liz trussThe first full week as British prime minister has not been easy. It started with the pound falling to its lowest level in decades after the government’s decision on him. interim budget last Friday. It ended with his meeting with the UK’s independent financial forecaster and he had to explain himself after a week of economic chaos.
This weekend he will travel to Birmingham to attend his Conservative party’s annual conference, a meeting that could become a defining moment in his term.
His party is bitterly divided. Since he became leader, poll ratings have fallen lower than even under the disgraced leadership of Boris Johnson. Conservative Members of Parliament fear that the combination of tax cuts coupled with huge government spending to help people cope with energy bills, rising inflation, rising interest rates and falling the pound will make it impossible to win the next general election.
Even his supporters say privately that while they support his tax cuts, communication has been terrible and they fear he may never recover from his disastrous start. Many compare it to Black Wednesday in 1992, when the British pound crashed enough that the UK had to withdraw from the European Exchange Rate Mechanism. The then Prime Minister John Major never recovered from the crisis and, despite the economic recovery, he lost the next election in 1997.
For now, no one expects the government to reverse its policy. “They are stuck with this. The thing about radical politics that shakes market confidence is that the U-turn creates even more instability and will not restore market confidence,” says a Conservative MP.
Regardless of how much of a U-turn that may seem to those on the outside, the biggest reason Truss is likely to stand her ground is that she sincerely believes her economic plan is the right thing for Britain. His supporters argue that the UK has had anemic growth for years. They believe that a more competitive tax system and a new regulatory system is the best way to encourage investment, create jobs and grow the economy.
In itself, this is not a controversial idea. What some fear is that the combination of tax cuts and loans to finance government spending is a disastrous mix of policies that have been miscommunicated at the worst possible time.
“We look like reckless gamblers who only care about people who can afford to lose the bet,” a former Conservative minister told CNN earlier this week. “My fear is that it is the final roll of the dice to win the next election that has already failed.”
The idea that this is a gamble, Truss’s kitchen sink moment, to do something drastic and win the next election, is shared by other Conservatives.
However, they worry that these policies have been invented by politicians who spend too much time in Westminster talking to people who agree with them, but are far removed from what average voters care about.
“Ordinary people are seeing their mortgages rise at a rate that outstrips any government support for energy bills or money saved through tax cuts,” says another former minister. “The crazy thing is that Boris [Johnson] he won an 80-seat majority with an electoral coalition that still exists today. Breaking the policies of his government and reinventing the wheel just wasn’t necessary.”
The mood ahead of the Conservative Party conference is undeniably gloomy. Not everyone thinks that the next election is already lost, but most think that the current situation is a disaster that needs to be resolved quickly.
“They need to explain their fiscal rules, cut spending on white elephant projects and not look like they’re doing everything so hastily,” says a Conservative MP who supported Truss’s leadership campaign.
Another Truss ally says: “The problem with Liz and Kwasi [Kwarteng, the finance minister] is that they are both very smart and think six moves ahead of the others. They need to explain their actions more clearly and give people time to understand what they are trying to do.”
And his critics also believe there are ways to change this without losing face. “They could keep the policies but implement them slowly. Kick some stuff into the tall grass so there’s not as much of an immediate impact.”
There is also the real possibility that your plans will work. The British pound could recover, the economy could grow against all odds and it could have some real wins to take to the next election, which is probably still more than two years away.
The question conservatives are asking is whether Truss has the political talent, both she and the team around her, to win over the public.
His team is full of young people who are undeniably skilled but in some cases lack the experience you’d normally associate with people working for a country’s leader, many conservatives believe. There is also a feeling that the third change of leaders in six years has burned out the talent.
There is still time for Truss to turn things around. But he is losing support from her own side, and there is already speculation that Conservative MPs are thinking of ways to get rid of her, which is unbelievable just weeks into her tenure as Prime Minister.
The official opposition Labor Party held its conference earlier this week, and the mood was one of cautious optimism. Almost everyone there, from corporate PR to party activists, felt that this was a party on the brink of power.
In the week ahead, Truss needs to address her own party faithful and give them something to be optimistic about. If he doesn’t, the sense of inevitability that power is slipping away from the Conservatives could become a self-fulfilling prophecy that drives the party into the wilderness after more than a decade at the top of British politics.