By Paul Atkin,
Published on Urban Ramblings, Oct 15, 2022:
Written for the New Cold War website by Paul Atkin, this piece describes, often tongue in cheek but nonetheless with a grim message, the political chaos that has enveloped the Conservative Party and the UK since Liz Truss became Prime Minister, and the disastrous mini-budget that her Chancellor Kwasi Kwarteng cooked up and inflicted on the country, which resulted in economic meltdown and the possible collapse of the Tory Parliamentary Party.
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It used to be a truth universally acknowledged in the UK that instability in government was something that other countries with less sang froid and stiff upper lips were prone to, but not us. “I have been in negotiation with one of the French governments” was a joke from the 1950s Goon Show that sums this up. Until relatively recently it could be taken for granted that UK governments were, if not strong, at least stolid, and if not stable, at least able to stumble along with a somnambulist inertia that everyone could live with. Not anymore.
We have now had four Chancellors of the Exchequer in as many months and will probably be on our third Prime Minster of the year by Xmas. Kwasi Kwarteng was sacked on Friday afternoon by increasingly isolated new PM Liz Truss “because”, as one BBC commentator pithily put it, “he agreed with her”. Boris Johnson resigned in July. There was already a definite fight on economic policy between himself and his Chancellor Rishi Sunak, whose resignation started a flood of Cabinet members jumping ship and making his position untenable.
There was then a leadership contest in which Sunak won a majority of MPs, but Liz Truss won the backing of Conservative Party members – who tend to be older, whiter, better off, more Southern and rural than most – for her attempt to defy gravity. Running alongside Truss in a sort of three-legged race, was Kwazi Kwarteng. Both Truss and Kwarteng were joint authors of “Britannia Unchained” a wild neo liberal tract from 2012, aiming to slash and burn the state and allow the private sector to rejuvenate the economy in one mighty bound, if given enough “incentives”. Having won the race and promised to “deliver and deliver and deliver”, Truss and Kwarteng went for broke, sacking the chief Treasury civil servant and announcing a “mini budget” without a financial forecast from the Office for Budget responsibility to give it some cover.
This announced £54 billion worth of tax cuts to benefit the wealthy and corporations, which would have to be covered by borrowing, on the presumption that this would stimulate “growth”. This was at the same time that government Ministers were still solemnly intoning that pay claims by workers were unaffordable and “inflationary”. At the same time, they announced a subsidy for energy bills, again to be paid for by borrowing £150 billion over two years while refusing to put a tax on the windfall profits of UK based energy producers (projected to be £170 billion over the same period). As the Daily Mail put it “AT LAST! A TRUE TORY BUDGET”.
As the Chancellor was speaking, the pound collapsed ten cents against the dollar and the interest rates on UK Government bonds started rising sharply as investors started to demand what one of them called a “moron premium”. The knock-on effect of this was that the Bank of England had to intervene in the bond markets to buy government stocks to prevent a run on pension funds that could have seen them collapse; and raise interest rates to stop a collapse in the currency – which had a devastating effect on mortgage rates, with lenders withdrawing 40% of the schemes previously on offer. A young woman on the BBC Question Time programme caused a horrified sharp intake of breath the following week when she said that her previous mortgage offer of 4.5% had gone up to 10.5% as a result. That intake of breath was the sound of the air coming out of the Conservative Party’s support across the country. One sort of growth that Truss has definitely delivered has been a staggering increase in the Labour opinion poll lead, which is now around 30%.
This is meltdown territory. Extrapolations from these polls have projected a collapse of the Tory Parliamentary Party to fifty something MPs at best, and 3, or 0, at worst. Unless they can pull something miraculous out of the fire, it’s possible that future historians will be writing books entitled “The Strange Death of Conservative England”. This is much worse than1992, after the pound was forced out of the European Exchange Rate Mechanism on “Black Wednesday” and the stuffing was knocked out of the previous long period of Tory governmental dominance. This lot have had black Friday, Saturday, Sunday, Monday, Tuesday, Wednesday, Thursday…
If you want to see what this looks like, check out the faces on the Tory benches at Prime Minister’s Questions last week, and look at Truss’s face too. The great baying, roaring monster that is the usual face of the Parliamentary Conservative Party at PMQs is weirdly shell shocked. Even the cabinet, with the single exception of Truss’s overpromoted understrapper Therese Coffey, although sitting alongside Truss on the front bench, seem in another world. Visibly plotting.
As in the Book of Revelations, we now are seeing “a great wailing and a gnashing of teeth”. Party discipline is in disarray. Frantic efforts by demoralised and angry Tory MPs to steady the ship are combining with comments, some off and some on the record, that whatever they do now they’ve blown any reputation they had for economic competence and the attempt to find a new course may lead to a split. This last is possibly overstating things, but nemesis looms one way or another. Jeremy Hunt as Chancellor has little support in his own Parliamentary Party – getting less than 30 endorsements when he stood for leader – and was a deeply unpopular Secretary of State for Health, when he presided over the long and bitter Junior Doctors strike.
The underlying problem that Truss tried to solve with an act of will is that the underlying fundamentals of the UK economy are shaky. Investment is low and therefore so is productivity. In Britannia Unchained, Truss attributed this to workers in the UK being “the worst idlers in the world” and needing to “graft”more. Clearly a woman with a popular touch. The attempt to break with long slow managed decline by leaving the EU after the referendum in 2016, a piece of faith healing on a par with “throw aside thy stick and walk”, has compounded the long term British disease of weak investment from the private sector with a collapse in exports to the EU. There is now a balance of payments crisis of historic proportions. A running deficit of 8% according to Torsten Bell of the Resolution Foundation. This is very thin ice to be jumping up and down on in the way that Truss has tried to do. Sacking Kwarteng and replacing him with Jeremy Hunt was supposed to be reassuring; but an extraordinarily wooden press conference by Truss, simply left everyone speculating how long she had left. The Bank of England has now said that it will stop buying government bonds on Monday. So, probably not long. This very short press conference makes painful viewing. After attempting to describe the complete wreck of her economic policy as decisive action by her that somehow left it intact, she took just three questions, from the BBC, ITN and Murdoch’s flagship tabloid, the Sun, to take the key indicators of the media temperature, eyes desperately looking around the room for sympathy in an awful icy silence, finding none and fleeing at the end to calls of “are you going to apologise?” As she spoke, the interest rates on UK government bonds went up and up and up.
The basis for Johnson’s sleight of hand, that Brexit would unleash the animal spirits of Great British entrepreneurism, supposedly stifled by the dead hand of Brussels bureaucracy, allowing “left behind” regions to “level up” has gone up in smoke. Cakeism is as dead as the Queen, and all the Kings Horses and all the Kings men can’t put it back together again. When Truss went for her weekly audience with Charles III he is reported to have said, “You’re back again. Dear, oh dear”. Ouch.
At the same time, inflation is hitting living standards hard. One in four children are now living in poverty. The effect of tax breaks for the rich and a wages squeeze on the rest of us is a redistribution of wealth from worst off to best off. As a result, we have seen a wave of local and national strikes by Rail Workers and Communication Workers which have rolled on all summer. Barristers just won a 15% increase in fees after an all out strike. Large settlements have been won in local disputes. Nurses and Teachers unions are balloting and getting record turn outs, flooding over the government’s thresholds of 50% turnout and a majority of all those eligible voting yes to be lawful. More significantly, although these strikes are being bitterly resisted by employers, with the government backing them up, there is no sign of support for them flagging among the workers involved, they have very strong popular support and arguments about wages versus profits have now been aired on mainstream media, whose beautifully coiffed attack dogs have been exposed as the tawdry hacks they are by a set of trade union leaders, like the RMTs Mick Lynch, who stand their ground and tell their truths and strike a popular resonance. Rallies for the union led Enough is Enough campaign have regenerated the sort of enthusiastic support and political ferment we saw in the early period of Jeremy Corbyn’s leadership of the Labour Party.
Meanwhile, Truss’s government has had to make u turn after u turn as it collides with reality. They have conceded that onshore windfarms might be a good thing after opposing them as matter of principle all summer. Truss still has an irrational antagonism to solar farms, even though they are only allowed on marginal land and cover less acreage than golf courses; but even here she has run into a row with the unlikely figure of her Business Secretary, Jacob Rees Mogg, who, although he flirts with climate denial, knows a cheap energy source when he sees it. They have also told Friends of the Earth and Client Earth that they will not appeal against the High Court Judgement that their climate plan for 2050 is unlawful; so, they will have to come up with one that is by the end of March 2023.
At the same time, noises from previously belligerent Brexiteers put into the Northern Ireland Office have become positively apologetic towards the Republic of Ireland and, whisper it softly, the EU itself, to try to resolve the row over the Northern Ireland Protocol, which put them at odds with Ireland, the EU and the United States. A deal on this may not be enough to prevent Irish unity in the relatively near future however, as there is now a strong current of Unionist opinion that is open to it and seeking to explore it, Sinn Fein is the largest Party in the Northern Irish Assembly, and is leading in opinion polls for the next General Election in the Republic. Truss’s gauche attempt to dismiss SNP leader and Scottish First Minster Nicola Sturgeon as an “attention seeker”who she would “ignore” have won her no friends North of the Border and compounded the pressure for a new independence referendum there.
In what might be one of her last significant moves, Truss looks set to announce that China will be officially classified as a “Threat” rather than “strategic competitor” as now. If this goes ahead, this will be another act of spectacular self harm by the UK, as the Office for National Statistics points out
- In 2021, China was the UK’s largest import partner and sixth-largest export partner for goods.
- The UK imported £63.6 billion of goods from China in 2021 (13.3% of all goods imports to the UK) and exported £18.8 billion of goods (5.8% of all goods exports from the UK)…
- China is one of the UK’s largest trading partners, accounting for £93.0 billion (7.3%) of the UK’s total trade in 2021.
There are also 143,000 Chinese students studying at UK Universities, a quarter of the international student intake that pay the exorbitant fees that keep the higher education sector going. Combine this with taking an axe to joint research and development projects between UK and Chinese Universities and you have a formula for serious damage to one of the few world class sectors the UK still has.
Combine this with Truss’s intention to double military spending to £100 billion a year by 2030 and you have a situation in which the rest of public spending will be squeezed at home, after ten years of austerity have already cut them to the bone, and the country will be gearing up for war abroad. The UK already spends more on its military than any other country in the world other than the USA, China and India, and is in direct alliance, through NATO and AUKUS, with countries responsible for two thirds of global military spending. Inside the country it’s possible to pass this off as “defence”. People overseas, given the UK’s consistent history of military interventions, will understand it better.
Opposition to this is hampered by the bipartisan policies of the current Labour leadership on these issues, and a motion calling for increased military spending proposed by the GMB union was passed at Party Conference in September. This was posed as defence of unionised manufacturing jobs. It must be very reassuring for a woman in Yemen who has seen her family blown to bloody rags by a BAE systems missile fired from a Saudi jet, whose pilot was trained by the RAF, to know that the workers who built it were trade union members with decent terms and conditions. The only delegate who spoke against support for the Ukraine war at Conference was suspended the following day. Labour MPs have been banned from criticising NATO, with the dozen or so from the Socialist Campaign Group who had signed a Stop the War statement told to take their names off if they didn’t want to be expelled from the Parliamentary Labour Party. A similar motion, also proposed by the GMB, is going to the TUC this week and the scale of the vote against it will indicate where the ground the Labour leadership is standing on will begin to shift.
Opposition to increased arms spending is much wider than support for a peace deal in Ukraine, as the phrase “Putin’s war” for the war that NATO provoked is repeated like a mantra across a wide political spectrum, from Boris Johnson to Owen Jones. But, as the crisis bites harder over the winter, the struggle over the cost of living deepens and widens, the government stumbles from crisis to crisis and desperately tries to improvise itself out of the hole it has dug, clarification can’t help but spread through the ferment.
