If Tories think she offers a cautionary tale against tax cuts, they’re looking at a decade in the wilderness
Near The Spectator’s office lies a gorgeous pub, The Two Chairmen, scene of many a Westminster drama over the past few years. It fills up quickly on Thursday afternoons as civil servants start to clock off for the week. Almost exactly a year ago, after Liz Truss’s mini-Budget, it was mobbed. Markets were reeling but the Treasury staffers were celebrating in a mood of cheerful defiance, of history being made. As I walked past I saw Kwasi Kwarteng, the chancellor, in the throng. He called me over.
He was observing tradition: even the teetotal Rishi Sunak would come by the Two Chairmen after his Budgets. Kwarteng seemed settled, enjoying the moment. Normally, a chancellor spends his post-Budget afternoons anxiously ringing round editors and markets but the Truss operation had a more relaxed, laissez-faire air to it. I asked him if he was nervous about the market reaction. No, he said: the markets will calm down. It was time to be bold. Push back the tide of big-state conservatism.
History records what happened next, after Truss and Kwarteng went full-bore for tax cuts, having fired or sidelined civil servants who they thought would interfere. Their ideology collided with reality, sending mortgages surging and almost bankrupting the country. Having warned about “Reaganite” unfunded tax cuts, Rishi Sunak stood vindicated and was ushered into No 10 to clean up the mess he tried to warn about. The fantasy of growth via deficit-funded tax cuts had, at last, been tested to destruction.
Except this narrative is a fake, albeit a fake which suits supporters of both Sunak and Keir Starmer. Trussonomics was not tax-slashing but something else: a Corbynite spending splurge dressed up in free-market language. More Chávez than Reagan. Now that a year’s worth of dust has settled, the real history of those 49 days is far clearer to see.