At His Majesty’s Treasury, it’s all looking a bit like Year Zero in revolutionary Cambodia. Kwasi Kwarteng’s first act was to sack the respected but ‘orthodox’ permanent secretary Sir Tom Scholar. Now the FT reports the Chancellor ordering underlings to focus ‘entirely on growth’, presumably at the expense of financial discipline. I’m picturing a locked basement of fearful officials labouring under Kwarteng’s lash to translate his forthcoming ‘fiscal event’ – tax cuts on top of massive spending to cap energy bills and unlimited borrowing to pay for it – into the sort of Whitehall language that might make it sound reasonable.
Meanwhile, businesses large and small remain completely in the dark as to the detail and value of the government’s promised six-month energy-subsidy scheme. History will one day judge whether the Truss-Kwarteng economic revolution changed Britain for the better, or simply fizzled out. But in the short term, all that matters is efficient execution of measures to avert fuel and food poverty, widespread civil unrest and a tsunami of bankruptcies this winter. Action please, not gestures and slogans.
Rethinking the City
To the Old Bailey to meet Sheriff Nick Lyons, who succeeds as Lord Mayor in November, having defeated a botched aldermanic conspiracy to knock him out on grounds of his Irish citizenship. A former banker who sits on several insurance company boards, Lyons says the City doesn’t want the Truss government to dilute the Bank of England’s independence, nor does it want ‘a bonfire of regulations’. But it would welcome a shift in tone at the Prudential Regulation Authority in particular – in tune with Kwartengism – towards recognising ‘competitiveness’ as an objective alongside balance-sheet strength.
The PRA still applies EU-derived solvency rules for insurers and pension institutions which, he says, makes it difficult for them to invest in or lend to long-term infrastructure projects – hence desperate calls for foreign money to back new UK nuclear power stations.
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