Why the premiership of Liz Truss failed

When Liz Truss became the PM, she did not want to listen to views contrary to the tax-cutting pledge she had given to the Tory membership during her poll campaign. Fearing that consulting other wings of governance might lead to inputs opposed to her views, she did not consult the Bank of England, the Treasury and even business leaders.

MISFORTUNE: The Russia-Ukraine conflict added to Truss’ difficulties in controlling inflation. REUTERS

Pritam Singh

Professor Emeritus, Oxford Brookes Business School, Oxford, UK

THE humiliating fall of Liz Truss, who will ingloriously go down in history as the British Prime Minister with the shortest tenure, was primarily due to a combination of three factors — her personality make-up, her doctrinaire ideological outlook and the global energy crisis caused by the Russia-Ukraine conflict.

What led to her rapid success in the political career itself became a serious contributor to her fall when she reached the top. She comes from a family of left-wing academics; her father was a mathematics professor, who, it is rumoured, disowned her when her turn to unbridled right-wing adherence to free market ideology became pronounced during her bid for prime-ministership.

Her single-minded ambition to succeed in her political career provided her the energy, which ambitious personality trait people have, but the glaring downside of this personality trait is that such persons are one-dimensional and not open to critical views. This downside becomes critical when such a person assumes headship of an institution and, more so, when that institution is the state itself. At that position, it is a necessity for the success of the leader to listen to dissenting views and possess the ability to synthesise different viewpoints to reach meaningful decisions.

When she became the Prime Minister, she did not want to listen to any views contrary to the tax-cutting pledge that she had given to the Tory membership during her election campaign. She did not understand the difference between winning the vote from Tory members, who come from relatively wealthier backgrounds with a general orientation to a politics of low taxes, and governing a country where a leader must pay attention to the needs of all sections of the population. Fearing that consulting other wings of governance might lead to inputs opposed to her views, she did not consult the Bank of England, the Treasury, the Office for Budget Responsibility and even business leaders (leave aside trade union leaders) and unilaterally announced massive tax cuts through her equally committed free marketeer, Chancellor Kwasi Kwarteng.

Since the proposed unprecedented massive tax cuts would have led to massive holes in state revenues, the Truss-Kwarteng team proposed huge borrowing to finance the state expenditure. The team’s ‘mini-budget’, based on this huge borrowing proposal, was an exercise in fiscal irresponsibility. It created huge economic uncertainty, leading to a fall in business and consumer confidence. The excessive borrowing proposal fed the inflationary spiral.

To Truss’s misfortune, the Russia-Ukraine conflict added to her difficulties in controlling the inflation. The conflict contributed to rising inflation through higher energy and food prices. The Bank of England resorted to a rise in interest rates to control inflation. Increased interest rates fed into mortgage rates and an extra burden on homeowners of higher mortgage payments.

A fear of general dismay gripped all sections of society. Even the appointment of a new Chancellor, Jeremy Hunt, did not allay the widespread sense of economic insecurity. Her mode of success in reaching the top by being single-minded became one of the chief sources of her downfall.

She could not acknowledge that her doctrinaire ideological outlook in support of giving primacy to markets and privatisation did not fit the reality of the current British economy and society, where many households and small businesses needed state support to survive.

Her rival in the previous Tory leadership race, Rishi Sunak, though himself a moderate right-winger, had sensed this need for state support to vulnerable sections of society during his tenure of Chancellorship under former PM Boris Johnson when he worked out a structure of state support in dealing with the Covid-19 pandemic.

Her policies were clearly aimed at making the rich richer even when the less rich were struggling. She lost her support even among Tory voters, who had previously voted for her. Tory MPs were quick to realise that if she continued, their party would lose the next General Election and many of them would be defeated, especially those from marginal constituencies where their victory margins over their Labour and Liberal Democrats counterparts were small. This is something remarkable about the Tory MPs that they are not permanently committed to any one person and are quick to overthrow anyone who may cause their defeat. This time, they ditched Truss, as they had ditched Johnson only a few months ago.

One solution to the current political turmoil in the UK is to have a General Election, which the opposition parties (Labour, Liberal Democrats, Green and Scottish National Party) are demanding, so that the entire electorate participates in choosing a new government and PM. This demand is logical and fair. However, fearing that the party would lose if an election is held now, most Tory MPs would rather choose a new Prime Minister from their ranks who may be able to use the next two years to regain credibility of the party, which is so severely shaken, as it has never been before.

The continued economic and political mismanagement in London has given a boost to the Scottish National Party’s demand for an independence referendum. The party has outlined an economic plan for a stable and independent Scotland.

The Tory MPs are conscious of the need for political stability for both the economic recovery of Britain as well as keeping the UK united. That will be the prime consideration in their choice for prime-ministership from the three likely candidates, Rishi Sunak, Boris Johnson and Penny Mordaunt.

Sunak is considered the most competent, but divisive due to opposition from the Johnson supporters, who accuse that his resignation triggered the fall of Johnson as PM. Johnson is the most popular among the Tory voters, though tainted and still facing an inquiry that he might have lied to Parliament. Mordaunt is the most likely consensus candidate, but inexperienced and not known for the economic expertise needed for the job.

If the Tory party can ensure one consensus candidate on Monday, there will be a new PM that day. If there is no consensus, an expedited online voting by all Tory members will choose by Friday the one from the two who gets most MPs’ votes on Monday.

The new PM will have a huge challenge to deal with the chaos and mess created by the failed premiership of Liz Truss.