Liz Truss, prime minister, arrives in Birmingham for her Conservative conference this weekend facing the task of rebuilding her party’s shattered morale after one of the shortest political honeymoons on record.
Truss made her first big move as prime minister on September 8, announcing a £150bn energy package to help households and business, but things have gone rapidly downhill since then.
Rather than reaping any political dividend from the huge energy intervention, Truss received a note in the House of Commons within minutes of sitting down, telling her the Queen was on her deathbed.
Truss had to put politics on hold for almost two weeks; the energy package, which takes effect on Saturday, was old news by the time Kwasi Kwarteng’s “plan for growth” was eviscerated by the markets last Friday.
Truss arrives in Birmingham not with the glow of a newly elected prime minister, but as the head of a party traumatised by the economic fallout of Kwarteng’s statement and trailing Labour in the polls by huge margins.
“There’s a general election in two years,” Tory grandee Sir Charles Walker told Times Radio. “I think it’s hard to construct an argument now that the Conservatives can win that general election.”
A YouGov poll this week gave Labour a 33-point lead over the Conservatives — a margin not seen since Tony Blair’s heyday — while other polls have confirmed the Tories are in meltdown.
Truss did little to settle her party’s nerves with a faltering series of local radio interviews on Thursday, where she faced the wrath of listeners over spiralling mortgage rates following Kwarteng’s statement.
“Colleagues are petrified, perplexed and very angry,” said one government member. Another senior Tory said: “Those MPs who were already sceptical have looked at the events of this week and started panicking.”
However, even Truss’s critics say that the Tory conference — and her speech on Wednesday in particular — give her a chance to claw back some of the initiative.
One MP said that the Bank of England’s £65bn intervention in the bond markets had brought some economic breathing space, while most MPs “want her to succeed”. He added: “She has some time to right the ship.”
Truss and Kwarteng arrive in Birmingham insisting they will see through their policy of tax cuts and supply-side reforms, arguing that the alternative for Britain would be long-term decline.
Kwarteng, who speaks on Monday afternoon, will attempt to flesh out the conference slogan “Getting Britain Moving”, as well as trying to reassure the markets and public. The markets will be following every word.
“This is a huge change — of course there will be some disruption,” said one ally of Kwarteng. “The path we were on was unsustainable. The prime minister and chancellor are confident of their approach.”
The recovery of the pound to levels close to pre-mini Budget levels has brought some relief, but the bigger political risk is linked to the sharp spike in bond yields, which feed through into higher mortgage payments.
Tory MPs fear the worst if these rise sharply. Peter Aldous, Tory MP for Waveney, said he favoured tax cuts in principle but was “conscious of budgetary constraints, and the need for sound money”.
Aldous, writing for PoliticsHome, said so far Kwarteng and Truss had taken action that “almost seemed designed to provoke the markets at a time when they were already demonstrably volatile”.
Fortunately for Truss, many Tory MPs will not attend conference: her base in the party is among activists. “Whether or not she still has that support will be interesting to see,” said one former cabinet minister.
Anthony Wells at YouGov said if people felt better off and the economy was growing at the time of the next election — expected in 2024 — that would make a “substantial difference” to Tory fortunes.
But he said: “At the moment, the vast majority of people think that the economy is in an extremely bad way — there is no optimism either on a national level or on people’s personal finances.
“In the polls, we have started to see a substantial chunk of people who say they voted for the Conservatives in the last election and now would vote for Labour.
“It is important to note that success breeds success and having a 33-point lead means that the public will start to see Keir Starmer [Labour leader] in a different way — possibly as a prime minister in waiting.”
Even Conservative critics say the party would look ludicrous if it started talking about ousting Truss from Number 10 less than a month after she was installed as prime minister, but the clock is ticking.
The prime minister, in her conference speech and when the Commons returns on October 11, will have to demonstrate that her supply-side reforms can generate real growth.
But that will take her into tricky political terrain, whether advocating more immigration, lighter planning controls or real term cuts in benefits — a policy she is considering. Some Tory MPs want her to reverse her tax cuts.
One consolation for Truss is that Rishi Sunak, the former chancellor, will not be in Birmingham. Sunak, who fought Truss for the Tory leadership, warned of market chaos if she pursued unfunded tax cuts.
Sunak has told friends he intends to stay in parliament and has no intention of returning to a lucrative business career in the US.
Boris Johnson, meanwhile, has also indicated that he will not be at conference. But unless Truss quickly gets a grip, both Johnson and Sunak will be circling as the election approaches.