Kwarteng follows dirty work at Treasury with bonus cap farce | William Keegan

One of the themes of the coverage of our late Queen’s life has been what a good sense of humour she had. But I did not see any references to the day it fell to her to make her speech at the opening of parliament on 21 June 2017.

On that day her monarchical duty, in the Queen’s speech, was to outline the proposed legislation that would prepare the UK for its departure from the European Union.

As the BBC reported, it did not escape notice that the design on the Queen’s hat that day bore a remarkable resemblance to the flag of the European Union. Before the 2016 referendum there had been a malicious report in the rightwing press that the Queen was a Brexiter. The message on the hat was a neat riposte. As Guy Verhofstadt, then the European parliament’s chief Brexit negotiator, observed: “Clearly the EU still inspires some in the UK.”

The snap general election of 2017 took place before Boris Johnson, the Brexiter-in-chief, had elbowed Theresa May out as prime minister and taken over himself. We are living with, and trying desperately to cope with, the consequences first of the Brexit referendum, which the mendacious Johnson and his crew foisted on the public, and secondly with the way he managed to pollute the Conservative party. Not to put too fine a point upon it, by sacking everyone in his cabinet who was not a Brexiter, Johnson handed the membership of his party precious little choice when it came to their choosing his successor.

They have now achieved the counterpart of what Labour did in adding Jeremy Corbyn to the list of candidates in 2015. He was basically a joke candidate. So was Liz Truss. But he was selected, and so was she; and here we are, once the commemorations of the Queen’s life recede, back with an economy in serious trouble and a prime minister who is a laughing stock.

Unfortunately, laughing stocks in high places can cause trouble, and Truss is in the process of doing so. She has started off by sacking the most senior and most experienced Treasury official, Sir Tom Scholar. New governments need experienced and trustworthy officials. In my experience, Treasury officials adapt to new governments even if they have their doubts about their programmes: the Treasury adapted successfully to chancellors such as Nigel Lawson (1983-89), John Major (1989-90), Norman Lamont (1990-93), Kenneth Clarke (1993-97), Gordon Brown (1997-2007), Alistair Darling (2007-10) and George Osborne (2010-15). Since then there have been so many chancellors that there has hardly been much time to adapt.

Given Truss’s and Chancellor Kwasi Kwarteng’s constant evocation of the spirit of Thatcherism, the example that comes to mind is the change of government in 1979. Sir Brian Unwin, a senior Treasury official at the time, recalls how the Treasury “adapted overnight” to the radical change of government. “We produced a new Conservative budget within a few weeks and although he was a well-known Keynesian and not ‘one of us’, Margaret Thatcher retained Sir Douglas Wass as Treasury permanent secretary so that his knowledge and experience would remain available to her new government.”

My understanding is that Kwarteng had doubts about sacking Scholar, but carried out the dirty work for Truss.

His arrival at the Treasury has certainly been farcical: he goes on and on about the need for growth as if that had not occurred to the Treasury before. Under Lawson and Brown, for example, growth, productivity and the need to improve the “supply side” were all the rage. But they did not have to cope with the self-harm of putting up trade barriers against our nearest and most important export market, or the result of that nasty xenophobic Brexit campaign that has made a huge hole in the labour force as vital workers have gone back to EU countries.

As for the chancellor’s plans to remove the post-2008-crisis cap on bankers’ bonuses on the grounds that this would improve the City’s competitiveness, this is obviously politically crass and socially insensitive at a time such as this. I wonder what the deceived “red wall” voters make of this so-called “benefit of Brexit” as they contemplate their reduced economic circumstances.

This country’s competitiveness problem extends far beyond the City. Aggravated by the impact of Brexit, the deficit on the current account of our overseas balance of payments, at 8.3% of GDP, far exceeds the one that led the Labour government of 1974-79 into the hands of the International Monetary Fund. The financial markets may sympathise with a deregulating, rightwing government, but they know an economic crisis when they see one. How is your pound today?

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