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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
When did the last Conservative government lose itself? Or to put it differently, what was its gravest strategic error? We are, it must be admitted, spoilt for choice when we consider the options.
For some it will always be Brexit. Or the carelessness of Boris Johnson. For others on the right it is the enforced lockdowns, or the immigration spike that Nigel Farage calls the Boriswave, or the embrace of liberal social policies.
But I would advance a more foundational moment in the party’s drift from seriousness when, in the last months of Johnson and during the mercifully brief ascendancy of Liz Truss, the Tories abandoned their belief in sound public finances and stopped arguing that public spending had to be paid for.
Specifically, they appeared to conclude that the costs incurred during the pandemic did not need to be recouped. Even after Truss’s fall, they backed away from the argument and ultimately ended up offering the futile electoral bung of an unaffordable national insurance cut. It continues into the current leadership of Kemi Badenoch, since the post-pandemic tax increases are central to her analysis of Tory defeat.
Tories, of course, want lower taxes. But even more central to conservative thinking is sound public finances. After spending billions on furlough and other support, and with debt at modern record levels, the then chancellor Rishi Sunak was clear that the public finances had to be restored. This was a simple argument. The government was there when you needed it, but now it had to pay down the debt.
Yet this position initially cost him the party leadership. So when he did become premier, after Truss had cut taxes and promised billions more on an energy price cap, he ran shy of his own argument. The taxes remained but all effort to explain and secure public buy-in fell by default. Cuts were parked until after the election.
Sunak’s original line would not have saved the election, but it would have shown there was still a point to the Tories. Instead, the party that once mocked opponents for believing in a “magic money tree” turned out to have built its own house in the branches.
Brexit was a retreat from economic sense, but this was a departure from first principles. What is the point of a Conservative Party not prepared to confront voters with this most conservative fact, that daily spending has to be funded?
If this were only about the Tories it might matter less, although you wonder who else will make the case if they don’t (apart, perhaps, from the bond markets).
However, contagion spread. Labour feared arguing for the reversal of the NI cuts. As a result it failed to level with voters about the money it would raise and was forced to heap more pain on business, the supposedly victimless cash cow. In power it has responded to concerns about the cost of living by spending some of its stealthy tax rises to hold down prices. Pay is boosted by minimum wage increases, which disincentivise hiring, especially of young employees. This is kiss-it-better government. Let’s not speak of the trade-offs.
There are no serious plans to reduce the scale of UK debt. The best this government can offer is hope for the economic growth its pushmi-pullyu tax and regulation policies simultaneously promote and frustrate. Rachel Reeves, the chancellor, has been forced to retreat on Budget measures after political campaigns by farmers, publicans and pensioners spooked her own MPs’ reduced threshold for political pain.
This goes deeper than fiscal considerations. The diminishing readiness to confront voters with difficult choices or trade-offs is one of the factors making the UK so hard to govern. How often have we heard that we can find all the money we need by taxing billionaires?
There is little public discussion of the costs of an ageing population or how, for example, to fund the faster increases in defence spending Keir Starmer has concluded are necessary.
Tax rises are not the only option if governments are prepared to make spending cuts. On the question of who will speak for prudence, the Tories should be alarmed that in his first outing as Reform UK’s new “shadow chancellor”, Robert Jenrick has tried to claim their mantle, mentioning debt six times in a speech and ditching some previous spending promises. Of course spending cuts are never easy and, as with Jenrick, calls are routinely framed as a debate on soft targets such as Whitehall waste, foreign aid or welfare spending on “undeserving” immigrants or young people. There will be savings here but transformative retrenchment requires a smaller state. Cutting debt means running a budget surplus. It is doubtful Reform really wants to be that party.
A recent poll for FGS showed a majority of those questioned feel there are “fairly clear and easy solutions [to the country’s problems] if only we had better political leaders”. Sure enough, the UK has not recently been blessed with giants. But it is rarely that simple, especially when voters have been weaned away from confronting difficult trade-offs. Better leaders are those who are ready to level with the country and carry it with them. That means facing choices and the costs. Higher taxes or lower spending.
Ultimately this lack of honesty can only benefit the most cynical populist parties. If voters no longer recognise trade-offs and hard choices, what is to keep them from flocking to those whose solutions do not require any?