Truss and Kwarteng will face fury of Tory MPs in week of crisis meetings
The prime minister, Liz Truss, and the chancellor, Kwasi Kwarteng, will face the wrath of Tory MPs at a succession of crisis meetings in parliament this week as their high-risk economic policies hit their poll ratings and spread panic in all wings of the party.
After a turbulent first five weeks at No 10 and an ill-disciplined, chaotic annual conference in Birmingham last week, Truss is expected to address the 1922 Committee of Tory backbenchers on Wednesday evening after taking on Keir Starmer at prime minister’s questions.
Both the prime minister and the chancellor are also holding meetings early this week with anxious “red wall” Tory MPs, who are deeply worried that tax cuts will mean less money for roads and other infrastructure projects in their areas.
The 40-strong Northern Research Group of Tory MPs has been pushing for immediate reassurances that pledges to level up the country, made in the party’s 2019 manifesto, are not downgraded.
There is also mounting dismay among Conservative MPs in rural seats at Truss’s enthusiasm for fracking, with backbenchers seeing her interest in the issue as hugely provocative with voters.
Already the parliamentary party has fractured into a series of factions under Truss, with even cabinet ministers such as the business secretary, Jacob ReesMogg, opposing her over real-terms benefits cuts and her decision to block a public information campaign on how to use less energy.
Former Truss loyalists, including one of her most vocal backers, Nadine Dorries, also appear to have abandoned her.
Kwarteng, who is scheduled to take Treasury questions on Tuesday, is holding a succession of meetings and calls with MPs worried about his and Truss’s plans for £43bn of unfunded tax cuts, which will disproportionately benefit high earners, and suggestions that benefits will be cut in real terms to try hold back borrowing.
Many will press for the early release of draft figures on the state of the public finances from the Office for Budget Responsibility (OBR), which were sent to the chancellor’s office on Friday. Sir Charlie Bean, an ex-member of the independent watchdog and a former Bank of England deputy governor, said on Friday that the document would probably show a large shortfall for the exchequer.
“It will be in the order of £60bn to £70bn relative to its previous forecasts,” he said, adding that Kwarteng would face three options: further Uturns on his tax-cutting plans, deep cuts to public spending, or risking the ire of already rattled financial markets by substantially adding to the national debt.
MPs want Kwarteng to publish the OBR figures within a fortnight rather than delay their release until he delivers a new medium-term fiscal plan on 23 November. One senior Tory MP said Truss’s first weeks had been nothing short of a “disaster” and that, if the mood continued to deteriorate when parliament returns on Tuesday, her leadership would be in a “death spiral”. The pressure on the PM and chancellor will continue when the Treasury select committee examines Kwarteng’s contentious mini-budget on Wednesday, with the Resolution Foundation’s Torsten Bell and Paul Johnson of the Institute for Fiscal Studies – both of whom have been hugely critical of the tax-cutting plans – due to give evidence.
In her party conference speech, Truss attempted to rally her divided party by describing those opposed to her “dash for growth” as part of an “antigrowth coalition” that included the unions, green campaigners and people who opposed Brexit. But the prime minister is now facing danger from a different kind of coalition of groups in her own party, which is thinking of ways to address the catastrophic slide in the Tories’ standing since she took office.
While there is little or no appetite among Conservative MPs for another leadership contest so soon after the last, neither is there any appetite to continue on the current downward spiral.
Who’s who in the troublesome tribes
True believers
Truss is facing opposition from many MPs over various aspects of her plans, but she will also face pressure should she deviate too much from the libertarian approach she has endorsed at the start of her premiership. Tory MPs such as John Redwood have been applauding her attempts to shrink the state and should she U-turn on much more of her programme, a section of the party will be frustrated by her reversals. Some of them are in government. Home secretary Suella Braverman condemned her party for opposing the cut to the 45p tax rate, saying MPs had performed a “coup” by forcing a U-turn. Levelling up secretary Simon Clarke said Braverman was speaking “a lot of good sense” in making the comment. It means Truss will face rows in government and among her own MPs if she strays too far from the tax-cutting path she has embarked on.
Boris allies
Liz Truss secured her place in the leadership contest thanks to support from many MPs loyal to Boris Johnson. For many in this group, their commitment to the legacy of the former prime minister trumps loyalty to the new one. Nadine Dorries has emerged as leader of this group. While backing Truss, Dorries has criticised the doomed attempt to abolish the 45p top rate of tax and accused the government of lurching to the right. Figures close to Johnson hold senior posts in Truss’s team – most notably, business secretary Jacob Rees-Mogg, who has clashed with No 10 over the need for a public information campaign on saving energy. This group could cause another headache for Truss. Several Johnson loyalists, including Dorries, are said to be on his list of peerages. Should they resign and cause byelections, Truss will be faced with yet another political minefield.
Fiscal hawks
Kwasi Kwarteng’s refusal to publish Office for Budget Responsibility forecasts with his mini-budget was seen as a main reason for the market reaction that led the pound to plummet and the Bank of England having to stabilise UK government bond markets. For the large part of the Tory party that sees fiscal responsibility as its calling card, restoring the credibility of the government’s spending plans will be the key battle. Treasury select committee chairman Mel Stride has almost become a shadow chancellor in his attempts to reassure the markets, most notably by revealing that the OBR would deliver the first iteration of its forecasts last Friday. Stride is likely to feature prominently should the government be evasive on its spending plans. Others in the group are those close to Rishi Sunak, such as Grant Shapps and Dominic Raab.
Red wallers
The government’s decision to end the moratorium on fracking led to a huge reaction from northern Tory MPs. They were led by Mark Menzies, MP for Fylde, who made clear there was no local support for the drilling. The Northern Research Group of MPs, until recently fronted by new Tory chairman Jake Berry, is opposed to fracking. As the de facto voice of red wall Tories, its views will be powerful. Apart from fracking concerns, northern Tories are on the lookout for any attempts to cut promised infrastructure projects as part of the government’s attempts to
rein in spending. The costs of many projects are increasing, but several MPs said they were essential to the levelling up agenda and growth prospects in their areas. Thirsk and Malton MP Kevin Hollinrake has warned against any attempt to claw back infrastructure spending after the mini-budget.
Health watchers
As the NHS heads into what everyone expects to be a very hard winter, a series of competing demands means that there are serious concerns over the health of the health service. Truss has set her health secretary and ally Thérèse Coffey a series of seemingly impossible targets for improving access for patients. Coffey has said that people should be able to see their GP within two weeks. However, former health secretary Jeremy Hunt – a defeated Tory leadership rival – has already said the NHS needs more targets “like a hole in the head”, and has become the de facto leader of Conservative concern over the health service. Any attempt to erode its budget will also cause huge problems. Meanwhile, MPs with an interest in 40 promised hospital building projects are also taking a close interest to make sure their favoured scheme is not axed.
Welfare protectors
The idea of cutting welfare to help balance the books has already run into opposition within the cabinet, with ministers Penny Mordaunt and Robert Buckland raising concerns about benefits being increased below the rate of inflation. That means it is extremely hard to see how Truss would secure enough support for the measure. However, Whitehall insiders say welfare will have to be tackled in order to protect health and education spending. The government could try to put off or dodge votes in the Commons, but it is up against some savvy operators in its own party who will be wise to such tactics. On the backbenches, universal credit creator Iain Duncan Smith is a formidable opponent who has warned against eroding welfare. Ministers are also up against MP Stephen McPartland, who led a successful rebellion over a tax credit cut under George Osborne.
Climate and countryside Tories A huge row over the post-Brexit regime for farming subsidies is under way, with some experienced parliamentarians leading the resistance. While the government insists it is not rowing back on its plans to reward farmers who help improve biodiversity, there are huge concerns among green groups and the farming lobby. Michael Gove, the former environment secretary who devised the plans, has warned against any backtracking – as has one of his successors in the job, George Eustice. Any sign the government is rowing back from its commitment to net zero by 2050 will also cause problems within the party. Alok Sharma, who chaired the Cop26 meeting on climate change, has made clear he will guard the pledges made at the meeting by the UK.