28 October
Dear Rishi Sunak,
In taking over as prime minister from Liz Truss, you have inherited a difficult economic and political situation, to say the least. As a Tory who leans libertarian, I opposed your leadership bid over the summer and was thrilled by Truss’s refreshing enthusiasm for low taxes and economic growth. Like her countless other supporters, I did not foresee the disaster that would follow. I am glad you are her replacement.
Now, for the first time in about a year, we can say with confidence that we know who the British prime minister will be a few weeks into the future. In fact, given polling trends, Britain’s immediate political future seems to be quite certain – two years of PM Sunak, a general election, and then a Labour government under Sir Keir Starmer for a further five years. For the next seven years, then, Britain will (probably) be free of any new political chaos stemming from the top of the government. For this political and economic stability, we can all be grateful – even if, like me, you supported Liz Truss and had high hopes for her low-tax, small-state agenda.
Before Liz Truss, Britain underwent a slow, managed economic decline as productivity stalled and growth was low. As a believer in the limitless potential of the free market, I was itching for a disruptor like Truss to bin ‘Treasury orthodoxy’ and unleash economic growth in Britain. Unfortunately, she went about it at the wrong time, in the wrong way and far too quickly, but the underlying theory remains.
Now, it seems likely we will undergo seven more years of that same managed economic decline under Sunak and Starmer where grand ambitions about growth must be put on hold in order to deal with raising taxes and cutting spending to fund the everyday functions of government and finding ways for government to work in this new age of high interest rates and expensive borrowing. Nonetheless, I am grateful for the political and economic stability offered by the new government.
Looking to the longer term, though, it is vital that we don’t abandon the pursuit of growth altogether. There are lessons to be learned from the failure of Liz Truss and Kwasi Kwarteng, but to conclude that economic growth is somehow undesirable and/or unattainable would be detrimental. I am concerned that Liz Truss has inadvertently given economic growth a bad name. She made it seem reckless and damaging. There now seems to be a new false dichotomy forming between the growth believers (Truss, Kwarteng) and the sensible grown-ups now running the economy, the implication being that the serious, intelligent types see growth and its benefits as fantasy.
Of course, in reality, you know all about the reasons why economic growth is desirable – but based on the decisions you have made in your first few days in office, you are junking pro-growth policies with a worrying hastiness. For example, Liz Truss made much fuss over her ‘supply-side reforms’ such as liberalising migration rules, reforming planning restrictions and changing the way childcare is funded. But in a blanket statement, your spokesman said the previous government’s supply-side reforms were being shelved indefinitely.
I hope this was just a temporary decision motivated by a desire to keep the bond markets calm and allow for a clean break with the Truss government. I hope you will revisit these vital reforms – and many more besides – later in your premiership. Without them, the British economy risks remaining stagnant for the foreseeable future.
Yours sincerely,
Jason Reed
Jason Reed