Liz Truss was no radical – but she was right

The 49-day PM correctly diagnosed the very structural problems that proved to be her downfall

Sometimes, to get a sense of perspective on current events, I’ll pretend to write a history essay about them. Put yourself 30 years into the future and answer this question: “Why did Liz Truss only last 49 days?”

The standard answer is that reactionary Tory members elected her to impose a Right-wing philosophy that the country didn’t want and that didn’t work. Policies intended to unleash the markets threw them into a blind panic, forcing the grown-ups to step in and restore fiscal order. Truss definitively proved that you can’t buck social democracy – even the bankers want it! – and yet she had the nerve to pen a 4,000 word essay for The Sunday Telegraph in which she failed to display “a shred of regret or remorse” (to quote the BBC’S Laura Kuenssberg).

A neat theory; it just doesn’t fit the facts. For a start, Truss was not elected on a far-right prospectus. Rishi Sunak was unpopular with the members because he raised National Insurance – a tax on workers opposed by Truss, Labour and those notorious libertarians at the TUC. Once in No10, the largest part of her economic rescue package turned out not to be tax cuts but an energy price freeze that some feared could cost as much as £150billion. As for the infamous fiscal statement, I did think the 45p cut was a big mistake (when it comes to economics, I’m wetter than Willie Whitelaw wrapped in wet wipes), but it only amounted to 0.2 per cent of government spending and returned us to the highest rate employed under Tony Blair. The mini-budget wasn’t materially radical but signalled a new direction, and the economic analysis behind it was compelling.

Again, imagine it’s 30 years hence. Kent is under water; Sam Smith has come out as a man; globalisation has given way to protection, and, as China, India and Brazil dominate, Western nations bleed their diminishing tax-bases dry to bankroll the welfare state. In this context, Brexit could look mad. Why on earth did we make things harder by putting ourselves outside of the EU tariff wall?

Unless, of course, we had done what Truss wanted to do and laid the groundwork for a dynamic, free-trade economy: light regulation, light tax, high-tech. The fiscal statement was meant to indicate to future innovators and investors that, while the rest of the West will tax them to death, Britain will welcome their business (steal it, even).

What went wrong? Well, Truss does acknowledge that she was a terrible communicator who “perhaps” tried to do too much too soon. She was also unlucky.

Theresa May nearly lost an election and bungled Brexit, yet the Tories stuck with her for three years. In 2023, by contrast, we got through three PMS in one year. That’s because our economy and society were upended by a pandemic that stoked demands for more government while injecting wild anxiety into our political culture.

The death of Queen Elizabeth II further destabilised things (the new PM lost critical weeks of media time), and when Truss finally found space to unveil her supply-side programme, she discovered that pension funds were dangerously over-exposed to fluctuations in the bond market, forcing her into an about-turn that proved terminal.

A contrarian history student might argue that the market turmoil which destroyed the Truss administration actually proved its point about the need for structural reform. The world was weaning itself off cheap money. The rise in interest rates caused such a shock because they’d been artificially suppressed for too long. And the fact that so many capitalists were critical of supply-side reform, as they were Brexit, spoke to how all-encompassing the social democratic consensus had become. Companies are getting fat and monopolistic; regulation is welcomed. Businesses voluntarily waste money on diversity and inclusion. Markets have been so distorted by years of state policy, and the corporatist politics that flows from it, that many market players no longer operate the way one would expect – to the detriment of the consumer. The same goes for universities that no longer teach, police who don’t nab criminals or conservative parties that don’t conserve wealth and freedom.

Truss is a civilisational libertarian. Implicit in her agenda is a critique of a culture that has lost sight of design and purpose.

She says she faced a vast monolith of opposition that made tax-cutting not just hard but inconceivable – a consensus baked into the system via the BBC, Civil Service groupthink and institutions such as the Office for Budget Responsibility (created by a Tory), which sets parameters for what a chancellor should or shouldn’t do. All of this is undemocratic. It undid Truss, but someday, if we got a Labour leader who was a genuine socialist, it could destroy a Left-wing agenda, too. And whatever you think of Truss’s philosophy, she did at least have some democratic mandate via the party vote. Sunak, who was airdropped in to replace her, has absolutely none at all.

We are now governed by the Treasury under the watchful eye of international institutions that apparently believe G7 countries must no longer compete but retire into genteel poverty. I note in the conclusion to this essay that last week the IMF said British recovery would be limited by its tax rises. And that, you silly people, was Truss’s entire point.