Tory MPs are publicly contemptuous of Matt Hancock, but they may soon be privately envious. There are worse fates for a politician than being force-fed kangaroo testicles and ostrich anus in return for a very large cheque. While the disgraced former health secretary is down under consuming exotic genitalia, Conservative MPs are preparing for the ritual humiliation of facing aggrieved constituents demanding to know why the government is making their lives even more difficult.
The signature domestic event of late autumn is the fiscally brutal package of tax rises and spending cuts expected from the chancellor in 11 days’ time. This will be a bushwhacker trial of the entire Conservative party conducted in front of a jury that is already telling pollsters that they can’t wait to evict the Tories.
Jeremy Hunt was recently overheard quoting something said by Barack Obama during the financial crisis of 2008: “This would be really interesting shit if I wasn’t in the middle of it.” It is shit that is only going to get shittier. The Bank of England accompanied its latest increase in interest rates, the sharpest jump since Black Wednesday three decades ago, with the warning that, on the journey through this crisis, Britain is likely to suffer an inflation peak of around 11%, the longest recession in a century and a doubling in the rate of unemployment. The bank’s governor, Andrew Bailey, warned of a “tough road ahead”.
Many voters already think they are on a highway to hell paved with falling real incomes that are nowhere near keeping up with escalating mortgage and rent payments along with surging prices for food, energy and the other essentials of life. Some may have thought things couldn’t get any worse, but Rishi Sunak and his chancellor will soon rid them of that illusion.
Their planned crunch may not be quite as excruciating as the government is putting it about in advance. “They are flying a lot of kites to see which ones attract most fire,” comments one senior Tory. By feeding media speculation about just how savage the squeeze will be, the government is playing the expectations game in the hope of generating some relief when the chancellor’s measures turn out to be slightly less horrendous than is being pre-briefed. I am unconvinced this manipulation will work. Being told that you are about to be chucked out of a 10-storey window won’t make it feel any better when you are then thrown out of an eight-storey one.
Neither tax rises nor spending cuts will be popular, but, asked to choose, most of the public say they’d prefer the former to the latter. The average Tory MP leans in the opposite direction. The Liz Truss fantasy that growth could be reignited through unfunded tax cuts exploded on contact with market reality and parachuted Mr Sunak into Number 10. A fiscal conservative now has charge of the government and Tory MPs generally accept that more tax rises are inevitable. This doesn’t mean that they will be enthusiastic about it. More than anything else, it was his record of tax-raising that stopped Mr Sunak from getting the Tory leadership when he made his first tilt at the job. Unity and discipline have only been superficially restored to the Conservative party. At best, Tory MPs will be sullen about voting to increase taxes even further. The prime minister and the chancellor will be highly fortunate if they don’t trigger one or more backbench revolts.
Finding and implementing cuts to public spending will be even more nightmarish. It has been bruited about that the Treasury will try to hold down public sector pay increases to just 2% in the next financial year, which would mean a big bite out of the real value of the salaries of police officers, teachers and health workers. “They won’t get away with that. They just won’t,” says one former Tory cabinet minister. Public sector unions have already begun balloting their members for strikes over the winter. Staff shortages are getting more and more acute. The most recent official statistics report that the NHS in England is short of more than 46,000 nurses, meaning less than 90% of posts are filled. The effects of strikes on the health service, where more than 7 million are already on English waiting lists, would be utterly atrocious. In a battle between Tory politicians and nurses, the winner will not be Tory politicians.
The Resolution Foundation reckons that the government could find £10bn from cuts to infrastructure projects and other capital investment that would be relatively easy to announce, but bad for growth. Attacking the real value of working-age benefits and pensions could raise a similar sum, but would be toxic in the middle of a cost of living crisis.
For the grisly state of the public finances, ministers have two excuses. One is the vast spending related to the pandemic. The problem with this alibi is that it is also Mr Sunak’s main claim to fame. Says one senior Tory: “It is hard for him to say I did this wonderful thing with the furlough scheme and all the rest of it – now you are going to have to pay for it for years ahead.” Ministers’ other culprit is the Kremlin. It is indisputable that both Putin’s war and the legacy of the pandemic are having a global impact, but no other advanced economy has done worse than Britain. We are the only G7 country to be poorer today than we were pre-pandemic. The predicted post-Covid boom never materialised and now we must brace for another downturn. The Bank of England’s grim forecast is that Britons will still be worse off in 2025 than they were before Covid and people didn’t feel terribly prosperous then.
The Opinium poll we publish today suggests that Labour and the Tories are pretty much neck and neck when voters are asked which of them is more competent to run the economy. That’s a glimmer of encouragement for the Tories given what they have put people through this year, but it doesn’t tell us how the public will be feeling once they’ve endured a rough winter during which disposable incomes will be squashed even harder.
Conservatives will attempt to deflect attention from their record by diverting questions to the opposition. Labour will be against spending cuts. So the Tories will ask which taxes Sir Keir Starmer’s party would raise instead. If the opposition denounces tax hikes, ministers will demand to know what spending Labour would slash instead. Sir Keir’s party doesn’t have a detailed tax and spending plan yet. He and the shadow chancellor, Rachel Reeves, can argue that it is unreasonable to expect them to produce one when the Tories have lurched from the madness of Trussonomics to the misery of Austerity 2.0 in the space of less than two months. The shadow cabinet agree that it is imperative that they don’t get dragged into a “so what would you do?” trap, which will impale them on the hook while letting the Tories off it. “This is not our black hole,” says one senior Labour frontbencher. “It’s the Tories’ black hole and they must be made to own it.”
When Mr Sunak first moved into Number 10, Sir Keir led a clamour for an immediate election, and had a lot of public backing for that demand, but not everyone around him genuinely desires an early visit to the polling stations. You are unlikely to hear any Labour person say this into a live microphone, but some of them furtively mutter that their party’s longer-term interests might be better served if the election comes later rather than sooner. A Labour government taking power in the near-future would be handed wrecked government finances and distressed public services while being instantly confronted with horrendous dilemmas about how to fix things.
It would not be like 1997 when Tony Blair inherited a growing economy from the outgoing Tory government. That provided him and Gordon Brown with the cash to hold down taxes while increasing spending on the services that the public most cared about. A Labour government taking office anytime soon would be faced with a situation more like that in 1964 and 1974 when Conservative regimes bequeathed an unholy mess to Labour successors who were subsequently engulfed by economic crises themselves. So better, goes the thinking among some Labour people, to have a later election and let the Tories endure the hellscape that they created. This is more telling testimony to the depth of the shit Mr Hunt and Mr Sunak are in – and the country with them.
• Andrew Rawnsley is Chief Political Commentator of the Observer
