Kwasi Kwarteng: What do we know about the new chancellor?


Kwasi Kwarteng entered parliament early enough not to be rushed. Elected in 2010, three weeks short of his 35th birthday, he spent his first seven years as a moonlighting MP as an author. The chancellor, as he is now, has written three books himself (in 2011, 2014 and 2015) and has co-authored three others, including Britannia unleashedthe founding text of the Truss government, which called for a radical reduction in the welfare state and a return to Victorian productivity.

This text had five authors, Truss herself among them. Kwarteng’s opinions need to be analysed, but his historical comments – in articles, interviews and speeches in the House of Commons – show that the book has captured his own view of the world, which he is not ashamed to offer. .

“I walked around a Chinese factory, and I can tell you, he told the Guardian with admiration in 2012“they time absolutely everything you could do. They have to do a certain job in an hour, and if they do it in 58 minutes, they get two minutes free.

“We’ve created a culture where people can, as a way of life, choose not to work,” he said then, saying the public agreed with his view. “It is completely acceptable these days, and possible, to decide never to work. And at the same time people who work are very heavily taxed. People “working long hours in the fields for low pay” were usually immigrant workers, not Britons, he added.

For Kwarteng, “one has to ask questions about the welfare state”, which he sees as far too expansive and different from the basic safety net envisioned by William Beveridge in the 1940s. Kwarteng believes – as he put it to my colleague Anoosh Chakelian in 2013 – that welfare is “an issue that conservatives could own and win by making bold arguments and challenging the consensus… If we talk about an honest day’s work for honest pay, if we bring those ideas back, c is something we can win on”.

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Shrinking the size of the welfare state is a familiar goal of conservative politicians and conservative chancellors (George Osborne embraced Iain Duncan Smith’s universal credit scheme in the early 2010s, once he saw it as a means of reducing benefits). However, two factors generally constrain chancellors once in office. First, benefits in the UK are low, not high. As the new statesman noted, the UK has the lowest unemployment benefit as a percentage of previous income of the 38 countries in the Organization for Economic Co-operation and Development. Second, Treasury officials will likely advise Kwarteng that further cuts are unsustainable. Nick Macpherson – who led the Treasury from 2005 to 2016 and put in place many of its current senior officials – pointed out to me in December that there was little more than can be cut in support payments of the State, taking into account the expectations of the voters. The British don’t want Victorian insecurity.

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“I would like to ask someone on the left,” Kwarteng told the Guardian, “Do you believe that everyone who receives benefits is really trying to get to work? I obviously think most are, but some are not. But there is little evidence that the British public agrees with Kwarteng. The latest UK Social Attitudes Survey, with data from 2021, showed that 52% of Britons want spending on ‘health, education and social benefits’ to be increased, with 40% wanting it to remain at current levels and only 6% wishing it would fall.

Part of Kwarteng’s skill as a politician comes from his ability to reasonably say unreasonable things. His baritone voice, calm eyes, easy laugh, and thick glasses give the impression of an amiable intellectual, a state analyst who happens to be in politics. It has none of the urgent, tedious energy of Rishi Sunak, nor the troubled intensity of Gordon Brown. He is invariably relaxed, which makes him a disarming presence in interviews: he is not as easily troubled by questions as Boris Johnson, Keir Starmer or even Liz Truss.

This is partly because Kwarteng has a hinterland. He wrote considerable works of history – of Ghosts of the Empirehis caustic study of the savage inconsistencies of British administration in six colonies, at war and goldhis examination of 500 years of financial crises, and Thatcher trial, a 1981 six-month study that nearly knocked her down. He has the confidence of someone who knows his own opinions.

Kwarteng was trained as an economic historian, but he is much more of a historian (and a classicist) than an economist. He is indifferent to the mathematical precision of economic models; he is more likely to resist than accept the forecasts offered by internal Treasury economists. As he said in 2019, his father was an economist at the Commonwealth Secretariat, but for him economics had “very little predictive power”. “It can never be physics, it can never be hard science, because it’s about human motivation and human behavior,” Kwarteng said. “I think some of the economists’ claims are quite misleading, and we have to take them with a grain of salt.”

Rather than relying on econometricians, Kwarteng will likely rely on his own analysis of history to guide him to the Treasury. He has yet to appoint a chief economic adviser, in the mold of Ed Balls (for Brown) or Rupert Harrison (for Osborne). Instead, he will lead the civil service himself, having replaced the top Treasury official on his first day in office.

He has, ironically, been portrayed by some in the past as an idler in power. But the Treasury is the most intellectually demanding government environment, and that should suit Kwarteng, who won the Harrow History Prize at prep school, the Newcastle Scholarship at Eton and the Browne Medal (twice ) for the classics at Cambridge. He was part of a team that won the college challenge. He won a Kennedy Fellowship at Harvard. Now Kwarteng has found a role he can’t dismiss as insufficient for his intellect.

On Friday, September 23, in his first act as Chancellor, Kwarteng cut taxes more dramatically than in almost any other tax return in modern history. This decision will lead to an increase in public borrowing. A young Kwarteng would not have approved. “Borrowing, as every economist knows,” he writes for the new statesman in 2007, “will eventually be paid for by more taxes”.

But the borrowing that Kwarteng criticized then was made by the Labor Party. This, it seems, was bad borrowing, while his borrowing is good – because it will, he says, lead to increased “wealth creation”. The problem for the new Chancellor is that there is very little evidence, as almost every economist knows, that a tax cut for the rich – which is what Kwarteng’s plan to reverse the rise in national insurance – will lead to economic growth.

This article was originally published on September 22, 2022 and has been updated with the latest information.

[See also: Liz Truss’s “pro-growth” strategy for the UK could fail spectacularly]


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