For the fourth time in six years, the United Kingdom has a new Conservative prime minister. The unelected Rishi Sunak inherits a country in political and economic crisis – not least due to his party. If history remembers Liz Truss at all, it will be as the prime minister who did the most damage in the shortest time. Her defenestration after 50 days in office was the deserved consequence of a catastrophic ideological experiment. Far from stimulating growth, her unfunded tax cuts strangled it, leaving a £40bn hole in the UK’s public finances.
Yet her final speech as prime minister outside No 10 proved she has learned nothing. “We simply cannot afford to be a low-growth country,” Ms Truss declared, as if a neutral expert. Britain, she repeated, needs “lower taxes”, her own mini-Budget having demonstrated the futility of this strategy. It was the UK’s misfortune to be burdened by such an inadequate prime minister. But the problems did not begin with Ms Truss’s arrival – and they will not end with the arrival of Mr Sunak.
After 12 years in office, the Conservative Party is politically and intellectually exhausted, a fractious outfit that has become ever more detached from the national interest. Successive Tory leaders have failed to provide the economic and social renewal the UK desperately needs.
David Cameron’s premiership – destructive austerity, a “golden era” with authoritarian China, an unnecessary EU referendum – has only worsened with hindsight. Theresa May promised a new era of state intervention but her authority was destroyed by a feeble election campaign. Boris Johnson promised to lead a post-Brexit, cross-class realignment but, in the end, achieved little beyond his own advancement – and even now yearns for a sequel.
Will Mr Sunak fare any better? The new Prime Minister is not, as some suggest, a centrist technocrat. He is a liberal Thatcherite from the Conservatives’ free-market Brexit wing. In 2015, betraying his small-state inclinations, he declared that “in normal times, public spending should not exceed 37 per cent of GDP”. Unlike most of his predecessors, he backed Brexit during the EU referendum in the belief that it would advance pro-market ends.
But Mr Sunak is undoubtedly a more pragmatic and emollient politician than Ms Truss. As chancellor during the Covid-19 crisis he introduced the laudable furlough scheme to protect jobs and increased Universal Credit to shield the poorest. Though he raised National Insurance – which penalised low earners – he also pledged to raise corporation tax from 19 per cent to 25 per cent. Mr Sunak would never have been so reckless as to propose – as Ms Truss did – abolishing the top rate of tax in the middle of the worst living-standards crisis on record.
Today, such pragmatism is needed again. A new era of high inflation and rising interest rates is testing governments across the world.
Mr Sunak’s rhetoric of “tough decisions” is reminiscent of that deployed by the former chancellor George Osborne as he unveiled austerity in 2010. But the new Prime Minister should not emulate Osborne’s approach. After a decade of austerity, there are few politically or morally palatable cuts left to make. In its review of public services, published on 17 October, the Institute for Government warned: “There is no meaningful ‘fat’ to trim from public service budgets.”
Rather than relying on cuts to reduce the UK’s debt, Mr Sunak should prioritise higher taxes on static assets. There is an egalitarian case for wealth taxes but there is also a conservative one. By taxing unearned income more heavily and earned income more lightly, the government would promote enterprise and reward work.
But should Mr Sunak wish to impose a new round of destructive cuts, he will need what he currently lacks: a mandate. The 2019 Conservative manifesto promised higher spending in order to fund “superb public services and infrastructure”. Yet after three years of drift and decline, the British people deserve their say on whether any progress has been made.
Mr Sunak can reasonably hope to exceed Ms Truss’s reign in office. But it is far from unthinkable that the regicidal Conservatives could oust another leader before the next election. Rather than inviting this fate, the new Prime Minister should have the courage to call an early general election – and free the British people from the whims of his inept party.
[See also: Leader: The rout of the libertarians]
This article appears in the 26 Oct 2022 issue of the New Statesman, State of Disorder