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Mon, 30 January 2023

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MPs Demand No 10 Deals With "Open Sore" Of Economic Fallout Sooner Rather Than Later

MPs Demand No 10 Deals With 'Open Sore' Of Economic Fallout Sooner Rather Than Later

Liz Truss and Kwasi Kwarteng are facing pressure on a number of fronts from rebellious Tory MPs as Parliament returns this week (Alamy)

9 min read

Rebel Tory MPs have said that the government cannot wait until 23 November to publish the Office for Budget Responsibility's (OBR) independent forecast of economic plans, and that they must offer a benefits guarantee as they prepare to return to Westminster following a febrile few weeks.

After a bruising Conservative party conference in Birmingham, Liz Truss faces further threats to her authority from her own backbenchers, many of whom are critical of what they consider to be a lack of engagement from Downing Street.

Emboldened by having forced the Prime Minister to u-turn on plans to abolish the top rate of income tax, rebel MPs have now reset their focus onto pressuring Chancellor Kwasi Kwarteng into bringing forward the fiscal statement currently scheduled for November to the end of this month. It is believed that such a move would begin to calm financial markets that descended into chaos following Kwarteng's "mini-Budget" last month. 

Kwarteng has so far rejected calls to deliver his spending plans and the attendant OBR report ahead of the original date – despite suggestions from within government that he would.

But a former minister, who has been critical of the new administration’s approach, and backed Rishi Sunak in the leadership contest, said backbenchers are not ready to drop the issue, and plan to apply pressure on Downing Street to confirm a new date when the Commons sits again on Tuesday.

“There's a political issue around this, in that it'll just be an open sore until they do come forward with it, so let's get it dealt with,” they told PoliticsHome.

“There's a lot of people waiting and uncertainty doesn't help anyone, so let's get the uncertainty over with as soon as we can."

Initial reports that Kwarteng would deliver plans sooner were welcomed by Tory backbenchers who now say it is "disappointing" that the Chancellor seems to be sticking to the November date. 

The OBR has said its interim report was ready yesterday, which has led to further confusion over Kwarteng's delay of its publication. 

“I just don't understand why we have to wait another six weeks," the former minister continued. 

“[If] the government is to learn anything from the 45p tax cut issue, it's you can't just make this decision and expect us all to row in behind.

“They just seem to be picking a fight they're not going to win, and how they have not realised that I don't know.”

A cabinet split is also emerging over whether the government should issue a guarantee that benefits will rise in line with inflation, rather than earnings, next year.

Commons leader Penny Mordaunt is among a number of Conservative MPs who have publicly backed the higher level of welfare payments. Truss, however, is believed to be opposed to the rise, as the government looks to reduce spending in order to pay for tax cuts that are currently funded by massive public borrowing.

“Just say you're going to raise benefits by inflation, because you're going to have to do it anyway, so just say it and don't don't make us fight for the next three months," the exasperated former minister added. 

A Tory MP in the North-West also foresaw an internal battle over whether many “Levelling Up” projects will still go ahead. Much of the funding was green-lit by government in 2017 meaning there are now significant budget shortfalls as a result of rapidly rising inflation.

“If colleagues are to save their seats in the ‘red wall’ they need to have those projects started before an election is underway,” the MP told PoliticsHome

“But people are worried they may all be revisited because of inflation and because when spending cuts are needed, infrastructure and capital spending are often the first to go.”

Since entering No.10 only a month ago, Truss has so far failed to reunite the party after a divisive Tory leadership contest in which she defeated Rishi Sunak in a vote among grassroots members, but was only backed by 50 MPs out of the 357 total Conservatives in the first ballot.

The former minister suggested “the seeds of what happened in the last 10 days were sown in the reshuffle,” when Truss mostly appointed her loyal supporters to top government jobs, and very few Sunak backers were given a government position of any kind.

“It was just a huge mistake to drop some very capable and experienced, decent people from government who I think could have been very useful to them at this time,” the MP said.

“The problem is you've got a lot of us now who don't feel we have anyone in government that represents our views, and therefore we have no stake in this government.

“There's a lot of us who just feel disenfranchised from it all, and there just seems to be no effort to reach out to us, it just seems a bizarre way to be running things.”

Kwarteng is understood to be planning to address the 1922 Committee of Tory backbenchers on Wednesday, but one MP said since the Chancellor’s "mini-Budget", there has only been one conference call to discuss is, and that government Whips have not done a ring-around to find out what colleagues have made of it, as would usually be the case.

“I just find that astounding, two weeks after the budget nobody has called to ask me,” they added.

“It's just a very strange way of operating.”

The refrain this week has been that if things don’t improve quickly, Truss could be ousted by MPs and replaced with “Rishi by Christmas”.

But one MP said while installing Sunak in No.10 may succeed in calming the financial markets, it would be highly unpopular with Conservative party members who have so recently voted for Truss if MPs unilaterally overrode their decision.

A prominent supporter of Sunak said the former chancellor was unlikely to even want to take over after the factious nature of the summer’s contest.

“If it does happen, and I genuinely hope we can avoid it, I think we're going to have to find someone that truly can unite the party and bring everyone together,” they told PoliticsHome.

“I think because of the bitterness of the leadership election, although I think Rishi would do a great job for us, I think too much damage was done during that time, and I'm just not sure enough people would be willing to forgive and forget.”

For the time being Truss is likely to be safe, as the Tory party rules prevent another contest for 12 months, although there is unease at her framing of her opponents as an “anti-growth coalition” during her headline speech to close Conservative party conference on Wednesday.

A Downing Street insider said “the language is shit,” a sentiment echoed by several government sources. They argue that references to growth and supply side reforms are wonky and won't connect with ordinary people.

Truss's public persona has also been derided after struggling in recent media interviews, with one MP remarking of her at party conference as being “wooden” and having “zero empathy”.

“It’s a lethal combination, like Theresa May but worse,” they said. 

In the hotel bar at party conference, government staff moaned about the abundance of anonymous briefing against the prime minister.

A senior minister agreed that backbenchers should stay quiet and get behind Truss. “For ages Tory MPs have been calling for the party to be more Conservative, and now we actually have a Prime Minister willing to enact these policies, and they’re complaining that they’re too Conservative – it’s pathetic,” they said. 

They complained that Sunak supporters “thought it was nailed on that they would win, and now they are angry and disappointed and lashing out,” but insisted that they “need to get a grip and realise what will happen” if they don’t back Truss and Kwarteng’s plans for the economy. There have been a number of warnings that if tensions in the party fail to subside, losing the next election will be inevitable. 

But the MP suggested that No.10 needs to work harder to bring the Parliamentary party on side too, and “to govern like we’re in a minority to get through policies,” working extremely hard to get support from within the party.

“MPs want influence and if you can offer them that, then you can get people on side,” they added.

One MP who supported Truss said the Prime Minister needs to get on with delivering her plans, and that if she ignores the internal criticism MPs will fall into line if her policies work.

“Some people think leadership is about finding a crowd and standing in front of it, I actually think good leadership is about saying ‘something isn't there, it should be, this is what I can do’, and then get in front of it and doing it,” they said.

“I think that is exactly what she's done, look at the energy crisis – she did something about it, and that for me is leadership.”

With a number of opinion polls putting the Tories as much as 30 points behind Labour, the mood at conference overall seemed to reflect a weariness that the party will lose the next election.

But a former special adviser said they didn’t think the problem was “existential” and that the party could still bounce back.  

“Labour were too quick to be patting themselves on the back last week," they said. 

“They are still a long way from power and if they are complacent then it won’t happen, a lot can change in two and a half years.”

The former minister believed the party needs to move back to the centre to have a chance of winning.

“Fundamentally, the problem that the Prime Minister has is that in the last 30-odd years of British politics people have won elections from the centre ground – slightly to the left or slightly to the right – but broadly from the centre,” they explained.

“The British public has always voted for the most moderate party at the time, the reason we have won four elections is we were against Gordon Brown, Ed Miliband and Jeremy Corbyn, and we always looked like the most moderate party.

“But Truss has taken us to a position politically now where we make Keir Starmer look like the moderate, and I think fundamentally that is the problem.”

While they agreed that Truss needed to handle the parliamentary handling of her policies better, they also felt it was essential to improve communications of them too. 

"The main thing I'm looking for is just better political judgement and a realisation or acceptance of the reality of the political situation we're in," they added. 

“If we carry on down the path we seem to be setting on, I don’t see how we win an election.”

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