Earlier this year I spoke to one of Liz Truss’s former Oxford professors while writing a profile of her for the New Statesman. He remembered her well because her essays were either “fantastically brilliant” or “off the wall”.
It remains to be seen what category last week’s tax-slashing “fiscal event” falls into, but as the pound plunges to record lows against the dollar I strongly suspect that it will come to be seen as a reckless gamble with the country’s economic future, an act of almost criminal irresponsibility, an ideological flight of fancy that disdained the warnings of experts and greatly accelerated Britain’s descent to banana republic status.
No wonder Truss and the Chancellor, Kwasi Kwarteng (another in a long line of modern-day human wrecking balls produced by Eton), blocked the Office for Budget Responsibility from forecasting the consequences of near-record tax cuts at a time of near-record borrowing and government expenditure. A Kwarteng ally, quoted by the Times, even had the gall to blame the pound’s plunge on “City boys playing fast and loose with the economy”.
It was, moreover, a Budget for which Truss and Kwarteng had absolutely no mandate from either the public or the party. Such an act of larceny, such a blatant giveaway to the mega-rich and corporate giants at the expense of everyone else, was not remotely foreshadowed in the Conservatives’ 2019 manifesto, and went far beyond anything Truss promised during her leadership campaign. Had she revealed her true intentions, even those 81,326 right-wing Home County Tories who elected her might have paid more heed to Rishi Sunak’s warnings about “fairy-tale economics”.
And the Budget is just the start. Downing Street’s power-drunk duumvirate is now promising a bonfire of regulations in their crazed dash for growth at any cost. They plan to junk environmental protections, net zero provisions, employment rights, planning restrictions, animal welfare legislation, anti-obesity measures, proposed curbs on hate speech and much, much more besides. Any legislation that originated in Brussels, however sensible or benign, is doomed.
Kwarteng is right about one thing. This is a “new era”. Just as Theresa May promised a new direction after David Cameron’s government, and Boris Johnson tore up so much of what May had sought to achieve, so Truss and her chancellor are ditching Johnson’s programmes wholesale. We have swapped a government of profound personal sleaze for one of profound political immorality – one more concerned with bankers’ bonuses than the proliferation of food banks. Instead of a single prime minister careering around like a supermarket trolley, we have successive Conservative governments doing so as each strives frantically to distance itself from its predecessor.
All this renders Keir Starmer’s speech to the Labour Party conference this afternoon (27 September) by far the most important of his career, and the one that may well determine the outcome of the next general election.
The Budget offered next to nothing to Red Wall voters. Any short-term gains from Kwarteng’s National Insurance and income tax cuts will be swiftly eliminated by soaring inflation and interest rates, while Johnson’s professed goal of “levelling up” regional parts of the country has clearly been abandoned altogether. Nor did it offer anything to the more traditional Tory voters of Middle England. They will be watching in dismay as the value of their savings erodes, mortgage repayments surge, property prices fall and the stock market plummets.
These two key constituencies still regard the post-Corbyn Labour Party with deep suspicion, but for the first time they will be listening keenly to what Starmer has to say. For the first time they will be weighing him up as a possible prime minister, as a potential alternative to a Conservative Party that has abandoned any semblance of fiscal rectitude or social responsibility.
In his 29 months as leader he has regained control of the party, largely sidelined the hard left and eliminated the most salient reasons for not voting Labour, but now he must offer a compelling reason for doing so.
[See also: How the pound has plummeted against the dollar]
He needs to make the case that Labour is the party of fiscal responsibility, and the Conservatives are the ones plundering the magic money tree. He needs to portray Labour as the party that will defend the NHS and other public services, and the Tories as the ones destroying them. He needs to establish Labour as a party that will pursue economic growth without destroying British values in the process, and that greater investment in training and education is a much better way to achieve it than the ephemeral sugar rush of tax cuts. He needs to position Labour as the party that will work constructively with the EU, restore the “special relationship” with the US, and seek to hold the United Kingdom together.
More than that, Starmer must – in this age of short attention spans – condense the thrust of Labour’s policies into a single, catchy slogan. The 2016 Brexit referendum was lost because the Leave campaign’s bumper sticker (“Take back control”) was so much more resonant than the Remain campaign’s, which boiled down to “the EU is flawed, but we’re better off in than out”. I’m not sure Labour’s conference slogan in Liverpool this week – A fairer, greener future – quite fits the bill.
As Starmer prepares to address his party and the nation he has, unusually, the wind behind him. Polls suggest the public now considers expenditure on health, education and social benefits to be much more important than tax cuts. In some areas – notably water quality – it wants more regulation, not less. The Labour leader’s call for a further windfall tax on energy companies to finance the energy price cap is much more popular than the Tories’ borrowing binge.
The Conservatives have done their level best to revive their image as the party of the rich and are, for once, markedly more divided than Labour (though Andy Burnham should put the party’s interest above his own ambition and, just for once, shut up). The culture wars – an electoral liability for Labour – have for the moment been sidelined by the economic crisis. Starmer is no longer eclipsed by Johnson’s ebullience and dominant personality. Indeed, in his tribute to the late Queen he expressed the nation’s sorrow far more eloquently than Truss.
But he faces obvious dangers, too. For all their travails and internal tumult, the Conservatives only trail Labour in the polls by a relatively slender deficit. Moreover Truss and Kwarteng have a plan, a narrative, a sense of purpose and direction that has a superficial plausibility, and they are being hailed by the right-wing press for their firm, decisive leadership.
Starmer must rise to the challenge in Liverpool today. The stage will for once be his and his alone. He must deliver the speech of a lifetime. He must unveil a coherent, compelling, joined-up vision of his own and start building real momentum ahead of an election that Truss could call as early as next year.
He must not only condemn the Conservatives for the immense destruction they have inflicted on this once-proud country, but persuade a still-dubious electorate that he and Labour could do far, far better.