British Prime Minister Liz Truss is not Margaret Thatcher
The theme of Truss’s speech – that she was not “consigning the country to decline” and that change would mean “disruption” – came as no surprise. Attentive Tory members would have known she was engaged in shock therapy through her association with the Free Enterprise Group of MPs, which she founded 12 years ago. She made no secret of her view that deregulation, low business taxes and a small state are the only way to reverse Britain’s dwindling fortunes – painfully illustrated this year by a former colony, India, which takes its place as the world’s fifth largest economy.
“The status quo is not an option,” Truss told the conference. “I will do whatever it takes to grow our economy and get Britain moving.”
Truss’ problem is that her first dose of this therapy scared off the very markets she’s so eager to unleash. In a mini budget two weeks ago, Chancellor of the Exchequer Kwasi Kwarteng announced sweeping tax cuts – including reducing the top rate from 45% to 40% on incomes over £150,000 – without specifying how the state would be reduced to finance them. The windfall for high earners was politically toxic as people battled a cost of living crisis, and the rising budget deficit triggered a sharp fall in the pound and a liquidity crunch for dependent pension funds government bonds – gilts – holding their value.
The Time accused Truss and Kwarteng of “astonishing political incompetence”; the FinancialTimes called the measures “reckless”; and Michael Gove, a senior minister in every cabinet since 2010, said Truss was “betting too much on tax cuts as we borrow to pay them”.
Such was the fury that with his party conference already underway, Truss told Kwarteng to announce a humiliating U-turn on the top tax rate to head off a growing revolt among Tory MPs.
But she didn’t rule out revisiting the issue and clarified her philosophy, telling the conference that “for too long the political debate has been dominated by how we distribute a limited economic pie.”
In this regard, she returns to the mantra of previous Conservative administrations. From 2010, under David Cameron and his chancellor, George Osborne, the Tories cut corporation tax from 28% to 19% and the top personal income tax rate from 50% to 45%, while imposing austerity through welfare cuts and public policy. – wage freeze in the sector.
Two things forced a change of course: first, the 2016 referendum vote to leave the EU, which triggered Cameron’s resignation; and, second, Jeremy Corbyn’s success in depriving his successor, Theresa May, of an outright majority in the 2017 general election with a Labor manifesto promising to run the economy ‘for the many, not the few’. . To make Brexit happen and counter the Corbyn threat, May and then Boris Johnson had to declare austerity over and pledge to keep jobs and environmental protection in the EU post-Brexit.
In the 2019 general election, Johnson went even further, pledging to invest in the NHS and “level up” deindustrialised regions. It helped him win a landslide, capturing seats at the heart of Labour, but his approach began to be questioned by many of his MPs after a string of by-election defeats in traditional party strongholds .
Truss is the product of a popular Tory groundswell in favor of über-Thatcherism, a belief that Britain could be great again if only it allowed the rich to earn money and keep more for themselves. themselves. She told the conference she would “harness the power of free enterprise” and promised “all EU bureaucracy would be a thing of the past” by the end of the year.
The far-right think tank that fueled Truss’ career believes these so-called “supply-side” reforms will be decisive. In a Time article last Thursday, Mark Littlewood, the chief executive of the Institute of Economic Affairs, said: “It is in this area of deregulation that Truss’ economic strategy will succeed or fail…. If you can find significant sectors of the economy that have been suffocated by bureaucracy and you have the political will to liberalize, you can essentially get economic growth for free.
The list of goals, already announced in a statement accompanying Kwarteng’s mini-budget, ranges from reducing the ‘burden’ of environmental assessments for major infrastructure projects to deregulating childcare services to make them cheaper. and, therefore, expand the labor market.
One of the pet peeves of free-marketers is planning regulations, which they say impede housing construction. In the 1980s, Margaret Thatcher stopped local authorities from building social housing and forced them to sell off much of their stock. Housing was to be left to the market, but private sector construction did not expand to fill the void. Free-marketers blame the planning system, but the truth is that big house builders are hoarding over a million plots of land, half of them already with planning permission. Even if they got their hands on prime land in the greenbelt, they would still be restricting supply, as it drives up prices and profit margins.
Truss faces more battles with his own MPs: over planning, from those in rural seats whose voters don’t like development on their doorsteps; on the possibility that social benefits are not revalued according to inflation, compared to those of deindustrialized areas where the number of claimants is high.
But their resistance might prove the least of his worries. During her speech, she got an unexpected taste of the disruption her idea for change can bring when two Greenpeace activists held up a poster asking, “Who voted for this? They were quickly chased from the room by stewards, but their views will not be lost on the millions of people whose standard of living is threatened by a prime minister who has no mandate from the electorate.
On the eve of the Tory conference, Royal Mail workers staged a day-long strike in a long pay battle and campaign group Enough Is Enough staged 50 rallies and demonstrations across the country. As Truss spoke, the train conductors had brought the rail network to a standstill. Recent weeks have also seen dockworkers, bus drivers, garbage collectors and housing maintenance workers take industrial action. Nurses and teachers will likely be next.
Polls suggest that public support for workers fighting to protect real wages is strong. As austerity intensifies to pay for tax cuts, the Tories will no doubt try to pit workers against claimants, but their common interest is underscored by the fact that 40 percent of those on Universal Credit– the benefit likely to be targeted by Truss for a reduction in real terms – actually work but are poorly paid.
The stakes are high. Cameron’s austerity is estimated to have caused an additional 330,000 deaths. Truss’ shock therapy could be even deadlier.