Even before Liz Truss had arrived at Balmoral to be invited to form a government, her team was briefing that she is likely to freeze energy prices until the next general election. That’s all you need to know about her indomitable will to win and why she shouldn’t be underestimated.
Labour’s policy of an across-the-board energy price freeze was never touted during the Tory leadership election, which finished only last Friday, least of all by Truss. Handouts were bad. Interfering in “free” markets was bad. Only tax cuts and pure Thatcherism were good. There might just possibly be some extra targeted help, it was briefed, but she herself never said as much while pandering to every prejudice of the Tory rank-and-file and demonising Rishi Sunak for—shock horror—wanting tax cuts next year, rather than this year, and a big package of support beyond tax cuts for energy bills.
None of which should come as any surprise given the tactical game she played in the leadership election of waiting for Sunak to declare a position, then slotting herself in to the right of it. It is a tactical game she has played all her political life. The Remainer who became the ardent Leaver. The Lib Dem who became a Tory. The republican who I doubt was saying as much to the Queen at Balmoral.
“Those are my principles and if you don’t like them… well, I have others,” said Groucho Marx. Truss takes political elasticity to lengths not seen since Ted Heath, who comprehensively U-turned on practically his whole manifesto. But this took Heath four years, not the four hours of Truss’s conversion to the energy price freeze once the Tory ballot had closed.
Maybe this presages an early election. Given Truss’s instinctive boldness I wouldn’t rule this out. But she would need a pretty hefty poll bounce, starting from about 10 points behind. No one wants to be the shortest-lived prime minister in modern history, which is a big part of the reason why Gordon Brown and Theresa May didn’t call elections immediately on becoming prime minister, despite poll leads. I doubt Truss will be an exception.
Furthermore, the overall economic outlook will continue to be bad or even dire, despite the energy price freeze. Or to some extent because of it, as it will add upwards of £100bn to public borrowing sustained until 2024. About a quarter of this could be recouped from windfall taxes and excess profit levies if Truss eats her words on those too. But the pound and interest rates will be under enormous further pressure as borrowing goes through the roof to fund both the energy price freeze and Truss’s tax cuts.
For Labour, riding high during the Tory meltdown, everything depends on the fate of the economy and living standards over the next year. But of one thing you can be sure. Keir Starmer won’t get the electoral credit for dreaming up the energy price freeze before Truss adopted it. That’s life.
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