Six years into the Brexit disaster, the malevolent anti-democratic forces who did so much to facilitate the success of the vote to leave the EU in June 2016 are finally where they always wanted to be: running the government, and able to implement their four prevailing obsessions: enriching the already rich at everyone else’s expense; shrinking the state (or preferably entirely obliterating the state provision of any services whatsoever); using the UK’s departure from the EU as an opportunity to scrap all the inconvenient ‘rights’ that have protected the British people and the environment from grotesque exploitation; and denying the existence of catastrophic climate change to further enrich the oil and gas companies that are driving the planet to extinction.
These anti-democratic forces, largely clustered in a handful of buildings in Tufton Street in Westminster, just a stone’s throw from Parliament, include the Institute of Economic Affairs (IEA), the Taxpayers’ Alliance, the Centre for Policy Studies and the Adam Smith Institute, all far-right ‘libertarian’ think-tanks representing “the extreme fringe of neoliberalism”, as George Monbiot explained in an article for the Guardian on Friday. Also related, though located 400 yards to the north, is Policy Exchange, another right-wing think-tank, and Tufton Street was also initially home to the Vote Leave campaign, which was registered there, as well as Leave Means Leave, which campaigned for a hard Brexit after the EU referendum. It is also currently home to the Global Warming Policy Foundation (DWPW).
This latter group has been described by climate researchers and environmental groups as “the UK’s most prominent source of climate denialism”, as was explained in an OpenDemocracy article in May, when “two MPs, three Lords members and more than 70 scientists, writers, and campaign groups” sent a letter to the Charity Commission complaining that the GWPF was “not a charity but a fossil fuel lobby group”, after evidence emerged establishing that it “had received donations from a foundation with millions of dollars’ worth of shares in oil, gas and coal companies — despite claiming it would not take cash from anyone with a fossil fuel interest.”
The funding of all of these organisations — many, absurdly, run, like GWPF, as charities — is “highly opaque”, as the investigative organisation Transparify has explained, although, as with the example provided by GWPF, it’s clear that some funding comes from the fossil fuel industry, as well as from far-right US foundations committed to climate change denial.
In his article, George Monbiot pointed out how Truss has surrounded herself with representatives of these think-tanks (and further information can be found in ‘Liz Truss: The Tufton Street Candidate’, an article by Sam Bright in Byline Times in January this year). As Monbiot explained, Truss’s senior special adviser, Ruth Porter, was the communications director of the IEA, and then became the head of economic and social policy at Policy Exchange; her chief economic adviser is Matthew Sinclair, who was formerly the chief executive of the Taxpayers’ Alliance; her interim press secretary, Alex Wild, was the research director for the Taxpayers’ Alliance; her health adviser, Caroline Elsom, was a senior researcher at the Centre for Policy Studies, and her political secretary, Sophie Jarvis, was the head of government affairs at the Adam Smith Institute.
According to Mark Littlewood, the current head of the IEA, prior to her victory in the Tory leadership contest, Liz Truss had spoken at more IEA events “than any other politician over the past 12 years”, and now that she has become Prime Minister, and has surrounded herself with staff from the Tufton Street think-tanks, their obsessions are official government policy, even though the government in question has no mandate for its extreme right-wing agenda. Truss was elected by just 81,326 members of the Conservative Party, and yet, rather than seeking approval for her plans via a General Election, she has, instead, chosen to unleash a blitz of new and almost unimaginably damaging and inappropriate policies, all bearing the hallmarks of her subservience to the Tufton Street ideology.
The energy price cap and the refusal to impose a windfall tax on energy companies
In the few hours of Parliamentary activity undertaken by the new government before the death of Queen Elizabeth II was announced, derailing Parliament for the next ten days, Truss didn’t immediately launch the kind of agenda that the think-tanks hoped for. Instead, she was obliged to announce that she was introducing an energy price cap, to prevent spiralling energy costs that otherwise looked certain to hurl two-thirds of the country into desperate and unprecedented poverty.
Had the situation been any less disastrous, she would no doubt have chosen not to do anything at all, but as the severity of the crisis managed to pierce even the dim recesses of her closed mind, she introduced a cap on energy costs for the next two years, meaning that the average household will pay about £2,500 a year rather than the endlessly spiralling costs — potentially reaching over £5,000 a year in 2023 — that would otherwise have been inflicted on consumers.
Truss also subsequently introduced a cap on the energy costs of businesses, although only, initially, on a six-month basis, which will provide little reassurance for many businesses that a viable future awaits them.
No one knows quite how much the cost of this intervention will be, but estimates from experts indicate that it will cost at least £100 billion, and maybe much more. However, while this appears generous, it is worth noting that Truss refused to fund any of it though a windfall tax on the energy companies who have seen huge and unearned profits as a result of upheavals in the energy market, no doubt to the evident satisfaction of Tufton Street’s backers. This is in marked contrast to the EU, which, on September 14, announced a windfall tax of £120 billion on the energy companies to protect its 447 million citizens from naked and unjustifiable profiteering. If Truss had done the same for the UK’s 67 million citizens, there would have been a windfall tax of £18 billion in the UK.
Instead, however, and perhaps most alarmingly — although it has barely been discussed in the media — it seems that the government intends to recoup the £100 billion it is borrowing to protect the energy suppliers through increased bills, as I explained in my article, ‘The Greatest Economic Crime in UK History? Liz Truss Caps Energy Prices By Taxing Us For Up to 20 Years Instead of Taxing Energy Companies’ Obscene Windfall Profits’, in which I suggested that, from what I was able to ascertain, we, the UK’s taxpayers, would end up paying back the loan though increased bills over the next ten to 20 years.
My conclusion was based partly on a suggestion in the Guardian, on September 6, that the debt “would be repaid by consumers, either through a surcharge on bills or from wider taxation over a 10- to 15-year period”, although just yesterday the BBC, in an article about the cap under the sub-heading, ‘How much will the energy guarantees cost and who will pay for it?, stated, “It will be paid for through increased borrowing. This is when the government raises money by selling financial products called bonds, which have to be paid back, usually after several years, with interest. This means taxpayers ultimately pay back more than the government raised.”
Expanding fossil fuel extraction
Not content with this sleight-of-hand to burden bill-payers and tax-payers for a generation to come, to protect the colossal unearned profits of the fossil fuel companies, Truss’s new government also took advantage of the energy cost crisis to announce what Truss described, in a press release announcing the “Energy Price Guarantee for families and businesses while urgently taking action to reform broken energy market”, as a promise to ”tackl[e] the root cause of the issues by boosting domestic energy supply”, which she blamed on “[d]ecades of short-term thinking on energy”, as though, for the previous 12 years, the country hadn’t in fact been run by a succession of Conservative governments.
Truss’s solutions, of course, were designed to appeal to Tufton Street’s backers, with promises to”[l]aunch a new oil and gas licensing round”, which was “expected to lead to over 100 new licences”, and also to “[l]ift the moratorium on UK shale gas production”, otherwise known as fracking, which “will enable developers to seek planning permission where there is local support”, and which, according to the press release, “could get gas flowing in as soon as six months.”
On every front, the energy announcements were profoundly dispiriting, demonstrating contempt by the government not only for its obligations to reduce carbon emissions by 2030, but also for the British people, who have persistently expressed enthusiasm not for new fossil fuel extraction, but for wind, wave and solar power, and also demonstrating an inability to think clearly because of the inflexibility of their ideology. Fracking is disastrous in every way imaginable, but it is also ridiculous to suggest that its resumption, even if “local support” can be secured, which seems highly unlikely — would “get gas flowing in as soon as six months.” New fossil fuel extraction projects take years, if not decades to become operative, along with another pet enthusiasm of the right, new nuclear power plants.
Instead, the immediate solutions are to hand — the wind, wave and solar power generation that Truss’s government and Tufton Street despise, despite their popular support and their practicality. What is also urgently required is investment in insulating the UK’s insanely leaky homes, but on renewables and insulation Truss’s choice as Business and Energy Secretary, the execrable Jacob Rees-Mogg, is silent, preferring instead to try to hoodwink Parliament into accepting fracking as both safe and necessary, as he did on Thursday, to derision not only from his political opponents, but also from many of his own backbenchers.
The ‘mini-budget’ delivering tax cuts for the rich
On Friday, the government’s arrogant, contemptuous disregard for everyone except the rich manifested itself via an extraordinary ‘mini-budget’ delivered by the new Chancellor, Kwazi Kwarteng.
The centrepiece of Kwarteng’s ‘mini-budget’ was the £45 billion of tax cuts that were the relentless focus of Liz Truss’s campaigning during the dismal Tory leadership campaign of the summer, even though they were derided by her challenger, Rishi Sunak, the now-deposed Chancellor under Boris Johnson, who “consistently made the case that permanent, unfunded tax cuts would cause significant damage to the public finances and push inflation up higher”, as the Guardian explained in August, as inflation reached an eye-watering 10%, and after the independent Institute for Fiscal Studies had published a report criticising Truss’s tax cutting proposals.
Truss and Kwarteng, however, ignored all the warnings, obsessed with the deluded notion of “trickle-down economics”, which first emerged in the 1980s, and which falsely alleged that, by making the rich richer, the benefits would ‘trickle down’ to the poor. Experience has demonstrated, convincingly and repeatedly, that the ‘trickle down’ effect is an illusion — and not even its most ardent admirers ever argued that cutting taxes during a recession made economic sense.
However, when the time came for Kwarteng to endorse Truss’s deranged proposals, he went even further than expected, permanently cutting the top rate of tax from 45% to 40%, which, along with the scrapping of Sunak’s proposed national insurance rise, and a meagre 1% tax cut for lower earners, meant that, as the barrister Jolyon Maugham explained, “those earning a million a year will have £54,400 extra in their pockets after tax and NICs”, while, “[f]or those earning £25,000, the equivalent figure is about £280.”
As if this wasn’t bad enough, Kwarteng also confirmed that the cap on bankers’ bonuses, which, as the Guardianexplained, was “imposed after the 2008 financial crash”, and which “capped bonuses at twice an employee’s salary”, would be scrapped, as ”part of what he calls ‘Big Bang 2.0’, a post-Brexit deregulation drive to make the City more competitive”, and also announced that he was shelving plans, introduced by Rishi Sunak, to raise corporation tax to 25% from its current rate of 19%, as well as raising the threshold at which stamp duty is paid, from £125,000 to £250,000, presumably to enable more of the newly enriched to buy second or third homes, or more buy-to-let properties with which to fleece those trapped in the private rental market.
And just to make sure that no one was in any doubt about whose side the new government is on, Kwarteng also announced that “the unemployed will see their benefits slashed if they can’t prove they’re searching for more work”, as Jonathan Freedland explained in a powerful article for the Guardian, adding that, “even though the trade unions have a fraction of their former strength”, Kwarteng also “promised legislation to shrink workers’ ability to act together yet further.”
The creation of “investment zones”
While Kwarteng’s desperate appeal to attract investors to the City and Canary Wharf ignored the damage caused by Brexit, another announcement — establishing new ”investment zones” across the country — was clearly designed to capitalise on the bonfire of workers’ rights, planning regulations and environmental concerns that the most hardcore Brexiteers always intended to impose on the UK as they delighted in cutting us off from all EU protections.
As the Guardian explained, “Businesses will receive big tax cuts and relaxed planning restrictions” in the new “investment zones”, adding, “Stamp duty will be abolished, employment taxes will be slashed, planning rules will be swept aside and companies will be able to completely write off investments in plant and machinery in the zones as part of the plans”, which are also “thought to include removing restrictions on height limits” in new developments, and “potentially ditching requirements for affordable housing alongside developments, as well as other regulations such as environmental rules.” Unmentioned, but also implicit in the plans, is the notion that workers in these “investment zones” won’t have any quaint protections against any kind of exploitation.
Since the announcement, however, the most fervent criticism of the proposals has come from environmental groups, with the RSPB leading the charge against the carving of over half of England’s land mass into “investment zones”, described as “[p]laces where anything could be built anywhere.” The RSPB also identified another future battleground, the Retained EU Laws Bill, introduced on September 22, in which “all remaining retained EU Law will either be repealed, or assimilated into UK domestic law” by the end of 2023, which “could see the end of basic protections known as the Habitat Regulations — laws that protect our birds and animals, everywhere from forests to our coasts,” As the RSPB added, “Where you live, the wildlife and places you love, from the shires to the cities — all under threat from bulldozers, from concrete.”
The full horrors of the Retained EU Laws Bill — including its assault on “important workers’ rights like holiday pay” — will hopefully be exposed and fought over in the coming months, but for now the “investment zones” plan needs tackling by those parts of the country threatened with the establishment of a kind of unfettered free market feudalism. In seeking to justify its plans, the government claimed that it “is talking to 38 local authorities in England about the plans, with 24 sites already earmarked as prospects”, including “sites at Coventry and Somerset that are hoping to attract investments in ‘gigafactories’ to make car batteries, industrial areas around existing car plants in Ellesmere Port and Sunderland, airports at Teesside and Newquay, and urban centres ranging from Blackpool and Plymouth to Workington.”
Ignored in all of this feeding frenzy is, yet again, the spectre of Brexit, which has made the UK into a profoundly unattractive place for inward investment because it is so difficult to successfully trade with the EU, with whose 27 countries the UK used to undertake half its business, but while a battle against the proposed “investment zones” is clearly required, the most immediate fallout from this hideous ‘mini-budget’ is its immediate effect on widening inequality in one of the most unequal of all the world’s supposed ‘developed’ economies, and its reception by the ultimate judges of governments’ success or failure — voters on the one hand, and the markets on the other.
Damning criticism of the ‘mini-budget’, and the reaction of the markets
Criticism of the ‘mini-budget’ was more comprehensive and damning than anything I have ever seen in response to a government’s implementation of economic policies. In his Guardian article, which he helpfully entitled, ‘Liz Truss and Kwasi Kwarteng have made a declaration of class war’, the normally sober Jonathan Freedland pulled no punches. “Liz Truss has embarked on an ideological project so extreme that the de facto budget announced by her chancellor … amounts to a declaration of class war”, he declared, adding, “It was a reverse Robin Hood: taking from those who have least, lavishing gifts on those who have most. It is morally indefensible, economically reckless and so politically risky as to suggest a death wish.”
From the US, the former US Treasury Secretary Larry Summers told Bloomberg, “It makes me very sorry to say, but I think the UK is behaving a bit like an emerging market turning itself into a submerging market. Between Brexit, how far the Bank of England got behind the curve and now these fiscal policies, I think Britain will be remembered for having pursuing the worst macroeconomic policies of any major country in a long time.”
As for voters, Byline Times’ Adam Bienkov noted that a snap YouGov poll found that 63% of voters believed that the ‘mini-budget’ “will mainly benefit the wealthy, compared to just 3% who say it will benefit poorer people more”, and that “[o]nly 19% agree it will help to grow the economy.”
More importantly, however, the markets responded with horror, with the pound falling three and a half cents to $1.09, its lowest rate against the dollar since 1985, leading Larry Summers to declare, “It would not surprise me if the pound eventually gets below a dollar, if the current path is maintained”, and adding, in a final condemnation of the government’s idiocy, “This is simply not a moment for the kind of naïve, wishful thinking, supply-side economics that is being pursued in Britain.”
The damage caused by Truss and Kwarteng also has longer-term impacts, as the Treasury now has to pay for these deranged policies by somehow persuading international investors to buy £234.1 billion of government bonds, an increase of £72.4 billion on the already eye-watering £161.7 billion planned by the Debt Management Office in April. In a sign that investors are understandably wary, as the Guardian explained, “Borrowing costs on 10-year bonds rose by more than 0.2 percentage points to trade close to 3.8%, continuing a dramatic climb under way since Liz Truss took over as prime minister.” Since the start of September, the newspaper added, “yields on benchmark UK sovereign debt have risen by almost one percentage point, significantly more than for comparable advanced economies.”
End this government now!
It’s difficult to see how Liz Truss’s government can survive this self-imposed disaster on every front, and it’s impossible, frankly, not to conclude that they deserve to be removed from office at the first available opportunity. Their failure is the sternest of rebukes to the coterie of self-satisfied, arrogant ideologues in Tufton Street, whose adherence to the most extreme form of neoliberalism is evaporating on contact with reality, and showing them all up for what they are: immature poseurs, and the prostitutes of big business.
Furthermore, as Truss and Kwarteng represent the third scraping of the bottom of the barrel since the Brexit vote (the first two scrapings producing the hapless Theresa May and the disturbingly narcissistic Boris Johnson), it’s also important to remember how all of the misery we have been enduring over the last six years is because of Brexit, and the refusal to acknowledge that it was the single most stupid act of unprovoked economic suicide by any nation in history.
Not only has it crippled British businesses, cutting them off from their largest trading partners, and led to a haemmoraging of the EU workers necessary to make Britain work, it also delivered us Boris Johnson, the only knave arrant enough to lie that he would ‘Get Brexit Done’, who then proceeded to destroy whatever integrity remained in a Tory government by lying about everything as a matter of course, and leaving the UK largely as a rudderless theme park of decline fronted by a clown.
Moreover, when Johnson was finally undone by the breadth of his casual corruption, his political demise has only served to deliver us the hard Brexiteers’ most fervent dream: pliable idiots fixated with enriching the already rich, enslaving the poor, wrecking the environment, ignoring or denying climate change, and somehow thinking that they will get away with it. Hubris — and, presumably, significant doses of sociopathy — have brought us to this point; now it is time for it all to be brought crashing down, whether through the ballot box or out on the streets.