“The Tories believe in the markets but the markets no longer believe in the Tories!”
– Ed Miliband, former Labour leader, now Shadow Secretary of State for Climate Change
“It’s hard to construct an argument now that the Conservatives can win that general election, I suspect the conversation is, you know, how much do we lose it by?”
– Veteran Tory MP Charles Walker on Times Radio
The Conservative party held its annual conference in Birmingham last week.
Prior to the Tory conference the MSM had decided party leader Keir Starmer had a “good” Labour conference, which was not difficult, given that the Tory meltdown after Liz Truss’s debacle of a “mini budget” gave Labour a double-digit lead in the opinion polls during the Labour conference. That lead has now extended to 33-points in the latest poll.
All Starmer had to do was demarcate himself from Truss, who has done a fantastic impersonation of a kamikaze politician in the short time she has been in office.
The cynical dishonesty of describing her “Dom Pérignon budget” as a “fiscal event” in order to avoid scrutiny by the government’s Office of Budgetary Responsibility was remarkable though hardly surprising. Her predecessor Boris Johnson had a breathtaking record when it came to weaving and sidestepping round the official bodies entrusted with scrutinizing his decisions and government policy. He also bypassed the “mother of parliaments” as often as he could. No surprise then that Truss should take a leaf out of BoJo’s book.
The seriously unstable Tory party appears to have nuked itself. Four prime ministers in 6 years, 5 chancellors of the exchequer/finance ministers in 6 years, and 4 health secretaries (in charge of the critically underfunded NHS) in 6 years, are markers of this instability. For the first time in NHS history the nurses union is polling members on possible strike action.
To this shuffling of the proverbial deck chairs we have to add the fact that the Tory party is now riven by cliques publicly at war with each other.
This warfare was in open view when the chancellor Kwasi Kwarteng announced in a U-turn that he was scrapping plans to abolish the 45p tax rate paid by those on incomes of more than £150,000/$166,000.
In addition, there was confusion over whether Kwarteng will bring forward a key Commons statement regarding his plans for funding his tax cuts (the cut to the top rate was accompanied by several other cuts). He told GB News he was sticking to his original plan of delivering a medium-term fiscal plan on November 23. However his own officials confirmed it could be brought forward to the end of October.
BoJo’s chancellor, Rishi Sunak, who lost to Truss in the Tory leadership contest and now has no ministerial position, had promised to tackle inflation before looking to cut taxes.
The leader of the House of Commons, Penny Mordaunt, challenged Truss to espouse BoJo’s promise to increase welfare benefits by the rate of inflation. BoJo’s former cabinet minister Nadine Dorries echoed this position, and accused Truss of “lurching to the right”.
The former cabinet minister Grant Shapps, sacked by Truss when she became PM on September 6, told media she had only 10 days to save her job.
With Kwarteng facing withering criticism, Truss failed to say she trusted him– she had previously appeared to blame Kwarteng for the 45% tax rate debacle.
At a conference fringe event, the home secretary/home affairs minister, Suella Braverman, announced her opposition to the 45% U-turn. Braverman went further and claimed that Truss’s opponents had “staged a coup and undermined the PM in an unprofessional way”. One of Braverman’s first pledges when she became home secretary was to resume the deportation of refugees, some clearly victims of torture, to Rwanda by December this year. Braverman is the daughter of Kenyan and Mauritian immigrants.
The levelling-up secretary, Simon Clarke, then displayed his fealty towards Truss by tweeting his support for Braverman.
Clarke is a close ally of Truss, and had said in a speech at the start of the conference that Britain had long lived in a “fool’s paradise” and needed to curb public spending to subsidize the £45 billion worth of tax cuts. Clarke blamed the “very large welfare state” for the country’s economic stagnation, and said government departments, already slashed to the bone, would have to “trim the fat”.
Clarke obviously needs to be told that several European countries with larger welfare states (measured by using welfare expenditure as a percentage of country GDP) have long been performing better economically than the UK.
The former home secretary, the loathsome Priti Patel who wanted refugees flown to Rwanda for offshore “processing”, urged her party to back Truss while speaking at a fringe event. Patel is also the child of immigrants.
Clearly Truss still has a few lackeys marching in lockstep with her.
The Tories rebelling against Truss and Kwarteng probably also recalled that the two fired the most senior civil servant in the Treasury (in case he stood in the way of their farcical budget’s implementation).
Truss and Kwarteng cut every possible corner in this reckless “push for growth”, in essence using vast government borrowing to transfer wealth upwards from those who have little to those to those who have lots.
A probable sign that a major western government has gone completely off the rails comes when the IMF rebukes it for irresponsible economic decision-making. The IMF typically only uses such rhetoric when bullying less wealthy countries into submitting to its draconian policy prescriptions (think of hapless Greece during its economic collapse a decade or so ago). This time it was the Truss government’s turn to receive an IMF tongue lashing.
Truss’s short closing keynote resembled her gung-ho stump speeches during the campaign for the Tory leadership. Lots of huffing and puffing about “aspiration” and “growing the economic pie”– the word “growth” was used 29 times during her 34-minute speech. But no detailed economic plans were mentioned.
There was also no mention of the cost of living crisis, the climate crisis, the NHS, the minimum wage, the creaking education system, the judiciary under pressure, or the parlous benefits system. Truss was unable to rule out cuts to public spending and curbs on welfare payments to pay for her policies.
Instead, in yet another attempt to stoke the “war on woke”, Truss made a fierce attack on what she called the “anti-growth coalition” alleged to be standing in the way of her “pro-growth” plans. This “coalition” includes “Labour, the Lib Dems, the SNP, the militant unions, the vested interests dressed up as think tanks, the talking heads, the Brexit deniers, Extinction Rebellion and some of the people we had in the hall earlier” (the Greenpeace protesters who were removed for disrupting her speech).
When her speech was over he pound went down by nearly 1% against the dollar but gained ground afterwards.
After Kwarteng’s budget Moody’s warned that the UK’s sovereign credit rating could be downgraded, and adjusted its 2023 growth forecast for UK GDP downward from 0.9% to 0.3%.
The Bank of England intervention to halt the economy’s nosedive ends on October 14, and UK financial assets, the pound, and gilts could behave even more unpredictably when this happens.
Truss and Kwarteng are still in deep water with no lifeboat in sight.