“TMarkets will react the way they will,” the Chancellor told the House of Commons as he launched the tax cuts that have sunk the pound and skyrocketed borrowing costs. And they did. As the pound plunged again, the Treasury said it was ‘bloody’, promising yet more tax cuts for the wealthy, this time to allow them to rack up fatter, tax-free pensions. Liz Truss came to power without any significant rebound in the polls – making her unique in polling history. YouGov associate director Patrick English tells me to expect more plummeting numbers. A panicked promise from the Treasury of a “new fiscal event” in November sounds more like a threat than a promise.
Here ends the arrogance, the self-esteem, the sectarian obsession with economic fantasies that have failed and failed again. Here dies the absurd Laffer curve, the theory that tax cuts for the rich pay more than they cost. This should make conservatives ineligible for a generation, because this crash is theirs alone.
Who pays? The shock is hitting home as people realize what this means for everyone: those who have the least will suffer the most. Public sector workers, who have fallen behind on pay since 2010, will be crushed for another two years as Truss reportedly backs away from his spending review promise. This leaves all departments with their current budgets against the headwinds of rising prices – every school and hospital left strangled by inflation. The Treasury spokeswoman had the nerve to say: ‘It is more important than ever that departments work effectively to manage existing budgets, focusing on unlocking growth and delivering high quality public services’ .
A massive reduction in real wages will not and should not be tolerated. There can be no “we’re all in it” invocations of belt-tightening when the loan that broke the bank was only to give the rich extra vacations in the Caribbean. There will be no more solidarity after tax cuts are given to companies that already enjoy the lowest tax rates in the G7, which they hardly use for investments, preferring share buybacks and dividends to increased productivity. The utter enormity of what this generation of Tory Ukippers did to the country is now glaringly glaring to voters in all its arrogance and madness.
In the Labor camp, no secret joy broke out, no midnight drink at the Liverpool conference toasted the opening of the Asian markets with a bang. They are appalled by what they will inherit. Abandoned public services and a crippled economy give any possible victory a bitter taste. It was already clear that Labor was on track to win the next election before this fit of tax cut madness. Already, those on the party’s sober front were seen as the only adults, unlike the runaway political theater of the absurd ruining, without running, the country since 2019.
Shadow Chancellor Rachel Reeves’ incisive speech at Monday’s conference, full of dynamism mixed with outrage, ripped through the catalog of economic disasters wrought by Conservative politics during the year. Who wouldn’t rather trust this former Bank of England economist than the chancellors currently in charge? His pledged National Wealth Fund defines the difference between the two sides: Truss and Kwarteng are borrowing to blow away millionaires, Labor is borrowing to invest in wind, solar, tidal, battery and nuclear projects, producing real energy returns. energy independence. It’s a difference people understand – between borrowing to binge and borrowing for a mortgage or starting a business.
Understandably, a party so often wiped out at general elections, absent from power for more than two-thirds of the late Queen’s reign, dare not quite believe that this time it is truly about to rule. Keir Starmer has ventured to say that hope turns to belief, but if you tell Labor at Liverpool they are destined to win, they raise garlic and cross to ward off any dangerous complacency. The party does not make much noise, faced with the violent breath of a mainly conservative press. Some have complained about Labour’s lack of eye-catching dynamism and Starmer’s deadpan quietude, but beneath the surface, largely unnoticed, a sea change has taken place that resembles the years before 1997.
Here’s what the far-from-left-friendly economist reports: The Labor Treasury team had about 250 meetings with CEOs of major corporations, who are now so eager to talk to the opposition that tickets are running out. are sold in July for a business meeting with the shadow cabinet months ahead. “He is the most professional in terms of business engagement of any executive since Tony Blair,” says Miles Celic of TheCityUK, representing financial and professional services. The Economist continues: “What they say to each other reverberates to the electorate…Labour portrays business as a solution to Britain’s problems, rather than a problem to be solved…Calls are taken; emails are returned; speech projects are shared. ‘They are very clear on where they agree with us and where they disagree,’ says a bank executive… as businesses despair of the Conservative Party. They call it Labour’s “smoked salmon offensive,” after Blair and Brown’s famous prawn cocktail commercial campaign.
Nevertheless, everywhere the atmosphere is extremely cautious. The shadow ministers and their aides evoke Roy Jenkins’ description of Tony Blair carrying that famous Ming vase on slippery ground to election victory in 1997. The risk is that nervousness will make their politicians too docile, too cautious. Instead, there was much celebration among delegates after Reeves’ speech: amid the crisis, many dared not expect to hear his promise to increase the number of new training places from doctor each year to 15,000 (this year the government cut 3,000 places), but promises that she has. Along with thousands more district nurses, midwives and others, it would be the biggest increase in medical school places in British history. And that must be paid for by restoring the highest tax rate. Then there’s Wes Streeting’s National Care Service, which elevates care workers to the same salary and career path as NHS staff. And Bridget Phillipson, the shadow education secretary, is due to announce a “completely revamped” childcare system on Tuesday. Add to that Reeves’ genuine promise of a living wage, with fair wage deals across entire industries, and there’s no more talking about “Where are their policies?”
Spark panic among Tories over Labour’s growing lead in the polls as Truss outraged everyone including farmers, the RSPB, the National Trust and the Wildlife Trust with his speech on deregulation. Pleasant wild gossip is circulating that frightened Tory MPs will oust Truss and Kwarteng with another round of these letters to the Chairman of the 1922 Committee. So what? Bring back Boris Johnson? Or, or perhaps also, an early election? We now know that on their benches absolutely anything is possible. The only thing that seems impossible is that they can win the next election. But whisper it – because it scares away former workers who have been here before.