Liz Truss' economic agenda

Prime Minister Liz Truss? Liz Truss has maintained and extended her lead over fellow Conservative leadership contender Rishi Sunak, despite several U-turns, most notably on regional public sector pay. According to Politico’s Poll of Polls, Liz Truss leads with the backing of 56% of Conservative members compared to Rishi Sunak’s 32% and 11% who don’t know. Neither candidate is currently performing as well among the wider electorate, however, with a YouGov poll finding that Liz Truss would not increase the Conservatives’ support.

• Who’s who. Politico has produced a handy guide to Conservative MP support for each candidate, including analysis of the political breakdown of Truss and Sunak supporters. 80% of those publicly backing Truss, for example, either supported Brexit during the referendum or have publicly stated their conversion to Brexit, while just over 40% of Sunak supporters are pro-Brexit. More than twice as many ‘red wall’ Conservative MPs back Truss (12) over Sunak (5), while Sunak has nearly double the number of ‘Traditional Tory’ supporters than Truss. 
• But, what about the members? Analysing the political divides behind Conservative member support for Truss and Sunak is a whole different story. The New Statesman’s Charlotte Ivers explains why demographic data on “the most powerful people you have never heard of'' is notoriously sparse and outlines the effect this has on polling.
• Appealing to the right. What we do know about Conservative members is that they like right wing policies and that appealing to this majority faction may be the key to Truss’ success, argues polling expert John Curtice. 54% back Liz Truss’ tax cut pledge while only 37% agree with Rishi Sunak’s argument that tax cuts could fuel inflation.
• Truss’ cabinet. As Truss remains the hopeful to be the next Prime Minister, speculation is well underway over who may be in her cabinet. Close ally and current Secretary of State for Business Kwasi Kwarteng is widely tipped to be chosen as Truss’ Chancellor. Kwarteng famously co-authored Britannia Unchained with the leadership frontrunner along with Priti Patel, Dominic Raab and Chris Skidmore. Others tipped for cabinet positions include Ian Duncan Smith, Suella Braverman, Simon Clarke and Kemi Badenoch. ‍
• Jumping ship. The Mail on Sunday reports that several members of the current Sunak camp have been in talks with Team Truss about joining her campaign as her lead widens. 

Economic policy. Throughout the leadership contest, economic policy - particularly taxation - has been at the heart of deep divides between the two candidates. Tax cuts are central to Truss’ campaign, where proposals include reversing national insurance increases, cancelling the planned corporation tax rise and temporarily removing green energy levies on electricity bills. While her opponent argues that tax cuts could fuel inflation, Truss has maintained that her plan could actually avoid recession. (Read Politico's piece on how Trussonomics differs from the 'sound money' principles of previous Conservative governments.)

• Tax. Though originally pledging to reverse the recent rise in National Insurance in April next year, Liz Truss now plans to rush through tax cuts in a September emergency budget. Writing for the Telegraph, the frontrunner confirmed her plans to cut taxes immediately, which could see cuts come into effect as soon as November. Truss appears to have surrounded herself with fellow low-tax Conservatives. Kwasi Kwarteng, tipped to become her Chancellor if elected, is a low-tax, free-marketeer who repeatedly clashed with Rishi Sunak in government over windfall taxes and net zero.
• Tax cut pushback. The reversal of tax rises would boost inflation and fail to boost growth, argues Conservative Home’s William Atkinson. What’s more, the public do not want tax cuts if it means spending cuts, according to a poll by Opinium. About a third (34%) of those surveyed said taxes and spending on public services should remain at current levels, while 26% think there should be an increase in tax to increase funding. Just over a fifth said that taxes should be reduced and less spent on public services. For more on the debate around tax cuts and inflation, see our Digest. 
• Growth. Truss has described the UK’s lack of economic growth as “the number one problem in this country” and has used this to justify her proposals for tax cuts. She links this to her commitment to government reform, stating that “happiness is a faster-growing private sector than public sector” in an interview with Conservative Home. 
• Handouts. Faced with a growing cost of living crisis, Truss has made the case against ‘handouts’, arguing that lowering the tax burden is the “Conservative way” to ease cost pressures. As the energy price cap is due to rise, many have interpreted this as Truss rejecting support packages in the Autumn. However, her team insists that she has not in fact ruled out cost of living support, with opponents accusing her of making yet another U-turn. 
• Bank of England. As the Bank of England warns that the UK will fall into recession this year, Truss’ camp has adopted a hostile tone towards the central bank. Supporter Kwasi Kwarteng argued that “clearly something has gone wrong” in the Bank’s handling of inflation and suggested that base rates could have been raised “slightly sooner”. In the Spectator, Matthew Lynn goes as far as to suggest that the Bank of England’s recent move to raise interest rates by half a percentage point was influenced by Liz Truss’ repeated argument that the bank has been too relaxed about inflation. Truss has said that she would review the Bank’s mandate if elected. The FT's George Parker also reports that Truss intends to give ministers powers to override financial regulators seen to be limiting post-Brexit reforms in the new Financial Services Bill.
• Treasury shake-up. Truss is planning a ‘Thatcherite shake-up’ of the Treasury, according to the Telegraph, which would give Number 10 more control over the economy. Truss clearly has a longstanding commitment to the shaking up of Whitehall, arguing in 2018 that to “unleash the UK’s potential, we need to fight the blob”. 
• Public sector pay. There are clearly limits to Liz Truss’ resolve to reform the Civil Service however, evidenced by her U-turn on public sector pay last week. Having originally suggested that she would introduce regional pay boards to effectively cut civil servant pay in poorer areas, Truss was forced to withdraw the proposal after heavy criticism of both the implications of the policy and the accuracy of the costings. The FT’s George Parker labelled the move a “case study of the danger in photocopying a Taxpayers' Alliance press release - adding a few billion - and presenting it as a programme for government”.  
• Climate. Reflecting on both candidates’ climate policies, Conservative Environment Network’s Sam Hall has said Truss will need to strengthen green policies if she is to meet the net zero target that she has confirmed she supports. Green Alliance’s Shaun Spiers warns that while both candidates may “pay lip service” to climate policies, they are likely to “dodge the difficult decisions”. 
• Good for women? Representation is not enough for Liz Truss to be beneficial to women, argues the Women’s Budget Group’s Mary-Ann Stephenson. Refinery 29’s Vicky Spratt argues that Truss’ “Destiny's Child” approach to feminism fails to recognise that women are disproportionately affected by the cost of living crisis.
• Farewell ‘levelling up’? Whitehall officials warn that the outgoing Prime Minister’s ‘levelling up’ agenda is being “quietly ditched” and will not survive a new leader. Though not a policy priority, however, Liz Truss is “advocating low-tax zones to encourage investment in deprived areas”, notes Politico’s Esther Webber. 

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Politics. If successful, Liz Truss would be the first Conservative leader since Churchill to have been a member of another political party. Hailing from a family that she describes as “left of the Labour Party”, Truss went on to become president of the Oxford University Liberal Democrats which she has labelled a “youthful error”. Upon entering Parliament in 2010 and first joined the government in 2012 as a Parliamentary Under-Secretary for Education. 

• An outsider? Despite having now been a Conservative party member for 25 years, Truss still “sees the Conservatives with an outsider’s eye”, argues Conservative Home’s Paul Goodman. In contrast to Sunak’s comfort with “conventional wisdom”, Truss is more of a libertarian, he argues, but at the same time is “remarkably flexible” in her views.
• Vibes? The reason why Liz Truss is positioned so clearly as the right wing candidate has little to do with her policies and more to do with ‘vibes’, argues the FT’s Janan Ganesh. Despite vocally supporting remain during the referendum, Truss consistently polls better with Brexit supporting Conservative members than Sunak. This contradiction, Ganesh argues, checks out in a world where “people’s ideological commitments are extraordinarily soft” and instead are motivated by “tribal signifiers”. 
• Trusting Truss. After several U-turns (or, as Team Truss would describe, instances in which her policies have been ‘misinterpreted’) even her backers are beginning to ask whether she can be trusted. Truss’ many U-turns are rooted in the clash between her classical liberalism philosophy and the ‘Red Wall of reality’, argues the Institute of Economic Affairs’ Emily Carver. 
• Approach to experts. Former cabinet minister David Gauke argues that the thread running through Liz Truss’ politics is her skepticism of experts. The Spectator’s Fraser Nelson that the two candidates’ approach to experts and economic forecasts in particular is one of their “biggest differences”. As the Bank of England warns of recession, Truss is right to say that “forecasts are not destiny”, argues Nelson. 
• The new Thatcher? Comparisons between Truss (and indeed any aspirational Conservative politician who is a woman) and Thatcher are predictable, argues Martha Gill. However, it is actually the current Prime Minister, rather than Margaret Thatcher, that Truss is channeling, argues the New Statesman’s Rachel Cunliffe.  
• Rick Perlstein. Liz Truss is allegedly inspired by historian and “man of the left” Rick Perlstein. Nick Cohen outlines some of the lessons Liz Truss may be learning from her favourite historian’s analysis, such as how to ‘Mobilise resentment’ and ‘Never accept defeat’.