Liz Truss’s unfunded public spending cuts will unleash austerity 2.0
3 min read
When newly minted Prime Minister Liz Truss tweeted that she was “ready to hit the ground” most of us thought it was an unfortunate twitter malfunction. Little did we realise it was a statement of intent.
In the aftermath of the announcement of her energy support package and Kwasi Kwarteng’s disastrous “fiscal event” (mini/mega budget to you and me), it is clear that she has indeed hit the ground. Her government is on the rocks and the country’s economic credibility has taken a huge kick in the markets.
That means higher mortgage payments and lost chances to buy your own home for millions. It also means a huge program of public spending cuts unleashing austerity 2.0 if the £43bn of unfunded tax cuts are still going ahead.
This administration is proving itself to be ideologically extreme, incompetent and incapable
How on earth did she achieve this level of dangerous dysfunction in a mere three weeks?
Listening to the announcement of the likely £150bn energy package before the news of the late Queen Elizabeth II’s illness interrupted the Commons infighting, I was struck by the disdain the government had shown towards Parliament. They had unusually insisted on holding a debate rather than a statement on their announcement. This meant long speeches rather than short sharp questions to the PM which would have put her under more effective scrutiny.
The debate opened with the Speaker decrying the absence of the Government’s written statement on the package meaning MPs had no detail upon which to base their contributions. When it did finally arrive, the statement was an insulting and perfunctory two paragraphs of meaningless blather. Had the Queen’s death not suspended proceedings, there would have been far more focus on unanswered questions such as the still unknown actual cost, and whether the decision not to spread it more evenly between the unexpected and unearned super-profits of the energy giants and future public borrowing is acceptable.
Ideologically pure and surrounded by true believers, the Prime Minister scorns other viewpoints and clearly did not believe them worthy of her consideration as she and her equally ideologically fixated Chancellor planned their tax-cutting small state fiscal event. The combination of ideological certainly and incompetence they displayed will take some beating.
What a humiliating and costly disaster it has proved both for their authority and for the country’s credibility around the world. Once more they showed no respect for the institutional framework they should have been operating in. They thought they could get away with sacking Tom Scholar, the long-serving and respected senior Treasury mandarin, menace the independence of the Bank of England and fail to publish an OBR report which would have contained a forecast of the effects of their decisions. They thought they could load £45bn of unfunded tax cuts going mainly to the better off on top of the energy support package they had already announced, and the markets would be sanguine about it.
A week of mayhem on the markets with a plunging pound, rising costs of borrowing for everyone, and the forced £65 billion intervention by the Bank of England to prevent the collapse of some pension funds told a very different story.
As Cabinet ministers spend Tory Party Conference in hiding and alienated backbenchers plot which bit of the package to rebel against next, a return to rational policymaking and calm stability is unlikely any time soon. It is increasingly clear that waiting until 23 November for an OBR forecast is untenable. This administration, elected by a tiny sliver of Conservative party members, is proving itself to be ideologically extreme, incompetent and incapable of mustering a majority in the Commons.
Angela Eagle, Labour MP for Wallasey.
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