September 23, 2022

In 2010, a new generation of Tory MPs began to find their feet in Westminster. Though pleased to see the party in power for the first time in their adult lives, they were frustrated that it took them a coalition with the Lib Dems to get there. They bristled at what three terms of Labour government had brought — what they saw as an over-regulated, underproductive economy. And they knew that as freshers in the Commons, they could not shape Cameron’s agenda in the short-term. So, they set their sights further ahead. Kwarteng, Patel, Raab, Skidmore and Truss; the five MPs began to think and write, looking beyond the coalition to what a Tory majority might do next.  

The result — Britannia Unchained — was a call to look to the most dynamic economies around the world for inspiration: to cut spending like Canada, teach children like Japan, and build businesses like Silicon Valley. It didn’t oppose the austerity measures of the early Cameron government, but saw that as a precondition, rather than an endgame. The Gang of Five no doubt hoped to be the heirs of Cameron, and with the budget balanced, this global smorgasbord could be their agenda. 

At the time, the approach of the Unchainers was criticised for its inaccuracies and drew ire for eye-catching comments on productivity. But beyond that, it made little impact. The authors were promising politicians but did not have a mainline to Downing Street, and their cures for the nation’s ills were unlikely to fly with the Government dependent on the Lib Dems. Even when the Tories held an outright majority, attention quickly moved to Brexit and then Covid, leaving little time for the long-term considerations that the book sought to address.  

Through this period, however, the five authors rose through the ranks of the party. Just one week short of the book’s tenth anniversary, they made their final breakthrough when Liz Truss became Prime Minister, with Kwarteng at her side as Chancellor. Today, Trussonomics will move from campaign mode to implementation with the unveiling of the Government’s mini-budget. Will this be the moment Britannia is finally unchained?  

Together, Truss and Kwarteng have pitched their changes as an agenda for growth, prioritising expanding the economy over redistribution. Early policy leaks have suggested the moment will also be used to deregulate, confirming the reversal of the fracking ban and removing the cap on bankers’ bonuses. This is likely to be accompanied by the removal of the national insurance rise and reductions on corporation taxes.  

Yet the full realisation of the Unchained agenda has been derailed by reality. Today, the priority in the Treasury is the response to rising energy prices. The Government was half-way through detailing this when parliament was interrupted by the death of the Queen, and businesses and individuals remain desperate to see what help they will be given through the winter crisis. Tax cuts alone will not be enough to achieve this, as those most affected simply don’t pay enough tax. 

The Government’s preferred option appears to be a per-unit price cap. The costs of this remain unclear and will be determined by the fluctuation of wholesale prices, with the government bound to make up the difference. It’s not the low-tax, low-borrowing idealism of Britannia Unchained, but rather debt-fuelled cakeism, pushing taxes down while keeping spending up. It’s a clear sign of a disconnect between the words and actions of Truss’s top table. Beyond that, despite Truss and Kwarteng’s proud boasts of doing the unpopular to secure growth, it’s noticeable they don’t appear ready to grasp the nettles that might alienate their own support. Uncapping bankers’ bonuses might not win over floating voters, but plays well with the Tory base, either among those who benefit or feel an ideological allegiance against the Government setting wages. It is also a measure that only fiddles at the edge of growth, slightly altering incentives in the already massive speculation economy. 

Even the Unchainers will not turn against the vested interests of the Tory Party. When it comes to the growth-sapping shortage of houses, Truss and Kwarteng are unwilling to deregulate planning, knowing that it will sting them in the shires. Throughout the leadership campaign, Truss equivocated on this subject, frequently attacking her own government’s approach to housing targets. Instead, her government now offers a cut to stamp-duty — not a bad idea in itself, though it will just juice the market without more building.  

At the moment, the only push towards planning reform appears to be in “full-fat freeports”: enterprise zones with reduced restrictions and lower taxes designed to spread the growth around. But this is nothing more than a distraction from the inability to build houses where the jobs, productivity and people currently are. It is unlikely to do anything to defuse the acute crisis of housing in the southeast of England, where short-term electoral interests push against new housebuilding.  Truss’s liberalisation of fracking will doutbless hit a similar stumbling block. Ministers have been at pains to stress that exploitation of shale gas will only go ahead with the consent of local communities. This is an almost impossible bar. Fracking developments generally meet with deep local opposition, the major barrier to development before the 2019 ban was in place. If this is the plan, it is a non-starter. 

Meanwhile, there seems to be no solution for liberalisation where businesses want to build. The Oxford-Cambridge Arc, for instance, which was designed to accelerate Britain’s science and tech sectors around world-leading universities, remains cancelled due to local objections. Instead of backing what is working, the Government looks to create magic in underperforming areas.  Agglomeration and acceleration around strategic advantages cannot easily be replicated by liberalising around left behind towns. The green belt and the planning regime are likely to remain some of the most burdensome regulations afflicting British growth.  

Other policy announcements show a lack of seriousness in the Truss reforms. In 2012, the Unchainers talked a lot about raising educational standards, citing Britain’s uncompetitive PISA scores as a sign of future stagnation. So far, the main policy hinted at is the ending of the ban on new grammar schools. It is a favoured policy of a certain type of Tory, but unproven at best in its outcomes. The grammar school had certain positive impacts at a certain time, but it’s slowly become clear that they tend to favour the rich and have a minimal impact on overall attainment. It’s less of a global lesson than an expired policy gathering dust in the back of the Conservative cupboard. 

The same is true of measures such as abandoning the sugar tax, squeezing the margins on benefits, or Johnson’s proposed ban on the importation of foie gras and furs. These are things which please the ideological Right and anti-regulation small-staters such as the authors of Britannia Unchained. They are, however, small fry in the scale of the British economy. Quite literally all fur coat and no knickers. 

And yet, in the decade since Britain Unchained was published, its diagnosis has largely been vindicated. Britain has struggled with sluggish growth and flatlining wages. The fundamental premise remains obviously true: Britain’s economy can grow and doing so will benefit the whole country. Even the practice of cherry-picking the best policies from around the globe remains sound, though often there’s valid local reasons why we’ve ended up where we are and why change is difficult.  

Much else has shifted though. The Tories sit atop an entirely different political coalition. The fiscal impact of austerity has been wiped out by Brexit, Covid and Johnsonian high spending. The low-borrowing economy has never emerged, and debt will only increase as they seek to graft a low-tax economy on it. In response, instead of turning to a World XI of global policies, Truss and Kwarteng seem keener to play the Thatcherite B team. Tax cuts will come in the face of short-term spending crises and long-term rising service costs meaning a decline in income and more borrowing, at a time when rates are rising, if the growth doesn’t come. It is, in effect, a gamble which could come up short, padded around the edges with policies such introducing grammar schools which invigorate the Tory base but are neither groundbreakingly innovative or proven to work.  

If this happens, all the authors of Britannia Unchained will have brought are more diminished public services, which have neither seen major investment nor the reform to make them more effective. Early on, they correctly identified critical issues facing Britain — and as they rose through the ranks, they saw the need for change become more urgent. Yet now they’re in power, their agenda looks more underwhelming than unchained. Rather than a radical agenda for growth, all Trussonomics looks likely to add up to is the Eighties — but more so. 

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