Liz Truss and the death of Thatcherism

In the last days of Liz Truss’s record-breakingly brief term as Britain’s prime minister, the Daily Star, a tabloid newspaper, ran a competition asking readers to guess which would last longer: a supermarket lettuce head or Truss’s term in office.

By Wednesday, the bookmakers had cut their odds to 1-2 against Truss, and the Daily Star was demanding Truss’s resignation by picketing the gates of Downing Street with a man dressed as a “wet lettuce” — luminous green body stocking, lettuce leaves affixed to his person, specimen lettuce in one hand, sign saying “Lettuce In” in the other.

The Daily Star set up a livestream of its lettuce decaying in real time. This dying vegetable was about as interesting as Wednesday’s livestream of Prime Minister’s Questions from the House of Commons, in which Truss could be seen decaying in real time. The previous night, the House of Commons had seen disorder extreme even by the disorderly standards of Westminster.

LIZ TRUSS QUITS: BRITISH PRIME MINISTER RESIGNS JUST SIX WEEK AFTER TAKING OVER AS LEADER

Britain’s Prime Minister Liz Truss addresses the media in Downing Street in London, Thursday, Oct. 20, 2022. Truss says she resigns as leader of UK Conservative Party. (AP Photo/Alberto Pezzali)

Alberto Pezzali/AP

One of the last remaining elements of the program on which Truss won her office was to restart fracking for shale gas in Britain. The Labour opposition, exploiting the public collapse of her agenda and the Conservatives’ mixed messaging on green energy, had tabled a motion to ban it permanently.

Truss’s home secretary, Suella Braverman, had resigned on Wednesday afternoon, allegedly after Truss and new Chancellor of the Exchequer Jeremy Hunt asked her to abandon the government’s target numbers for reduced immigration. Braverman became the shortest-serving home secretary in U.K. history (43 days). The fracking vote became an informal no-confidence vote. So many Conservatives rebelled, whether against fracking or the prime minister, that party whips and even a Cabinet minister had to intimidate and even shove members of Parliament into the chamber in order to vote.

“I am f***ing furious, and I don’t give a f*** anymore,” Chief Whip Wendy Morton was heard to say. In this much at least, the House of Commons can still be said to represent the feelings of the British public. Morton resigned late on Wednesday night. Truss resigned on Thursday, admitting the obvious that nothing remained of her plans to set the government and the economy on a new course. She had been in office for only 45 days. The second shortest-serving prime minister, George Canning, lasted for 119 days in 1827. He at least had the excuse of dying from tuberculosis.

Those who bet on the lettuce are now collecting the green stuff. Britain will have its fifth prime minister in six years, and the next week will be enlivened by further public displays of the Conservatives’ kamikaze vanity. Perhaps Truss underestimated herself on the way out. She really did set Britain’s economy and government on a new course. Unfortunately, it was full steam ahead to disaster. No U.K. government in modern history has collapsed as quickly and damagingly as Truss’s has. Previous governments have taken years to wreck the economy, sink the pound, and trash the City of London’s reputation for trustworthiness. Truss did it in little more than a month.

Only six weeks ago, Truss was curtsying to Queen Elizabeth II. Now, she is limbering up for a final bob to King Charles III. The collapse has been so rapid that no one cared that when Truss staffed the Cabinet with her friends and allies, it was the first time in U.K. history that not one of the four Great Offices of State (prime minister, chancellor of the Exchequer, home secretary, foreign secretary) was held by a white male. As the Biden presidency has reminded Americans, the empty symbolism of diversity means nothing when the economy is diversifying southward and the voters are crying “Lettuce Out.”

Truss was elected prime minister by the Conservative Party’s membership on Sept. 5. The parliamentary Conservatives had overthrown Johnson earlier in the summer, following a series of damaging leaks in the press about the consumption of alcohol and snacks in No. 10 Downing St. while the rest of the country had been under a series of stringent COVID-19 lockdowns. The sources of the leaks have never been identified, but one of the incriminating photographs, showing Johnson and his staff sunning themselves in the garden of No. 10 Downing St., could only have been taken from No. 11 Downing St., the residence of the then-Chancellor of the Exchequer Rishi Sunak.

The hustings for the new prime minister were a circular firing squad, so they made splendid viewing. For six weeks, some of the most unpopular politicians in living memory competed to denounce each other on television — each accusing the other of disgraceful failures for which, given that they all had served in Cabinet positions, all of them were liable. Eventually, with the public convinced that none of these people deserved to be in office, the Conservative MPs in the House of Commons narrowed the field of would-be successors down to two, Sunak and Truss.

The MPs picked Sunak, by 137 to 113 votes. But the final decision rested with the party membership, not the parliamentary party. The membership is older, less metropolitan, and much more right-wing than the parliamentary representatives. They picked Truss, 57.4% to 42.6%. This was the lowest margin of victory ever recorded in a Conservative runoff. Still, the members knew what they were getting. Truss had been very clear in her campaign.

LIZ TRUSS IS GONE — WHO CAN REPAIR THE SINKING CONSERVATIVE PARTY SHIP?

Truss promised to return the Conservatives to Thatcherite principles of low taxation and small government. To encourage private enterprise and “go for growth,” she would cancel Sunak’s planned rise in the corporation tax and reverse the recent rise in National Insurance rates. She would cancel the “green levy” on energy bills and abandon Johnson’s plans for a “Net Zero” economy. To address Britain’s cost of living crisis, she would press the Bank of England, which sets policy independently of the government, to do more to reduce inflation. She would put a two-year price cap on energy bills, even though Sunak warned that this would cost more than 100 billion pounds. She also said Conservatives should “reject the zero-sum game of identity politics” and “the illiberalism of cancel culture.”

The Conservative membership took to this bracing hit of Thatcherism like Hunter Biden to his pipe. The party has been in power since 2010, but the governments of Johnson, David Cameron, and Theresa May all rejected libertarian economics and cutting back the state. Since Margaret Thatcher’s fall in 1990, both the Labour and Conservative parties have raised spending on the welfare state and the bureaucracy and raised taxes. Growth has slowed accordingly.

Truss and Kwasi Kwarteng, her new chancellor of the Exchequer, delivered, too. On Sept. 22, Kwarteng announced a “mini-budget” called “The Growth Plan.” Sunak’s plan to raise the corporation tax from 19% to 25% was canceled. So was Sunak’s proposed Health and Social Care Levy, a subsidy for the beloved and dysfunctional National Health Service. Sunak’s plan to reduce the basic rate of income tax from 20% to 19% was brought forward, and the 45% top rate of income tax was canceled.

Sunak had raised taxes to their highest level since 1947. Kwarteng proposed to cut taxes, raise spending, and cover the shortfall by increasing the national debt. He promised to give a full spending plan at the end of November. The markets, however, had other ideas. Within three days, the pound, already struggling against a strong U.S. dollar, dropped from $1.13 to an all-time low of $1.03. Parity with the U.S. dollar, the destination that the pound has been lurching toward for a century, was only hours away.

The prospect of massive, unfunded borrowing caused traders to sell British assets. The five-year government bond saw the single largest one-day rise ever recorded. Gilt yields spiked, leaving pension funds on the verge of collapse. Mortgage providers, expecting a sharp rise in inflation, raised their rates and suspended fixed-rate products.

The Bank of England stepped in, promising to buy government bonds in order to save the pension funds and bring down gilt yields. But the Bank of England’s governor, Andrew Bailey, insisted that this would be a temporary and limited program, ending on Oct. 14. Kwarteng moved his spending plan announcement up to Oct. 31. Yet Bailey refused to sustain the government’s plans until the end of the month. Bailey was not the only one to doubt the credibility of “Trussonomics.” In late September, the International Monetary Fund warned that Kwarteng’s tax cuts could cause a further rise in prices at a time when the Bank of England’s policy was to slow them down. This was an unusually blunt public criticism.

On Oct. 3, Truss told Kwarteng to abandon the abolition of the 45% income tax rate. On Oct. 14, Truss recalled Kwarteng from an IMF meeting in Washington, D.C. Kwarteng went straight to Downing Street from the red-eye and was fired, apparently to his surprise. The pound recovered, the market panic abated, and the new chancellor, Hunt, was appointed. But anyone who thought that the government was not grossly incompetent needed only to look at Kwarteng’s resignation letter. No one in Downing Street noticed as he addressed and signed it to himself.

What were they thinking? Truss and Kwarteng launched the biggest tax plan in 50 years against the headwinds of a global recession. They failed to consider the markets or convince anyone that they could grow the economy at 2.5%. They seem not to have noticed that the era of cheap money, low inflation rates, and quantitative easing had ended. They failed to convince the Bank of England to raise interest rates and back their gamble, so their fiscal policy was pulling in the opposite direction to the Bank of England’s monetary policy.

They also went against the “Washington consensus” on post-COVID-19 economic policy. We know this because President Joe Biden, who is deeply illiterate about economics, criticized the Truss-Kwarteng budget, too. During the pandemic, governments pumped a torrent of cash into their economies. This has produced a rapid rise in the rate of inflation. The consensus, which includes the Bank of England, favors a deflationary correction with low interest rates. That makes sense on paper, but it offers no electoral consolation if, like the Conservatives, you are trailing in the polls.

Most damningly of all, Truss and Kwarteng did not ask the Office of Budget Responsibility to supply an analysis and forecast. Several civil servants have subsequently claimed that they warned Truss and Kwarteng that their plan risked tipping the U.K. into a repeat of 1976, when only a loan from the IMF had averted bankruptcy. Anyone who read a British broadsheet in September would have been alerted to the resemblances between Trussonomics and Anthony Barber’s “dash for growth” budget of 1972.

Barber’s budget also cut taxes and set a target of 2.5% growth. It led to higher inflation, political instability, and the humiliation of the 1976 bailout by the IMF. All this discredited the cross-party postwar consensus that accepted high taxes and low growth as the cost of social harmony and keeping the unions happy. That crisis forced the Conservatives to search for a new ethos, Thatcherism. This time around, an amateurish, opportunist Conservative government has affirmed the old consensus. It may have discredited Thatcherism forever.

After Kwarteng’s firing, Hunt immediately announced the complete reversal of the Truss-Kwarteng mini-budget. Truss sat next to him in the front row of the House of Commons, looking pale and stupefied and not unlike a hostage. She occasionally emitted a robotic bleat about “focusing on delivering” and apologized for going “farther and faster” than the markets could bear, but every day she retained office was a betrayal of her platform. Braverman’s resignation and the fracking vote fracas were blessings in disguise. Even Truss, who had been making sub-Thatcher noises about toughing it out, could see it was hopeless.

The Conservative MPs now have a week to find a new leader. They no longer talk of winning the next elections but of damage control and trying to avoid a total wipeout. Truss achieved the lowest ratings of any prime minister in the history of YouGov’s polling. By mid-October, 77% of voters disapproved of her. The Conservatives are meant to be the party of fiscal discipline, but 87% disapproved of their handling of the economy. Labour, which has yet to announce its economic policy and whose leader, Sir Keir Starmer, has the mien and charisma of a boiled ham, leads in the polls by 36%.

Kwarteng lasted only 38 days, the second-shortest term of any chancellor. The shortest was also a Conservative. In 1970, Iain Macleod lasted only 30 days. He, though, had the grace to die in office from a heart attack, presumably after reading the bottom line. Thatcher had two chancellors in 11 years. Tony Blair had one chancellor in 10 years. Britain will now have its fifth chancellor in a year. If you are looking to reinvest your winnings on the lettuce, bet on a general election before the end of the year and a Labour landslide. There was a time when the British mocked this kind of turnover as the stuff of banana republics, but now the joke is on them.

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Sunak is, of course, nowhere to be seen. His supporters have long laid the ground for the takeover they intended when they overthrew Johnson. They were thwarted in September by the party membership’s preference for Truss, but her sheer hopelessness invited them to overthrow her, too. That might have been in the national interest as well as their personal interest, and it was entirely legal, too, but it is against the spirit of the system.

In Britain, the voters are supposed to be choosing from parties and platforms, not leaders and personalities — at least in theory because leaders and personalities have also been on the ticket since the days of Disraeli and Gladstone. While it is not unconstitutional for a party to change its leader while it holds power, it is customary for the new leader to seek the endorsement of the country in new elections. John Major replaced Margaret Thatcher in 1990, and he won an election in 1992. Gordon Brown replaced Tony Blair in 2007, was criticized for delaying his reckoning until it was unavoidable, and eventually lost the 2010 elections. Theresa May replaced David Cameron in 2016 and won an election in 2017. Johnson called and won an election immediately after taking over from May in 2019.

When the parliamentary Conservatives overthrew Johnson, they changed their party’s leader. In the leadership contest that followed, the Conservative membership changed its party’s platform. Truss tried and failed to implement that platform and reverted to Sunak’s norm. Now she has gone, can the MPs replace her with Sunak, whom the members rejected, and still claim to represent the will of anyone but themselves?

The public voted for Johnson. The parliamentary Conservatives voted for Sunak. The Conservative membership voted for Truss. The polls show that the membership would rather Johnson return than Sunak become prime minister. Hunt might fancy moving next door from No. 11, but he fell in the first round this summer. The Conservatives have created a crisis of legitimacy. They can only resolve it by calling a general election. They are bound to lose it, and they deserve to lose it. The British public, however, deserves none of this. Lettuce pray.

Dominic Green is a fellow of the Royal Historical Society and a senior fellow at the Foreign Policy Research Institute.