Truss and Sunak’s Reheated Thatcherism Is the Last Thing the UK Needs

Yves here. The Tory leadership contest is a depressing spectacle. This post puts a spotlight on an element that hasn’t gotten the attention it warrants: the bankrupt economic policies of the two contenders, Truss and Sunak. Neoliberalism played a big role in the slow erosion of the UK, and more of that bad medicine will not make things better.

By Laurie Macfarlane, economics editor at openDemocracy, and a research associate at the UCL Institute for Innovation and Public Purpose. He is the co-author of the critically acclaimed book ‘Rethinking the Economics of Land and Housing’. Originally published at openDemocracy

Boris Johnson’s time as prime minister has been defined by a series of contradictions.

On the one hand, his approach to the economy has been markedly more interventionist than any of his recent predecessors. A new generation of state-owned bodies has been established, including the UK Infrastructure Bank, the Advanced Research and Invention Agency (ARIA) and ‘Great British Nuclear’. Numerous businesses have been nationalised in whole or in part, including the steelmaker Sheffield Forgemasters, the National Gridand large parts of the rail sector.

This has led some commentators to herald ‘the death of neoliberalism’ and former shadow chancellor John McDonnell to remark: “Johnson has carried out more nationalisations than any Labour prime minister since Harold Wilson.”

On the other hand, though, Johnson has doubled down on the kind of free-market fundamentalism imposed by his predecessors. Under the banner of ‘Global Britain’, he has promised a “bonfire” of domestic regulation to maximise the opportunities of Brexit, and struck trade deals that threaten to undermine social environmental standards. Most recently, his government has moved to deregulate the City of London and launched the biggest attack on trade union rights for a generation.

How will the two candidates seeking to be his successor manage these contradictions?

Liz Truss has run her leadership campaign largely on a platform of cutting taxes and curbing trade union power, while also pledging to be tough on crime. This platform has proven popular with Tory members, with polls indicating that Truss has gained a substantial lead over the former chancellor.

Rishi Sunak, meanwhile, initially opted to take a more cautious approach, prioritising ‘responsible’ public finances and ruling out personal tax cuts until inflation is “under control”. But in a last-ditch appeal to win over Tory members, this week Sunak announced he will cut the basic rate of income tax from 20% to 16% by the end of the next parliament if he becomes prime minister.

Despite their public disagreements, it is clear that the issues that divide the candidates are predominantly tactical rather than ideological. Both candidates resolutely believe that tax cuts and a smaller state are a route to prosperity. Both believe that Brexit will unleash the UK’s economic potential. And both look to Margaret Thatcher for the answers to the UK’s problems.

Truss’s plan to cut taxes and curb trade union power has strong echoes of Thatcherism, and some commentators have noted striking similaritiesbetween her campaign and that of the Iron Lady.

Meanwhile, writing in The Daily Telegraph, Sunak proclaimed: “I am a Thatcherite, I am running as a Thatcherite and I will govern as a Thatcherite.”

Whether or not the candidates would actually govern in Thatcher’s image remains to be seen. But one thing is clear: reheated Thatcherism is not the answer to the UK’s deep-rooted crises.

Many of the UK’s most pressing problems – from soaring inequalities and deindustrialisation to the housing affordability crisis and failing utilities – have their roots in Thatcher’s economic revolution. The failures of privatisation, deregulation and trickle-down economics underpin many aspects of Britain’s economic malaise.

Presenting turbocharged Thatcherism as the solution to Britain’s problems is therefore like trying to cure lung cancer by smoking a hundred cigarettes. The cure for the disease can never be its cause.

But the Conservatives aren’t the only party harking back to the past. This week, Keir Starmer set out his most comprehensive vision for the economy to date. According to the Labour leader, the party will fight the next election on the issue of “growth, growth and growth”. Prioritising economic growth is of course not new – it has been a priority of virtually every government in modern times. The question that matters is: what sort of model will be pursued to deliver growth?

For Starmer, the answer is to catalyse private sector investment and innovation, supported by pro-business government policy. In a clear departure from the party’s direction under Jeremy Corbyn, Labour has distanced itself from nationalisation and public ownership in recent years. Instead, a Labour government will focus on “working in partnership with business”. As Starmer told the Daily Mirror, “My priority is growth and partnership. Not an ideological attachment to particular models of ownership.”

What this partnership with business looks like remains to be seen. While in his speech Starmer talked about the need for an industrial strategy to “make sure this partnership grows our collective contribution”, elsewhere he has called for the UK to scale back financial services regulations to “maintain the City’s competitiveness”.

The hope it seems is that, with the right support, corporate Britain can turn the UK’s economic fortunes around. In turn, the proceeds from unlocking private sector growth will enable a Labour government to invest in public services and increase wages. “Without growth we won’t get a high-wage economy. And without growth we can’t revitalise public services,” Starmer said.

If this sounds familiar, it’s because it bears a striking resemblance to that of another former prime minister: Tony Blair.

The problem with this approach is that it overlooks the systemic causes of the UK’s economic troubles. In reality, large parts of corporate Britain are engaged in wealth extraction, not wealth creation.

From the financial sector to real estate, and utilities to pharmaceuticals, many of the UK’s most profitable sectors are engaged in a process of taking wealth away from workers and funnelling it upwards to asset owners. Profits are made not through entrepreneurialism and innovation, but by owning and controlling scarce resources – be that land, natural resources, monopoly networks, intellectual property, or money. In other words: one person’s gain is another’s pain.

Neither the reheated Thatcherism being offered by Truss and Sunak, nor the revamped Blairism being offered by Starmer, is proposing to confront the UK’s extractive model. The former will put it on steroids, while the latter will let it continue unchecked. As long as those are the choices we face, the UK’s deep-rooted economic problems are likely to remain.

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  1. Amigauser

    Tory light (labour) was a complete disaster for ordinary people last time with its free trade deals (China) and unlimited immigration.
    This is what lead to Brexit and the approaching Scottish freedom.
    I doubt England will survive another immizeration again by either Tory or new Tory.

  2. TimH

    Liz Truss has run her leadership campaign largely on a platform of cutting taxes and curbing trade union power.

    So NHS will get even less funding and wages will go down. Great.

    1. Sausage Factory

      and interest rates will get higher, quicker. The political and economic bankruptcy in the UK just seems never ending.

  3. orlbucfan

    Is this actually Great Britain I’m reading about?!? Cos it sure sounds like a twin to the USA! USA! when the curse called Reagan was elected in late 1980.

    1. Michael Ismoe

      This is like watching Ted Cruz and Marjorie Taylor Green fight for the Republican nomination to find out which one will face Pete Buttigieg in the general election. There are no winners here, although I have to admit that Liz Truss could well be the stupidest woman politician ever. Here’s looking at you Kamala.

  4. chuck roast

    Geez…the English are re-nationalizing a portion of Nation Grid? This would be the same National Grid that has become a demonstrable public nuisance on my little island. In addition to plunging the island into the deep-freeze two years ago and causing wide-spread hardship because of under-investment, we have just witnessed a doubling of our electric and gas bills. I’m seeing a parsimonious future ahead for many locals. The local broadsheet is oddly amenable to publishing my near-socialist mutterings…here goes another “Let’s Nationalize National Grid.”

  5. David

    Journalists use words to write text to get clicks. That’s pretty much all there is to it.
    Ever since Brexit, successive Tory Prime Ministers have been on the back foot, ducking and weaving, and trying to deal with problems that are too big for them. That’s not going to change: indeed, if it is Truss, someone of her extremely modest abilities will be immediately overwhelmed by questions she has no idea how to address, and events that she’ll be reduced to gawking at as a hypnotised bystander.
    She’s saying what she presumably thinks she has to say to get elected by the militants. But there’s a big, bad, world out there, and much of what she’s saying now will be simply irrelevant.

  6. Oh

    The sooner England self destructs the better for the people there and here. We’ll follow soon. Hurray for the tories!

  7. Some Guy

    The premise of the article is so obviously true that there is no need for further comment on it here. But in thinking about what the U.K. needs, I feel that people need to look at more than the class war part of it. Don’t get me wrong, the class war part, funding NHS properly, reducing inequality, shutting down the right wing newspapers, is incredibly important, but not enough on its own.

    The U.K. has a big energy problem, made worse by the war in Ukraine. Their old nuclear plants are shutting down, new nuclear is incredibly expensive, their oil and gas production is declining to nothing, coal is bad the environment and supplies aren’t what they once were anyway, and gas is super expensive to import, especially now.

    They’ve built a ton of wind, and the population has been squeezed to lower and lower levels of energy consumption over time, but it’s not enough (the intermittency of wind means significant backup power needs to be kept available, increasing costs). Without some way to make sure the country has an affordable energy source to power the country over the next few decades, I think things will get tougher and tougher, no matter who is in charge (obviously worse with Thatcher wannabes in charge, of course – Thatcher’s time in power coincided with the North Sea oil discoveries, which bought the U.K. time, but now the fields are depleted and there is nothing similar on the horizon that I can see.

  8. ChrisPacific

    I find myself a little bemused by the downfall of Boris. So he’s a mendacious unprincipled rogue. Is that really a surprise? Who did people think they were voting for?

    His real sin, from what I can tell, isn’t that he’s a liar (after Brexit, that’s practically a party requirement) but that he’s not a good enough liar. The electorate already chose the path of comforting lies over uncomfortable truths when they elected him, but for lies to be comforting they have to be convincing enough that you can pretend they’re true without too many mental gymnastics. Boris has increasingly failed on this count. His lies are too obviously lies. There is no comfort to be had from them any more. One starts to wonder what else he might have lied about, and all those inconvenient facts one has tried so hard to block out come creeping back in around the edges.

    Invoking the holy name of Thatcher is an implicit promise of a return to the days when believing the lies was easier and people could treat their vices as virtues. It won’t work – the problems are too immediate, and as the article points out, the proposed ‘solutions’ are anything but. I would expect the replacement for Boris to have an even shorter lifespan than he did.

  9. ChrisRUEcon

    > For Starmer, the answer is to catalyse private sector investment and innovation, supported by pro-business government policy.

    Yep, Blairite through and through … Labour is dead. Corbyn and a few of the others should splinter off into Old Labour or something. I used to think that such a construct would take time to “catch fire” as it were, but #BrExit, #Ukraine and the knock-on effects would I suspect be a good catalyst.

    1. drumlin woodchuckles

      Maybe they could call it Worker Labour, or Labour Labour, or Left Labour, or something.

      1. ChrisRUEcon

        I actually did think about “Labour Labour”, and gave myself a chuckle … ;-)

        (Labour)² … hahaha!

        All good choices. I also thought about Real Labour … to differentiate from Faux Labour Blairites.

  10. Tom Stone

    I suspect that when the Atlantic Conveyor shuts down in a few years that Brexit will seem like a nothingburger.

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