FTI Consulting Public Affairs Snapshot – Liz Truss: Britain’s New Prime Minister

Truss was elected as the Member of Parliament for South-West Norfolk in May 2010, having unsuccessfully contested the seats of Hemsworth in 2001 and Calder Valley in 2005. After serving on the Justice Select Committee, she became a Parliamentary Under-Secretary at the Department for Education in September 2012.

She was promoted to Cabinet in July 2014 as Secretary of State for Environment, Food and Rural Affairs. After Theresa May’s appointment as Prime Minister in July 2016, she was moved to the Ministry of Justice as Secretary of State and Lord Chancellor, becoming the first woman to hold both roles. In June 2017, following the General Election in which Theresa May lost her majority, Truss was moved to the position of Chief Secretary to the Treasury, in what was widely seen by those in Westminster as a demotion. This was judged to be a result of a series of controversies and gaffes during her time at the Ministry of Justice.

After supporting Boris Johnson’s bid to become leader of the Conservative Party, and advising him on economic policy during the campaign, Truss was tipped by many for a promotion to Chancellor of the Exchequer or Business Secretary. Instead, she was appointed as Secretary of State for International Trade, a role she held until her promotion to Foreign Secretary in September 2021. Alongside other briefs, Truss has also held the position of Minister for Equalities since September 2019.

Prior to her election to Parliament, Truss worked for Shell between 1996-2000 and Cable and Wireless between 2000-2005. She became Deputy Director of Reform in January 2008, where her work focused on education policy, serious and organised crime, and the decline of Britain’s competitiveness. Truss graduated from the University of Oxford in 1996 with a degree in Philosophy, Politics and Economics. Whilst at Oxford, she served as President of Oxford University Liberal Democrats.

Truss plans to govern in two phases. The first will be focused on her first 100 days in office and getting to grips with the cost-of-living crisis. The second phase would then begin in early 2023, with the administration implementing her long-term agenda. She has reportedly told colleagues she wants to ‘prioritise, prioritise, prioritise’ and ‘strip away the crap’. Truss is known to be committed to slimming down No 10 and the Cabinet Office operations, having been ‘mildly horrified’ at reports that Downing Street has more than 350 employees.

For a significant number of the Conservative Party’s grassroots’ members, Truss’s arrival in No 10 signals an important ideological shift in the party – a return to perceived core Conservative values of low taxation, deregulation and free trade. Indeed, Truss has long positioned herself on the free-market wing of the Conservative Party, publicising her libertarian views on issues from the economy to personal freedoms.

Writing for the free-market publication 1828 in January 2019, Truss branded her ideology ‘popular free-market conservatism’, governed by three principles: ‘First of all, we should focus on people’s priorities, not the blob of vested interests. Second, for a free-market economy to succeed, everyone must have a shot. Third, the state should help people on the margins take control of their own lives, not tell capable citizens what to do’.

As Chief Secretary the Treasury, she also spoke frequently about her desire for a state that ‘does less, better’, as well as the need to tackle vested interests in the utilities, transport and planning sectors, arguing for deregulation across the board. There is also likely to be a significant shift in the government’s strategy on trade negotiations, with more of a focus on free trade and liberalisation, perhaps even unilateral liberalisation, than protection for industry groups.

Taken together, Truss has made a total of 149 separate policy pledges over the past two months, covering almost every government department.

On the economy, Truss has made several pledges including a 10-year plan for the economy; a reversal of the national insurance rise; a reversal of the planned corporation tax rise; a temporary moratorium on the green energy levy; maintaining the Bank of England’s independence but reassessing its mandate to better deal with inflation; a review of business rates and taxes for the self-employed; creating new ‘investment zones’; liberalising freeports; introducing primary legislation in the first 30 days of government to ensure minimum service levels on critical national infrastructure and to raise the minimum threshold for voting in favour of strike action from 40 to 50 per cent. It is also widely known in Westminster that Truss wants to address labour market reforms, including reviewing existing EU worker protections such as the 48-hour working week, in an attempt to improve productivity and the competitiveness of the British economy.

But the most pressing issue Truss will have to tackle from day one is the cost-of-living crisis. She has pledged to make an announcement within her first week to detail her policy proposals. This will be followed by a ‘fiscal event’, rumoured to be scheduled for 21 September, to pass them into law. A more comprehensive budget and spending review is expected to be held later in the year. Over the past week, the current Chancellor, Nadhim Zahawi, has said that the Government could learn the lessons of Covid and introduce targeted reductions in VAT and business rates to help energy-intensive sectors. Truss is also thought to be considering increasing universal credit, additional help for pensioners, and a 5 per cent reduction to VAT. Treasury ‘insiders’ have said that the Truss cost-of-living plan will ‘easily exceed’ £100 billion, the majority of which will be added to government borrowing. Last night, there were even reports that Truss’s team is considering freezing energy bills for millions of households this winter. Campaign sources familiar with discussions have said that a freeze of some form is indeed now expected.

Truss has presented herself as the ‘Brexit delivery’ Prime Minister, with a pledge to set a sunset deadline for every piece of EU-derived regulation, making sure all EU law is either repealed or replaced by the end of 2023. This can be seen as a not-so subtle dig at Johnson’s government, particularly Sunak, for not moving fast enough on the issue. She has spoken about plans to introduce ‘bold’ reforms to deregulate the financial services sector, calling the City of London the ‘jewel in the crown of the UK’ which has had its potential held back for too long by ‘onerous’ EU regulations. Such reforms will include both Solvency II and MiFID.

Another significant announcement to look out for in the next few weeks will be potential reform of the City’s regulators. Truss is reportedly planning to review the roles of the Financial Conduct Authority, the Prudential Regulation Authority and the Payments Systems Regulator, believing that they need to increase their focus on economic growth. One idea is to merge the regulators into a new, single body. This would be highly controversial and would come less than a decade after the bodies were formed in 2013 as part of a post-financial crisis overhaul. But Truss is known to want to protect, facilitate and take the burden off the financial services sector, which is critical to post-Brexit success. Ever since the vote to leave the European Union, ministers have worried that firms will steadily leave the country, so expect Truss to have a much warmer relationship with the City than her predecessor.

One Bill that is unlikely to continue in its current form is the Online Safety Bill. At present, it is unclear whether the draft legislation will only be tweaked, or if it be subject to a more fundamental rewrite. During the leadership election, Truss said that she believes the government has a duty to protect the under-18s from harm, particularly teenage girls, but also cited that it must strike a balance and protect freedom of speech and the freedom of the press. If Dorries leaves her post at the Department for Culture, Media and Sport, it is likely the changes to the Bill will be more extensive than if she stays.

Whilst her rival for the leadership, Rishi Sunak, explicitly vowed to scrap GDPR and create in its place ‘the most dynamic data protection regime in the world’, Truss did not speak as extensively on the subject. However, she is known to favour deregulation in this area and is likely continue with the reforms outlined in the Data Protection and Digital Information Bill. Speaking about the Bill, Dorries said that it will ‘build a new, independent data regime … one that with a number of common-sense changes, frees up our businesses and unlocks scientific and economic growth, while maintaining our high data protection standards’.

Whilst her policy platform has left some to question whether the net zero commitment will survive the next couple of years, Truss has pledged to retain the 2050 target. However, there have been notable caveats added to it. Her campaign has said she wants to achieve the pledge ‘without reducing household incomes or damaging businesses’ and by ‘harnessing the innovative technologies, world-leading research, and top-class manufacturing’ instead. There will likely be a clear change in rhetoric under Truss, alongside a slight shift in urgency – but there is no suggestion that the 2050 net-zero target, which is enshrined in law, will be reversed. Although there are wider concerns that reaching it may be slipping further from grasp, with Truss eager to see a rollout of fracking nationwide. There have also been reports last week that the 2030 offshore wind target is going to be missed as nearly half of the projects needed to deliver it are still in the early stages of planning.

Over the past fortnight, it has been reported that Kwasi Kwarteng, the man set to become Chancellor, and Jacob Rees-Mogg, who has been tipped for a potential move to the Department for Business, Energy and Industrial Strategy, have been meeting oil and gas companies to negotiate a deal to secure energy supplies this winter. The pair have reportedly concocted a ‘two-pronged’ approach that involves securing more gas from Norway whilst maximising domestic production by approving a new series of drilling licences in the North Sea.

Kwarteng is also considering plans to offer fixed-price contracts to existing renewable-energy producers as a way to blunt the impact of soaring power costs on households this winter. Energy UK said its proposals could cut £18 billion a year from energy bills, including £11 billion for businesses, delivering savings for households of between £150 and £250 a year. Kwarteng is understood to have met members of Energy UK to discuss the proposal and is said to be considering it seriously as an option to present to Truss.

The voluntary scheme would work by separating the cost of electricity from sources such as nuclear, solar and windfarms from the sky-high prices being paid for electricity generated by burning gas in power stations. Under the proposals, nuclear power stations and renewable electricity generators would be encouraged to sign up to Contracts for Difference. This would mean selling their electricity at a lower price, but one that was fixed and guaranteed over a number of years.

More generally, Truss has ruled out government rationing of energy, although if the situation deteriorates further this could become a major u-turn; committed to expanding nuclear power usage and going ahead with small modular nuclear reactors; supporting offshore wind energy as part of a domestic energy strategy; reviewing the regulators of energy and water to ensure they are ‘much more effective’; holding water companies to account on pollution and ‘dealing with the effluent that is going into our waterways’; opposing solar panels on productive agricultural land; enhancing food security by giving farmers access to seasonal workers; reviving the rural economy by cutting regulation; and working to protect endangered species.

A foreign policy and defence hawk, Truss has fast become one of the West’s most outspoken critics of authoritarian states such as Russia and China. Since the Russian invasion of Ukraine, Britain has sanctioned more than 1,000 people and over 100 businesses linked to Russia, with Truss arguing that total victory for Ukraine is a ‘strategic imperative’ for the West. One of her first international visits is also expected to be to Kyiv to visit Ukraine’s President Zelenskyy. In recent weeks, she has also pledged to update the government’s Integrated Review of Security, Defence, Development and Foreign Policy, introducing a new chapter focused on tackling Chinese and Russian aggression.

Truss is well-disposed to maintain high levels of security collaboration with NATO, the US and Australia. Her principal foreign policy programme is the creation of a ‘network of liberty’ made up of ‘freedom-loving nations’ around the world. One proposal has been to expand the G7’s alternative to China’s Belt and Road initiative. Another is a proposal for a ‘New Commonwealth Deal’, designed to act as a ‘vital bulwark’ to China and strengthen economic ties across the Commonwealth by expediting bilateral trade agreements. Given her strongly Eurosceptic stance during the leadership campaign, direct and enhanced security cooperation with the EU is unlikely in the short term due to disagreements over issues such as the Northern Ireland Protocol, with Truss thought to be considering triggering Article 16 – which could itself trigger a trade war with the EU.

During the leadership campaign, Truss also committed to increase the defence budget to 2.5 per cent of GDP by 2026 and 3 per cent by 2030, as well as pledging to make the British military “the most capable force in Europe”. As part of this, she has pledged to look again at plans to cut the size of the Army. Other defence investment commitments made by Truss include the delivery of a new fleet of submarines and renewing the nuclear deterrent; greater investment in new cyber, space, and new defence capabilities; more support for the intelligence services; reviewing the size and shape of the Armed Forces; updating the Integrated Review to focus more on Russia and China; and giving the MoD resources to focus on immediate procurement priorities.

To deliver her policy programme in the short period before the next general election must be called, Truss has said she will appoint a Cabinet which represents ‘all the talents’ of the Conservative Party. Whilst the extent of her victory in the leadership election should – in normal times – enhance her authority and legitimacy to form a Cabinet in her image, she will nonetheless need to reach out to Sunak supporters with ministerial positions, as they will not only be feeling bruised by his defeat but nervous about the direction of travel under Truss.

As ever, speculation has been rife as to who may be given the top jobs. But what is certain is that Truss will want to follow in the footsteps of both Theresa May and Boris Johnson in one endeavour: creating a new Conservative Party to present to the public. Both May and Johnson were able to make highly significant changes to both personnel and their policy agendas that they were treated as brand new governments, rather than continuations from the previous leader. In order to achieve this, Truss will need to take decisions that signal a clean break from the status quo.

It is widely expected that Truss will appoint Kwasi Kwarteng as Chancellor of the Exchequer. A fellow free-marketeer, Kwarteng has been Secretary of State for Business, Energy and Industrial Strategy since January 2021 and has been a close confidant of Truss since they entered Parliament together in 2010. If he takes the reins at HM Treasury, Kwarteng will become the first Black Chancellor in British history.

Loyal supporters of Truss also include Thérèse Coffey, Simon Clarke, James Cleverly, Jacob Rees-Mogg, Suella Braverman, Nadine Dorries and Jake Berry. Along with Penny Mordaunt, Ben Wallace, Nadhim Zahawi, Tom Tugendhat and Anne-Marie Trevelyan, they are expected to be offered Cabinet positions. Whilst she declined to endorse either Truss or Sunak during the contest, it is highly likely that Kemi Badenoch will join Cabinet as well. Lower-profile MPs such as Michelle Donelan, Chloe Smith, Ranil Jayawardena and Wendy Morton are also expected to be promoted, whilst potential returns to Cabinet could be on the cards for Iain Duncan-Smith, Robert Jenrick, Robert Buckland and Sajid Javid. Meanwhile, the two men who issued the most bruising attacks on Truss over recent weeks, Dominic Raab and Michael Gove, are both expected to leave their positions, with Oliver Dowden, Grant Shapps and Priti Patel all at risk too.

However, individuals don’t always accept the positions they are offered and there is always room for surprise. For that reason, Conservative MPs will also be keeping a close eye on junior appointments. Dehenna Davison, for example, is a close ally of Truss and is likely to be rewarded with a ministerial role in the new administration. Outreach to rising stars in the Sunak campaign, such as Claire Coutinho and Laura Trott, would also be prudent in the pursuit of healing the party’s recent divisions.

Twelve years into Government, the Conservatives have for quite some time found themselves divided and sorely lacking purpose, direction and discipline. Combine that with issues ranging from the cost of living and rising energy prices to the war in Ukraine and a surge in channel crossings – Truss faces a set of formidable challenges from day one. Many have concluded it is the gravest in-tray for a Prime Minister since Margaret Thatcher took office in 1979.

Why? It’s not just the cost of living that has left people bereft of optimism when looking ahead, but a general perception that Britain isn’t working. Whether it’s rail strikes bringing the nation to a standstill, ambulances unable to drop patients off because of a lack of NHS beds, or police officers refusing to investigate burglaries – the list goes on and on. Whilst Truss has outlined proposals for a 10-year plan for public service reform, Britain is a country infatuated with outdated institutions that boast records of failure, as well as infrastructure not fit for the 21^st century. Confronted with widespread resistance to acknowledge these problems and the solutions necessary to fix them, Truss will face an uphill struggle from the beginning.

This becomes even more daunting when you factor in the short timeframe Truss will have to make her impact. Only two years away from the next general election, many in the party feel that her fate will be sealed within her first month in office. There have been growing reports over the past week that Truss will in fact spend more alleviating the cost-of-living crisis than earlier anticipated. But it will have to be sufficient enough to prevent an ensuing u-turn and a damaging blow to her personal brand, whilst also ensuring that forecasts of inflation hitting 22.4%, the pound slumping to parity with the dollar for the first time since 1992, and warnings of civil disobedience do not come to fruition.

If that isn’t enough of a challenge, add to the list a party bitterly divided over its ideological direction, a Supreme Court hearing could open the door to a Scottish independence referendum in 2023, further allegations of sexual harassment against Conservative MPs, a parliamentary investigation into whether Boris Johnson misled the House of Commons on ‘partygate’, and the upcoming inquiry into the government’s response to Covid-19.

As for the opposition parties, Truss’s victory plays into the hands of Labour’s portrayal of the Conservatives as being out of touch and their portrayal of Truss as being out of her depth. Sir Keir Starmer is understood to be planning to try for a vote this week on his plans to freeze energy bills so that he can paint Truss as an obstruction to immediate action. Meanwhile, the Liberal Democrats are planning to ‘flood’ so-called ‘Blue Wall’ seats in the South with ads citing Truss’s comments on the economy and attacking her record on farming and sewage. In Scotland, the SNP will undoubtedly use Truss’s election as another argument for independence. The party’s leader and First Minister of Scotland, Nicola Sturgeon, said yesterday that Truss would be a ‘disaster’ if she planned to govern in the same spirit as she campaigned throughout the leadership contest. Privately, many Scottish Conservatives believe that to be true too.

Despite all of this, there is room for optimism for Truss, whose first 30 days will indeed be high risk, but also carry the prospect for high reward. She has an enormous, if time-limited, opportunity to grip the current situation and provide people with the financial reassurance they need, but also to go further and address long-standing issues that have held the country back for decades and contributed to the anaemic growth that Truss referenced throughout the leadership campaign. She will also be helped by the public’s apathy towards the Labour leader, Sir Keir Starmer, whose party may have leapfrogged the Conservatives in the polls, but there remains little evidence that this is due to enthusiasm for the opposition rather than exasperation at Boris Johnson.

When a Prime Minister takes office, political commentary usually focuses on what may lie ahead in their first 100 days. It is a period in which every leader hopes to make their mark, set the tone for their government, and undertake as much activity as they can, whether in rhetoric, policy changes or major legislation. Given the realities about to confront Liz Truss, she might just be happy for hers to pass without further economic turmoil, the nation’s lights turning off, and the growing prospect of civil disobedience. Indeed, her own colleagues are privately speculating that her fate may be decided in her first 30 days, due to there being no room for error on the cost of living.

But as a politician who can boast a history of being underestimated at every turn, and as the longest continuously serving cabinet minister, Truss will surely take comfort in her proven ability to survive against the odds. This time, however, it is not only her own career that’s riding on her ability to do so, but the fate of the whole United Kingdom, its people and its place in the world. If she succeeds, she could materialise as the most radical and transformative Prime Minister since Margaret Thatcher. If she fails, she could condemn her party to a decade in opposition.