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Emily Carver: Has Truss’s classical liberal vision just run head-first into the Red Wall?

Emily Carver is Head of Media at the Institute of Economic Affairs.

They say a day is a long time in politics, perhaps no more so than during a leadership campaign. Liz Truss’ team have been churning out policy ideas quicker than even the most industrious Westminster think tank could.

But announcing new and rather bold promises almost every day increases the risk of it all going a bit pear-shaped.

This is how the frontrunner has made her first major unforced error. Less than 24 hours after her team announced a policy for regional pay boards for the public sector, she canned it. Her U-turn de ella comes after outrage from social media, the media, Labour, and Rishi Sunak’s supporters.

Truss quickly claimed that there had been a “wilful misrepresentation” of the proposal by critics. But this is only partially true.

Yes, the media headlines and Sunak’s campaign exaggerated that the plan would leave millions of nurses, police officers and soldiers £1,500 a year worse off; the proposal made clear that “any new pay scales would apply only to new recruits”, at least for now. Nor was the initial plan meant to apply beyond civil servants.

But the underlying idea – that public sector pay should begin to vary across the country – was very much printed in black and white. This was not helped by the Truss campaign’s media release using an estimate of savings that included savings across the public sector.

However, the proposal does make sense. It also fits with the ‘levelling up’ agenda, despite what Angela Rayner and others may say.

Public sector wages can dominate and crowd out the private sector in less prosperous areas of the country, and businesses often find themselves unable to compete with taxpayer-funded salaries. We also know that the cost of living varies depending on where you live. The average house price or rental in Cambridge is going to set you back rather a lot more than in Doncaster.

Why, then, should public sector workers necessarily be paid the same wherever they choose to reside? We’re already accustomed to London weighting.

Economists have argued for many years that there should be variations in civil service pay depending on regions. The same has been said with regard to minimum wages. On paper, it’s logical.

There is also a very strong case to say that the UK should abandon national pay bargaining altogether to give public services more flexibility. For example, if a school in Yorkshire is struggling to recruit a maths teacher, yet there is a surplus elsewhere, surely it makes little sense for the under-staffed school to be limited by national pay scales in what they can offer to attract applicants.

However, the Foreign Secretray’s shake-up would in reality be very difficult to implement, practically as well as politically. It would be tricky to deliver depending on aggregation level – do we decide by region, town, council?

However, for Truss, it appears the classical liberal motor is crashing into the Red Wall of reality. Her proposals from her may be sound, but the reaction demonstrates the scale of the challenge undertaking reform of the public sector would be, in regions where public sector jobs are often the most lucrative.

It’s pretty hard for her to maintain credibility that she’s the one to shake up “the Blob” when she immediately backtracks, explaining to the BBC that her reason for ditching the policy was that she was “concerned that people were worried”.

Some have pointed out that it was a bit of a rogue move for Truss to, first, take such a risk when she’s miles ahead in the polls, and two, frame the policy as waging a “war” on Whitehall waste which can so easily be presented as cruel by her detractors.

But more fundamentally, announcing what could have been a flagship policy without full time to develop it, figure out potential criticisms, and ensure it is water tight, is a mistake.

And perhaps it was always foolish to shift beyond the country’s immediate and very visible challenges – inflation, energy costs and NHS waiting lists, to name a few.

The real question is how do we increase productivity, and that’s where Truss’ strengths lie. She knows that lower taxes and less red tape are what businesses are crying out for. Plans to slash the number of diversity and inclusion jobs, for example, will also go down very well with Conservative members who are sick of taxpayer money going to expensive non-jobs.

One of the flaws of Boris’ leadership of the Conservative Party and the country was his propensity to u-turn – from windfall taxes to vaccine passports.

If Truss seriously wants to take on Whitehall and increase productivity in the civil service, she’s going to need the strength to commit to a policy, communicate it well and see it through. Weakness and ill-worded press statements are not an option.

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