As the Tory faithful gather in Manchester this weekend for their first annual conference since Boris Johnson led them to the biggest Conservative majority in three decades (way back in December 2019, which now seems like another age), you would expect them to be in a cheerful mood.
The worst of the pandemic is over and some semblance of normality has returned, with voters more inclined to credit the Government for the successful and game-changing vaccine roll-out than to dwell on the myriad missteps and ministerial incompetence of a Cabinet clearly out of its depth when Covid first struck and spread through the nation last year.
The economy has been growing strongly and, despite recent stumbles, will soon be back to its pre-pandemic size.
Instead of mass unemployment, widely feared and even officially predicted in the early days of Covid, there are widespread labour shortages and wages are rising fast.
Perhaps most remarkable of all, despite long queues for petrol, rising food and fuel prices and empty supermarket shelves, the Johnson Tories are still eight percentage points ahead of Labour in the latest YouGov poll.
This would be extraordinary for any government mid-term, when the opposition is usually in the lead.
The Tory faithful gather in Manchester this weekend for their first annual conference since Boris Johnson (pictured) led them to the biggest Conservative majority in three decades
It is unprecedented at this stage in the political cycle for a government as assailed by as many woes and mistakes of its own making as this one.
Keir Starmer might have begun Labour’s return to respectability (and, eventually, electability) in Brighton this past week.
But the current Tory lead shows the mountain he has to climb.
Even to win a majority of one at the next election would require a swing to Labour of more than ten per cent on the 2019 result and the taking of 123 seats — more than Tony Blair’s historic landslide in 1997. That is simply mission impossible.
So, plenty of reasons for Tory cheer in Manchester. But it would be sensible to eschew any sense of complacency, much less triumphalism (which would be totally inappropriate at a time of shortages and supply chain chaos).
For, behind the Tory smiles, the wiser among them harbour a deep sense of foreboding on several fronts.
Just what, exactly, is the purpose of the Johnson government, other than its own perpetuation in power?
Is it really a Tory government in any recognisable sense, given its enthusiasm for big government and the inevitable high taxes that go along with it? And, most viscerally of all, how long can Boris’s luck last?
Johnson has undoubtedly been a lucky Prime Minister. Lucky vaccines came along when they did.
Lucky to face such weak, uninspiring opposition. Lucky the Tory gene pool is so depleted that there are few credible contenders for his crown.
Lucky that, even when things go wrong, the normal rules of politics don’t seem to apply to him (an asset he has in common with Donald Trump and Nicola Sturgeon).
That could be about to change. Prices are rising fast across the board. Yes, wages are rising strongly too. But on average they are barely keeping pace with prices.
The Bank of England now guesstimates that inflation will reach four per cent before the year is out — twice its official target. There was a time when it said this was a temporary spike and inflation would soon settle back close to two per cent. Now it’s not so sure.
Labour shortages have empowered workers, even non-unionised ones, to demand higher pay.
This winter they will seek rises to match the price increases — and more — thus baking in the higher prices, producing the return of an old-fashioned wage-price spiral and the inflation which inevitably follows.
Despite long queues for petrol, energy prices and empty supermarket shelves, the Johnson Tories are still eight percentage points ahead of Labour in the latest YouGov poll (stock image)
Even in an age of rising wages, workers will struggle to maintain their living standards.
The cost of living will take centre stage once more, especially for those on average or below average incomes, as it did in the 1960s and 1970s, when it was the slayer of governments. This is where Johnson’s luck could run out.
It is all the more likely to do so because of his government’s unerring instinct to make things worse.
As the squeeze on living standards tightens into the new year, spring will bring a rise in National Insurance Contributions (NICs), hitting the poorest most because NICs start to bite lower down the pay scale than income tax — which is also set to rise with the freezing of thresholds, further undermining living standards.
It’s almost as if the Government is out to create the perfect storm when it comes to depressing living standards.
Wholesale gas prices have risen sixfold, something over which it has no control since it reflects a global gas scarcity.
But, despite Brexit, the UK has adhered to the European Union’s high tax on carbon and added its own British premium in a fit of virtue-signalling to the rest of the world.
Both will be part of your rising domestic gas and electricity bills this winter.
Rising prices at the petrol pump and in supermarkets are being blamed on a shortage of HGV drivers. Industry has been predicting this shortage for months, if not years.
Yet more than 54,000 HGV licences applications are waiting to be processed at the DVLA. In January, you can normally expect 3,000 licences to be granted; last January the agency managed just 173.
Perhaps we should not be surprised by such incompetence. After all, this is a government which regularly boasts about its commitment to law and order yet cannot stop a bunch of teenage trustafarians and aging Swampies from repeatedly blocking the Queen’s highways.
It bigs up its vision of Global Britain yet presides over five-hour queues at Heathrow for folks trying to enter Britain to do business.
It speaks endlessly of ‘levelling up’ the North with the South, yet when Johnson made his keynote speech about it in July all he offered was £50 million for northern football pitches.
When I asked a Cabinet minister a few days ago by what metrics we could measure the success of levelling up come the next election, he was unable to give any.
Wholesale gas prices have risen sixfold, something over which it has no control since it reflects a global gas scarcity. Pictured: Climate activist being arrested on M25
The blunt truth is that Johnson is running out of time to make any difference to the prosperity of the Red Wall seats that swept him to power two years ago.
But perhaps the biggest source of unease among Tory activists will be tax. The rise in NICs has been well flagged and will generate an extra £12 billion a year.
It is perhaps illustrative of the Johnson government’s ideological promiscuity that it is copying Gordon Brown, who as Chancellor also raised NICs to feed the insatiable appetite of the NHS for cash.
But less noticed has been the impact of Chancellor Rishi Sunak’s freezing of income tax thresholds, a stealth tax if ever there was one. It means 1.3 million low-paid workers will be brought into tax for the first time.
It will also drag a million moderately well-paid folks into the higher 40 per cent tax bracket, even though it was never designed for them. It is not clear in what way any of this is Tory. But it will raise a further £12 billion.
Then there’s the coming increase in Corporation Tax (CT), which companies pay on their profits.
For years, ministers told me in TV interviews that cutting CT would generate more tax revenues because more businesses would expand and locate here. Now they insist raising CT will add to revenues, just as Jeremy Corbyn claimed in the 2019 election.
Both statements, of course, cannot be true. If a cut raises revenue then an increase must surely erode revenue. No matter. The Treasury now says CT will generate yet another £12 billion and rising.
So, by 2024, these three Tory tax rises will produce an extra £36 billion a year in revenues, adding to a tax burden that is already the highest overall since Labour ruled the roost in the 1960s.
It might seem strange that a Tory government should be so keen to raise our taxes by so much but it is really no mystery: Johnson is a big government Tory and big governments require big taxes.
For those Tories of a Thatcherite bent heading to Manchester with a belief in markets, low tax and limited government, it must have already dawned on them that this is not their decade.
Almost everything the Johnson government is doing and hopes to do will require more government and more taxes. Tories who think there’s still time to cut taxes before the next election are in denial. There’s a much bigger chance of more tax rises to come.
Levelling up the North? That means state direction of resources and government investment in infrastructure.
More money for the NHS, social care and schools? No escape from more taxes (Chancellor Sunak’s only victory over Johnson in this spending jamboree was to insist that it had to be financed by raising taxes, not more borrowing).
A so-called ‘green deal’ to reach net zero carbon emissions? That will require hundreds of billions of pounds — more likely trillions — and a huge increase in state intervention to regulate everything from how we travel to how we heat our homes.
It has already meant our manufacturers are now lumbered with the highest energy costs in Europe, which rather undermines the levelling-up project, since most manufacturing is north of Watford.
State intervention often has unforeseen consequences, as the Johnson government will soon learn the hard way.
Shorter supply chains to give us more control of essentials and make us less dependent on imports of everything from PPE to car parts? That means state subsidy to meet the higher costs — and higher prices for consumers.
Prices are rising fast across the board. Yes, wages are rising strongly too. But on average they are barely keeping pace with prices (stock image)
Make our high-tech industries less reliant on Chinese technology? That gives ministers an excuse to dabble in a spot of industrial policy, something beloved of all governments despite its underwhelming track record.
Another Cabinet minister I spoke to this week was unapologetic. This is the way the world is going, he insisted, and we need to lead it.
I asked him: Even if it means the tax policies of Gordon Brown (raising NICs) and the energy policies of Ed Miliband (the energy price cap plus a plethora of green levies)? Yes, he replied without hesitation.
There is a sense in which he’s right. The return of big government is a global phenomenon.
It is the offspring of the pandemic just as it was once the consequence of war. During World War II, the role of government expanded as never before. It was a key part of our victory and in 1945 the British people voted for big government to continue in peacetime.
It gave us Clement Attlee’s Labour government, the welfare state, the NHS and the nationalisation of basic industries.
Covid has also resulted in a massive expansion of government intrusion and power. The voters believe this was as necessary to get on top of the pandemic as it was to beat the Nazis.
The political culture, despite all the efforts of a small band of lockdown sceptics, has adapted to look more kindly on a continuation of big government in a post-pandemic world, just as it did in a post-war world.
The Johnson Tories are now riding that wave.
So far, so popular, as the polls show. It also moves Tory tanks on to centre-Left ground, leaving Starmer’s Labour party with little room for manoeuvre. So it’s also good politics, at least for now.
But big government requires big competence, something Johnson and his lacklustre Cabinet clearly lack. That is likely to become even more apparent during a winter of scarcity, disruption and rising prices, with ministers seemingly incapable of resolving any of it.
If BoJo the Uplifting Clown morphs into the Grinch that Stole Christmas, the voters might not be so forgiving of all this government’s obvious inadequacies.
If that, in turn, leads to falling living standards, then the Tories’ extended and remarkable honeymoon with the British people could dramatically come to an end.
The Tory faithful should enjoy Manchester. They’re likely to be meeting in far less propitious circumstances come next year’s party conference.