Liz Truss: What Went Wrong?
By Joanna MacInnes
30th January 2023
“I am a fighter, not a quitter!” were the words of Liz Truss to the Leader of the Opposition in PMQs on October 19th 2022. But keeping in line with the pattern of U-turns made over her forty-five-day tenure as prime minister, the very next day she announced her intention to resign from office. In doing so, she broke not one, but two records; one as the shortest-serving prime minister in the history of the UK and second as the least popular prime minister in the history of polling. Exactly how did the former prime minister go from winning the Tory leadership race with a 57.4% majority to being ousted by her own party in under two months?
In keeping with the traditionally elitist higher-educational backgrounds of the wide majority of the country’s previous political leaders, Liz Truss attended Oxford University in 1993 where she read Philosophy, Politics and Economics.
In 2010 she entered Parliament, just as the Tories won an election for the first time in thirteen years, and quickly rose through the Conservative ranks. In 2022, with twelve years in the Commons under her belt, she seemed to tick all the boxes for the making of a prime minister.
Yet when asked whether the French President Emmanuel Macron was Britain’s “friend or foe” at a Conservative leadership campaign on 26th August, Truss’ answer - “the jury is out” - was met with criticism from both Labour and Conservative politicians as it seemed only to heighten tensions with France, a long-standing military ally of Britain. It was certainly a surprising comment, given the diplomatic skills and knowledge the country might have expected from Truss, who was still Foreign Secretary at the time.
Truss went on to defeat rival Rishi Sunak to become prime minister in the Tory leadership race. Within hours of her victory, clips of her memorable ‘pork markets’ speech at the 2014 Conservative Party conference, filled with ill-timed pauses, awkward rhetoric and scattered applause began circulating on online platforms.
But with UK inflation at a forty-year high, the war in Ukraine indirectly driving up energy bills and the country facing a general strike, there was no doubt that the new Prime Minister was facing a monumental task. Within only two days of her premiership, the BBC announced the death of the Queen, monumental news that was met with varying reactions across the nation and the world.
It was in this socioeconomic climate that Truss and her newly appointed Chancellor of the Exchequer, Kwasi Kwarteng, presented the fiscal statement of September 2022 to Parliament, announcing billions of pounds in tax cuts that would be funded via borrowing. The plan was met with cross-party condemnation, including from within the Prime Ministers’ own party. The Leader of the Opposition, Sir Keir Starmer, accused the Tories of ‘taking the piss’ with the tax cut plans and urged Truss to rethink the mini budget after the IMF recommended against its implementation in a statement warning that it could have serious negative consequences on the UK’s economy.
The unveiling of a mini budget was arguably the beginning of Truss' downfall. She insisted that the tax cuts outlined were the "right plan" to “grow the economy,” pedalling the ‘fantasy’ of ‘trickle-down economics’; the ideology that cutting the 45% tax on those earning over £150,000 would “help stimulate growth” and be reinvested into the economy, benefitting workers in the long-term. How much reality this has is highly controversial, but with both the IMF and the Bank of England warning against the implementation of the budget, you have to consider whether it was a wise course of action. Once again, the Conservative leadership was ignoring the experts.
Many influential people spoke against Truss’ economic plans, from US President Joe Biden, who tweeted that he is “sick and tired of trickle-down economics”, to the Archbishop of Canterbury, Justin Welby, who stated that he was “deeply sceptical about trickle-down theory” and “can see no moral case for budgets that disproportionately affect poor”.
Even the high-profile Conservative MP and former Chancellor of the Exchequer Rishi Sunak, criticised her economic plans, saying “Liz’s plan is to say ‘well, I believe in tax cuts, not direct support’, though a tax cut for someone on her salary means £1700 of additional income. For someone working on a national living wage in the care sector, that tax cut is worth about £1 a week. For a pensioner who is not working, that tax cut is worth precisely nothing. That’s not a plan that is right for our country. If we don’t directly help those vulnerable groups, those on the lowest incomes, those pensioners, then it will be a moral failure of the Conservative government.”
Deaf to all warnings and under instruction from Truss, Kwasi Kwarteng insisted that the government would be “sticking to the growth plan”. Meanwhile, Truss, defending the so-called Growth Plan in an interview, insisted that it is wrong to view all economic policy through the “lens of redistribution”, telling Laura Kuenssberg that it was “fair” to reward the richest with £1,800 in tax cuts per annum and the poorest with just £7.66, benefitting highest earners 250 times more than the poorest.
In addition, Truss wanted to raise bankers’ bonuses amid fuel poverty and rising inflation rates. It was only the day before the fiscal statement that Liz Truss defended her plan to lift the cap on bankers’ bonuses that prevents them receiving bonuses double the amount of their salaries. Kwarteng’s reasoning behind the move was that it would serve to attract more investment to the City of London.
However, the policy was an ill-timed one amid a cost-of-living crisis. The Conservatives were seeming more and more like a party who did all they could to help their billionaire friends and the absolute minimum to help the vulnerable and working class from the unprecedented rise in energy bills at costs that would have been unfathomable a year ago.
But Truss’ budget was not to be. The proposed sweeping tax cuts funded by government borrowing sent investors into a panic. Subsequently, the markets went into meltdown, interest rates skyrocketed and the Bank of England was forced to spend £5bn a day for thirteen days on buying up government bonds over the threat to pension funds. Within three days, the pound had hit an all-time low against the dollar.
Truss’ response to this catastrophe? To sack her political soulmate Kwasi Kwarteng and in one of the most astonishing U-turns in living memory, rip up the entire budget that they had designed together in a last-ditch attempt to regain support among her party.
But the damage done was irreversible. Saying “I’m sorry for the mistakes, but I fixed them” as she did in a Guardian interview unfortunately wasn’t going to bring back the additional £537 per month families will now be spending on the average property mortgage or save the pension funds at risk of crashing.
It subsequently emerged that the former Chancellor Kwasi Kwarteng refused the Office for Budget Responsibility's (OBR) offer of modelling an economic forecast based on the mini budget. Ian Blackford, leader of the Scottish National Party in Westminster received a letter from OBR chair Richard Hughes, which read as follows:
“We sent a draft economic and fiscal forecast to the new Chancellor on 6th September, his first day in office. We offered, at the time, to update that forecast to reflect the economic and fiscal impact of any policies announced in the ‘fiscal event’ planned for later in the month. We were not commissioned to produce an updated forecast alongside the Chancellor’s Growth Plan on 23rd September.”
The last step taken on the ladder towards Truss’ resignation was on the 19th of October when the government forced MPs to break a manifesto pledge and vote to overturn the ban on fracking as Truss’ “solution” to rising energy bills.
The vote quickly dissolved into chaotic scenes when Tory Ministers were widely reported to have dragged wavering MPs into the division lobby to vote on the side of the Government while colleagues screamed at each other. The reports painted a damning and blasé affront on British democracy. Meanwhile, Prime Minister Liz Truss was seen chasing after her Chief Whip Wendy Morton who had allegedly quit amidst the mayhem, leading to both of them to miss the vote. She later promised to take disciplinary action against Conservative MPs who abstained or failed to vote with the party.
Speaking to the BBC following the vote, Conservative backbencher Sir Charles Walker called “the whole affair” a “shambles and a disgrace”. He went on to say, “I’ve had enough of talentless people putting their tick in the right box - not because it’s in the national interest but because it’s in their own personal interest.”
Meanwhile, former Cabinet Office minister Sir David Lidington said that the party looks ‘incompetent and tin-eared’. Speaker Sir Lindsay Hoyle has since opened an investigation into the alleged incidents in the House of Commons that night.
The following morning, Chairman of the 1922 Committee Sir Graham Brady entered Number 10 for an unplanned meeting with Truss amid mounting calls for her to resign. A few hours later, a podium was wheeled out into Downing Street. In an address to the nation, Lis Truss stated that she could not “deliver the mandate” before announcing her resignation.
Despite shattering public trust in Whitehall, crashing the markets and furthering the divide of the classes in the UK, her farewell speech on the 25th of October was unrepentant with no concern or ‘contrition’ shown for the political decisions she made over her forty-four-day premiership.
As a former prime minister, Liz Truss will be entitled to the Public Duty Costs Allowance of up to £115,000 per year. However, many have been calls for her to be barred from receiving it. The leader of the Liberal Democrats, Sir Ed Davey, explained why he thought it would be wrong for Ms Truss to accept the allowance. "Most people have to work at least thirty-five years to get a full state pension. I think working forty-five days shouldn't give you a pension that is many, many times what ordinary people out there get after a lifetime of work."
Keir Starmer said, “After twelve years of Tory failure, the British people deserve so much better than this revolving door of chaos. In the last few years, the Tories have set record-high taxation, trashed our institutions, and created a cost of living crisis. Now, they have crashed the economy so badly that people are facing £500 a month extra on their mortgages. The damage they have done will take years to fix.”
Ultimately, Liz Truss’ short-lived premiership as Prime Minister was tumultuous at best. Propped up by those who put her in Number 10, she was allowed to run an ill-advised Thatcherite-style experiment on the British economy that crashed and burned before it even began, leaving tens of thousands of households paying higher mortgage bills for years to come, pension funds at risk and our international reputation in tatters.
Stability from a democratically elected government headed by a leader with a good degree of common sense and a thorough understanding of the economy with empathy for society’s most vulnerable is needed now more than ever.