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Tuesday, Nov 29, 2022

Kwasi Kwarteng: free marketeer and Truss’s ideological soulmate becomes chancellor

Kwasi Kwarteng: free marketeer and Truss’s ideological soulmate becomes chancellor

Former business secretary will be helped by close relationship with PM but takes role during historic economic storm

During his stint as business secretary, Kwasi Kwarteng clashed with Rishi Sunak over how best to oversee the UK economy. This week, he walks into the office of chancellor once held by his former rival, taking charge at the Treasury under his longstanding political and ideological ally Liz Truss as the most powerful black man in British politics.

As a loyal supporter of Truss – the pair entered parliament together in 2010 – Kwarteng is likely to have a much smoother relationship with his Downing Street colleague than Boris Johnson endured with Sunak. The two are already neighbours after Kwarteng moved to the same Greenwich street as Truss earlier this year.

His elevation, however, comes in the midst of a historic economic storm with the worst outlook outside the Covid pandemic in decades. The country is teetering on the brink of a lengthy recession with inflation at the highest rate in 40 years and the NHS braced for a winter crisis.

An ideological soulmate of Truss from the free-market right, the Surrey MP is a relative latecomer to ministerial jobs – his first junior role came in late 2018 – but rose rapidly under Johnson to become a key member of his government.

He was born in east London to parents who migrated from Ghana as students in the 1960s, and was educated at Eton then Cambridge, where he completed a PhD on a 17th-century crisis with English silver currency. A Kennedy scholarship at Harvard followed, before work in finance at JP Morgan and Odey Asset Management, run by the Brexit-backing investor Crispin Odey.

Tall and imposing at 6ft 4in, with a loud belly laugh that can be heard from other floors in his Whitehall office, he won the Newcastle scholarship while at Eton – the school’s most prestigious prize for achieving the highest marks in a special week-long exam – a distinction shared with Johnson, among other Conservative politicians.

Since entering parliament, Kwarteng has been a consistent advocate of Truss-style economics, and was, with his new boss, among the co-authors of Britannia Unchained, a 2012 collection of essays advocating a small-state UK.

The controversial libertarian tract railed against a “bloated state, high taxes and excessive regulation” – complaints that Truss made a cornerstone of her Tory leadership campaign, neglecting her party’s 12 years in power. Undoubtedly they will reflect Kwarteng’s thinking as chancellor, too. Yet measures to realise their vision could be tough to apply in practice.

Over and above ideology, Kwarteng prides himself on “Making Shit Happen” – with the letters MSH scrawled on the whiteboard in his Whitehall office, above a list of his favourite achievements in government – including state support for industry.

Already there are signs of potential moderation, with Kwarteng writing as Truss’s envoy in the Financial Times this week to “reassure” City investors that any tax cuts would be “fiscally responsible” – code to calm financial markets betting that Trussonomics unchained could crash the pound.

Although a free marketeer by nature, his first week as chancellor will probably feature some of the most far-reaching interventions in the economy by any government since the 1970s, with a mooted price freeze in energy markets and a package of financial help for struggling Britons worth up to £100bn.

It would follow a pattern, with Kwarteng last year called a “libertarian in rhetoric but social-democratic in delivery” by the free market Institute for Economic Affairs, over his interventionist stance as business secretary.

However, his promotion to the most powerful government role behind prime minister – and with a hand-in-glove relationship with his Downing Street ally – could give Kwarteng more scope to put his credentials as an advocate for liberal economics into practice.

Alongside the soothing message for City investors in the FT, Kwarteng issued a warning shot that redistributing the proceeds of economic growth – helping rich and poor benefit from rising prosperity – would take a distinct backseat under a Truss government.

“We will get a super-state to fire a competitive market economy. [That’s] not particularly Conservative,” says Ryan Shorthouse, the chief executive of Bright Blue, a liberal Tory thinktank. “But, with major tax cuts for high earners and large companies, [it’s] not especially socially democratic either.”


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