There can be no starker contrast between how the two political parties are judged on economic policy than the way the past fortnight has played out for Liz Truss. The astonishing scale of state spending to relieve the energy crisis and enable tax cuts has been announced with total omertà thus far on how much the proposals will cost the British taxpayer. One Labour shadow cabinet minister observed this week that they had been irritated by an interview with Rishi Sunak earlier in the leadership contest on how he would fund his own energy crisis package – costing a mere £15bn – where he had admitted at least £10bn would come from borrowing. “We’d have been crucified for that,” the shadow cabinet minister observed. “But since then we’ve had the new PM announce hundreds of billions and refused to say anything at all.” The energy package for business announced on Wednesday also has no detail on the anticipated costs of discounting wholesale power prices for companies, charities and public sector organisations, including schools. The whole package was announced via a press release from the department and a video posted on Twitter by the business secretary, Jacob Rees-Mogg. There will be no statement in the House of Commons where Rees-Mogg can be questioned – MPs are using the time swearing new oaths to the King, even though there is no obligation for them to do so. There was no cabinet meeting to sign off the proposal this week – Truss is in New York at the UN general assembly. Parliament will have a chance to debate the proposals only this Friday, the last day before another recess, where Kwasi Kwarteng is expected to announced another slew of new tax cuts, including national insurance, cancelling the proposed corporation tax rise and cutting stamp duty. It is only then when Kwarteng will finally have to address the full costings. But there will be no one officially marking his homework on the costs of the tax cuts and the energy freeze at this week’s “fiscal event”, which is in effect a mini-budget.
Kwarteng has declined to ask the Office for Budget Responsibility to produce any forecast, despite a strongly worded intervention from Mel Stride, the Tory chair of the Treasury select committee, who urged him to reconsider. Richard Hughes, the chair of the OBR, has told Stride they were ready to provide a forecast but the Treasury refused. We have only external predictions from thinktanks, financial firms and lobby groups to turn to for an idea of how much the full spending package will cost. The predictions are eye-watering: tax cuts of £30bn to £50bn and the government’s intervention to freeze energy prices for consumers and businesses could cost more than £100bn, with some predictions of £150bn. It is a generous short-term fix that does not address a long-term problem. There is little to say about an exit strategy and what happens when the six-month cap on support runs out. Businesses will face an anxious wait to see if they will be able to access support for the most vulnerable. Labour MPs can grumble all they like about Tories “playing politics on easy mode” but there are also major pitfalls to this approach. The vagueness of the proposals can make the markets nervous and there is a risk of so much borrowing leading to an inflation spiral. Truss is gambling everything on economic growth, but if it does not materialise there will be little choice but to slash spending. Truss started her term in Downing Street with one of the most daunting weeks a prime minister can face. But she has much now in her favour: a huge spending package to protect people this winter, a major world event, however tragic, which allowed her to seize a moment as a sombre stateswoman, the chance to avoid recession as well as lower fuel prices helping to bring down inflation. Those factors should deliver a poll bounce for the prime minister in the coming weeks, especially if she pulls off a successful Conservative conference. If that does not materialise, Tory MPs will begin to wonder if there is anything that can save them.