As the newly installed Chancellor, Jeremy Hunt, scrambles to recover the Tories’ economic credibility, Liz Truss is still trying to save her premiership. Hunt – the government’s “chief executive”, as he has been dubbed – used this morning’s cabinet meeting (18 October) to warn ministers that he was planning a series of tax rises and spending cuts to repair the public finances after Kwasi Kwarteng’s disastrous mini-Budget more than three weeks ago. All departments were asked to draw up plans for “efficiencies”.
But enacting fresh austerity will not be an easy task for at least two reasons. Firstly, Truss’s perilous position gives her little room to resist a cabinet revolt against new spending cuts. Secondly, the Conservatives won the 2019 general election on a pledge to “level up” the country. Many of the 2019 intake of MPs, and more besides, know their constituents will punish them for endorsing further rounds of austerity.
The Chancellor jettisoned almost all of Kwarteng’s Budget, reversing £32bn of the £45bn tax cuts. But economists believe Hunt must find up to an additional £40bn to stabilise the public finances ahead of his fiscal statement on 31 October and the accompanying Office for Budget Responsibility forecast.
With some Conservative MPs already publicly calling for Truss’s resignation – several favour her defeated rival Rishi Sunak, others the Defence Secretary Ben Wallace, or the House of Commons Leader Penny Mordaunt, and even Hunt himself – time is short. There are reports Wallace could resign if Hunt abandons plans to increase defence spending to 2.5 per cent of GDP in 2026 and to 3 per cent in 2030.
Meanwhile, Truss – who last night used a BBC interview to apologise to the public for the economic crisis – is attempting to win over colleagues in a series of meetings with back-bench MPs. A meeting between the Prime Minister and front-bench ministerial aides this morning was deemed a “grim” occasion that did “not exactly inspire confidence”. One Tory source said that “most people did not want to be in there listening to the PM so early in the morning”.
Fears are growing that Truss will attempt to scale back levelling-up projects and reduce infrastructure spending – something the One Nation parliamentary group, and those 2019 MPs who backed Sunak in the leadership election, would take a dim view of. A source said: “A lot of the Red Wallers are really worried about the size of the hole in public finances. They are concerned that the development they have been promised – new roads and new hospitals – is just going to go up in smoke.”
The word from the members’ tearoom, where ministers have been doing the rounds, is that MPs fear “the department for levelling up is about to become the department for levelling down”. The Prime Minister is also expected to address the European Research Group of eurosceptic MPs this evening. Truss won the Tory leadership by convincing the party’s right-wing Brexiteers to fall in behind her. That she must now remake her case to the same group reflects her weakened state.
But is the embattled PM’s job safer than some suggest? Perhaps so. As backbenchers learned during the Boris Johnson and Theresa May years, it is stubbornly difficult to remove a prime minister who does not want to leave. Conservative Party rules decree that a new leader is safe from a formal leadership challenge for a year. Members of the party’s back-bench 1922 Committee have signalled that they are willing to change the rules but only if around 60-70 per cent of Tory MPs endorse this move.
Factions are deeply divided over who the “unity candidate” should be. Is it Sunak, whose economic critique of Truss has been vindicated, or Hunt, who already appears to be doing the top job? They are also divided over strategy. Do they remove Truss now to minimise the damage? Or, as the One Nation group would prefer, force Downing Street into a reshuffle to promote wiser heads… and remove her later?
Some MPs believe rebelling over budget legislation could be their one chance to prise Truss from office but this could inflict yet more damage on the Tory brand as Labour’s mammoth poll lead endures. But the rebels do agree on one thing: that Truss’s insistence she will lead the Conservatives into the next election is a fantasy. Perhaps the one thing delaying her inevitable demise is precisely how bad the situation has become: who would want to be prime minister now?