Liz Truss is a warning to us all about the danger of overconfidence

The instant histories are already being written that seek to explain the collapse of her premiership after just 49 days, writes John Rentoul

How did it go so wrong, so fast for Liz Truss? (Getty)

How did it go so wrong, so fast for Liz Truss? This could already be an exam question for students of ultra-contemporary history. Next week, the first attempt to answer it, by Harry Cole and James Heale, will be published. They had been writing a biography of the prime minister aimed at the Christmas market, but they have had to update and re-title it, rushing it out as an e-book next Tuesday, with hard copies by the end of next month.

An extract was published in The Sun this morning, which sheds new light on the question. It underlines how politically close Truss and Kwasi Kwarteng were. They both came into the Commons in 2010, and Kwarteng told the authors: “I remember saying to her in our first year in parliament, you’re going to get to the top because you’re going to stick around longer than anyone else.”

From my own recollection, it would seem that the critical period was 2017-18, when Truss was chief secretary to the Treasury and Kwarteng was parliamentary private secretary to Philip Hammond, the chancellor. I get the impression that they formed a strong bond, presumably based on complaining to each other about Hammond, about his caution and unwillingness to challenge what they derided as the “Treasury orthodoxy” – a phrase that was to feature prominently in Truss’s leadership campaign.

In today’s extract, Cole and Heale race on to the breaking of the relationship when, on 14 October, after three weeks of turmoil since the mini-Budget of 23 September, Truss sacked Kwarteng as chancellor and replaced him with Jeremy Hunt.

The critical scene was in the cabinet room in 10 Downing Street on 13 October, featuring James Bowler, the top Treasury civil servant (Truss had already overruled Kwarteng to appoint him), and Simon Case, the cabinet secretary. “Bowler, all the Treasury officials, Case, they all sat around the cabinet table and said to the PM, ‘Unless you junk [your plans for] corporation tax, we are going to have the most catastrophic meltdown; it will take 20 years to recover’.”

Caught between mayhem in the markets and a mutinous Conservative Party in parliament, Truss realised that she would have to put up corporation tax after all, and that Kwarteng “had to be offered up as a sacrifice if her administration was to remain in any way credible”.

Therese Coffey, her other close political friend and deputy prime minister, was also “determined to get Kwasi”, according to one of Cole and Heale’s sources. Sir Graham Brady, chair of the 1922 Committee representing Tory backbenchers, Wendy Morton, the chief whip, and Craig Whittaker, her deputy, “all told her to sack him”.

She kept saying, “This is so painful, so painful,” but she did it, in the hope that ceding all power to Hunt would allow her to stay on and possibly to recover. “We just thought, ‘Use Jeremy as a human shield’,” said an anonymous No 10 official. “And we thought it would work, to be honest. But it didn’t.”

It was too late by then. The majority of Tory MPs had resolved that she had to go and be replaced by Rishi Sunak, with a minority preferring to revert to Boris Johnson.

So the important question is why Truss and Kwarteng made the original mistake in the mini-Budget, of cutting taxes by more than she had promised in her leadership campaign. Julian Jessop, an economist at the Institute of Economic Affairs, was one of a delegation of advisers who visited Truss when she was holed up in Chevening, the foreign secretary’s country house, on the first weekend in September, during the leadership campaign, preparing for government.

He said, in an article headed “Liz Truss: my part in her downfall”, that he, Gerard Lyons and Andrew Lilico briefed her on “the mood of the markets”, and that he and Lyons wrote a paper for the meeting, which “stressed the need to move carefully”.

What we do not yet know enough about, though, is what happened when the external advisers and civil servants were out of the room, and Truss, Kwarteng and the inner circle discussed what to do. On a series of decisions, they got it wrong. They went for a cut in the top rate of income tax; they went further in cutting national insurance, the basic rate of income tax and stamp duty than had been promised; and they did it all without allowing the Office for Budget Responsibility to see the numbers. And they did it all straight away, in addition to a questionable decision to provide generous, untargeted support to keep down energy prices.

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Many more thousands of words will be written about how that happened. How, as Jessop put it, the leadership campaign “had become very focused on tax cuts”, pickling one aspect of Conservative thinking and separating it from another important aspect, namely the need for sustainable public finances after the shocks of coronavirus and the energy crisis.

But I am sure that the lasting lesson will be a variation on a theme that emerges from so many policy disasters in the past: the dangers of groupthink and overconfidence. In this case, of Truss and Kwarteng, egging each other on, echoed by a tiny coterie of think tankers often slightly misunderstanding each other.

To those watching in disbelief – encapsulated by the anonymous Tory backbench MP who involuntarily exclaimed, “Jesus Christ!” when Kwarteng announced the top rate tax cut in the Commons – it was so obviously going to end in disaster that it requires a great effort of historical reconstruction to imagine how it came about.

I look forward to reading the rest of Cole and Heale in the hope of finding out more.