Is it too late for Liz Truss to regain trust?

It seems barely conceivable that a prime minister appointed just 40 days ago should already be fighting to preserve her premiership. Yet that is the predicament in which Liz Truss has placed herself.

Having sacked her chancellor and reversed one of the key policy-changes on which she won the leadership, Truss has admitted that what she continues to describe – without irony – as her “mini-budget” went “further and faster” than the markets expected. It is the latest attempt to rectify some of the mistakes she made on entering office, but she is taking these steps belatedly, and largely without explicit recognition of why they should have been an integral part of her approach from the start. 

Liz Truss’s premiership has barely begun, but her chaotic first weeks in office means she may not have done enough to persuade the markets – and the public – that she has the credibility to govern.

Truss has been converted to the value of independent institutions

Truss’s first concession to the basics of good government was to acknowledge the value of the OBR analysis that she rejected when first announcing her sweeping tax cuts. Accompanying her former chancellor Kwasi Kwarteng to a meeting with the OBR and peppering her public statements with reassurances that her Medium Term Fiscal Plan will be subject to the watchdog’s scrutiny are strategies intended to persuade the markets that she now understands the assurance they take from this analysis. This is sensible, although that analysis may yet prove to be uncomfortable.

Likewise, Truss has moved away from her questioning – during the leadership election - of the Bank of England’s mandate, and towards regularly restating the significance of its independence. Unfortunately however, this shift appears to be less a belated recognition of the value of independent institutions and more a strategy designed to deflect criticism that the government has been responsible for rising interest rates. Truss’s answers to questions about predicted increases in the Bank of England base-rate have implied that these can have nothing to do with the impact of the ‘mini-budget’ because the Bank is independent. This line – whether obfuscation or – worse – misunderstanding – has done nothing to enhance the government’s fiscal credibility.

Truss has been forced to broaden her ministerial team

Having lost one minister to allegations of scandal and chosen to sacrifice the chancellor with whom she was previously said to be in ‘lockstep’, Liz Truss has taken the opportunity to diversify her ministerial team. Her appointments of Greg Hands and Jeremy Hunt – both of whom were Rishi Sunak supporters (after Hunt exhausted his own leadership ambitions) – to replace Conor Burns and Kwasi Kwarteng seems to indicate a recognition that she needs to build support beyond her most loyal supporters. The robustness of future policy proposals should benefit from the challenge that their alternative perspectives will bring to ministerial discussions, and – despite Hunt not having previously worked in the Treasury –Truss will hope that his previous ministerial experience will help reassure the markets, even if his first interviews as chancellor underline the extent to which her own economic agenda is being ripped up.

Truss has prioritised stability in her Treasury civil service appointment

The same hope may have been behind the PM’s decision to overrule Kwarteng’s choice of MoJ permanent secretary Antonia Romeo – a senior civil servant with a reputation as a ‘disruptor’ – to take over the top civil service job at the Treasury. Truss’s more orthodox choice of long-time Treasury civil servant James Bowler to replace Sir Tom Scholar – who was sacked by Kwarteng on his first day in office – was presumably intended to signal the government prioritising stability and expertise. Despite her initial enthusiasm for challenging “treasury orthodoxy”, Truss seems to have realised that knowingly destabilising the key government department responsible for dealing with the economic crisis her policies have either triggered could end up being a further own goal. Nonetheless, the fact remains that none of the Treasury’s top three civil servants now has the experience of economic crisis management and international reputation that Scholar would have brought to the table. And the replacement of the top two Treasury ministers – Kwarteng and chief secretary Chris Philp – with Jeremy Hunt and Edward Argar means the department is now working to its fourth new set of ministerial priorities in a year.

Truss continues to avoid scrutiny

Despite her moves to rectify the mistakes which fatally undermined market confidence in her radical economic agenda, Truss continues to shy away from scrutiny. Friday’s perfunctory ten minute press conference - in which she lamented her own sacking of her “great friend” Kwasi Kwarteng without giving any rationale for why she felt he needed to go, and announced her u-turn on corporation tax - concluded with clipped and uninformative answers to just four increasingly frustrated questions from the lobby. Rightly or wrongly, this approach continues to imply a lack of confidence in her ability to defend her own plans.

Truss has taken some welcome steps towards the basics of good government, but so far it seems unlikely that she has done enough to restore her administration’s credibility. There has been a backlash to her Friday press conference, her MPs are restless, and the economic picture will not improve anytime soon – her premiership looks far from secure. 

The great frustration for the prime minister is that she need not have ended up here. A more measured approach from the start might not have squandered the trust her radical agenda needed to succeed. A shift back towards the basics of good government – though welcome – may still not be enough to restore the trust that Truss desperately needs.