The UK has a new prime minister. Liz Truss, aged 47, beat Rishi Sunak, 42, to become the new Conservative party leader and replace Boris Johnson as prime minister. The leadership contest was, at times, nasty as it was fought on personality not policy. Τhe main difference between them was when to cut taxes and by how much.

Sunak had the support of most Conservative MPs and was the more impressive candidate, but Truss was the better politician. Although wooden, vague and hesitant compared to Sunak, Truss persuaded party members to vote for her. Truss was helped by some Conservative party members seeing Sunak’s decision to resign as Chancellor of the Exchequer as a betrayal of Boris Johnson.

By the right, march

During the leadership contest Truss was vague about her policies. On becoming prime minister on 6 September, she promised ‘to deliver’ but did not say what. However, after a few days as prime minister, the direction she will take seems clear.

Average UK household energy bills were £1,000 (€1,140) a year before Russia’s invasion of Ukraine, now they have risen to £3,200 (€3,650), creating a social crisis where many people in the UK will have to choose between heating or eating. this winter. In her first act as prime minister, Truss said average households would not have to pay more than £2,500 (€2,850) a year for the next two years. The energy price cap will cost at least £100 billion, which Truss will pay for by extra public borrowing. She resisted calls by the Labour party opposition to raise the money by taxing the record profits of oil and gas companies. Truss also announced that she would issue new oil and gas exploration licences, restart shale gas production (‘fracking’) and review the UK’s target of net-zero carbon emissions by 2050.

By capping energy costs Truss has demonstrated the type of short-term pragmatism that she has shown throughout her career, while staying true to her ideology. Like her role model Margret Thatcher, the Conservative party’s iconic prime minister from 1979 to 1990, Truss believes in limiting state power, low-taxes, deregulation, and personal responsibility and market forces. During the leadership contest, when asked how she would respond to the energy crisis, Truss expressed a dislike of government ‘handouts’, preferring to cut taxes. This was seen as criticism of Boris Johnson’s policy of direct payments (of £650 to date) to help eight million poor households with rising energy costs. It also provoked an outcry as tax cuts do not help the poorest people. By introducing an energy price cap that helps everyone, Truss was able to stop the ‘handouts’.

Short-term pragmatism aside, Truss clearly wants to govern from the right-wing of her party. By shifting energy policy towards using more fossil fuels, despite record summer temperatures melting the tarmac at Heathrow airport. Her refusal to tax oil and gas company profits also favours big business. In addition, tax cuts, popular with the Conservative party’s right-wing and part of the Brexit agenda, are central to Truss’ plan to revive the UK economy and she is considering reversing recent tax rises. This would benefit top earners who would receive an extra £1,800 a year, compared to £7 for the lowest earners, increasing income inequality in the UK. This is not a problem for Truss, who when asked if such a move was fair, replied, ‘Yes’.

Right or wrong

Whether Truss’ approach will solve the UK’s serious problems remains to be seen. The country is experiencing its biggest fall in living standards since records began and, according to the Bank of England, faces an economic recession that could last well into 2024. Tax cuts may help but must be paid for either by higher government borrowing, or by reducing public expenditure.

More borrowing threatens to increase inflation, currently 10% in the UK and forecast to be 13% by the end of 2022. But the Truss government needs money, not only to pay for the energy price cap, but also to invest in the UK’s public services. The UK‘s National Health Service has some 6.4 million people waiting for treatment, while England’s lack of 12,000 hospital doctors and 50,000 nurses and midwives is regarded as a serious risk to patient safety.

Cutting public expenditure is more aligned to the new prime ministers’ ideology, but there is no appetite for the type of austerity measures imposed by the 2010-15 Conservative-led government. It would also undermine plans to invest in deprived areas, many of which voted for the Conservative party for the first time because of Boris Johnson. Without these areas, the Conservative party could lose the next election, scheduled for 2024.

Truss will probably gamble on tax cuts bringing sufficient economic growth and investment to pay for improved public services. Some, not only the Labour party opposition, will hope that she fails. Boris Johnson remains popular among Conservative party members. There is speculation that, after a period devoted to making a lot of money, he may return if opportunity arises. Sunak, too, may welcome a second chance to become prime minister. People may underestimate Truss, as they initially did Margret Thatcher. It is also unclear how the death of Queen Elizabeth II will affect the UK’s mood. One thing is clear, time is not on Prime Minister Truss’ side.