If the polls are to be believed, Tory Party members are happy to repeat the error they made in backing Boris Johnson for PM. The parlous state of UK democracy is confirmed by 160,000 largely elderly and comfortably off party members whose obsession with tax cuts and delivering Brexit, demonstrates a callous disregard for those at the sharp end of the cost-of-living crisis and contempt for the warnings of experts if not the population in general. As was the case with Mr Johnson, they are prepared to vote for Liz Truss despite her wanton avoidance of scrutiny by independent commentators; a worrying harbinger. Based on reports from the hustings, the prospects for the nation of a Truss government are not good; indeed, they are likely to be disastrous.
If she becomes the third PM in a row to be foist on the country by the infinitesimally small and unrepresentative party membership she would be the first in recent history to enter office without the backing of a majority of MPs. Tory Party members have succumbed to the influence of the right-wing European Research Group and Truss has followed in their wake, as evidenced by her journey from pro-Remain to uncompromising Brexit zealot. She campaigned hard for remain, warning of the difficulties of doing business outside the EU but, just as the facts confirm her prescience, she declares her previous stance to have been an error. Her modus operandi of adopting positions to suit the moment does not bode well. Lacking loyalty to anything that isn’t anti-European, the ERG has been instrumental in defenestrating of the last three Tory leaders – even Johnson despite his popularity with party members. Like Johnson the born-again Liz Truss will be in hock to the ERG and is therefore likely to repeat the error of her predecessor in failing to form a cabinet the country needs. Johnson’s Brexit cabinet proved disastrous in large measure because Brexiters tend to be second tier politicians. Truss might go further and appoint a cabinet of largely, third tier ERG zealots e.g. Jacob Rees-Mogg, Suella Braverman and Nadine Dorries.
Installed in No 10, Truss will inherit an economy broken – by her own admission – by twelve years of Tory rule and facing a cost-of-living crisis including, but not confined to, soaring energy prices. Brexit ministers would like us to believe these pressing issues are all down to Covid and the war in Ukraine but – as pointed out by the redoubtable Resolution Foundation – the low levels of household incomes and financial resilience reflect a ‘stagnation nation’ i.e. an economy defined by low growth and increasing inequality. This trend, matured under Tory PMs since 2010 – along with the reckless claims of Mr Johnson – is largely responsible for the disastrous referendum outcome and is now being worsened by Brexit; further increasing the pressures on struggling households and the UK’s vulnerable democracy. Taken at face value Truss’ hustings claims that past (Tory) policies have failed and the need is to generate economic growth might appear to offer some hope. But closer analysis suggests nothing has been learnt from the last twelve years – her ERG sanctioned strategy is to double down on past errors i.e. past failures were the result of insufficient zealotry, not ideology.
With the possible exception of the efforts to control inflation in the 1970s, I cannot think of a PM who did not believe the economic priority was growth. As I noted in a previous blog, Brexit is dragging the country back to the 1970s and what we learnt from that painful period is that curbing inflation must come first. Truss, lacking any credible evidence, claims growth will curb inflation and is best achieved with tax cuts – pure ERG ideology. If tax cuts were the answer why has the UK’s record since the financial crash been so poor compared to comparable economies with higher taxes e.g. France and Germany. Between 2010 and Covid, Tory Chancellors reduced taxes thereby compelling austerity – e.g. corporation tax was reduced from 26 per cent in 2010 to 19 per cent – the result of which has been ‘stagnation’. Even worse, at a time of rising inflation cutting taxes will do little for those on the lowest incomes whilst fuelling inflation.
Economic growth depends on increases in productivity and/or the number of hours worked. Brexit alongside Covid has reduced the numbers actively engaged i.e. total hours, and the growth of productivity per hour worked has averaged only 0.8 per cent per annum since 2016 compared to an average of 2.8 in the thirty years to 2008. Productivity depends on investment in fixed capital, innovation, training and skills but business investment in the UK is the lowest in the G7. Cutting taxes is not the remedy: studies show that it depends on ideas, opportunities and above all confidence. Bexit having imposed trade sanctions on businesses has diminished opportunities and confidence – a situation that Truss seems wilfully determined to exacerbate with her ignominious threat to tear-up the NI protocol. On-the-job training by British firms has fallen behind the OECD average and the effects of austerity on education and training have further added to the skills lacuna. If all Truss has to offer is ERG dogma that these deficiencies would be remedied by tax cuts, diverging UK regulations from those of our biggest market and reducing labour market protections, there is no hope.
Truss and her ERG controllers can persist in this fantasy because, as Emily Maitlis recently warned, the traditional media appears reluctant to stand-up for itself allowing facts to get lost and untested claims go unchallenged. She pointed out that despite queues at the British border and economic issues piling up, the media is reluctant to discuss the impact of Brexit ‘in case they get labelled pessimistic, anti-populist, or worse still, unpatriotic.’ She went on to say that sidestepping these issues feels like a conspiracy against the British people – a description that might accurately be applied to the behaviour of the ERG and its protégé.