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4 October 2022

Liz Truss’s tax U-turn has emboldened Tory dissenters

The party conference is a festival of discord and the next fight is brewing over plans to cut benefits.

By Freddie Hayward

Liz Truss’s first Conservative Party conference as Prime Minister should have been a celebration. She should have partied with the Tory members who put her in office – if not with the MPs, most of whom voted for Rishi Sunak. Instead, it’s become a festival of internal discord and division.

Here in Birmingham yesterday the main event was the speech by Kwasi Kwarteng, the Chancellor, after he cancelled the abolition of the 45p top rate of income tax, which had been a key part of his mini-Budget. His speech was riven with contradictions.

The U-turn was an attempt to pacify the government’s rebellious MPs. The trouble for Truss is not over, however. Ben Houchen, the Tory mayor of Tees Valley, has called on the government to reinstate the cap on bankers’ bonuses. Esther McVey, the former work and pensions secretary, has said that plans to cut benefits in real terms would be a “huge mistake”. And now Penny Mordaunt, a member of Truss’s cabinet, has come out against the cuts.

The party’s popularity is collapsing. Our own polling tracker predicts the Conservatives would lose 211 seats in a general election, giving Labour a majority of 142. A veteran rebel MP and architect of Boris Johnson’s downfall believes the very survival of the party is in question. They told me Truss wouldn’t lead the Conservative Party into the next general election and described the mood among their colleagues as a “state of disbelief”. Relatively few Tory MPs are walking the corridors of this byzantine conference centre; many have chosen to stay away. However, forecasts of the party’s failure are not universal. “Like Dracula, they do not die,” an old lobby hand observed. Or as one seasoned pollster put it to me: “What goes down comes back up. A year is a long time in this country.”

While predictions of the party’s demise may be rash, the dividing lines of a post-Truss party are emerging. Michael Gove is traipsing the conference fringe circuit, charming the party faithful with his wit. He appeared at one event on Sunday to discuss “social capitalism”, which stresses the importance of social infrastructure – charities and voluntary groups, parks and town halls – in promoting economic growth and binding the country together. He argued that his party had lent too far into liberalism and neglected its conservative roots.

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Whether Gove is merely causing mischief or beginning a leadership challenge is yet to be seen. In any case, the tax U-turn will embolden the dissenters within the party. Truss has been forced to change tack once, so why not again? That will make her return to parliament next week difficult and underline the precariousness of her position. The upshot is an emaciated government trying to control an unruly party which faces electoral oblivion. My thoughts are with those writing the Prime Minister’s speech for tomorrow.

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This piece first appeared in the Morning Call newsletter; subscribe here.

[See also: The next Tory leadership contest has already begun]