It all started on Saturday, September 3, before Truss was announced as the leader of the Tories. She was quite confident she would win. The meeting took place at Chevening, the foreign secretary’s (as Truss then was) grace and favour residence in Kent.
Along with Truss and Kwarteng, there was Matthew Sinclair, former head of the TaxPayers’ Alliance, a right-wing, small-state think tank formed originally by Matthew Elliot who wrote the 1,000-page Change or go document about leaving the EU published in late 2015. They have close ties with the Institute of Economic Affairs (IEA), another ideologically inclined think-tank.
Also in attendance were the free-market economists for Brexit, Andrew Lilico, Gerard Lyons and Julian Jessop.
Lilico and Jessop can be found on Twitter regularly defending the mini-budget and we can now see why. It was their idea. But listen to this”
“The three economists were supportive of Truss’s growth agenda, according to one person at the meeting, but they reminded the soon-to-be-PM that markets were in a febrile state and that any fiscal action would need to be seen as necessary, non-inflationary and affordable. Truss was advised not to do anything the markets didn’t expect.”
I would bet money this was from Lyons because I’ve heard him say exactly the same thing during an interview he gave to a TV company. It’s like speaking at the inquest of a teenager killed by an AR15 automatic rifle given to him as a birthday present by a rich uncle who now says, “I told him to be careful”.
Tom Scholar, the Treasury's permanent secretary, was sacked on Kwarteng’s first day as chancellor. This wasn’t because of any incompetence on his part but apparently, it was because he had upset Truss when she was chief secretary by ‘mansplaining’ something to her. It was simply because she didn’t like him even though he had huge experience managing big fiscal events and had good contacts in the financial markets:
“It all fell apart because of Tom Scholar,” said one cabinet minister. “He was the one who had the contacts in the City, all the phone numbers.” Others in the Truss camp dispute whether Scholar’s sacking was that pivotal, but it certainly deprived the government of the experience of a man who had helped to see Britain through the 2008 global financial crash.
Having dismissed Scholar, the mini-budget began to take shape during another meeting in the prime minister’s Downing Street flat, where Truss, Kwarteng and Sinclair worked along with deputy chief of staff Ruth Porter, formerly of the IEA, another deep-state plant.
On the tax cuts for the richest, advisers warned about creating a perception of a 'Budget for the rich' but were shut out of the room. “People got carried away, myself included,” Kwarteng said. “There was no tactical subtlety whatsoever.”
The strategy was right but they only got the tactics wrong!
Kwarteng's mother (he was born in 1975) was a barrister and his father an economist, and he excelled academically, attending Eton College, Trinity College, Cambridge (where he won a double first in classics and history), Harvard University as a Kennedy Scholar and Cambridge again, where he earned a PhD. He later worked at JPMorgan Chase and a hedge fund.
He was, on the surface, very clever but as the FT says, self-doubt was not part of his make-up. And that's the problem, a clever man recognises his own limitations and defers to experts. But he is clever enough to deflect blame afterward:
"Truss did not want the OBR to produce any forecasts about her Budget’s impact. When Kwarteng proposed spending cuts to offset some of the tax cuts, Truss refused, arguing again that the government balance sheet could take the strain. 'There were no forecasts, no spending measures, no scoring. It was kind of nuts,' said one cabinet minister. 'It was hubris. She felt invincible, almost regal'.”
In other words, Truss made him do it.
Sir David Lidington, Theresa May’s deputy, said: “Those who thought Brexit was going to unleash a hidden or suppressed dynamism in the British economy were wrong. Simply believing that your problems are solved if you break free from the EU and talk confidently about the future is nonsense.”
Of course, not everybody is convinced, especially the puppet masters in the think-tanks who provided the ideological underpinning for the government's economic policies:
"Mark Littlewood, director-general of the IEA, still holds to the free-market, low-tax ideas his think-tank helped Truss and Kwarteng push, but he admits things went terribly wrong. 'You might have the recipe for making the most perfect and delicious pizza, but if the chef is hubristic, or crazy, or incompetent, you are not going to end up with a particularly tasty pizza. Does that mean you shouldn’t eat pizza again? No, it just means you shouldn’t eat pizza cooked by that chef'.”
They still think slashing taxes and deregulation is the answer and no matter what evidence is presented to the contrary or even an experiment that triggered a meltdown in the financial markets, nothing will persuade them it is simply not true. Virtually every EU member state has a higher tax take than we do and is more tightly regulated but they insist we must succeed by doing the reverse.
Given the chance, they would do it all over again - and again - and again.
If there is one reason why the Tories need to go, it's to break the link between the puppets and the crazy puppet masters manipulating them.
