The crisis at the heart of the Conservative Party has rippled out into the economy. Rishi Sunak is now the third Tory party leader and Prime Minister this year. What next for the Tories?
After the ignominious end to cakeism of Boris Johnson – the lack of an ideology or ability to manage, the party then bought into trussonomics – ideological libertarianism. After 49 days this ideology was ended for a number of reasons – poor execution (ignoring the OBR and her own cabinet), chaotic u-turns on policy announcements, panic sackings (Kwateng), and an ideology that did not make sense – tax cuts paid for by promised growth (i.e. unfunded). So where can Sunak go with Tory party policy?
There are key underlying factors in the economy that Truss did not create – they were there already there. The Bank of England failed to recognise the upcoming rise in inflation following recent years of quantitative easing and Pandemic spending, and a fiaxtion with low interest rates. Sunak/Hunt now need a plan to address them that the electorate will swallow and the money markets will accept.
The underlying low productivity problem has dominated Britain’s recent history. Sunak will need to find ways to improve the level of company investment. Truss failed to make the case for supply side reforms despite the necessity. Sunak will need to implement these changes, however painful, to raise productivity.
Truss had some worthy ideas – ending the triple lock on pensions is a necessary evil to reduce costs but not one that a government can push through before a general election, and the Tory party will be reluctant knowing their own voters are pensioners. Sunak will need to be strong.
Labour will set out a different manifesto to Sunak which is likely to include nationalisation (popular with voters) and levies on utilities who made a fortune out of the cost of living crisis. The housing crisis is another problematic area that both parties need to come up with a plan.
Taking on both the leadership of the Tory party and the prime minister of the country in the middle of a cost of living crisis could be a poisoned chalice for Sunak. He will need to unite a divided party with Left and Right vying for power.
The current leadership issues partly stem from Rishi Sunak causing the resignation of Boris Johnson. It may take a general election before the party recovers and forgives him. The party has trust issues with Sunak. Boris Johnson is popular party members and will not forgive him easily for stabbing him in the back. The exposure of his original leadership website campaign planned before he jumped was embarrassing.
The second issue is that Sunak will need to put the country through austerity measures. The latter could be very unpopular and ultimately cost the Tories the next election. Sunak inherits cost of the ongoing Ukraine war and the problems of Boris Johnson’s reign – years of taxes required to pay off interest from borrowing and quantitative easing.
In the original leadership election it was the MPs who had Sunak as their number one candidate. But they also voted Truss as the number two candidate. As much as the party membership voted for Truss (because they have not forgiven Sunak for ousting Johnson) it was the MPs who put Truss on the list. So are the MPs the root of the problem for the party? Getting party members back on side will take time for Sunak.
The wider question is whether the two party system is in decline. Northern voters may have “lent” their vote to the Conservative Party at the last election but, after the failure of levelling up, that now looks unlikely to happen next time. The question is where voters go next?
The Tory party is becoming increasingly dependent on pensioners Tory voters are home owners, pensioners and have savings accounts. This is going to influence how Sunak frames his economic policy. What will be on offer for renters and first time home-owners? The Labour party is becoming increasingly reliant on young people. In other words, both parties are fracturing.
The Tory right and left, like the Labour right and left are so at odds with each other since Corbynim, Brexit, culture issues and the fate of neoliberalism. Can the parties firstly hold it together, and can the parties reach out to the disenfranchised electorate?
