inequality“Don’t blame it on the good times
Blame it on the boogie”

Two-years on from a mini-budget we are still paying for ,“Loopy” Liz Truss has been treading the boards in the US, at the annual Conservative Political Action Conference (CPAC). From what I read they are equally deluded so she doesn’t especially standout, though, as a Brit, she has novelty value.

Before we start on her comments at the conference, lets revert back and consider her legacy.

Her Mini-Budget was to unveil ‘The Growth Plan’ that was to be the centrepiece of economic policy for the new government. The Chancellor announced that the tax and spending changes contained within the Mini Budget would result in a trend GDP growth rate of 2.5 per cent. Given the history of UK economic growth – and particularly the recent history – this target always seemed unrealistic, especially as it was based on a series of unfunded tax cuts:

  • Bringing forward from April 2024 a 1% cut in the basic rate of income tax to April 2023
  • Cutting the top rate from 45% to 40%
  • Reversing the April 2022 increase in National Insurance Contributions of 1.25% and the abolition of the ‘Health and Social Care Levy’
  • Reversing the planned increase in the Corporation Tax Rate from 19% to 25% due in April 2023;
  • Raising Stamp Duty thresholds.

The madness was hailed by her supporters as “at last, a true, Tory budget”, in truth it was the biggest tax giveaway since 1972, funded by a vast expansion in borrowing, with only a vague attempt to argue it could be paid for by an unlikely economic boom.

Adding to the giveaway was a total disregard by the PM and Chancellor for some of the key institutions in the UK system of government, HM Treasury, the OBR and the BoE, left financial markets totally ‘spooked’.

‘Amusingly, whilst some financiers were applauding a “true” Tory budget they were shorting the ass out of Sterling and Gilts’

Amusingly, whilst some financiers were applauding a “true” Tory budget they were shorting the ass out of Sterling and Gilts; the 10-year Gilt spot rate, rose just over 1% between 21 September and 27 September, whilst sterling fell to its lowest value against the dollar since 1985. As is well known, the rise in gilt yields led to a crisis for pension funds that had invested in LDIs forcing the BoE to intervene on 28 September.

Basically, anyone with half-a-brain doubted the idea that £45bn of unfunded tax cuts for the rich could ever catalyse economic growth and pay for itself in the way the government argued. It wasn’t just Trus’s despised “anti-growth coalition”, but analysts from Goldman Sachs, Bank of America and the IMF. With a backdrop of inflation at a 40-year high, rising recession risks and higher borrowing costs across advanced economies, it was the wrong idea at the wrong moment.

It is generally accepted that Loopy Liz’s disastrous mini-budget cost the country C.£30bn: £20bn the cost of the unfunded cuts to national insurance and stamp duty, with a further £10bn added by higher interest rates and government borrowing costs as the markets reacted with dismay to her dash for growth.

‘Loopy Liz’s disastrous mini-budget cost the country C.£30bn’

When her resignation came it was overdue and no surprise. Now, for most people that would be sufficient, time to keep one’s head down. Not for Liz, speeches to fringe events at party conferences, setting up PopCon her faction within the parliamentary party, and flying round he world to speak at right-wing events.

Last week, at CPAC, she railed against President Biden, transgender rights and a so-called leftwing-run deep state.

In her 15-minute speech, entitled Taking Back Our Parties, she said; “Conservatives are now operating in what is a hostile environment and we essentially need a bigger bazooka in order to be able to deliver. We have got to challenge the institutions themselves. We’ve got to challenge the system itself, and we’ve got to be prepared to take that on as conservatives.”

The was also an ulterior motive, as her PR offensive coincided with the publication of her book Ten Years to Save the West. “I’ve written a book which is coming out very soon and you can pre-order it,” she told CPAC in what critics might identify as the key line of the speech.

She continued, insisting that western values were being undermined. “Our history is being challenged, even our biology is being challenged. Can you imagine? Could you imagine 10 years ago that we’d be talking about what a woman is or what a man and having a serious argument about it. It’s incredible.

“And yet every issue the left win, they push it even more. They push it to even more extreme. Meanwhile, we’ve seen President Biden asleep at the wheel in the White House.” She also complained: “We’ve got a new kind of economics in the west. It’s called ‘wokenomics’.”

“We’ve got a new kind of economics in the west. It’s called ‘wokenomics’”

Like any good show-person she saved the best to last, after bemoaning economists, et all for sinking her budget, she continued, saying; “Even the IMF [International Monetary Fund] intervened and even President Biden intervened to have a go at my policy. Now, can you imagine being attacked on your economic policy by the inventor of ‘Bidenomics’? Talk about offensive.”

Harry Maynard, 71, from Tallahassee, Florida, summed-up the whole shitshow when he said: “It’s great that she’s here. I’m sorry she only lasted six weeks. She was hijacked and so was Boris – Bo Johnson – whatever his name is.”

Basically, Truss blamed everyone but herself, including the Environment Agency, Office for Budget Responsibility, Bank of England and Judicial Appointments Commission. “There’s a whole bunch of people – and I describe them as the economic establishment – who fundamentally don’t want the status quo to change because they’re doing quite fine out of it. They don’t really care about the prospects of the average person in Britain and they didn’t want things to change and they didn’t want that power taken away.”

She was introduced to the audience thus; “there was a collective cheer in the conservative movement in the United States saying, wow, Margaret Thatcher is back!”

Ahhh yes, Thatcherism, the start of a cult, the inspiration for successive Tories, including Truss. Now I want to consider what Thatcher actually delivered.

‘Starting with privatisation. The failure of the water industry has become a text-book lesson in why the policy was bound to fail’

Starting with privatisation. The failure of the water industry has become a text-book lesson in why the policy was bound to fail. In 1989 the government received a net £1.1 bn for the water companies, whilst, to date, investors have received £60 bn of dividends. We now face a £200 bn repair bill just to make it fit for purpose.

Another flagship policy was “right-to-buy”, which allowed tenants to buy their council houses at a deep discount. In essence, there is nothing wrong with that, other than no plans were ever made to build replacement houses, leading to the chronic shortage of homes we have today.

Whilst this imbalance in supply and rising demand is always good for the lucky homeowners, it has unbalanced the economy. According to figures from the Department for Communities and Local Government, the average selling price of a house in 1979 was £19,925. By 1990, this had tripled, to £59,785. Over the next two decades, it multiplied again, reaching £251,634 by 2010.

The economy has been subject to the whims of the housing market ever since: the housing crash and negative equity of the early 1990s were hardly unrelated to the accompanying recession, while the consumer boom of the early 2000s was fuelled by housing debt, as was the subsequent bust.

‘The economy has been subject to the whims of the housing market ever since’

Turning to the core measure of economic performance – GDP growth – Thatcher’s performance was slightly better than that of her predecessor, James Callaghan, but slightly worse than under Tony Blair, with average growth over her tenure standing at around 2.3% a year.

Without doubt Thatcher had impact, making changes to the UK’s tax system, some changes to welfare, and many to the nature of British jobs, both through privatisation and economic liberalisation – not least in her battle with the unions.

To really put her policies into perspective, we need to consider what Thatcherism meant for British families. Following, are a series of measures calculated by the Institute for Fiscal Studies, which calculated household incomes after tax (and any income from benefits), and put them into monetary amounts relative to 2010-11 prices, stripping out the effects of inflation.

These figures show families got richer. The median household – the household right in the middle, where half are richer, half are poorer – earned the equivalent of £270.74 a week in 1979. By 1990, this had increased by 26% to £341.58.

But, as you would expect, these gains were nowhere near evenly distributed, and the poorest got the least. A family in the bottom 10% had a weekly income of £151.58 as Thatcher came into power. Eleven years later as she left Downing Street, the family had just £158.57 – a mere 4.6% more. Such stagnation for the poorest families was not inevitable: though inequality remained high in the post-Thatcher era, by 2011 that income had risen to £215.86.

The richest families – the top 10% – did far better, with their incomes increasing from the equivalent of £472.98 in 1979 to £694.83 in 1990. The good times for high-rollers continued post-Thatcher, with 2011 incomes of £845.54 a week.

Still, the poverty figures don’t look good: the number of children in poverty almost doubled under Thatcher, from 1.7 million in 1979 to 3.3 million in 1990. Pensioner poverty in the same period increased too, from 3.1 million to 4.1 million. Those numbers rise still further if housing costs are factored in.
Following are some further statistics that consider our economic performance since the 1970s

  • 1. GDP and Unemployment

a) In 2008 to 2009, GDP had the largest fall of the period. This reflects the extent of the economic downturn of 2008 to 2009 compared with previous periods of negative economic growth.

b) highest GDP growth rate was experienced in 1973, at 6.5%, and the lowest was experienced in 2009, at -4.2%.

c) The unemployment rate was the lowest in 1974, at 3.7%, and the highest in 1984, at 11.8%.

  • 2. UK Balance of payments

a) By the 1980s, the previous almost cyclical pattern of deficit and surplus has been replaced by 21 years of consistent deficits.

b) The balance of trade in goods and services as a percentage of GDP reached the lowest at -4.4% in 1974.

c) The balance of trade in goods and services as a percentage of GDP reached its peak in 1981 at 2.6%

  • 3. The UK is now a service economy

a) In 1970, services accounted for 56% of the UK economy.

b) In 2016, services accounted for 80% of the UK economy.
Philip uses the word ‘surreal’ and he’s not wrong – the government is in a doom loop, but there seems to be no shortages of meat-heads seeking their fifteen minutes of fame; the Tories coud reasonably have expected to claw back some points at the polls after the shambollic scenes in the HoP last week, but 30p Lee just couldn’t help himself.

Did anyone predict the GE would be a straight shoot-out between Anti-Semites and Islamaphobics? Maybe Philip did?:

‘Today, we explore the surreal world of Liz Truss, who, despite blowing £30bn of our money on what was basically a gamble, knows no contrition.

In fact, it’s quite the opposite, being everyone’s fault but hers.

Her rambling speech in America was just a populist playlist; deep state conspiracies, race, transphobia. The only thing that is worse is that people still listen and believe.

Whilst Truss’s economic record speaks for itself, I have taken the opportunity to look back at Thatcherism and its legacy. She was the original, and in many ways the best. No one gets everything right, but some of her reforms were needed, others had the right idea but were, perhaps, poorly executed.

Two examples of the latter are right-to-buy with no replacement housing stock, and industrial policy where jobs in industries such as coal and steel were cut, with no replacement policy other than hope.

Elsewhere this week, Lee Anderson has done Labour a big favour. Until his intervention their internal issues over Gaza were headlines, especially after last week’s shambles in the Commons. Lee has restored the spotlight on the Tories with his Islamophobia, but more on that next time.

What does interest me is where the “red wall” votes will go. In 2019, Farage standing down his stormtroopers, gave the seats to Johnson, a result that underpinned the bulk of his majority. It would seem many voters there agree with Anderson’s comments, if so, will they swing toward Reform, which looks increasingly like Anderson’s natural home.

Lastly, on the subject of Gaza, whilst we were shaming ourselves with that unseemly shambles in parliament, in the Israeli parliament, the Knesset, they were also sitting and voting, and Benjamin Netanyahu was referring to “an overwhelming majority against the attempt to impose on us the establishment of a Palestinian state”.

Two thoughts; firstly, how are ever going to achieve the two-state solution required in the face of such obduracy. Secondly, whilst we were playing politics, exploiting the horrible situation in Gaza simply to score points ahead of the next election.

Lyrically, we start with the Jackson’s and “Blame it in the Boogie”, which was just about the only thing Truss didn’t blame for her own failings. We end with the Smiths and “What Difference Does it Make”, dedicated to Labour who, as the song says, will make none! Enjoy!


Philip Gilbert 2Philip Gilbert is a city-based corporate financier, and former investment banker.

Philip is a great believer in meritocracy, and in the belief that if you want something enough you can make it happen. These beliefs were formed in his formative years, of the late 1970s and 80s

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