Tory discord over government spending is bigger than Truss

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Good morning from Birmingham! Another day, another U-turn. Some thoughts on the latest change of position by Liz Truss and Kwasi Kwarteng and the bigger question facing the Conservative party below.

Inside Politics is edited by Georgina Quach. Follow Stephen on Twitter @stephenkb and please send gossip, thoughts and feedback to [email protected].

Become ungovernable

Wait ages for a U-turn and two turn up at once: Kwasi Kwarteng has not only abandoned the abolition of the additional tax rate, but has also announced he will set out his five-year plan to reduce the UK’s debts later this month — not on November 23 as originally planned.

Seb Payne, George Parker and Jim Pickard have written an in-depth piece on when and how Truss and Kwarteng came to realise that their planned tax cut for the UK’s wealthiest earners had no hope or prospect of getting past Conservative MPs.

Part of the reason the U-turn has weakened Truss is that she fought for the tax cut until the eleventh hour: quite literally! As Seb, George and Jim reveal, she finally gave up the ghost at 11pm in her hotel suite, a little more than an hour after she spoke and won applause for her growth plan at ConservativeHome’s glitzy reception. She told attendees that getting the UK growing again wasn’t just vital to making sure the Tories win at the next election, but also to demonstrating that the democratic west is still capable of delivering economic growth and dynamism as it faces both the threat of Russia’s invasion of Ukraine and a newly assertive China.

One problem Truss has now is that having been forced to retreat from a measure she defended in plainly existential terms, Conservative MPs think that they can force U-turns on essentially anything. Given how politically painful some of the spending cuts in Kwarteng’s debt reduction plan will be, more U-turns and reverses lie in this government’s future.

Someone who spots an opportunity in all this is Priti Patel, who, the Times has revealed, is set to use her first significant public statement since returning to the backbenches to call for Truss and Kwarteng to put “a ceiling” on public spending.

But the difficult question facing the Conservative party as a whole is: is there any fiscal policy it could possibly support? The next looming row is over Truss’s plan to abandon the government’s promise earlier this year to increase benefits in line with inflation.

Wet and increasingly flabby centrist that I am, I hate this plan and sincerely hope that it is scrapped. But, you know, I also supported Rishi Sunak’s plans to increase taxes to pay for increased spending (albeit while thinking it would be better to just increase income tax rather than fiddling about with national insurance).

Penny Mordaunt became the first cabinet minister this morning to publicly urge the government to uprate benefits in line with inflation. “It makes sense to do so,” she told Times Radio. Former housing minister Esther McVey is the most senior backbencher to oppose both Sunak’s tax rises (she voted against the health and social care levy) and announce her opposition to Truss’s plans to cut welfare spending in real terms, but she is by no means alone.

During this conference, Paul Scully, Kemi Badenoch and Simon Clarke have all claimed that there is plenty of surplus activity that can be cut from UK government budgets. Clarke said Whitehall departments would have to “trim the fat” in an interview with the Times. However, none of them have actually been able to identify a specific item or policy they would scrap.

I’m not saying that Truss and Kwarteng are blameless for the events of the past fortnight. But the Conservatives’ recent problems neither start nor end with the prime minister or her chancellor.

Now try this

As I am a) an only child and b) extremely grouchy, there comes a time during party conference season when I suddenly find myself craving my own company. So after dinner last night I went back to my hotel and watched Gagarine. It tells the story of Yuri, a 16-year old boy whose housing estate is threatened with demolition. What unfolds is a beautifully told and shot slice of magical realism.

Danny Leigh’s review is here, and readers in the UK can watch it, as I did, on Curzon Home Cinema.

Top stories today

  • ‘Half-baked ideas’ | Liz Truss has quashed a series of “half-baked” ideas put forward by business secretary Jacob Rees-Mogg to slash workplace rights, including introducing a form of no-fault dismissal for higher earners and repealing the 48-hour week.

  • Get back on the rails | Truss has pledged to reverse the decision to scale back the government’s rail scheme in the north of England. Yesterday she committed to a new high-speed line spanning the entire width of northern England between Liverpool and Hull.

  • Climate curbs | Tough new limits on nitrogen use around Poole Harbour in Dorset are expected to reduce river pollution. But farmers in the area warn that the clean-up plan puts their businesses at risk, while failing to pressure water companies to clean up their act.

  • Sound pound | The pound and UK government debt gained yesterday as investors gave a cautious welcome to the U-turn on plans to scrap the top rate of income tax. Sterling rose 1.1 per cent against the dollar to $1.128, rebounding to the level it traded at before the “mini” Budget.

  • Putin’s nuclear threat | Western officials and military experts believe the risk that Vladimir Putin will deploy nuclear weapons is low, but cannot be downplayed as Russian forces suffer military setbacks in south-eastern Ukraine. Here is what we know about the nuclear weapons Putin could be tempted to use.

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