Monday, June 27, 2022

‘We don’t know what to do about the economy’: Inside a Johnson Tory party looking for direction

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Ministers are confident the prime minister is safe from an immediate leadership challenge – but insiders are worried about the party’s next policy moves as the cost-of-living crisis lingers

Last Monday, Boris Johnson’s political demise seemed imminent after 148 of his own MPs voted to oust him and rebels warned it was only a matter of time before they returned with greater strength.

“It’s amazing what a difference a week makes,” remarked one Cabinet Secretary while sipping a gin and tonic in the sweltering Westminster heat.

But several members of the cabinet have said so I They now believe a second challenge to the Prime Minister’s leadership is unlikely in the short term and most Tory foot soldiers agree.

“When I saw the result I was like, ‘Damn it, he sucks!’ — but the mood in the party has completely changed,” said an MP first elected in 2019 who is weighing whether to join the rebellion. “I think he will lead us to the next election.”

The government has faced blows from the courts, the opposition, the EU and its own ethics adviser in recent days. Attempts to rewrite the Brexit deal and deport asylum seekers to Rwanda are popular with the Conservative base but hugely controversial, while the resignation of Lord Geidt as Mr Johnson’s adviser on ministerial interests was hugely embarrassing.

In Westminster, most Tories remain undeterred. “Nobody complains about the Northern Ireland Protocol because nobody understands it,” joked one minister.

They point to opinion polls suggesting that Labor’s lead may indeed have narrowed since the Prime Minister faced his vote of confidence, while Labor’s Sir Keir Starmer faces his own problems as several members of the shadow cabinet called him ” boring” and leaks inform private meetings of his top team.

The near-term threat is not over, with two by-elections on Thursday that the Conservatives are widely expected to lose.

Mr Johnson will be in Rwanda to attend a Commonwealth summit when the results are announced, but allies say he has already worked out how to brush off a possible double defeat.

“He will say that divided parties don’t win elections – and we were still divided when the absentee ballot ran out,” a source said.

Of more concern to many Tories are the economic storm clouds on the horizon. This week the Bank of England hiked interest rates again, putting further pressure on homeowners, long the political backbone of the Conservatives, and warning that inflation is likely to hit 11% by the end of the year.

Rishi Sunak has pumped billions of pounds into the economy in the form of emergency aid, with beneficiaries receiving a payout of £326 from mid-July, but colleagues fear the chancellor will remain paralyzed longer-term over fears acting quickly on tax cuts would only quell inflation skyrocketing and risk losing control of public finances again.

Polls show that Labor and the Tories are now neck and neck over who is better at managing the economy, traditionally a great strength of the Conservatives.

“The biggest thing is the lack of direction in politics,” a Cabinet source said I. Another Tory insider added: “We have no plans to pass decent legislation, we don’t know what to do with the economy.”

Mr Johnson and Mr Sunak are drawing flak from all sections of the party for their failure to date to set out a long-term plan for economic growth – even if MPs differ on their preferred solutions.

The only policy on which all sides of the Tory spectrum can agree is the need to cut taxes as soon as possible, but the Chancellor has privately ruled out the idea of ​​bringing forward an income tax cut, which is slated for 2024.

Some fear the Prime Minister will be intimidated by the Treasury, which has long been the only department in Whitehall able to act without No10’s say.

A former cabinet minister told I: “What he needs to do is cut tax revenues by tens of billions. They underestimated their tax revenue by £90bn this year, that’s a hell of a lot of money.

“He could easily cut Social Security. He could stop the corporate tax hike. He could stop the fiscal burden. But he’s still too weak to take on the treasury, despite being the first lord of the treasury, for goodness sake. He gives in to Rishi, who is himself fiscally useless. It always amazes me that people think bankers are good economists.”

Mr Sunak has said he will prioritize reform and corporate tax cuts in his next budget, which is expected to appear in October. According to Stuart Adam of the Institute for Fiscal Studies, his options include revising the apprenticeship levy to encourage more on-the-job training and more generous tax breaks for research – but there is a risk that the benefits of this policy will not bear fruit for years.

Some government insiders fear Mr Johnson and his team will end up resorting to flashy initiatives that are popular with the grassroots but may not solve the country’s long-term problems like expanding high schools.

“We’re going to come up with a lot of old ideas, but what we need are new ideas,” a Whitehall source predicted.

After the “Partygate” allegations first surfaced earlier in the year, the Prime Minister sacked senior staff and replaced them with a new inner circle, narrower than before and dominated by MPs including Steve Barclay, the Cabinet Office minister who is now also chief is of the staff in No. 10.

His deputy, David Canzini, is popular with backbenchers because of his intense focus on promoting conservative values ​​and downplaying policies that distract from core strategy.

However, skepticism remains as to whether the team can successfully rebuild Mr Johnson’s prime ministership in a way that will convince voters to trust him again at the next general election. While few mourn Dominic Cummings’ departure, many observers lament the loss of influence he exercised on the political agenda.

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