engine and therefore less tax income to spend on the regions. In effect, the government is not proud of its international financial, legal, technology and consultancy services capital. It finds its crown jewels oversized, vulgar and embarrassing.

You can’t do Thatcherism twice, we’re often told. There is nothing left to deregulate. Labour markets are reformed. Public utilities and businesses are fully privatised. Unproductive industries were shuttered for good. But planning was the one big area of state regulation Thatcher never touched.

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“Later this autumn, the government will set out its vision to unlock homeownership for a new generation by building more homes in the places people want to live and work and by getting our housing market moving,” the government’s growth plan, published alongside the budget, said. “This will boost growth across the UK helping more people afford to live near good jobs.”

Yes, this is a positive sign; these are the bitter vegetables that need to be eaten for growth to flourish. But forgive a millennial who has seen it all before: under a Tory party allergic to planning reform, will these reforms actually happen? I’m not holding my breath; already there are signs of disquiet from former ministers over the high-stakes approach being taken.

And yet, Truss and Kwarteng have shown they are prepared to be deeply ideological and challenge the fragile status quo. Their economic plan may have taken a battering by the markets, but they defiantly stand by it, daring the markets to back down before they do. All they need to do is match words with deeds, and make this clear at Party Conference next week. It all seems so wonderfully straightforward — until you remember that we’ve been here before.

The result — Britannia Unchained — was a call to look to the most dynamic economies around the world for inspiration: to cut spending like Canada, teach children like Japan, and build businesses like Silicon Valley. It didn’t oppose the austerity measures of the early Cameron government, but saw that as a precondition, rather than an endgame. The Gang of Five no doubt hoped to be the heirs of Cameron, and with the budget balanced, this global smorgasbord could be their agenda. 

At the time, the approach of the Unchainers was criticised for its inaccuracies and drew ire for eye-catching comments on productivity. But beyond that, it made little impact. The authors were promising politicians but did not have a mainline to Downing Street, and their cures for the nation’s ills were unlikely to fly with the Government dependent on the Lib Dems. Even when the Tories held an outright majority, attention quickly moved to Brexit and then Covid, leaving little time for the long-term considerations that the book sought to address.  

Through this period, however, the five authors rose through the ranks of the party. Just one week short of the book’s tenth anniversary, they made their final breakthrough when Liz Truss became Prime Minister, with Kwarteng at her side as Chancellor. Today, Trussonomics will move from campaign mode to implementation with the unveiling of the Government’s mini-budget. Will this be the moment Britannia is finally unchained?  

Together, Truss and Kwarteng have pitched their changes as an agenda for growth, prioritising expanding the economy over redistribution. Early policy leaks have suggested the moment will also be used to deregulate, confirming the reversal of the fracking ban and removing the cap on bankers’ bonuses. This is likely to be accompanied by the removal of the national insurance rise and reductions on corporation taxes.  

Yet the full realisation of the Unchained agenda has been derailed by reality. Today, the priority in the Treasury is the response to rising energy prices. The Government was half-way through detailing this when parliament was interrupted by the death of the Queen, and businesses and individuals remain desperate to see what help they will be given through the winter crisis. Tax cuts alone will not be enough to achieve this, as those most affected simply don’t pay enough tax. 

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The Government’s preferred option appears to be a per-unit price cap. The costs of this remain unclear and will be determined by the fluctuation of wholesale prices, with the government bound to make up the difference. It’s not the low-tax, low-borrowing idealism of Britannia Unchained, but rather debt-fuelled cakeism, pushing taxes down while keeping spending up. It’s a clear sign of a disconnect between the words and actions of Truss’s top table. Beyond that, despite Truss and Kwarteng’s proud boasts of doing the unpopular to secure growth, it’s noticeable they don’t appear ready to grasp the nettles that might alienate their own support. Uncapping bankers’ bonuses might not win over floating voters, but plays well with the Tory base, either among those who benefit or feel an ideological allegiance against the Government setting wages. It is also a measure that only fiddles at the edge of growth, slightly altering incentives in the already massive speculation economy. 

Even the Unchainers will not turn against the vested interests of the Tory Party. When it comes to the growth-sapping shortage of houses, Truss and Kwarteng are unwilling to deregulate planning, knowing that it will sting them in the shires. Throughout the leadership campaign, Truss equivocated on this subject, frequently attacking her own government’s approach to housing targets. Instead, her government now offers a cut to stamp-duty — not a bad idea in itself, though it will just juice the market without more building.  

At the moment, the only push towards planning reform appears to be in “full-fat freeports”: enterprise zones with reduced restrictions and lower taxes designed to spread the growth around. But this is nothing more than a distraction from the inability to build houses where the jobs, productivity and people currently are. It is unlikely to do anything to defuse the acute crisis of housing in the southeast of England, where short-term electoral interests push against new housebuilding.  Truss’s liberalisation of fracking will doutbless hit a similar stumbling block. Ministers have been at pains to stress that exploitation of shale gas will only go ahead with the consent of local communities. This is an almost impossible bar. Fracking developments generally meet with deep local opposition, the major barrier to development before the 2019 ban was in place. If this is the plan, it is a non-starter. 

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Meanwhile, there seems to be no solution for liberalisation where businesses want to build. The Oxford-Cambridge Arc, for instance, which was designed to accelerate Britain’s science and tech sectors around world-leading universities, remains cancelled due to local objections. Instead of backing what is working, the Government looks to create magic in underperforming areas.  Agglomeration and acceleration around strategic advantages cannot easily be replicated by liberalising around left behind towns. The green belt and the planning regime are likely to remain some of the most burdensome regulations afflicting British growth.  

Other policy announcements show a lack of seriousness in the Truss reforms. In 2012, the Unchainers talked a lot about raising educational standards, citing Britain’s uncompetitive PISA scores as a sign of future stagnation. So far, the main policy hinted at is the ending of the ban on new grammar schools. It is a favoured policy of a certain type of Tory, but unproven at best in its outcomes. The grammar school had certain positive impacts at a certain time, but it’s slowly become clear that they tend to favour the rich and have a minimal impact on overall attainment. It’s less of a global lesson than an expired policy gathering dust in the back of the Conservative cupboard. 

The same is true of measures such as abandoning the sugar tax, squeezing the margins on benefits, or Johnson’s proposed ban on the importation of foie gras and furs. These are things which please the ideological Right and anti-regulation small-staters such as the authors of Britannia Unchained. They are, however, small fry in the scale of the British economy. Quite literally all fur coat and no knickers. 

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And yet, in the decade since Britain Unchained was published, its diagnosis has largely been vindicated. Britain has struggled with sluggish growth and flatlining wages. The fundamental premise remains obviously true: Britain’s economy can grow and doing so will benefit the whole country. Even the practice of cherry-picking the best policies from around the globe remains sound, though often there’s valid local reasons why we’ve ended up where we are and why change is difficult.  

Much else has shifted though. The Tories sit atop an entirely different political coalition. The fiscal impact of austerity has been wiped out by Brexit, Covid and Johnsonian high spending. The low-borrowing economy has never emerged, and debt will only increase as they seek to graft a low-tax economy on it. In response, instead of turning to a World XI of global policies, Truss and Kwarteng seem keener to play the Thatcherite B team. Tax cuts will come in the face of short-term spending crises and long-term rising service costs meaning a decline in income and more borrowing, at a time when rates are rising, if the growth doesn’t come. It is, in effect, a gamble which could come up short, padded around the edges with policies such introducing grammar schools which invigorate the Tory base but are neither groundbreakingly innovative or proven to work.  

If this happens, all the authors of Britannia Unchained will have brought are more diminished public services, which have neither seen major investment nor the reform to make them more effective. Early on, they correctly identified critical issues facing Britain — and as they rose through the ranks, they saw the need for change become more urgent. Yet now they’re in power, their agenda looks more underwhelming than unchained. Rather than a radical agenda for growth, all Trussonomics looks likely to add up to is the Eighties — but more so.