The word ‘mini’ in mini-Budget was a bad choice.
That fateful fiscal statement set out the first steps along a wholly new political and economic roadmap for the UK set out during Liz Truss’s leadership election, dubbed ‘Trussonomics’.
In fact it was the opposite of mini. This was a profound statement about low tax, high growth, deregulation, less Government – supply-side economics on crack – Singapore on Thames the destination.
It shouldn’t actually have come as a surprise to anyone who had listened to Liz Truss during her leadership campaign – perhaps people’s scepticism that a politician would actually follow through on an election promise explained the general disbelief at what Mr Kwarteng announced less than a month ago.
As I’ve written here before Truss’s plan was a gamble. One she passionately thought she was right about and she upended the establishment, dispensing with dissenting voices such as the Permanent Secretary at the Treasury and ALL of Rishi Sunak’s supporters in Government, to force her will and put her bet into motion.
Perhaps she didn’t estimate the level of opposition and the extent to which some of those that she thought would benefit most from her wager would be prepared to bring it to a stop.
In any case, following today’s announcement from the new Chancellor, Jeremy Hunt, Trussonomics is dead and it surely follows that her premiership is too.
When she appointed the new Chancellor she told him not to backpedal on any more of the mini-Budget. She had pulled back on the corporation tax reduction and the 45p rate and that was Enough!
He didn’t listen and she couldn’t do a thing about it. Hunt has gone ahead today and seen it all off.
The reduction in income tax, the cut in VAT for foreign visitors, the freezes in duty, the changes to IR35; all measures that Truss explained would boost the economy now appear to be things that will do nothing of the sort.
Not only that but Hunt suggested there’s more to come. ‘There will be more difficult decisions, I’m afraid, on tax and spend,’ he said. ‘All departments will need to redouble their efforts to find savings, and some areas of spending will need to be cut.’ So even the promises Truss made to protect public services are now meaningless.
In selling us this new approach Hunt is going for full public disclosure (in contrast to Truss and Kwarteng) and has been doing the full media round. His key mantra is about restoring stability. He’s repeated that in bringing about this stability the last thing anyone wants is a protracted leadership campaign. The clear emphasis here is on the word ‘protracted’.
Only the £18 billion a year cut to National Insurance contributions and the cuts to stamp duty have survived and they did so only because they’ve either already kicked in or because they’re nigh on impossible to stop.
One can’t imagine a bigger change in direction for the Government and baring a miracle for her, Liz Truss will be replaced.
The mechanism for that and the timings are unclear, but we know that if Cabinet Ministers start to resign, as is being predicted, it could all happen quickly.
It’s safe to say that Conservative MPs don’t want another protracted leadership competition and that when the time comes we should expect a rapid coronation of a new Prime Minster.
Rishi Sunak would be obvious to turn to and a campaign to install him is in full flow in SW1.