Meltdown

Ten days ago after Liz Truss’s dismal party conference speech I suggested three steps she could take to reset her premiership:

·       A cabinet reshuffle, bringing in former ministers to help party management and government communications.

·       A fiscal statement that showed the government were serious about balancing the books over five years including the reinstatement of Sunak’s Corporation Tax rise, perhaps combined with an enhanced Windfall Tax.

·       Delaying the supply side reforms, which are being rushed through Whitehall at a ridiculous and counter-productive pace, and picking a couple of winnable battles, perhaps energy supply and infrastructure. 

Perhaps I should have been clearer that I meant doing it right away and with some authority, rather than in a desperate panic amidst contradictory briefings, emergency flights across the Atlantic, and stories of MPs openly plotting to remove her. Moreover, if you are going to sack your Chancellor and U-turn on your signature policy you have to be clear about your mistakes and how you’ll avoid them again in the future. Walking out of a press conference after four questions and eight minutes was guaranteed to make everything worse. Which it did.

In any case attempting to pass the blame onto Kwasi Kwarteng was always doomed to fail given the budget was so clearly driven by her. She spent all summer arguing for the Corporation tax rise to be stopped and now it will happen. It’s also not clear whether she can work with new Chancellor Jeremy Hunt. Her team is briefing out that she will not accept any further U-turns on the budget, and his supporters are on the radio describing him as Chief Executive to Truss’s Chair of the Board. Realistically she cannot fire him so he can do what he likes. Her authority is totally shot.

Tory MPs have moved past anger into a kind of shell-shocked despair. It’s all gone so cosmically wrong that they’re starting to wonder if they’re about to find themselves naked in an exam hall halfway through a French GCSE they haven’t revised for. They have taken to finding ever more elaborate and abusive similes to describe the awfulness of their position – e.g. “it’s like we’re being given a choice between a shit sandwich and a shit sandwich with extra shit”. Meanwhile the civil servants who are trying to hold everything together are watching on in disbelief. One Downing Street official said to me earlier this week that “I know it’s hard to believe but it’s worse than it looks”. Though, to be fair, that was before today’s multi-lane pile up.

Labour meanwhile cannot believe their luck. Not only have they been handed the next election but, as Danny Finkelstein says:

“In a decade Labour will still be talking about what has just happened. It will take years for the Conservative Party to be able to deploy the argument that it alone is fiscally prudent. And this is the argument that has repeatedly secured it victory.”

The only downside for them is the economic damage being done by the Government as markets lose ever more confidence means that Labour will be coming into office with the country in a very bad way. Tony Blair had four years of economic growth gifted by Ken Clarke to build on, Keir Starmer will inherit a mess. I’ll be saying more about what Labour should be doing to prepare for this in a future post. The rest of this one will focus on what the Tories might do to begin climbing out of the very deep hole they find themselves in.