FOR many, Boris Johnson’s boosterish premiership was always a car crash waiting to happen but after less than a month, as millions of mortgage and pension-holders fear for their financial futures, Liz Truss’s premiership has already become one.
The PM’s stuttering start in Downing St is the worst in living memory. The chain reaction of market negativity to her strategy caused the pound to slump to its lowest level against the dollar, boosted the prospect of higher interest rates and threatened future pension pay-outs.
It was in large part caused by the Chancellor announcing £45bn of unfunded tax cuts without a proper OBR cost-assessment after unwisely declining the offer of one.
So, it seems incredible, after a stage-managed meeting with the OBR chiefs, Kwasi Kwarteng will get a fiscal assessment from them next week but won’t publish the final version until November 23.
Which will be five weeks after the Bank of England’s £65bn intervention to buy UK Government bonds to stabilise the market ends on October 14 and three weeks after Threadneedle St is expected to raise interest rates by at least 1%.
The chances of a leak of one of the OBR’s iterations of the effects of the Growth Plan ahead of November 23 are, I would suggest, high. And how would the markets react then?
The Bank’s intervention to help keep the pension funds afloat has bought time but perhaps nothing more. As the FT reported, pension industry watchdogs have had daily emergency meetings with asset managers to try to avoid another crisis come October 14.
One analyst described the Bank’s intervention as a “sticking plaster” while another said it would have to “stay in the market longer” until there was a change in the Government’s fiscal policy.
Yet Truss, who apparently “doesn’t do humility,” is digging her high heels in, insisting she is not for U-turning. She managed, under questioning, to graciously accept that, following the fiscal statement, there had been “disruption”. A contender for the understatement of the year award.
The embattled Chancellor yesterday defended his Budget, saying that the Government “had no other choice” but to do “something different” to kick-start the economy.
He pointed to imminent “supply-side measures” to boost growth but these too could be contentious; from abolishing the 48-hour working week to reducing environmental protection and liberalising planning laws in England.
Simon Clarke, a key Truss ally, signalled austerity was again on the horizon. The Levelling-Up Secretary described Britain as having been a “fool’s paradise” for too long and signalled the Government would "trim the fat" on public spending.
Yesterday, John Swinney, the Deputy First Minister, together with representatives from the Welsh and Northern Irish devolved governments, called for an urgent meeting with Kwarteng, warning his “huge gamble” was jeopardising their nations’ vital public services and demanded more money.
The fact that Truss, having pledged to keep an “iron grip” on the country’s finances, couldn’t confirm benefits would be uprated in line with inflation, suggests that the welfare budget is in her sights. Such a move while lifting the cap on bankers’ bonuses would be politically toxic.
As turbulence rocked the markets, The Times reported how one Government figure approached No 10, urging it to change course, but was rebuffed.
“It’s like talking to crack addicts,” he declared. “You’re saying: ‘You guys need to stop … to communicate better.’ But they’re doubling down. They’re hooked on the economics.”
One Downing St insider also noted how the PM’s inner circle were “all true believers,” noting: “So there is no: ‘Oh sh*t, the headlines are terrible, we have to change course.’ They’re not panicking because they really believe it will work.”
But many of her colleagues don’t.
One ex-minister said bluntly: “She’s finished.” Another said: “She’ll be gone by Christmas. I can’t see this lasting. It’s bloody catastrophic. I think she should be thrown out, I really do.”
While under party rules the new leader cannot be challenged for a year, the 1922 Committee could change them. One backbencher claimed no confidence letters were already “flying in like there’s no tomorrow”.
One particular snapshot fired up Conservative jitters, suggesting nearly half of Tory voters in 2019 had now abandoned the party with 15% saying they had switched to Labour.
There is even talk of collusion between disgruntled Conservative MPs and Labour to halt some of the more politically controversial Truss policies in the Commons like the scrapping of the 45p tax rate.
The annual Tory conference is set to be a tense affair, to say the least. Scores of MPs are said to be boycotting it but, for those brave souls venturing towards Birmingham, the conference slogan of “Getting Britain Moving” will have an ironic ring given the countrywide rail strike.
Many conference events, which would normally attract hundreds of people, will have only have a few dozen. The popular end-of-conference karaoke night has been cancelled.
If the disaffection for the Tories – as evidenced by the giant leap in poll support for Labour – is bad now for Truss & Co, imagine what it will be like in the coming months when as interest rates hit 5% or 6% many thousands of people begin to lose their homes because they cannot afford the repayments while others see their dream of getting on the property ladder dashed.
There comes a moment in politics when a governing party just feels out of time, lurching from one disaster to another; distrusted, disunited and discredited. That time seems to have arrived.
Even senior Tory MP Sir Charles Walker, responding to the poll that gave Labour an eye-popping 33-point lead, said: “It’s hard to construct an argument now that the Conservatives can win that general election.”
This morning, Truss is due to be quizzed by the BBC’s Laura Kuenssberg as the Conservative conference gets underway. If the PM continues to issue robotic responses to deflect from pertinent questions about the financial concerns of ordinary people, her sophistry will confirm to many that the game is well and truly up.
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