Liz Truss: Is the lady for turning?

Opinion: With the result of the Conservative Party Leadership race finally announced, Chamber considers the new Prime Minister’s options.

Many congratulations to the new Prime Minister, Liz Truss.

Elected today as the fourth Conservative Prime Minister in six years with about as many problems to fix as Clement Attlee, or Jim Callaghan (but hopefully not Winston Churchill)

Simply put, once the dust settles, the economy will define the Truss premiership.

If the new Prime Minister is not seen to act fast enough to ease the cost of living pressures in an early “fiscal event” (not to be confused with an Emergency Budget due to the lack of independent Office for Budget Responsibility (OBR) scrutiny), then it will be an uphill battle for the Conservatives to win the next General Election.

How Truss reacts to the worst economic environment since the 1970s is a necessary if not sufficient requirement for the Conservatives to win the next General Election. Given the commitments during the leadership campaign, the options for the new Prime Minister look limited.

Is it big enough?

Pollsters gave Truss a commanding lead over Rishi Sunak, some predicting a 32% lead. Many in her team were hoping to get over the magic 60% threshold. However, today’s 57-43% split will lead many to question whether she will be able to bring the Party back together, let alone the country.

To put this into context (and useful for whatever pub quiz you are off to next) this is less than David Cameron won against David Davis (67.6%), this is less than Boris Johnson’s victory over Jeremy Hunt (66.4%) and ominously even less than the one Iain Duncan Smith received (60.7%).

As Truss supporters hit the airwaves with gusto this lunchtime to defend her “convincing mandate”, this backdrop will explain why any policy shift is going to be extremely difficult.

Truss needs to win the hearts and minds of Tory MPs to ensure her free market, low tax vision for Britain is implemented. With significant numbers of big state, high spending, red wall, pro-Boris loyalists, this is genuinely going to be hard for the new Prime Minister.

All doom and gloom for the Conservatives?

Yes.

The polls put Labour on a comfortable lead of 10-15%. As is traditionally the case, there has been no significant bounce caused by the election of a new leader. Labour remains ahead of the Conservatives as most trusted to address cost of living with both major parties neck and neck in terms of most trusted to grow the economy.

Without the “Get Brexit Done” slogan to win over red wall marginal seats, Truss has the unenviable job to hold onto red wall seats for all the reasons outlined above and fight a resurgent Liberal Democrats who are winning over (lazily called) ‘middle Englanders’.

What are Truss’ options?

Well, there are two things that Truss could do and one may counter the other. She could go hard on the Northern Ireland Protocol. This will inevitably lead to a trade war with the European Union when inflation is pushing 10% and people resorting to “warm banks” this winter. This is hardly a strategy that will win over the hearts and minds of the British public, and it will almost certainly push up inflation. On the bright side though it would strengthen her position on the right of the party which, despite being pandered to by Boris, is still a source of trouble for a Conservative PM.

Alternatively, she could U-turn (again) on further support through grants, universal credit, or other such mechanisms. This will almost certainly push up inflation, but it will make the next election more winnable for Conservative MPs in marginal seats, another essential constituency.

Truss was keen to highlight that she supported tax cuts during the leadership campaign. However, as her opponent highlighted on multiple occasions, tax cuts would help the well off, not those most in need. This is an obvious point given that people who are out of work are not taxed on income, as they do not have one. And again, this will almost certainly push up inflation.

So, the options ahead look as bleak as the captain steering the ship through a sea littered with icebergs. Only a perfect path will save the Conservative ship from sinking.

Liz Truss and Rishi Sunak
Most polls predicted a wider margin of victory for Liz Truss over Rishi Sunak

“Read my lips – no new taxes”

If you thought the triple lock was politically difficult to scale back from, Truss’ commitment at the last leadership hustings in London to not increase taxes amounted to a manifesto commitment. For a leader with little room for manoeuvre, this tying of her hands may well come back to haunt her.  

Given the twists and turns of British politics even over the last decade, it seems prudent for the new Prime Minister to leave themselves as many options as possible. However, for a former Lib Dem who was flexible enough to serve each of the recent Conservative Prime Ministers, campaign for Remain and then win from the right in a Tory leadership contest, perhaps Liz Truss is justified in some faith in her ability to perform U-turns when required.

As a result of this ‘commitment’ there are now three options for the Prime Minister, and none of them are good:

  1. Cut spending – this risks being accused in red wall seats of a return to austerity
  2. More borrowing – risking accusations of saddling future generations with our debt
  3. Breaking a promise – not ideal when you want to restore trust in politics

With the Treasury line being expounded by Sunak throughout the campaign, there will need to be a significant change by Truss and her team in the first weeks of the political cycle to come up with lines that are contrary to the evidence-based approach.

Conservative MPs will be watching with interest at what Truss does next. With former colleagues like Michael Gove claiming that Truss was on a “holiday from reality” and Dominic Raab suggesting that her plans for tax cuts were a “suicide note” with the wider electorate, it will be interesting to see how long the honeymoon period lasts.

The Budget

With all eyes on the ‘fiscal event’ as the first major announcement of the new premiership, it is important to stress how angry opposition parties are with the refusal of the Government to allow the OBR to review the statement.

Labour’s Shadow Chief Secretary to the Treasury, Pat McFadden said: “There’s no excuse for our next Conservative prime minister to try and wriggle out of proper scrutiny before announcing any cost of living measures this September.”

In fact, the criticism has come from Truss’ own side with the Tory chair of the powerful Treasury Select Committee, Mel Stride, who supported Sunak in the leadership contest, asked the OBR to ensure it would provide an independent analysis of any emergency fiscal event.

Whilst Truss may get through the ‘fiscal event’ without proper scrutiny, the new Government will not be allowed the same leeway when it comes to the Budget later this year. This will be a major test for the new Chancellor.

There is no shame in u-turning

For the sake of the country, there is no shame in a U-turn. While Truss has developed a reputation and even a skill for the U-turn, listening to the facts is not a sign of weakness.

Unfortunately, in 36 excruciating seconds, Sky’s Kay Burley read out a list to Truss in one of the most memorable moments in a somewhat dull leadership contest.

  • You were a Remainer, and now you’re not.
  • You supported Brits to fight in Ukraine then you didn’t.
  • You wanted to build on the green belt, and now you don’t. 
  • You wanted to abolish the monarchy, and now you don’t.
  • You wanted to arm Taiwan and now I’m not sure if you’re saying whether you do or not.

If this U-turn on further support comes, it needs to be rationalised following the predictions drafted by the Treasury. Whilst it is convenient to attack Treasury group think, the numbers presented to the Chancellor and Prime Minister will provide a sobering reality check on the policies outlined during the campaign.

Given what she said on the campaign trail, perhaps it is heartening that this lady is for u-turning.

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