NEWS Eleven Gambles That Liz Truss Failed

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In the autumn of 2022, Liz Truss staked her prime ministership on a so-called mini-budget that tore up decades of economic orthodoxy. It didn’t pay off.

I spoke to those involved about the thinking behind the biggest risks she took during her seven weeks as Prime Minister – and why they didn’t pan out.

1. Not Heeding the Warnings of “Fantasy Economics”

When I interviewed Liz Truss on Radio 4’s Today show at the start of her leadership campaign, I told her she was betting on the UK economy to borrow as much as Jeremy Corbyn, whom she had denounced policy of the author.

The real gamble, she replied, was to keep going like we did. Denounced the economic philosophy of the Conservative and Labor governments of the past 30 years, which she called “Treasury orthodoxy”; and told me she was prepared to “tear down” those who opposed her plans.

During the campaign, her rival, former prime minister Rishi Sunak, called her ideas “fantasy economics”. His ally Michael Gove said they were a “holiday away from reality”.

And, as it became clearer that she would win, her circle of advisers dwindled.

Then-Cabinet minister and one-time Truss ally Simon Clarke described the atmosphere in Truss’ campaign as “revolutionary”. “You could definitely feel that she had made up her own mind, it was a matter of life and death,” he said.

2. Firing senior Treasury officials

Asa Bennett

Asa Bennett

many people see [Tom Scholar] In the Conservative Party as the personification of Treasury orthodoxy

Asa Bennett
Speechwriter for Liz Truss

Days after she moved into Number 10, Truss sacked Treasury Permanent Secretary Tom Scholars, a senior civil servant who has worked for prime ministers from Gordon Brown to Rishi Sunak.

This served to intimidate other officials.

Once it was determined she would win the Tory leadership election, officials met her at Chevening – her official residence as foreign secretary – but they did not warn her of her plans.

They didn’t think it was their job to do that because Truss wasn’t prime minister at the time. But one political ally of Truss, who asked not to be named, told me that anyone who challenged her would be “executed in that room.”

In fact, until now, few of those working behind the scenes were ready to speak. I’ve spoken to many people privately. Asa Bennett, Liz Truss’s speechwriter before and after she became prime minister, did agree to speak in public.

“It is safe to say that he [Scholar] “If he was seen as helpful, he would still have the job,” Bennett said. “Certainly, many in the Conservative Party see him as the embodiment of orthodoxy in the Treasury.”

3. Bypass budget watchdogs

Jon Moynihan


The whole idea that you have to get OBR approval is…in my opinion, anti-democratic

Jon Moynihan
Major Fundraiser for Liz Truss

Truss does not trust the Office for Budget Responsibility (OBR) – the agency set up by former Conservative prime minister George Osborne to ensure politicians cannot tamper with official economic forecasts.

She argues that its forecasts are often wrong, and that it disagrees with her belief that tax cuts can spur growth and possibly pay for themselves.

To get around OBR, she says her plan to spend billions in tax cuts is not the budget. Instead, they are the language of what she originally called a fiscal event — designed to ensure that she can defy the law requiring the OBR to issue forecasts as long as there is a budget.

That worldview echoes what Truss heard from those around her during her leadership campaign over the summer.

Jon Moynihan, a key fundraiser for Liz Truss and who spoke to her frequently throughout the campaign, said: “The whole idea of ​​you having to get OBR approval, the other Financial projections have been wrong and, in my view, anti-democratic.”

4. Not following some tax and spending advice

Simon Clark

Getty Images

We certainly discussed the importance of making sure taxes and spending are aligned.The question is…at what point did she decide it wasn’t necessary

Simon Clark
Liz Truss’ Upgraded Secretary

Cabinet allies of Truss have warned her that she needs to develop a spending cuts plan to justify how she intends to pay for the tax cuts.

Her new promoted secretary, Simon Clarke, who was previously responsible for public spending at the Treasury, discussed plans to cut spending by 5 to 10 per cent with her.

While there are still ministers coming back to the Treasury to argue the need to discuss spending limits – a spelled out paragraph has been removed from paragraph 10 of Prime Minister Kwasi Kwarteng’s mini-budget speech.

Truss told them the cuts would “distract people from taxes and growth” and they could “worry about it later”.

Those who raised concerns were told they had become part of a “coffer orthodoxy”.

“We certainly discussed the importance of making sure that taxes and spending are aligned,” said Clarke, who was at one point rumored to be Liz Truss’ candidate for chancellor.

“The question at the heart of all of this is at what point does she see no need for it … I think her appetite for activism will only grow stronger.”

Nick Robinson reveals the inside story of the shortest prime ministerial term in British history

5. Not marking her “homework”

Truss had three friendly economists who gave her advice. They are called Trussketeers.

One of them – Gerard Lyons – said he warned her not to go further or sooner than financial markets expected, and he wrote a memo to the chancellor the week of his mini-budget to repeat his warning.

“My private and public view is that any fiscal announcement needs to stick to market expectations,” he said.

“I think all three outside economists emphasized the need for a full budget. The phrase I use is: there is a need to mark your homework.”

6. Lower the top tax rate

Rachel Reeves

Getty Images

We have a lot to prepare… [But] We didn’t expect this to happen…it’s bad economics and bad politics

Rachel Reeves
shadow minister

Truss’ closest allies at No. 10 and the Cabinet didn’t know she was planning to cut the top tax rate until the night before the mini-budget.

Although the cost is relatively small compared with other tax cut packages, it sends a signal to voters and markets that the new prime minister is willing to ignore concerns about unfairness – and that her economic approach is ideological.

Shadow chancellor Rachel Reeves sat opposite Kwasi Kwarteng as she announced the plans.

“We have a lot of things prepared because we don’t know what big surprises will be in the budget,” she said.

“We didn’t expect this to happen. The reason we didn’t expect it to happen is bad economics and bad politics.”

7. U-turn and 45p tax

In the wake of the mini-budget, Truss hopes reversing her plan to cut the top tax rate will silence her critics. But she has encouraged them to demand further change – also embarrassing and alienating her allies, like The Telegraph, who have hailed her as a woman who would not turn.

When she changed course – during a Tory conference – even her most ardent supporters worried.

“I thought: ‘This is the beginning of the end,'” Jon Moynihan said. “Concede on one, and you’ll end up conceding on all.”

8. Fired her prime minister

Sir Graham Brady

Getty Images

It was hard to see how the whole thing would work then…she ended up doing all the opposite of what she promised

Sir Graham Brady
Chairman of the 1922 Committee

Jon Moynihan is right. Days after the Tory conference, Truss sacked her friend, longtime ally and the man who implemented her ideas, Kwasi Kwarteng.

She replaced him with Jeremy Hunt, who tore up nearly every policy in the Kwarteng mini-budget.

Sir Graham Brady, chairman of the influential Backbench 1922 Committee, could feel where things were headed.

“I think at that point it was difficult to see how the whole thing worked,” he said.

“She can do everything she can to restore market confidence, but to do that she ends up doing the exact opposite of what she promised to do.”

9. Make enemies within the party

Nadine Doris

Getty Images

She’s always going to be kicked out. I thought she might be there for six months.But I know they won’t let her live until the next election

Nadine Doris
former culture minister

Truss fired nearly everyone who disagreed with her and promoted those who supported her.

She has done nothing to reach out to Rishi Sunak and his supporters, even though he has won the support of more MPs than she does.

Her allies have accused her critics – such as Michael Gove – of staging a coup. They still believe that’s true.

Nadine Dorries, a former culture secretary and a Truss ally, is writing a book arguing that this is a conspiracy, not a mess.

“The minute she won the leadership competition, they would never let her stay. She would always be taken. I thought she might be there for six months. But I knew they wouldn’t let her live until the next election.”

10. Cracking down on financial institutions

Allies of Truss believe she has been weakened by leaks from the Treasury and hostility from the Bank of England and the International Monetary Fund, which have criticized her policies.

Truss supporters — and some of her critics — believe that those she fired, ignored or belittled were happy to see her fail.

Some claimed there was coordination between the Bank of England and the IMF in making the big statement that rattled markets. Senior officials of one organization have previously worked for another organization or are well acquainted with their counterparts.

Her allies have accused the Treasury of making a U-turn on news of a possible corporate tax cut, which then forced her to sack the chancellor and ultimately cost her her job.

Jon Moynihan said the “forces against her” included “a large part of the UK establishment or group”.

“I don’t think the Bank of England has been particularly kind to the Truss government.”

Asked if anyone in the Treasury Department and the IMF wanted the Truss government to fail, Jon Moynihan said “sure.”

11. Truss always believed in himself

Liz Truss has been nicknamed “The Man Grenade,” but she takes that as a compliment rather than a criticism.

Officials said she always wanted to be the most progressive person in any room — which is fine when she’s not the final decision maker and could be overruled. But once she becomes prime minister, no one has the power to stop her.

Her chief of staff was a political activist who openly admitted to having very limited knowledge of policy. Her prime minister, a longtime political friend and ally, said he saw his job as fulfilling the prime minister’s wishes. Her cabinet secretary has been told she plans to sack him, and insiders believe she doesn’t want to turn against her while his position is precarious.

Truss is the candidate chosen by members of the Conservative Party to be prime minister. Members of Congress who were not her supporters rushed to endorse her as soon as they saw she would win. The Daily Mail and The Daily Telegraph hailed her as Margaret Thatcher’s successor. Her most ardent supporters attack Rishi Sunak as a socialist.

She, and they, took a gamble. Many would say that the state paid the price.

Additional reporting by Jack Fenwick and Stephanie Mitcalf

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