Kwasi Kwarteng – the big brain at the heart of Britain’s radical right counter revolution 

By Jaysim Hanspal, Patrick Smith
Posted on Monday, 3 October 2022 09:01

Britain's Conservative Party's annual conference in Birmingham
British Chancellor of the Exchequer Kwasi Kwarteng gives a television interview at Britain's Conservative Party's annual conference in Birmingham, Britain, October 3, 2022. REUTERS/Toby Melville

Styling themselves as right-wing disrupters, Britain’s new Conservative prime minister Liz Truss and her close friend and finance minister Kwasi Kwarteng haven’t disappointed their narrowing band of supporters.

Of the two, Kwarteng, of Ghanaian heritage, is seen as the intellectual powerhouse and insouciant in interviews. Truss comes across as awkward and staccato, but as committed ideologically to the radical right project as her finance minister.

In the two weeks Kwarteng and Truss have been in power, the British pound has sunk to its lowest level against the US dollar in 35 years, interest rates on British treasury bonds shot up to their highest level since the global financial crisis of 2008, and the ensuing crisis is reckoned to have added another £18bn ($20bn) a year to interest payments on the government’s debt.

Global disbelief

As the chaos continued, and home loan companies in London started withdrawing deals, the IMF condemned Truss and Kwarteng’s policies, warning them that they risked worsening inequality and urging them to reconsider their announcement of $45bn of unfunded tax cuts. The Fund argued that the “untargeted” fiscal package could work at “cross purposes” with the Bank of England trying to control roaring inflation.

In the wake of the IMF critiques, which are rarely handed out to G7 economies, the US, France and Germany followed suit with their own coded concerns.

Whatever happens in the UK will have some effect on our economies

France’s Finance Minister Bruno Le Maire told Europe 1 Radio: “I am deeply concerned about the British situation …when you take on major costs like that with spectacular announcements … it perturbs the markets.” Oscar Arce, a director general of the European Central Bank said: “Whatever happens in the UK will have some effect on our economies.”

Beyond the officials, media commentary was less restrained. “Trussonomics is deeply stupid,” said economist Paul Krugman of the New York Times.

Stephen Collins of the Irish Times said: “The danger facing the UK now is that it could in time become the Argentina of Europe. It should not be forgotten that Argentina was once among the richest countries, but bad decision-making brought it to its current sorry state.”

The Paris daily Le Monde concluded that Liz Truss’s first two weeks in power had been “spectacular and catastrophic”.

‘New Era’

The immediate trigger was what Kwarteng called a “mini-fiscal event” announced four days after the Queen’s funeral. He promised it would usher in a new era.

It was the biggest tax-cutting budget announcement in 50 years. Kwarteng cut the top rate of income tax from 45 pence in the pound (paid by those earning over £150,000 a year) to 40 pence and removed the cap on bankers’ bonuses – all in the name of driving growth, incentivising entrepreneurs and defying economic orthodoxy.

After delivering his statement in parliament, Kwarteng took his team to a pub across the road for a few pints, taking a selfie with the landlady. With his characteristic sangfroid, Kwarteng told interviewers over the weekend that more tax cuts were in the pipeline.

However, it backfired badly in the markets. It followed on the heels of an energy price guarantee that could cost up to $150bn in the first year. Even so, Kwarteng and Truss had declined to get an independent assessment of the fiscal implications of the package from the Office for Budget Responsibility.

It is this lack of independent analysis that seems to have triggered the market panic. The sums didn’t add up. The tax cuts could only be funded by massive new borrowing.

As the market panic and bond selling on Monday threatened to turn into a financial doom loop, Kwarteng announced he would bring forward his next financial statement and produce a debt-cutting plan by 23 November.

The Bank of England announced it would “not hesitate” to raise interest rates. Three days later, it launched a $65bn bond-buying programme to steady the country’s money markets.

The next few weeks will test both Kwarteng and Truss. The disorder in Britain’s currency and bond markets signified a loss of confidence in the top policy makers. The chief economist of UBS (the world’s largest wealth manager) describes their policy prescriptions as a “doomsday cult”.

Party backing?

Kwarteng and Truss insist they will not back down on the policy. One of their loyalists, former Brexit minister Lord Frost, said the critics were merely part of the “international hectoring classes” and could be safely disregarded.

The cracks in that position have already opened up, with Kwarteng telling British media on 3 October that the decision to abolish the 45% top rate of tax would be abandoned.

Less easy for Truss and Kwarteng will be their own Conservative party members who are due to start their annual conference on 3 October. Already, there have been moves to force Truss out of the party leadership or offer her a deal: She can stay if she sacks Kwarteng and changes course on policy.

This is highly unlikely, say insiders. Truss and Kwarteng, who were living on the same street in Greenwich, South London, share almost identical views on the need for a radical right counter revolution in Britain.

That means sweeping deregulation – the so-called Singapore-on-Thames model for Britain – and ruthless cutting of social provision in the welfare state.

Kwarteng has batted away criticism from the opposition Labour Party for his policy, including the closure of the Rough gas storage facility in Yorkshire, which will leave the UK with “just 1.7% of storage for annual demand”, says Stephanie Peacock, Labour MP from Barnsley East.

She says Kwarteng told her “that the question was irrelevant” and accused her of inducing panic and stoking alarm.

Truss quickly backed Kwarteng saying: “I am committed as prime minister …to helping people with their energy bills and to making sure we have security of supply for the long term.”

Old boys club

News reports of Kwarteng having private lunches with old hedge fund connections before his election to the new cabinet have garnered attention. This prompted concerns that the convention of maintaining total secrecy about forthcoming financial announcements might have been breached.

Crispin Odey, for whom Kwarteng used to work as a financial analyst, is one of the many hedge fund managers who has been making massive profits, having “short-sold” sterling in expectation of a fall in value.

Superficially he’s a black man, but again […] he went to Eton, he went to a very expensive prep school, all the way through top schools in the country.

The “fiscal event” has given the opposition Labour party a 33 point lead in the opinion polls, according to YouGov. This is the largest lead any party has had since the 1990s.

Kwarteng and the Tory party say they have much more in store over the next six weeks, including reforms in “childcare, business regulations, financial services, agriculture and more”.

Brexit path

Kwasi Kwarteng’s path to becoming Chancellor of the Exchequer this year was accelerated by Britain’s exit from the EU. In 2019, he was promoted by fellow Brexiter Boris Johnson to business minister.

Kwarteng’s parents left Ghana for Britain as students in the 1960s. His mother qualified as a barrister in London and his father worked as a senior economist in the Commonwealth Secretariat.

A brilliant student, Kwarteng won a scholarship to Eton College, where many Conservative prime ministers, including Boris Johnson and David Cameron, have schooled.

Kwarteng read Classics and History at Trinity College, Cambridge, before writing his doctoral thesis on monetary policy in the 17th century.

The new chancellor has a reputation for his directness. He featured on the front page of The Sun, the Rupert Murdoch-owned tabloid, for swearing twice on the television quiz show, University Challenge.

Kwarteng is one of four senior ministers of African heritage in the new Conservative government. Foreign Minister James Cleverly’s mother is from Sierra Leone; Home Affairs Minister Suella Braverman’s mother is from Mauritius and her father is from Kenya; while Minister of International Trade Kemi Badenoch’s parents are both from Nigeria where she spent much of her youth.

The diversity of this right-wing government’s front bench has unsettled some in the opposition Labour Party, which is yet to elect a woman leader or appoint an African or an Asian to senior ministerial posts such as finance, foreign or home affairs.

If you hear him on the Today programme you wouldn’t know he’s black

This may have prompted an ill-judged attack on Kwarteng by Labour MP for Ealing Central and Acton, Rupa Huq, who said: “Superficially he’s a black man, but again […] he went to Eton, he went to a very expensive prep school, all the way through top schools in the country. […] If you hear him on the Today programme you wouldn’t know he’s black.”

She has since issued a public apology.

“Worst idlers in the world”

Kwarteng was a beneficiary of fellow old Etonian David Cameron’s strategy to fast track the diversification of the Conservative parliamentary party.

In 2010, Kwarteng, whose booming voice earned him the sobriquet “the black Boris” in the tabloid press, was selected for the safe Tory seat of Spelthorne, three weeks before his 35th birthday.

As an MP, Kwarteng co-wrote Britania Unchained, a book of radical right-wing essays, with Liz Truss and several other Conservative MPs.

The book, seen as the “foundational text” for the Truss government, calls for deep cuts in social provision on health and housing, and lambasts Britain’s “bloated state, high taxes and excessive regulation”.

It also says: “The British are among the worst idlers in the world. We work among the lowest hours, we retire early and our productivity is poor. Whereas Indian children aspire to be doctors or businessmen, the British are more interested in football and pop music.”

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