Troubled Prime Minister tries to unite the Tories behind him

Troubled Prime Minister tries to unite the Tories behind him

London The British Prime Minister Liz Truss has with a short, from GreenpeaceSpeech at the Tories’ party conference in Birmingham, interrupted by protests, is trying to keep their four-week-old government from collapsing. “We mustn’t let ourselves drift any further at this important time,” said the 47-year-old, referring to the internal party dispute about the future course of the Conservatives, which overshadowed the party conference. “Whenever there is change, there is also disruption,” Truss emphasized, “not everyone will be in favor of it, but everyone will benefit from the result.”

Actually, Truss’ appearance in Birmingham after taking office in early September was supposed to be a lap of honor with which she wanted to lead her party into a “new era of growth”. Instead, the prime minister has been on the run to contain the damage of the first four weeks of her reign and to get her rebel party behind her.

The trigger for the political turbulence was the so-called “mini-budget”, with which Truss’ Chancellor of the Exchequer, Kwasi Kwarteng, first shocked the financial markets and then his own party friends. In particular, the planned tax cuts of 45 billion pounds (around 52 billion euros) on credit have caused the pound exchange rate to collapse, interest rates to rise and the Bank of England forced to calm markets with massive £65 billion bond purchases. Even Truss was unable to win back the markets’ lost confidence with her speech: the pound lost ground again and interest rates on British government bonds rose again.

Ministers argue publicly

The originally planned reduction in the top tax rate from 45 to 40 percent, which Truss and Kwarteng had to withdraw on Monday after a rebellion in the conservative parliamentary group, was particularly politically controversial. No sooner had Truss put out the fire with a U-turn that was humiliating for her than a new argument flared up at the party conference over the question of whether state social benefits for the poor should rise at the pace of wages of a good five percent or the double-digit inflation rate.

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Without inflation compensation, the British, who are suffering from the sharp rise in energy costs, would have to accept cuts in their social security benefits in real terms.

>> Read also: Humiliating U-turn by Liz Truss: Britain seems ripe for a change

A public row between ministers ensued, adding to the impression that the U-turn in tax policy had severely damaged Truss’s authority and that she had lost control of her cabinet.

Home Secretary Suella Braverman has accused Truss’s critics in her party of plotting a “coup” against the PM. Former culture minister Nadine Dorries called for new elections. Participants at the party congress spoke of an inner-party “civil war”. Others compared the doom and gloom at the champagne receptions to the sinking of the Titanic.

Former Transport Secretary Grant Shapps, who was fired by Truss, said Truss had just 10 days to get her government back on track. He did not want to rule out a vote of no confidence by his own parliamentary group against the head of government. It would be the Tories’ third attempt to overthrow a Prime Minister from their own ranks in three years. Many Tory MPs fear for their political existence, as the opposition Labor Party leads the Conservatives by up to 30 percentage points according to the latest polls.

Grant Shapp

Former Transport Secretary Grant Shapps gives the Prime Minister just ten days to change course.

(Photo: Bloomberg)

The political fate of Truss will probably be decided by the question of how she intends to finance the promised tax cuts in the medium term. The prime minister promised that she wanted to reduce the share of government debt in gross domestic product (GDP) again. The debt ratio is moving towards 100 percent.

Financing plan should be available on November 23rd

Exactly how this is to be done, however, is unclear. Finance Minister Kwarteng wants to present a financing plan by November 23 at the latest, which can then be recalculated and checked by the non-partisan Office for Budget Responsibility (OBR).

So far, Truss has been counting on her supply-side reform proposals to bring the British economy back on a growth path of 2.5 percent per year, so that the tax breaks will more or less finance themselves. At the same time, however, she does not rule out cuts in government spending. Truss tried to allay fears about a new savings era of “Austerity” with a promise. “We’ve got your back,” she called out to the British.

However, ministers have been instructed to look for so-called “efficiency savings” and welfare recipients, unlike pensioners, must expect their benefits to be reduced in real terms. Truss, on the other hand, wants to spend more money on defense – three percent of GDP by 2030.

Suella Braverman

Home Secretary Braverman fears a coup against Prime Minister Truss.

(Photo: AP)

The head of government is hoping for a growth spurt from the abolition of rules and bureaucracy from the time of EU membership, which “should be a thing of the past” by the end of the year. Specifically, this involves financial regulations such as the Solvency II directive for capital requirements for insurance companies.

>> Read also: EU: talks with UK on Northern Ireland issue later this week

The politically ailing Truss must assert itself with its plans against internal party critics in the coming weeks and get enough MPs behind them to get their plans through parliament. “Two things are pretty clear – the government wants to cut benefits to plug a big budget gap and it can’t get votes on it,” tweeted Torsten Bell, director of the think tank Resolution Foundation.

Financial plan decides the fate of the new government

The danger for Truss is that after the tax dispute and the arguments about social cuts, fracking and other infrastructure projects such as new wind farms, which are controversial among the Conservatives, will also fail due to the resistance of rebellious Tories. Truss’ start to more growth would then get stuck in the quagmire of conservative trench warfare.

It is doubtful whether the prime minister can get the party and the kingdom behind her with her narrative of “necessary disruption”. Many Britons have seen more than enough disruption to their daily lives after months of strikes, severe market turmoil and political chaos. Many party delegates would probably have wished for fewer disruptions: most trains from Birmingham back to London were canceled due to a train driver strike against real wage losses.

More: Liz Truss is under pressure after tax policy U-turn

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