CHANCELLOR GONE,TRUSS NEXT?

Liz Truss has laid down her friend for her life, but the sacking of Kwasi Kwarteng doesn’t really ease the pressure on the Prime Minister.

Where to start? What is the point of the Halloween Budget. Even choosing that date to give the papers easy headlines about horror shows and nightmares, seems inept. The substantive criticism is that October 31st is a long time in politics and for financial markets in their current twitchy state.

Andrew Bailey is in despair. The governor of the Bank of England is trying to slow inflation with higher interest rates but is having to take emergency action in the opposite direction to save pension funds. He announced this will stop on Friday. An unwise move, in my opinion, as there was a predictable market reaction. The latest indications are that the deadline may be softened.

Relations between the Bank and the outgoing Chancellor  were rancorous. It may be the case Bailey didn’t tackle inflation early enough, but he doesn’t deserve the criticism he’s getting from ministers. But that is the way with the Truss government, and |Business Secretary Jacob Rees Mogg in particular. Blame the Bank, blame the Office for Budget Responsibility, but don’t blame the government for a dash for growth in the middle of an inflation and energy crisis.

The Prime Minister seems to be backing herself into a tighter and tighter corner, ruling out a reversal on tax cutting measures and now saying there won’t be spending cuts. That leaves the giant question of how the government intend to reassure the markets. Halloween is too far away.

BACK ON TRACK?

Amid the mayhem the Prime Minister has promised a brand-new electric train line from Liverpool to Hull, with a stop in Bradford.

The northern travelling public need some good news with the continued severe problems with the Arriva service from Manchester to Euston. But before we crack open the champagne let’s remember that there have been endless promises about rail improvements since George Osborne launched the Northern Powerhouse Partnership in 2016.

Under Boris Johnson’s Premiership, the plans were scaled down and Bradford cut out. Now Liz Truss is promising the project is back on track. She said “yes” when asked if she backed it. She was equally emphatic in saying the 45p income tax cut was to take place. Given all the economic turmoil, I think we should watch this space.

CONGRATULATIONS AND JUBILATIONS!

Well done Liverpool in getting the Eurovision Song Contest next year. I was worried that Glasgow would be chosen because of the wider issues about the independence issue.

It feels a great fit considering the city’s musical and cultural heritage and will be a great boost for the local economy.

The city needed some good publicity amid the continuing crisis at the Town Hall where commissioners and improvement chiefs have been called in.

Liverpool has always had an international outlook and I’m sure there will be due recognition of Ukraine who should have been hosting the event.

TRUSS IN CHARGE OR GOVERMENT?

GOVE AND SHAPPS ON THE PROWL.

Although the Prime Minister’s keynote conference speech wasn’t bad, the opinion polls are disastrous. Pollsters are telling us that once public opinion has developed a view on a politician, it is very difficult to change it.

I keep going back to thirty years ago. The Tories never recovered from our humiliating departure from the European Exchange Rate mechanism even though, by 1997, the economy was in good shape.

Liz Truss has an attractive tigerishness. Her comprehensive school education frees her from the entitled air given off by her hapless Chancellor. However, her determination to launch an uncosted growth drive, at the expense of the poor, when we are assailed with so many problems, was reckless. The markets knew it and the British people knew it.

For all her talk of believing in spending cuts and a smaller state, the support for energy bills is a huge government intervention of potentially £120bn. But people have almost forgotten that in the row over the £2bn higher rate of income tax. Nothing was thought through. The presentation was hopeless and the disaffected pounced.

Liz Truss decided to exclude supporters of Rishi Sunak from her government. The result was that at the weekend ex Cabinet ministers Michael Gove and Grant Shapps were exercising what the Home Secretary called “a coup” against their former colleagues to get the 45p band reinstated. One wag said we were now being run by the Goverment.

The next victory for the rebels (and outspoken Cabinet Ministers like Penny Mordaunt) is likely to be bringing forward the Office for Public Responsibility report. The one after that will be overspending cuts, and benefits only increased in line with wages not inflation.

In other words, the government is in office but not in power. Ministers have the same problem they faced under Boris Johnson. They are going out defending policies that might be changed in a blink of an eye.

FALLING INTO LABOUR’S LAP?

Unfortunately for the Truss regime, it seems the voters have gone back to the seventies. The current rail strikes are not provoking universal anger, and amongst many of the inconvenienced, there is sympathy for the wage claims.

All this means there is a possibility Labour could come into government in two years’ time, but caution needs to be exercised. They will need these generous poll leads to overturn the large Tory majority without many seats in Scotland. Furthermore, they have left some unanswered questions as the Tories unravelled in Birmingham.

I have watched five or six interviews with Shadow Chancellor Rachel Reeves where she has not been able to answer the claim that Labour would face the same huge borrowing bills till the end of the decade. They are backing the 1p cut in income tax and the reversal of the increase in national insurance. They also plan to spend £28bn a year on their green agenda. This perhaps explains their cautious approach to energy bill subsidy. Labour’s pledge lasts six months while the government scheme extends to two years.

If the last few years have taught us anything, it is to expect the unexpected.

JUST JIM 512.

WE DO NOT TRUSS YOU.

SPECIAL FINANCIAL OPERATION.

A political party pressing the self-destruct button twice is a rare sight indeed. After choosing Johnson, who destroyed this country’s international reputation for probity, we now have Liz Truss and her arrogant Chancellor, nearly destroying the pensions of millions of people in their spectacularly mishandled dash for growth.

There are many features of this botched budget which are wrong, but what has most spooked the markets is the lack of scrutiny by the Office for Budget Responsibility (OBR). It looks sneaky. As Shadow Chancellor Rachel Reeves said, “What have you got to hide?” To get round the need for an OBR assessment, Kwasi Kwarteng, called his statement “a fiscal event.” This has led to comparisons with Russian obfuscation calling the war on Ukraine “a special military operation” while this is a “special financial operation.”

It is not wrong for the government to aspire to improve our growth and productivity levels. They are right to say we are often too focused on how to slice the existing cake, rather than enlarging it. But the approach has been hasty and reckless and surely has done as much damage to the party’s reputation for sound money as the Lamont financial crisis exactly thirty years ago.

GHOST OF ALTRINCHAM.

Antony Barber had been the MP for Altrincham for 5 years when Ted Heath’s Tories came to power in June 1970. He wasn’t given a leading post in the Cabinet but was made Chancellor of the Exchequer when the towering figure of Iain Macleod died just a month later.

It is doubtful if Macleod would have unleashed the very temporary boom that Barber initiated with slashing tax cuts in 1972, now rivalled by Kwarteng. Roaring inflation followed and the Tories were out two years later.

LABOUR READY FOR BUSINESS.

The suits were back at the Labour conference in Liverpool. Wandering around the halls one was struck by the return of business people and lobbyists. Labour is being taken seriously again.

The events where the Shadow Cabinet met business were rammed.

We saw it in the mid nineties as New Labour surged towards power and interest in John Major’s Tories drained away.

That’s not to say a Labour victory is certain. There is a significant majority to overcome, their former Scottish seats are held by the Nationalists and their attitude to the Chancellor’s “special financial operation” is confused as is their position on attending picket lines. Why not be honest and say they are not giving the Daily Mail pictures of the Shadow Cabinet standing over braziers and be done with it?

The Corbyn Left are marginalised but still a force. I attended a fringe where left wing unions warned of mass strike action and appeared to welcome unrestricted immigration. Greater Manchester mayor Andy Burnham, on manoeuvres to the left, opposes the reduction in basic rate income tax.

Nevertheless, Labour left Liverpool with a healthy opinion poll lead and every prospect of a thumping victory in the West Lancashire by election where Skelmersdale postie and Lancashire County councillor Julie Gibson is tipped for the party’s candidature.

Now it’s on to Birmingham and a conference that will be full of people who backed Liz Truss and ignored the warnings of Rishi Sunak. What was set to be a celebration of the new regime could turn into a bitter inquest into the “special financial operation.”

JUST JIM 511.

GIANT GROWTH GAMBLE.

Billions more is being piled on the national debt as the government protects us from wild energy price rises and cuts taxes.

The former is needed. It is just regrettable that Ministers have been in a state of paralysis since Johnson announced his resignation in early July. For many businesses, the measure has come too late. Uncertainty remains about what happens with the new year review when the government will try to end the universality of the cap. Which firms and organisations will continue to get protection from soaring energy prices, and which won’t? Companies plan for the middle and long term, a concept that politicians fail to comprehend. Long term planning by governments of both parties would have given us a home-grown energy market more capable of withstanding this price shock.

The expected decision to reverse the National Insurance increases, freeze corporation tax and end the cap on bankers’ bonuses to stimulate growth is the big gamble. Truss is right that our economic performance has been sluggish for years but whether the enriched will make the investment in new job creating green energy employment or stash it away in tax havens is a moot point. Controversy rages about the merits of “trickle down” economics. Truss has thrown the dice; we will see if it works.

More generally the Prime Minister has two years to put her party in a position to win a fifth General Election. We can debate whether 2010 was a win because a coalition was required. We can even debate whether Mrs May won in 2017, so disappointed were Tories at the comparative success of Jeremy Corbyn. However, the fact is that for 12 years the Conservatives have been on top. The spirit of “time for a change” can be very powerful which brings us to this weekend’s Labour conference in Liverpool.

STARMER’S LAUNCH PAD?

Is Sir Keir Starmer capable of exciting the British people? We have all been able to compare his rectitude against the shambolic Johnson. He now faces a new Tory leader who may be criticised for shallow beliefs, but she is lively and capable of growing in the job.

To be sure of victory Starmer, and his Shadow Ministers need to raise their game. It is not easy to position themselves when the Tories are spending shed loads of money on big state projects like Covid and energy relief. But we need to see what Labour is for. It would be dangerous for them to think power will just fall into their lap because of a need for change.

I think the Red Wall is in a mood to return to Labour. Levelling up has not happened and will have a low priority with the cost-of-living crisis dominating ministers’ thoughts.

So, a tricky conference for Labour, not least because it is in Liverpool. The crisis at the Town Hall is not a great example of the party delivering at a local level, and the recent dreadful reminder of the continuing power of criminal gangs in the area means this is not the best of times to welcome delegates to the city.

GIANT GROWTH GAMBLE.

Billions more is being piled on the national debt as the government protects us from wild energy price rises and cuts taxes.

The former is needed. It is just regrettable that Ministers have been in a state of paralysis since Johnson announced his resignation in early July. For many businesses, the measure has come too late. Uncertainty remains about what happens with the new year review when the government will try to end the universality of the cap. Which firms and organisations will continue to get protection from soaring energy prices, and which won’t? Companies plan for the middle and long term, a concept that politicians fail to comprehend. Long term planning by governments of both parties would have given us a home-grown energy market more capable of withstanding this price shock.

The expected decision to reverse the National Insurance increases, freeze corporation tax and end the cap on bankers’ bonuses to stimulate growth is the big gamble. Truss is right that our economic performance has been sluggish for years but whether the enriched will make the investment in new job creating green energy employment or stash it away in tax havens is a moot point. Controversy rages about the merits of “trickle down” economics. Truss has thrown the dice; we will see if it works.

More generally the Prime Minister has two years to put her party in a position to win a fifth General Election. We can debate whether 2010 was a win because a coalition was required. We can even debate whether Mrs May won in 2017, so disappointed were Tories at the comparative success of Jeremy Corbyn. However, the fact is that for 12 years the Conservatives have been on top. The spirit of “time for a change” can be very powerful which brings us to this weekend’s Labour conference in Liverpool.

STARMER’S LAUNCH PAD.

Is Sir Keir Starmer capable of exciting the British people? We have all been able to compare his rectitude against the shambolic Johnson. He now faces a new Tory leader who may be criticised for shallow beliefs, but she is lively and capable of growing in the job.

To be sure of victory Starmer, and his Shadow Ministers need to raise their game. It is not easy to position themselves when the Tories are spending shed loads of money on big state projects like Covid and energy relief. But we need to see what Labour is for. It would be dangerous for them to think power will just fall into their lap because of a need for change.

I think the Red Wall is in a mood to return to Labour. Levelling up has not happened and will have a low priority with the cost-of-living crisis dominating ministers’ thoughts.

So, a tricky conference for Labour, not least because it is in Liverpool. The crisis at the Town Hall is not a great example of the party delivering at a local level, and the recent dreadful reminder of the continuing power of criminal gangs in the area means this is not the best of times to welcome delegates to the city.