Rarely has a government appeared so intent on losing an election as Liz Truss’s in its first weeks. This gives Labour the opportunity to win simply by presenting itself as steady, responsible and unthreatening; Keir Starmer’s qualities in spades.
How does one explain the new government’s “Kami-Kwasi” strategy? Amazingly, they think it will succeed, on the basis that Thatcher was equally as bold and she succeeded.
If you think this far-fetched, just read Kwasi Kwarteng’s 2015 book on the subject: Thatcher’s Trial: Six Months that Defined a Leader. It’s about Thatcher’s unpopular 1981 budget and how the Great Leader weathered it to defeat first the “wets” inside her government, who were largely dismissed in the autumn 1981 Cabinet reshuffle, and then the Labour Party in the 1983 general election. Thatcherism was launched and went on to dominate the 1980s, politically and intellectually.
Kwarteng seems to believe that he and Truss just need to hold their nerve and the magic of big tax cuts and a small state will win. He can’t seriously believe that any of his much-trumpeted growth effects will be much evident within a year or two. But from his interviews after his mini-Budget last Friday, he clearly hopes that a political dividing line with Labour on the issue of tax cuts versus tax rises will win through in the short term—the “six months that defined a leader”.
I think this is pie in the sky. The differences with 1981 are legion. In the March 1981 budget, Thatcher and her softly-softly Chancellor Geoffrey Howe put up taxes at the same time as cutting spending, including windfall taxes on banks and North Sea oil producers, so as not to spook the financial markets with larger deficits.
As for the political context, in March 1981 Labour was about to split and veer to the hard left, under the hapless leadership of Michael Foot. By 1983 Labour was fighting for its life against Roy Jenkins’s centrist SDP/Liberal Alliance, which narrowly missed beating Labour into third place. The opposition parties were fighting each other as much as fighting the Conservatives. Labour’s 1983 manifesto committed the party to mass nationalisation and huge further tax rises.
Meanwhile the Falklands War of 1982 transformed Thatcher’s standing and further isolated the Labour Party on the left.
Starmer’s new, moderate Labour Party could not be more different. Or more united. As recent by elections have shown, the Liberal Democrats are in an informal alliance with Labour, which with tactical voting will further damage the Tories at the next election. This week’s Labour Party conference even voted in favour of proportional representation, which could lay the foundations for a long-term Lab-Lib partnership. Labour hasn’t even pledged to reverse all the Truss-Kwarteng tax cuts. Just the ones on business and the rich. And to impose popular windfall taxes on the energy giants who are coining it with the rise in oil and gas prices.
However, the immediate Tory enemy isn’t Labour. It is reality. With interest rates and government borrowing costs now going through the roof, Middle England stands to be impoverished—and there are only two people on trial: Liz Truss and Kwasi Kwarteng.
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