Truss enemies can’t agree on a replacement, yet

This is Iain Martin’s weekly newsletter, exclusively for Reaction subscribers.

“And that,” a senior minister messaged me last week, “is why they should never have got rid of Boris.” He was referring to the implosion of the Tory party amid plunging poll ratings and a disastrous conference at which cabinet ministers disagreed publicly over just about everything.

For now the mantra from Johnson’s most loyal supporters is that they are backing Liz Truss – “Back Liz, Back Liz” is what Boris has told them. When repeated by his fans it sounds unconvincing, as though there’s a hint of a smirk there, or if this was a Netflix drama, or the original House of Cards, a break the fourth wall look to the camera and raise of an eyebrow.

Nadine Dorries, the former Culture Secretary and Number One Boris fan, has given several interviews now in which she is billed as a leading supporter of Liz Truss. With friends like these, who needs enemies?

Truss has the full support of Dorries, says Nadine before she goes on to list the ways in which the new Prime Minister must stop what she is doing and change course. The Tory party was elected, says Dorries, on the 2019 manifesto that won the Red Wall. Truss needs to get back to that, says Nadine.

Sure, but the problem for the Tories is that Truss won the leadership promising explicitly to switch away from the Boris agenda and towards a low tax, more libertarian, Institute of Economic Affairs programme. Dorries is right that the country did not vote for this. Neither did Tory MPs. Only 113 of them voted for Truss in the parliamentary rounds in the leadership contest. Tory members did vote for her, but perhaps primarily on the basis that the majority had fallen out of love with her rival Rishi Sunak and she was the stop Sunak candidate, endorsed by Johnson and his allies for that reason. They would have endorsed Mickey Mouse if the cartoon character had been best placed to bring about the ruination of Rishi.

As it is, Britain got Truss. Her pro-growth incantations were admirable, although market confidence matters. Britain does need higher growth. This change of direction was undermined by an unnecessary emergency fiscal event (sounds like a nasty medical procedure) that has her enemies discussing who might take over if she has to be removed in the weeks and months ahead.

Over the weekend, Team Truss seems to have realised that the approach to date – behaving as though the PM has a strong mandate when she does not – is foolish and likely to speed her removal in the face of spectacularly bad polling numbers. There is to be a charm offensive, and a touring of the tea-rooms, Westminster code for a rescue mission.

To that end, as of Monday, His Majesty has a new trade minister. Truss has appointed Greg Hands as a Minister of State. This reaching out to an experienced former opponent is significant. Hands was a supporter of Sunak, a status that until a few days meant dwelling on the backbenches.

A minor quirk of the leadership contest was that Kwasi Kwarteng, then Business Secretary, backed Truss. Hands, the energy minister working under him earlier this year on the energy crisis, went for Sunak. It struck me as a little odd at the time. A pair who were, theoretically at least, working “hands in glove”, took very different views of what the country needed going into this winter crisis in terms of leadership.

It was also announced that Antonia Romeo, the anti-orthodoxy candidate due to become Permanent Secretary at the embattled Treasury, would not be appointed after all. Instead, James Bowler has been appointed. Romeo’s appointment was planned to shake up the Treasury. Bowler – former HMT director general, public spending and before that director general, tax and welfare – has been chosen in the hope it reassures investors there will be no more sudden excitement or disruption.

The appointment of Hands and the change of direction at the Treasury buys a little time for the Prime Minister, but not much considering what is happening in the markets, more of which in a moment.

The Prime Minister is lucky her enemies are divided, for now, and cannot agree on a replacement to coalesce around. There is no leader in-waiting, no Heseltine or Gordon Brown figure, otherwise she would be gone in pretty short order, and that may yet happen. This lack of a clear frontrunner gives her a little space which she is – she has no choice – filling trying to start again, although voter first impressions are usually fatal.

If the parliamentary party does try to remove Truss in the next few months, or after the local elections next May, they cannot go through another extended leadership race farce, with multiple candidates jostling and grinning as though it’s all the most tremendous wheeze, before two of them troop round the country for months allowing Conservative party members choose.

No, it would have to be by acclamation, with a delegation of cabinet members and grandees, and sufficient MPs arriving at a compromise name, a unity candidate.

It is difficult to see that being Rishi Sunak. He was just rejected by the membership, even if his supporters can say his warnings on the bond markets have been vindicated. So many cabinet members and MPs are Sunak sceptic that it is hard to see how he would get it this way. Unless Sunak reaches out to opponents.

Michael Gove could do the job tomorrow, but too many of his colleagues remember his defenestration of Boris in 2016 when he observed that shambolic Johnson did not have a Prime Ministerial personality. Right first time. 

Ben Wallace, the Defence Secretary, could serve as the war era unity candidate. He almost stood in the summer, but backed away.

There is strange talk of Grant Shapps, and not just from Grant Shapps. I find this idea so implausible I’m not even going to discuss it.

What about bringing Boris back? With that thought floating in the ether I decided to watch the gripping This England on Sky Atlantic, with Kenneth Branagh playing Boris. It is beautifully made and Branagh. captures the Boris shambles of a human being routine perfectly.

Has there ever been a stranger figure to become Prime Minister? Not many. Johnson possessed  extraordinary powers of connection with his voters, those who liked seeing the standard issue political types and commentators annoyed. What a performer. As is sometimes the case the camera lies, though. The public perception among his fans was of a jolly type, a life and soul joker. Weirdly, for someone so convinced he is a man of destiny, he is a loner who lacks confidence and needs reassurance. As a day to day administrator he was generally hopeless. But on driving his opponents mad to break the Brexit deadlock in 2019, persuading them to grant him a general election that was not in their interests, he was remarkable. On vaccines and Ukraine, he saw the big picture. The rest of it was a nationally humiliating farce. 

Bring back Boris? No, the country is in enough trouble already.

Bailout economics hits the buffers

The Nobel Committee proved that its members still have a sense of humour, or terrible timing. One of the two. The Prize for Economics has been awarded to Ben Bernanke, former chair of the US Federal Reserve from 2006 to 2014, along with two other economists – Douglas Diamond and Philip Dybvig. They are professors at the University of Chicago and Washington University, St Louis, Missouri respectively.

They were rewarded for furthering the understanding of how banks perform in a financial emergency. Bernanke’s great academic insight was that in the Great Depression, or at its start in 1929, the failure to save the banking system made a downturn a disaster, that then rippled across the world. The resulting political turmoil of the 1930s led to war and the deaths of tens of millions.

So, it follows, if you want to avoid a repeat of the Great Depression, policymakers should always prop up the system.

This is what inspired the 2008-2009 rescue of the system. Save the banking system with bailouts and slash interest rates to save businesses, increase activity and smooth the way out. Quantitative Easing, crudely called money-printing, was added.

The problem is that once you’ve started this process it’s difficult to stop. If every time you sense a downturn coming you slash rates or keep them low and use QE, when can an economy ever get back to anything like normal, pricing money properly, teaching us about risk and reward? Downturns are part of economic life, not everything can be smoothed out forever.

Instead, we consumers were taught by bailout economics to expect whenever something goes wrong that the authorities will be along with a large cheque of other people’s money. We now barely blink when we hear the government is going to spend another £100bn. Having cocked up energy security and supply, governments are now spending tens of billions of borrowed money providing an energy rescue. This followed furlough during Covid, justified but too long-lasting because the government in Britain’s case kept lockdowns going well beyond what was sensible or affordable.

Bernanke supporters will say he and his acolytes set out to minimise harm, to prevent disaster. The fear at one point was deflation rather than inflation. Now a pandemic and massive stimulus, and low rates that lasted too long, have created the conditions for an almighty smash. Rates can’t be lowered now, inflation is high. Or has it peaked? No-one really knows, so where there is uncertainty, in a war era, there is the potential for panic.

Britain is front of the queue, with investor trust in the government trashed. Warnings lights are flashing in the Eurozone too, but Britain is now regarded as an outlier with investors thinking it doesn’t know what it is doing, and prepared to place bets accordingly.

It is the misfortune of Liz Truss, and the rest of us, that just as bailout economics was about to hit the wall she put her foot on the accelerator.

SNP: if you’re feeling sinister

This subscriber newsletter was late, for which I apologise. After darting around various glorious parts of Scotland last week, meaning I was spared excessive exposure to the car crash Tory party conference, I tried to write first thing on Friday morning and must admit a mental fog descended. I needed a break. Almost everything about the events of the preceding week, or the last few weeks, has been so dispiriting that I didn’t want to risk adding to the despair or be a downer for subscribers to Reaction.

It is an understatement to say British politics recently has fallen somewhat below the level of events. And that’s even before the SNP conference taking place in Aberdeen started.

Nicola Sturgeon, leader of the SNP is now getting desperate. A Labour revival may put a non-Tory UK government in power at Westminster, depriving the SNP of its main grievance that Scotland votes anti-Tory and gets a Tory government.

Sturgeon used some striking, sinister rhetoric in interviews. On the BBC she said she detests Tories. Detests opponents? A prominent Nationalist, I’m too angry to name the blighter, said he is working for a Tory-free Scotland. Really? What is to happen to those with Tory views in Scotland? Will they be allowed to remain in Scotland, if they stay quiet, or be asked to leave? Or, what?

Even more than sounding sinister it sounded so small, when there is a real war in Europe that will not be short, rising fears of nuclear escalation, the collapse of the post-financial crisis easy money policy, an energy crisis, and Ukraine aside a leadership shortage internationally.

The headline to this item – If you’re feeling sinister – is a reference to the uplifting work of the Glasgow band Belle and Sebastian, a reminder that the SNP really is not Scotland.

Sir Angus Grossart remembered

To Edinburgh, and the High Kirk of Edinburgh, St Giles, on Friday. The place was packed for the memorial service of Sir Angus Grossart, entrepreneur, patron of the arts, networker, tastemaker, patriot. He was instrumental in the renovation of St Giles itself. As chairman of the National Galleries of Scotland in the 1990s he oversaw its renewal and reconstruction, with Sir Tim Clifford as director, turning it into one of the best galleries of its scale in the world. The Burrell Museum in Glasgow reopened recently. The best of the renovation carries the stamp of Grossart.

For several decades he was always kind to me, and funny and wise in his observations. When you see me heading early for the exit, he once told me of leaving company boards, that’s a sell signal. As he used to say, with a chuckle, his main interest was in ensuring “the Grossart party” prospered.

At the service in his memory there was a piper, a choir, traditional music, and Alexander McCall Smith read his poem for Angus.

Few people in the last fifty years or so left such a mark on Scotland and did so much good for it as Grossart.

As Sir Tim Clifford put it as the end of his tribute: “Scotland will not be the same without Angus.”

This is true, but there’s another dimension. Grossart was an optimist, about the next generation and the durability of human endeavour. He was one of those who saw it in terms of links in a chain, I think, connecting with history, improving the present, and leaving a legacy long after his name is gone. That’s what those great fundraising projects in the arts were about. Forty, fifty, one hundred years from now a youngster will catch a glimpse of a painting in the Burrell or in the National Galleries in Edinburgh, or gaze up at the gold leaf picked out on the ceiling in St Giles, and be inspired or intrigued, and feel that connection. 

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