The lady is not for turning. Hold on, hold on, there has been a development. It would appear that, after all, all things considered, the lady is for turning. The abolition of the 45p tax band will not go ahead.
The Daily Mail, a fan of the tax-cutting maxi-Budget announced ten days ago, was forced to change its splash between late night editions of the paper on Sunday. In version one, the headline on page one proclaimed: “Fury as Gove stokes 45p tax revolt.” As though this policy and resulting mess is former cabinet minister Michael Gove‘s fault. At Tory conference, in the bars and at parties, word was spreading that such was the strength of opposition to the tax cut from MPs, Tory members, voters and the international bond markets, that they would have to abandon the policy. The Mail changed its splash for later to reflect the fast-moving situation: “Are Tories on brink of 45p tax u-turn?”
The answer was, er, yes. Too right they were going to u-turn.
In the end, Liz Truss and the Chancellor Kwasi Kwarteng were left with no choice following the market response to their programme, and feedback from horrified MPs. At breakfast time on Monday, Kwarteng released a humiliating statement via the medium of Twitter.
Kwarteng then had to endure a round of broadcast interviews that he will want to forget.
The markets rallied a little, presumably on the basis that this is a sign of the return of some practical pragmatism in UK policymaking. There is still some way to go, as the Bank of England’s rescue of the pensions industry, by buying long gilts, long dated debt, to prop up the market, runs out on 14 October. The government will not announce its plans on spending and son on until 23 November. The gap between those dates is too wide, too much can go wrong in between. They’ll need an orderly programme of coordinated announcements to reassure investors.
What the 45p fiasco demonstrates once again is that the Prime Minister has a Commons majority in theory but not in practice. Day to day the government can get most mundane business through, and the administration carries on. On anything contentious or difficult it is highly vulnerable to revolts or pressure threatening revolts. There didn’t even need to be a vote in the Commons against this measure. Just the threat is enough.
That’s what just happened on the 45p tax cut. MPs made it clear they would not support this. They had not been consulted. Neither had the cabinet. And the voters hated it.
The new party chairman Jake Berry threatening MPs with deselection, and presumably having the whip withdrawn, as he did on Sunday on TV when defending the now scrapped policy, only underlined inadvertently how the leadership is not as powerful as it thinks.
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John Rentoul talked of the “party of Rishi Sunak” on the Tory backbenches, the large faction of MPs who supported the former Chancellor for the leadership. There are other factions too. Remember, only 113 MPs voted for Truss, under a third of the party in the Commons.
This lack of a majority in practice also applied under Boris “nickname Big Dog” Johnson, after he squandered his authority. Having very little care for the Commons he didn’t understand what was happening to him or why. He thought, to put this in crude terms, “big dog got big majority of 80 so big dog can do what big dog wants.” No, not quite. From the moment he squandered his authority on the Owen Paterson affair a year ago, he was at the mercy of his colleagues and had to be careful. He was not careful.
Now, the Truss administration faces a similar difficulty. Anything contentious it tries to do is vulnerable to rebellion, a shift in sentiment or withdrawal of support.
The sensible way forward would be to stop all the shouting about deselections, and the ridiculous bluster on showing people who’s boss. Lacking a general election mandate, the Prime Minister and Chancellor will have to consult their colleagues, test measures carefully and always remember the priority is to get the country through a tough winter in one piece.
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