Week-in-Review: The rightwing clamour for tax cuts is making Sunak look weak
In politics there are few more damning charges than that of “weakness”. This familiar jibe has hung ominously over a number of ailing premierships — especially that of John Major, who was characterised as “weak, weak, weak” by then-leader of the opposition Tony Blair. Back in 1997, this stinging defenestration chimed with the prevailing view among the public that the Conservatives were too consumed by the European question to pursue competent government. Consequently, Major’s Conservatives were routed at the ’97 election.
In 2023, Labour leader Sir Keir Starmer is consciously echoing Blair’s famous attack line, rubbishing Rishi Sunak as “weak” on a regular basis. The latest accusation came at PMQs on Wednesday as the prime minister struggled to explain away Nadhim Zahawi’s continued presence in his top team. Sunak’s counter-criticism was that it was Starmer who was the real weakling of British politics, referring to his failure to criticise Jeremy Corbyn while a shadow cabinet member.
The weekly weak-off at PMQs underlines that it is currently the Zahawi story that is engulfing the government like an out-of-control blaze. But as the scandals over home secretary Suella Braverman and deputy PM Dominic Raab indicate, tussles over personnel can prove fickle in the long view of British politics. With where Sunak is right now, there is another more persistent issue at play, something potentially far more ruinous for the prime minister and his party’s electoral prospects. I am of course referring to the Conservative party’s incapability of uniting over fiscal policy.
Back in October, the terms of Sunak’s succession as prime minister were set by his party’s infamous fiscal foibles. After a hedonistic long-summer spent flirting with Trussonomics, Sunak was ushered into No 10 to reinstate Britain’s much-maligned “treasury orthodoxy” and help rediscover his party’s commitment to “sound” finances.
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Tellingly, Sunak’s first decision as prime minister was to push back Jeremy Hunt’s “fiscal update” and expand its brief into a fuller Autumn Statement. It allowed Sunak to lay down the marker in a thinly veiled message to his party’s rightwing. The grown-ups are back, read the subtext.
This could initially be interpreted as a sign of strength. Sunak’s political calculation was that the public would presume that only he could be trusted to tell hard truths about the UK economy. Where it might have been more politically expedient to reign in the tax rises and show more caution on spending cuts, Sunak would instead be seen as prioritising sensibility.
The rapid, ragged retreat of the Autumn Statement was the cause of much political embarrassment for the Conservative’s rightwing. For when Hunt sat back down in the commons on November 17th, just about every tenet of the Truss’s fiscal plan has been dropped. But while the new proposals drew some grumbles from Trussonomics’ keenest converts, there was simply no political capital left to expend. The proposals were swallowed begrudgingly by the party, although some indicated that they were saving their protestations for a more politically opportune time.
That time, it seems, is now.
Since the Autumn Statement in November, advocates of the Trussite tax-cutting ideal have not been nearly as quiet as Sunak first calculated. A number of key party figures, including former leader of the Conservative party Iain Duncan Smith, have been laying the ground for a fresh fiscal clash.
“We are choking ourselves off”, IDS recently told the Financial Times. “If you want to cut the economy, you have to ease off the tax burden on individuals and companies”. In a similar vein, grandee John Redwood has argued: “A tax cut in the budget is essential to help people. We are overtaxing businesses and individuals”. Also joining the clamour for tax-cutting are Conservative-supporting newspapers, including the Daily Mail and Daily Telegraph. The situation is becoming unsustainable.
Tax cutters of British politics, unite!
Earlier in January, around three dozen Conservative MPs aligned with Liz Truss’s tax-cutting agenda gathered to form a new unofficial caucus: the “Conservative Growth Group”. Truss herself was in attendance as MPs gathered in the office of Simon Clarke, the former levelling up secretary and perennial rebel under Sunak. The creation of the group was just the latest indication that Sunak’s party right are keeping the Trussonomics flame alive.
For the prime minister, this debate over fiscal priorities now risks spilling out into a broader battle for the “soul” of his Conservative party. Having been coronated by 120-or-so MPs on a platform of fiscal tightening, Sunak’s inability to bring the rest of his party with him may be interpreted as a sign of underlying fragility in No 10.
Accusations of weakness may follow too from Sunak’s recent attempts to console his party’s tax-cutting faction. Speaking at a levelling up engagement last week, Rishi Sunak affirmed: “I’m a Conservative, I want to cut your taxes… I wish I could do that tomorrow”. Vowing to strengthen the economy, Sunak added: “Trust me that’s what I’m going to do for you this year, that’s what we’re going to do while I’m Prime Minister and if we do those things we will be able to cut your taxes”.
In taking this line, which was reaffirmed by chancellor Jeremy Hunt’s speech on Friday, Sunak is essentially accepting the argument of MPs on his party right. It sets up an extended political battle in the lead-up to 2024 as MPs ask not “will Sunak cut taxes?” but “when will Sunak cut taxes?”.
Given that the prime minister has already acquired a reputation for caving in to his MPs on policies ranging from housing to online safety, the political incentives are there for Tory tax-cutters to start making noise. The threat is that the Conservative Growth Group, formed in the same vein as the European Research Group, may begin to pull Sunak away from his Government’s founding principles.
An internal battle over fiscal philosophy would also hijack Sunak’s plan to trap the Labour Party on the issue. As I have stated before, the Autumn Statement was strategically orientated to exploit presumed Conservative strengths and traditional Labour weaknesses. But fiscal policy now looks set to become a wedge issue for Conservatism as Sunak’s own strategy on tax-and-spend is questioned. Indeed, if a number of backbenchers openly air their grievances over the Spring Budget in March, Hunt could hardly point fingers at Labour’s alleged fiscal irresponsibility.
“Weak, Weak, Weak”
“Is this 1992 or 1997?”, is the question on everybody’s lips at Westminster. In other words, can Sunak emulate the John Major of 1992 and shock the pollsters, or is he closer to Major circa 1997 and careering towards a rout come 2024? An answer remains elusive, but the last fortnight in British politics has held a number of bad omens for the Conservative party’s electoral prospects.
With allegations of sleaze and carelessness already a constant feature of the news cycle, the splits on fiscal policy now look set to mirror John Major’s battle over the European question. Sunak has already found that on almost any issue there are enough rebels to threaten his majority, so do not expect this to change as the stakes notch higher over the Spring Budget and tax cuts.
So can we expect Sunak to make meaningful progress through 2023 and beyond? Certainly, as the PM tries to do so, Blair’s terrifying tricolon of “weak, weak, weak” will hang ominously over proceedings. For as the polls stand, Sir Keir Starmer is steaming ahead, ’97-bound.