If the PM does not change course she'll consign her party to oblivion
DAN HODGES: If the PM does not change course on Wednesday, she’ll consign her party to political oblivion
On Wednesday, Liz Truss will step up to the lectern and address the Tory Party conference as its leader for the first time. Her opening words need to be this: ‘I am sorry. I have listened to the country and I have seen the reaction of the markets. I still believe in my Government’s plan for cutting taxes and generating growth. But that must be done fairly and responsibly. I am therefore cancelling the proposed 45p tax cut and the abolition of the cap on bankers’ bonuses.’
If they are not, she needn’t bother continuing with her speech. In fact, she needn’t bother travelling to Birmingham at all.
Nor should any party members or MPs. They can dismantle the sponsors’ stalls. Toss away the fringe guides. Pulp the speeches in which Ministers pledge to stand up to Putin, crack down on twerking police officers and hand Sir Humphrey his P45. Then they can return home and prepare to pass the reins of power to Prime Minister Starmer.
Don’t get me wrong, Ms Truss could still deliver a barnstorming performance. She could bring the hall to its feet with a trenchant defence of her dynamic economic strategy. The markets could rally, the pound could soar, and newspaper front pages display bold headlines proclaiming ‘Iron Lizzie!’ and ‘Lizzie’s Not For Turning!’
And it will mean nothing. The voters will simply look, shrug and go back to anticipating the day they drive Ms Truss and her Tories from office.
On Wednesday, Liz Truss will step up to the lectern and address the Tory Party conference as its leader for the first time. Her opening words need to be this: ‘I am sorry…’
Over the past week, we have been swamped with financial gobbledegook. Long-dated gilts. Leveraged Liability-Driven Investments. Margin calls.
But the British people have registered what matters. That their pension pots were brought to the edge of extinction. That their mortgage repayments are about to explode. That their wages are set to be eroded by soaring inflation. That public services are about to be cut. That welfare benefits are on the brink of being slashed.
And then, in the distant background, they made out the slight figure of their Prime Minister. ‘Sorry about all that,’ she said. ‘But I have to find a way to help out the City boys making a killing trashing the pound, and cut taxes for the richest people in the land.’
Last week I described Kwasi Kwarteng’s mini-Budget as the biggest economic gamble taken by a government in peacetime. But in the end, he didn’t even make it as far as the roulette table.
The burly bouncers from the International Monetary Fund and the credit-rating agencies grabbed the Chancellor roughly by the shoulders, growled ‘Your credit’s no good here’ and hurled him out into the street.
As Kwarteng’s Black Friday-To-Thursday unfolded, Tory MPs I spoke to moved beyond desperation to resignation. ‘It’s over. I don’t know a single one of my colleagues who believes the next Election is winnable,’ one told me. Another said: ‘You won’t even see a big rebellion at this stage. People are asking, ‘What’s the point? We’re done for anyway.’ ‘
Meanwhile, the inquest in government – including inside No 10 and No 11 – is beginning. And everyone has a different doom-laden analysis. Some view the mini-Budget as economically inept. Others argue that it was economically sound but had suffered from disastrous political mismanagement.
One person I spoke to said simply: ‘It’s morally indefensible.’
But as Ms Truss and her aides rip up the conference speech they had been preparing and desperately cast around to justify the greatest fiscal catastrophe since Tory Chancellor Anthony Barber went boom in the 1970s, they need to understand this simple fact. As currently constructed, the mini-Budget isn’t flawed because of the economics, or the politics, or even the basic morality. It’s undeliverable because of all three.
During recent days, the ranks of Britain’s amateur economists have swelled to overflowing. Everyone has a pet theory for the dramatic implosion of market confidence.
But I’ll stick with this one. It’s from credit- rating agency Moody’s, hardly a bunch of woke, closet-Corbynites.
It said: ‘Large unfunded tax cuts are credit negative’ and will ‘lead to structurally higher deficits amid rising borrowing costs, a weaker growth outlook and acute public spending pressure’.
Higher deficits. Rising borrowing. Weaker growth. No, not an assessment of the disastrous tax-and-spend policies of one of the Labour governments of the 1970s. But the cut tax, borrow and spend – in the midst of a global inflation crisis – policy of the Conservative Government of 2022.
Ms Truss’s strategy was supposed to decouple politics from economics. But what she’s managed to do is fuse the politics and the economics into one grotesque, molten mess.
Now, it’s Labour Shadow Ministers talking solemnly about the need for fiscal probity and market stability, while Tory Ministers wander round uttering testosterone-fuelled rallying cries about ‘Going big or going home’.
Be clear: despite the taunts of the Left-wing critics, this Kwasi-crash is not conservatism – either with a big or small ‘C’.
Imagine what Margaret Thatcher would make of such insane profligacy. Famously she stated: ‘Every housewife with a weekly budget to balance knows that nothing is impossible, given the will, the character and the strength of purpose.’ Her Tory successors appear intent on blowing the household budget on fags and booze, then running off with the milkman.
But at its heart, the problem with the mini-Budget isn’t the economic illiteracy or political vacuity. Instead, it’s how it has underlined how little faith Ministers have in the country they aspire to govern.
The British people are not idiots. Unlike the Prime Minister and her Chancellor, they know there is no magic money tree.
They recognise that after the huge expense of furlough during the pandemic, and the unveiling of the energy price cap, basic savings must be made. That’s why there was no significant public backlash to the announcement that taxes would have to rise to tackle the NHS backlog.
Last week I described Kwasi Kwarteng’s mini-Budget as the biggest economic gamble taken by a government in peacetime. But in the end, he didn’t even make it as far as the roulette table
The fact is that the hard-working men and women of Britain are fully prepared to tighten their belts when the need arises.
But there is something they are not prepared to do.
After the turmoil and upheaval of the past decade, they are not going to sit back and watch their household budgets decline, their wages eroded and public services cut while bankers and the richest fill their boots.
MOST political observers are saying Ms Truss’s speech on Wednesday will be one of the most difficult of her life. It isn’t. It is the easiest.
There are no hard choices to be made. Or complex options to be weighed. Quite simply, she must change course or consign herself and her party to political oblivion.
Some may counter by saying that if it ditches major parts of her Budget, her credibility would be destroyed. Maybe. In which case she would lose nothing.
Because if she doesn’t abandon elements of her mini-Budget, electoral annihilation will follow as surely as night follows day.
I started working in politics in 1991. I saw the implosion of Major up close. And the end of New Labour. The Miliband era. May’s collapse. Boris blowing it within three years.
But I’ve never seen a more toxic political, communications and policy mix than this one. It is simply unsustainable.
Make no mistake: Wednesday may be the first time that Liz Truss addresses her party as its leader. But it will also be the last time she will have a chance to save herself and her Government.
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