Trussonomics will deliver more division instead of growth - Stewart Lansley

The public, still reeling from the rolling shocks of the last decade, are desperate for a political vision that offers national renewal, greater equality, and a stronger social state.

Instead, it seems, Liz Trust is to double down on the pro-rich, anti-poor neoliberal politics that has already brought Britain close to its economic and social knees.

Liz Truss’s priorities, revealed in Friday’s ‘maxi-budget’, are tax cuts at the top, higher City bonuses and another bonfire of business regulation. Tackling inequality - and it seems, Boris Johnson’s levelling up agenda - is off the agenda in favour of the language of the pro-market, small state, anti-

equality philosophy applied from the early 1980s.

As one of its architects, Keith Joseph, a close adviser to Margaret Thatcher, declared in 1976: ‘true’ Conservatives need ‘to make the case against egalitarianism… The pursuit of equality has done, and is doing, more harm,

stunting the incentives and rewards that are essential to any successful economy.’

Yet the ideology of free-market neoliberalism and its pro-rich bias has been firmly discredited. The 2008 crash shattered the hubris of the pro-market school while it was further undermined by the destructive and over-applied post-2010 programme of austerity. Before his meeting with Truss in New York last week, President Biden lashed out at the past failure of ‘trickle-down economics`. Former cheerleaders have changed their tune. The IMF talks of neoliberalism being ‘oversold’. For Henry Blodget, a former leading Wall Street analyst, market capitalism has turned America into a ‘nation of overlords and serfs’,

Forty years on we now have the hard evidence of the inequality-driving real life experiment.

Far from ‘benefiting everyone’, as Mrs Truss has declared, Britain, one of the most equal of rich nations in the 1970s, is now the second most unequal (after the United States). As the gains from growth have been colonised at the top, the child poverty rate, in relative terms, has more than doubled.

The poorest fifth of Britons are much poorer than their counterparts in other, more equal nations. Germany’s poorest, for example, are a third better off than those in Britain.

The promise was that the political licence to get rich, along with the weakening of state social protection, would bring a more dynamic economy, with all getting richer, faster.

Yet the pro-market, anti-state doctrines of the last forty decades have delivered low levels of private investment and productivity – the key drivers of growth - along with a more turbulent economy with more frequent and more damaging financial crises.

When big corporations have been turned into cash cows to fund dividend payments and bloated executive pay rather than higher investment, the reversal of the planned rise in corporation tax makes no sense.

Lower tax rates have greatly benefited the rich, but have failed to yield faster growth. Instead, finance and corporate leaders have used their greater freedom to spawn a range of self-enriching business methods that have also contributed to Britain’s low-growth, low-productivity, low-wage economy.

The IMF has shown that high levels of inequality have been associated with brittle economies that are prone to crisis and weak growth. Key elements of Britain’s economic model – of structural poverty, insecure employment and a low wage share - have created consumer societies with too little demand, and a growing, self-destructive dependency on debt to survive. Delivering Truss’s call for ‘growth, growth, growth` will require a more equal society.

Excessive inequality is not just economically ‘corrosive’. It has also left a growing trail of social distress. Much of this - from a deep chasm in rates of life expectancy to rising levels of destitution - has been documented in the Levelling Up White Paper.

Britain has, in turn, seen a rising gap between the electoral turnout of the richest and poorest groups, while the return of high global concentrations of income and wealth has driven global warming.

The richest tenth of the global population emit 48 per cent of all global emissions , while the poorest half emit 12 per cent.

Britain has engineered the return of a form of luxury capitalism last seen a century ago, with extreme affluence alongside severe social scarcity.

Pro-inequality economics has been tried and failed. Experts such as the former head of the Treasury, Gus O’Donnell, have warned of the immense risks of such a huge ‘fiscal stimulus’.

That gamble may fail to deliver the call for ‘growth, growth, growth’, but will feed a longstanding politics of division that lies at the heart of Britain’s deteriorating social, and economic record.

Stewart Lansley is the author of The Richer, The Poorer: How Britain Enriched the Few and Failed the Poor, a 200-year History (Bristol University Press), and a council member of the Progressive Economy Forum.