What Liz Truss got right in her comeback essay ✒️ annemcelvoy for ipaperviews
, the Tory party and the media were lined up against her. Worse , she was not sufficiently warned by officials or institutions ranging from the Office for Budget Responsibility to the Bank of England about tripwires.– a long list of reasons why her own missteps were, in fact, someone else’s and it was the job of others to preempt decisions made at her behest.
When we get to the account of the pension funds panic which finally saw off her government, the defence is that such shaky instruments were in place that she and her chancellor Kwasi Kwarteng could not have been aware of the risks. But Truss herself had served two years as chief financial secretary to the Treasury. She was not an ingenue in the delicate balance of risk and complexity in financial products.
The bullish signalling of “you ain’t seen nothing yet” unfunded tax cuts caused asset price slumps, notably of UK government bonds, which put these funds under sudden pressure. To blame this on the nostrum that “communication could have been better” is akin to kicking off an avalanche and then blaming the damage on the afflicted not wearing the correct snow boots.
Many more criticisms of Truss’s arguments about cause and effect will follow in the coming days. More significant however are two questions her comeback raises. One is that her intervention – and intention to set up a think tank as a home for those who believe that both government and opposition are lacklustre on supply-side reforms aiming to make markets and industries more efficient – does have merit.
The bigger and rather better argument is whether, and how much, to continue tax rises on the brink of recession. That is a much more potent critique of Sunak’s position, because it points to underlying problems about how to re-stimulate growth, rather than simply controlling inflation.
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