Yahoo News Britain is watching a party render itself unelectable for a generation. Good riddance
“The markets will react as they will,” said the chancellor in the House of Commons, as he launched the tax cuts that sank the pound and sent borrowing costs soaring. And so they did. As sterling plunged again, the Treasury reported he was “sanguine”, promising yet more tax cuts for the rich, this time to let them accumulate fatter, tax-free pensions. Liz Truss has arrived in office without any significant poll bounce – which makes her unique in polling history. YouGov’s associate director, Patrick English, tells me to expect further plunging numbers. A panicky Treasury promise of a “new fiscal event” in November sounds more of a threat than a promise.
Here ends the arrogance, the self-regard, the cultish obsession with economic fantasies that failed and failed again. Here dies the nonsensical Laffer curve, the theory that tax cuts for the rich yield more than they cost. This should render the Tories unelectable for a generation, because this crash is all their own.
Who pays? The shock hits home as people realise what it means for everyone: those with the least will hurt most. Public sector workers, having fallen behind in terms of pay since 2010, will be crushed for another two years, as Truss is reported to have abandoned her promised spending review. That leaves all services with their present budgets against the headwinds of rising prices – every school and hospital left throttled by inflation. The Treasury spokeswoman had the nerve to say: “It’s more important than ever that departments work efficiently to manage within existing budgets, focusing on unlocking growth and delivering high-quality public services.”
A massive real pay cut all round won’t and shouldn’t be tolerated. There can be no summoning “we’re all in it together”, belt-tightening when the borrowing that broke the bank was only to give the rich extra Caribbean holidays. There will be no solidarity after tax cuts are rewarded to corporations that are already enjoying the lowest tax rates in the G7, which they hardly use for investments, preferring share buybacks and dividends to raising productivity. The full enormity of what this generation of Tory Ukippers has done to the country is now glaringly obvious to voters in all its arrogance and folly.
In the Labour camp, no secret glee erupts, no midnight drinks at the Liverpool conference toasted the Asian markets opening with a crash. They are aghast at what they will inherit. Derelict public services and a crippled economy gives any possible victory a bitter taste. It was already plain that Labour was on track to win the next election before this fit of tax-cutting insanity. Already those on the party’s sober frontbench were credited as the only grownups, in contrast to the out-of-control political theatre of the absurd ruining, not running, the country since 2019.
The trenchant speech by the shadow chancellor, Rachel Reeves, at conference on Monday, full of vim mixed with indignation, ripped into the catalogue of economic catastrophe caused by Tory policy over the year. Who wouldn’t rather trust this former economist at the Bank of England than the chancers in charge now? Her promised national wealth fund defines the difference between the two parties: Truss and Kwarteng borrow to blow on millionaires, Labour borrows to invest in wind, solar, tidal, battery and nuclear projects, yielding real returns in energy independence. That’s a difference people understand – between borrowing to binge and borrowing for a mortgage or business startup.
Naturally a party that is so often dashed at general elections, out of power for more than two-thirds of the late Queen’s reign, dare not quite trust that this time they really are about to govern. Keir Starmer ventured to say that hope was turning to belief, but if you tell Labour people in Liverpool that they are destined to win, they hold up the garlic and cross to ward off any dangerous complacency. The party doesn’t make much noise, facing the storm-force blast of an overwhelmingly Tory press. Some have grumbled about Labour’s lack of eye-catching pizzazz and Starmer’s stolid quietude, yet beneath the surface, largely unobserved, a sea change has taken place that feels just like the years before 1997.
Here’s what the far-from-left-favouring Economist reports: the Labour Treasury team has had about 250 meetings with CEOs of major companies, who are now so eager to talk to the opposition that tickets sold out in July for a business meeting with the shadow cabinet, months ahead. “This is the most professional in terms of business engagement of any leadership since Tony Blair,” says Miles Celic of TheCityUK, representing financial and professional services. The Economist continues: “What they say to each other trickles down to the electorate … Labour describes business as a solution to Britain’s problems, rather than a problem to be solved … Calls are taken; emails are returned; draft speeches are shared. ‘They are being very clear about where they agree with us and disagree,’ says a bank executive … while businesses despair of the Conservative party.” They are calling it Labour’s “smoked salmon offensive”, after Blair and Brown’s famously successful prawn cocktail business campaign.
Nonetheless, everywhere the mood is extreme caution. Shadow ministers and their aides evoke Roy Jenkins’ description of Tony Blair carrying that famous Ming vase across a slippery floor towards election victory in 1997. The risk is that nervousness makes their policies too tame, too careful. Instead there was much celebration among delegates after Reeves’s speech: mid-crisis, many dared not expect to hear her pledge to raise the number of new doctor training places every year to 15,000 (this year the government cut 3,000 places), but pledge she did. Together with thousands more district nurses, midwives and others, it would be the biggest increase in medical school places in British history. And it’s to be paid for by reinstating the top income tax rate. Then there’s Wes Streeting’s national care service, elevating care workers to the same pay and career path as NHS staff. And Bridget Phillipson, the shadow education secretary, is due to announce on Tuesday a “completely reimagined” childcare system. Add to this Reeves’s genuine living wage promise, with fair pay agreements across whole sectors, and there can be no more talk of, “Where are their policies?”
Cue panic among the Tories at Labour’s rising lead in the polls while Truss has outraged everyone, including the farmers, the RSPB, National Trust and Wildlife Trust with her deregulation talk. Enjoyable wild gossip circulates, saying that frightened Tory MPs will oust Truss and Kwarteng with another round of those letters to the 1922 Committee chair. Then what? Bring back Boris Johnson? Or else, or maybe as well, an early election? We now know that on their benches absolutely anything is possible. The only thing that looks impossible is that they could win the next election. But whisper it – as it spooks old Labour hands who have been here before.
Polly Toynbee is a Guardian columnist
