The markets rejected Trussonomics, but the Conservative party can’t let go 

Liz Truss became prime minister claiming to offer a fresh economic start – a new route map for post-Brexit Britain in the shape of a set of unprecedented, supercharging reforms. According to reports, Truss’s favourite mantra upon entering No 10 was “Go big or go home”. Those options, it turned out, were not mutually exclusive.

In fact, the sheer brevity of Truss’ tenure as PM was a consequence of the boldness and stubbornness of her fiscal regime. Desperate to unchain Britannia after a decade of anaemic growth, the much-misnomered “mini-budget” proposed a raft of tax-cutting measures. The result, as we know, was disastrous. The pound plunged against the dollar, pensions funds verged on collapse, mortgage costs soared and government borrowing costs skyrocketed. 

The world watched in awe as the “invisible hand” of the market strangled Truss’s economic dream at its birth. Never before had a fiscal programme been so comprehensively rejected.

Truss’s eleventh-hour torching of the economic proposals, guided by the reassuringly grey Jeremy Hunt, was not enough to save her premiership. After 49 days, Truss was ushered out of Downing Street by Graham Brady’s instructive advice. There were positives in all this for Truss, of course; “at least I’ve been prime minister”, she is thought to have reassured aides:

Winning the war

As of Tuesday morning, Rishi Sunak passed the 49-day threshold, outdoing his summer rival on that all important metric. 

But it feels longer. His premiership has been deliberately slow moving, allowing for Treasury norms to bed back in and for the country — and his party — to take stock of the change of regime. His Autumn Statement decisively dropped Truss’s ideological obsessiveness in favour of self-conscious fiscal stolidity. The UK’s weary financiers ultimately welcomed the new approach. 

But the political aspects of Sunak’s strategy rely on Trussonomics’ organised elements keeping quiet. The prime minister understands that if his tax-raising, “pragmatic” brand of Conservatism is to far succeed, his party needs to come together — bound by careerist survival instincts if nothing else. In any case, he probably expected Trussite parliamentarians to be too busy licking wounds to form any meaningful anti-Sunak front. 

But as the events of the past few days demonstrate, dissent within the Conservative party is building. 

Rather than enter a period regretful, peaceful introspection, Truss’s political soulmates have accused allies of Rishi Sunak of conspiring against the former prime minister. Their fundamental assessment of the UK’s economic ills, and their proscribed remedies, are still unchanged from the summer — October’s market reckoning notwithstanding. Liz Truss is now reportedly telling allies: “I lost a battle, but I haven’t lost the war”. 

The Conservative Democratic Organisation

Over the weekend, former UKIP MEP David Campbell Bannerman announced the formation of a new Conservative campaigning group called the “Conservative Democratic Organisation”. Its stated aim is to “restore party democracy” after Rishi Sunak became leader of the party and therefore prime minister in a coronation. 

According to the campaign, rank-and-file Conservative members feel they are held in “utter contempt by party leaders” and that “their views count for nothing”.

One prominent backer of the new campaign is Priti Patel, the former home secretary. She is quoted on the CDO website as saying: “Party members are committed to our values of freedom, enterprise and opportunity and we need to empower them to have more say over our policies and candidates”.

The campaign’s key demands include:

  • Giving local associations the right to choose their candidates
  • Having a directly elected Conservative party chairman
  • Replacing the National Convention with a general meeting of the Party to stop the party hierarchy rubber-stamping decisions
  • The Spring Conference becoming a policy conference for members in a more affordable location and the October party conference allowing members to submit motions with voting taking place.

Of course, there is a clear ideological undercurrent to the CDO. Composed of Conservatives on the Trussite/Johnsonian right, it voices anger on its website at the “left of centre position Rishi Sunak’s tax-raising Government has adopted”.

And the campaign is supported by billionaire Boris-backer Lord Peter Cruddas who also serves as president and treasurer. Cruddas was an outspoken opponent of Sunak’s Autumn Statement, stating at the time: “Its hard to distinguish between this government and the Labour party . . . it’s anti-Conservative”.

Ultimately, the CDO reflects the anguish of many in the Conservative “bubble” (donors, MPs, local organisers, etc.) about the direction the party is taking under Sunak. And the message it advances, namely that Truss’s replacement was some kind of elite coup, convened by faceless adherents to “treasury orthodoxy”, may prove difficult for Sunak to dispel. 

It certainly underlines the scale of Sunak’s task if he intends to unite his party before 2024.

The Next Gen Tories

Creating further trouble for Sunak are the “Next Gen Tories”, a grouping which launched last week. The new campaign is aimed specifically at the priorities of under 45s, urging the government to prioritise housing, the rising cost of living and unaffordable childcare. The way to do this, the group insists, is with “the principles of a freer market [and] nimble regulation”.

The group boasts the support of former levelling up secretary Simon Clarke, who, in the most recent cycle of Conservative factionalism over housing and onshore wind, has proven ready to rebel against Sunak. 

Last week, Clarke co-wrote an article in the Sunday Times with Next Gen Tories founder James Cowling which referenced Margaret Thatcher’s “property owning democracy” and urged the government to go “bold”. 

So while the stated aims of the “Next Gen Tories” are deliberately ambiguous, centring on “priorities” rather than policies, what we do know of the organisation suggests it may prove a problem for Sunak down the line. And in the short term, activists will be clamouring for the government to recommit to centralised housing targets. 

Conservative Way Forward 

Unlike “Next Gen Tories” and the CDO, “Conservative Way Forward” is not a new grouping. It was first founded in 1991, a year after the resignation of Margaret thatcher, committed to furthering the legacy and political priorities of the Iron Lady. 

But after decades of relative inaction, the campaign was “refounded” in December 2021 by prominent backbench rebel Steve Baker. First taking aim at the government’s “Plan B” lockdown arrangements, CWF’s ration d’être was essentially unchanged. As Baker said at the time: “[Conservative Way Forward will] celebrate conservatism, promote freedom under law and make the case for practical policies that prioritise personal responsibility”.

Baker officially took over as chair from Conor Burns, the former trade minister.

During 2022’s summer leadership content, the campaign group published “A Charter for Tax Cuts”, urging leadership candidates to sign up to its visions of a low-tax, low-regulation UK state. The Charter was written “independently” by Julian Jessop who, until December 2018, was the chief economist at the Institute of Economic Affairs (IEA) and is currently a fellow at the think tank. Zahawi and Braverman were the only two candidates to “sign” the charter (meaning quote tweet it), but Jessop would later gain prominence as an influential member of Truss’s inner economic circle.

Baker stepped down as chair after being offered a post in the Northern Ireland ministry by Liz Truss, a position he has retained under Sunak. Conservative Way Forward is therefore now chaired by Greg Smith, an MP of the 2019 intake who is also co-chair of the Free-Market Forum, a self-described IEA “project”.

Under Smith’s chairmanship, a report was published on Monday calling on the prime minister to make major spending cuts on equality and diversity measures. The group highlighted £7 billion in public expenditure which could be “returned to taxpayers” thorough tax cuts.

40 MPs have now signed a letter to prime minister voicing their support for the report’s findings. The letter reads: “We will have a much better chance of cutting taxes or spending more on frontline public services if we end this sort of waste”.

The signatories include the perennially anti-Sunak Sir Jake Berry, as well as ex-ministers Sir Iain Duncan Smith, David Davis and Esther McVey.

What does this mean for the future of the Conservative party?

In the short term, the level of political energy generated by the Conservative party’s right flank will place sharp limitations on Sunak’s premiership as he attempts to navigate the various overlapping crises the UK faces. While it is probably true that the initial memories of the Trussonomics disaster helped quell revolts around the Autumn Statement, now the party right seems ready to re-run the arguments of the summer and remake the ideological case for tax cuts and a slim state. 

In the long term, this may also mean that Sunak’s successor as Conservative leader, whenever they take office, will offer a vision of Conservatism more reminiscent of Truss’s. The wing represented by the CDO, the CWY and the Next Gen Tories will want a new champion. 

The former Brexit minister Lord David Frost, who happens to sit on the board of CWF, may wish to offer himself as that champion. According to friends of the peer, who is also a favourite of the grassroots, Frost has alerted Conservative Campaign Headquarters about to his interest in becoming an MP. One ally told the Mail, “If he does stand, it will be because he thinks he has a chance to lead the party at some point”.

And what about Truss’s future? The Sunday Times understands that the former PM wants to continue to fighting for her libertarian ideas with Truss apparently keen to associate her vision with a new think tank. “Plans for a think tank are progressing”, one source told the paper. “It’s still up in the air if she’s launching it, fronting it or backing it”. Given the prominence of Trussonomics in the murky world of right wing think tanks, this may be the natural — and strategically sound — move for the former prime minister. She can prepare the ground for another right-wing champion, just as organisations like the IEA, the Taxpayer’s Alliance and the Adam Smith Institute so consummately patronised her rise to power.

But wherever its namesake ends up, Trussonomics is alive and kicking. The Conservative party simply cannot let go.