Touchbutton 88 – A Very British Coup

The plotline of recent and unfolding political events could be straight from the pen of Chris Mullin, the Labour MP, who in 1982 wrote ‘A Very British Coup’, a fictional account of how a hard-left Prime Minister, Harry Perkins, was ousted by a combination of the established order aided by the financial markets.

“…Liz Truss, is now being led rather than leading…”

So, Jeremy Hunt is brought in as a reassuring figure to calm spooked markets and spell the end of ‘Trussonomics’ less than a month after his predecessor as Chancellor, Kwasi Kwarteng, announced its genesis in his ‘fiscal event’ of 23 September. The Prime Minister, Liz Truss, is now being led rather than leading and has been, to all intents and purposes, captured by the forces she sought to take on.

“…rumour has it that Truss will be out within a week and a new team will take the reins…”

At the time of writing, rumour has it that Truss will be out within a week and a new team will take the reins, with Rishi Sunak as PM, Hunt staying on as Chancellor, and Penny Mordaunt becoming Foreign Secretary.

Some may argue that this process is a subversion of democracy; others that it is reassertion of Parliamentary sovereignty – that we, the people, elect a Parliament (specifically a House of Commons) and whoever commands the majority of that House governs. Either way, as with our recent change of Head of State, it is surely reassuring that such potentially highly disruptive events can take place without a shot being fired.

“We will see in the next days and weeks the extent to which the measures announced today will do the job.”

Hunt’s task is gargantuan – to repair the damage done to Britain’s reputation in the markets and to calm a mutinous governing party. We will see in the next days and weeks the extent to which the measures announced today will do the job.

In brief, the 1p cut in the basic rate of income tax will be deferred indefinitely; the repeal of IR35 rules, which limit companies’ ability to engage contractors has been reversed; the proposed changes to dividend taxation have been binned; and VAT-free shopping for foreign visitors will not now be available. The energy price guarantee will continue to be applied universally until April next year; thereafter, support will be targeted. We can also expect spending cuts across Whitehall, probably involving the cancellation of a number of road and rail projects.

“…the cuts to National Insurance and Stamp Duty Land Tax…these last vestiges of the Kwarteng ‘mini budget’ remain.”

It would have been difficult for Chancellor Hunt to reverse the cuts to National Insurance and Stamp Duty Land Tax as these measures are already partway through the Commons, so these last vestiges of the Kwarteng ‘mini budget’ remain.

The Truss/Kwarteng experiment with ideological anti-orthodoxy, which stated that tax cuts could be facilitated by even more borrowing, has been swiftly and brutally ended by a Very British Coup. Incidentally, Chris Mullin’s novel is a great read and strikingly coincidental with current events.

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