Policy Futures: In Liz we Truss?
Insights
By Moray Macdonald, Group Head of Public Policy
The polling guru Sir John Curtice has now confirmed what has seemed inevitable to observers for weeks: barring a spectacular foul-up, Liz Truss will be announced as leader of the Conservative Party on 5th September. The following day she will meet the Queen and become the fourth consecutive Conservative Prime Minister and the third female Prime Minister, leading what looks set to be a singularly diverse cabinet, much to the chagrin of Labour – the so-called party of equalities.
We’ll hear lots in the first few days about Liz Truss as the media seeks to help the public gain a better understanding of a Prime Minister foisted on them without a general election. A savvy operator, she knows the public are looking for leadership through the impending economic and cost of living crisis and understands that quick answers are needed on complex policy areas.
For those of us who work in public affairs this is going to be a busy time: there’ll be a flurry of short-term policies and initiatives followed by a concerted effort to focus on delivery and communicating a clear long-term vision — Truss is well aware her government cannot avoid a general election within the next two years.
Despite the accusations, Truss is unlikely to be continuity Johnson: the cavalier rudderlessness of his administration was discarded with him. A return to serious and thoughtful leadership is the goal, and PM Truss will be keen to put the drama of the last few years behind to focus on delivery. Whether this is possible with a divided party and unsettled public is yet to be seen.
When Liz Truss speaks to the public for the first time from Downing Street she’ll have no choice but to acknowledge the harsh realities facing the country. We know that she already has a team working on transition and on her first few months in power; they will be acutely aware that they need to swiftly reanimate the government. Her new team will likely include election strategists Mark Fullbrook and David Canzini, who will be driving the Cabinet machine with 2024 in mind.
So what are we going to see?
An emergency budget is likely within the first week or so. This will seek to deal with a cost of living crisis about to be supercharged by continued inflation, a recession, and eye-watering energy prices.
Truss will be tested on whether her response is both sufficient and fast enough to get families and businesses through the winter. She won’t be helped by Unions unleashing a wave of strikes across industry and the public sector. A Covid spike is also probable as the cold weather settles in, adding more stress to healthcare and businesses trying to cope with seasonal pressures.
The leadership campaign has given us a hint of the Truss Government’s wider priorities: capitalising on the legislative freedoms afforded by Brexit with new trade agreements, ECHR reform, a bonfire of EU regulation, and untangling the Gordian knot that is the Northern Ireland Protocol.
On our sclerotic infrastructure there is little detail, but there is a sense that Team Truss understood something the Sunak campaign did not: successive governments have been coasting on delivering the basics and the public is growing fractious and unforgiving about it.
On business, corporation tax is unlikely to increase and the finance sector can expect a merger of regulators and the scrapping of Solvency II.
On the climate, the commitment to carbon neutrality will remain, but delivered in a “better” way that reduces the impact on households. At the very least, a moratorium on green energy levies is probable — the public’s appetite for Net Zero will be sorely tested by hard times.
Civil Service reform and a concerted effort to win the so-called “culture war” will be on the cards too, with departments and civil servants ordered to keep their eyes on the public services they’re paid to run.
Levelling Up looks set for a boost, with a focus on initiatives like Low Tax Zones to stimulate economic growth outside the South East.
Will any of this matter or improve the political fortunes for the Tories?
Truss will be denied both a moment of celebration and a honeymoon period: she inherits possibly the worst political and economic circumstances an incoming Prime Minister has faced in recent history. Her problem is that right now there are no simple or painless solutions to the problems we face – only grim compromises. There is a significant risk her government never achieves anything because it becomes constantly distracted by trying not to look bad at a moment when looking good will be next to impossible.
Can she pull it out of the bag? In the face of a massive economic storm, following years of the Johnson Government’s chaos, Labour’s polling remains remarkably limp. I wouldn’t write off a 2024 Tory win just yet, but the chances are getting slimmer by the day. This is the moment to start building relationships with Labour and trying to understand what their policies might mean for you should they win the 2024 election.
