Newly appointed UK prime minister Liz Truss faced her first task in the role as she picked her cabinet to tackle the rising number of problems left from the previous administration.
Truss, who took over as PM from Boris Johnson, turned to allies and friends for cabinet positions – with only an array of surprises making up the top jobs in government.
The cabinet reshuffle saw Kwasi Kwarteng become UK chancellor of the exchequer. He was previously secretary of state at the Department of Business, Energy and Industrial Strategy.
He takes on the position from Nadhim Zahawi, who only took the role after Rishi Sunak resigned in July.
Kwarteng faces a big task as chancellor with inflation set to hit over 20% in the coming months and rising cost of living crisis spiralling out of control.
‘Tricky balancing act’
Shaun Moore, tax and financial planning expert at Quilter: “As a long-time friend and ally of Prime Minister Liz Truss, it comes as little surprise that Kwasi Kwarteng has been promoted to chancellor. However, Kwarteng faces a long and difficult path ahead in his new role, and the duo will no doubt come under major scrutiny in the coming weeks as plans to help ease the cost-of-living crisis are laid out.
“The severity of Kwarteng’s oncoming challenge largely echoes that of former chancellor Rishi Sunak’s battle with the Covid pandemic. In its aftermath, coupled with the many other global issues from supply chain bottlenecks to the devastating ongoing war in Ukraine, the country now faces a rapidly slowing economy and rising interest rates. As such, questions will immediately be asked as to how and when help will come and, ultimately, how it will be paid for.
“Tax will be a hot topic in the coming weeks as Truss made a number of substantial promises during her leadership campaign. Truss claimed she would lower taxes as opposed to providing handouts to support businesses and households with ever rising energy costs, as well as cancel the national insurance rise, scrap a planned increase in corporation tax and even potentially look to increase the marriage allowance which would allow couples to pool their personal tax allowance.
“Should he fulfil these promises, Kwarteng’s approach looks set to be expensive and substantially different to that of Rishi Sunak. While Sunak was keen to slow inflation, balance the books and limit borrowing by increasing taxes, Kwarteng has already faced some criticism for suggesting further borrowing could well be on the cards. What’s more, while Kwarteng and Truss claim tax cuts will stimulate growth, they are likely to face criticism if they are not seen to be doing enough to help the poorest in the country.
“As former Secretary of State for Business, Energy and Industrial Strategy, Kwarteng has a breadth of experience in working closely with both business and energy suppliers – both of which could prove to be valuable relationships in the coming months.
“While the leadership campaign claims worked well enough to secure Truss the role of prime minister, chancellor Kwasi Kwarteng now faces a tricky balancing act in terms of bringing those claims to fruition while providing appropriate support to the British public to help them through the ever-worsening cost-of-living crisis. Should an emergency budget be called, all eyes will be on the new Chancellor to see just how he fares under the pressure.”
DWP
Another change in the cabinet, which impacts the financial advice sector, was Chloe Smith becoming secretary of state for the Department for Work and Pensions (DWP).
She takes on the role from Therese Coffey, who was promoted to health secretary and deputy prime minister.
Smith was previously minister of state (minister for disabled people, health and work) at the DWP.
She is the seventh secretary of state for the DWP since March 2016.
Currently, there has been no update on the role of pensions minister. Guy Opperman is still in the position after he resigned for a day to help oust Johnson as UK prime minister.
He has been in the role since June 2017 – and at a time when the country needs stability it would be nice to see Opperman stay in the role to carry on what he has started.
‘Poisoned chalice’
Jon Greer, head of retirement policy at Quilter, added: “One simple yet powerful act incoming Chloe Smith could do in her new role as Secretary of State for Work and Pensions is simply stay in the post for more than one calendar year.
“Since Ian Duncan Smith concluded his post in the role back in 2016 all but one of his predecessors have measured their tenure in months rather than years. The only one to have stayed longer than a year is the outgoing Thérèse Coffey who will have been in the role around three years.
“Coffey has been a steady ship but has hardly set an innovative course in relation to pensions in particular. She has become health secretary and hopefully some of the serious problems associated with NHS pensions which she would have been aware of, she will inadvertently be wrestling with to deal with retention issues in the NHS as part of her role at the DHSC.
“Pensions by their very nature are long-term and complicated and Smith will need time in the role to ensure that any changes in policy are carefully planned and crucially don’t create unintended consequences down the road. The government as a whole but particularly the DWP needs stability as otherwise the public simply will not have any faith in any enacted policy being seen through to the end.
“Smith will understand how complex the DWP is having served as minister for disabled people, health and work from 16 September 2021. However, she has a mammoth task on her hands as we enter into one of the most difficult winters of many people’s lives. It is during these hard times that people come to rely more and more on help from the state, which is often coordinated by the DWP. She may ultimately see this new role as a poisoned chalice as a result if mistakes are made.
“In the pension space, there are a number of projects and policies to be completed such as the upcoming pensions dashboard, which will allow users to see all their pension policies in one place.
“There still needs to be a lot of change within pensions but this will require cross-departmental collaboration between Smith and the new chancellor Kwarteng in the treasury. Progress in relation to pensions has been hampered by the political backdrop such as Brexit, Tory infighting and the pandemic. With the cost-of-living crisis rearing its ugly head we still have to wait for meaningful change for some time yet.”
‘Clear roadmap for delivery’
Steve Webb, former Minister and LCP partner, said: “When new ministers are appointed there is a risk that they simply roll forward everything that their predecessors had set in train. But change of leadership offers a unique opportunity to reassess priorities – something which is urgently needed.
“The best advice I ever received on becoming a minister was to identify a small number of big priorities and concentrate on these. In recent years, unfortunately, we have seen a ‘pepper pot’ approach, with vanity projects that have caught the Minister’s eye taking up far too much attention. It has increasingly felt that ministers had lost sight of the big picture and could no longer see the wood for the trees.
“The new DWP ministerial team will have my strong support if they can publicly identify their key priorities for the world of 2022 and beyond and set out a clear roadmap for delivery.”
