Analysis: Liz Truss Gambles By Putting Economic Growth Ahead Of Political Popularity

The new prime minister risks a backlash from voters by planning to boost bankers' bonuses during a cost of living crisis.
Kwasi Kwarteng was a key supporter of Liz Truss's Tory leadership bid.
Kwasi Kwarteng was a key supporter of Liz Truss's Tory leadership bid.
Leon Neal via Getty Images

There is a famous scene in ‘Yes, Minister’ in which Sir Humphrey Appleby tells a colleague the four words which must be included in a policy proposal to ensure it is rejected by a minister.

“Complicated. Lengthy. Expensive. Controversial,” he says. “And if you want to be really sure that the minister doesn’t accept it, you must say the decision is ‘courageous’.

“‘Controversial’ only means ‘this will lose you votes’. ‘Courageous’ means ‘this will lose you the election’.”

However, this morning’s news that Kwasi Kwarteng, the new chancellor, wants to scrap the EU-imposed cap on bankers’ bonuses suggests that the Appleby Doctrine has been consigned to the history books.

It is hard to think of a more “courageous” decision than giving already well remunerated City high-flyers the ability to earn even more cash while millions worry about how they’ll pay their next gas bill.

One former cabinet minister told HuffPost UK that it may simply be “kite flying” - floating an idea to see how it goes down with the wider public. But the Treasury is doing nothing to deny the fact that it’s definitely in the mix.

Plans to scrap Rishi Sunak’s proposed hike in corporation tax - a levy on companies’ profits - are already in the pipeline, while Liz Truss has also made it clear that she will not be bringing in a fresh windfall tax on energy firms, despite the huge sums they are raking in on the back of the war in Ukraine.

To be fair, the prime minister has also announced a multi-billion pound package of government support to help struggling households pay their energy bills for the next two years.

Details on how it will actually work remain thin on the ground, but the Resolution Foundation think tank has forecast that it will provide twice as much help to rich households than poor ones.

And businesses - who were promised “equivalent” support by Truss - have already been warned that their own package will likely be delayed.

Kwarteng will flesh out the government’s proposals in a mini-Budget at the end of next week, but it is already apparent that the PM is not interested in courting short-term popularity at the expense of her overall aim of boosting economic growth.

While this is refreshing after the boosterism of the Boris Johnson years, it is also a massive political gamble at a time when the Tories are already behind Labour in the polls and we are barely two years out from the next general election.

We already know what Sir Humphrey would have made of the government’s approach. The prime minister and her aides must now await the public’s verdict.

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