Picture by Simon Dawson / No 10 Downing Street

It’s Liz Truss, stupid

Few individuals make Westminster quiver like Boris Johnson. From Brexit through Covid and, finally, to his privileges committee comeuppance — Johnson’s headline-grabbing antics are catnip to Britain’s comment class. Still today, the dregs of the Johnson psychodrama whir Westminster into a frenzy: he ruined the “good chaps” understanding of government, revolving door watchdog ACOBA decries; his allies, such as Jacob Rees-Mogg and Nadine Dorries, could now be found in contempt of parliament for labelling the privileges committee a “kangaroo court”. 

In the end, Johnson’s decline and fall — complete with a flailing broadside on his successor-once-removed — was as irresistible as his rise. And self-imposed exile notwithstanding, Johnson’s parting gift by way of three by-elections will ensure he sticks in the headlines through the summer. 

But for all the attention Johnson’s misadventures have commanded in recent weeks, his legacy looks likely to be far less significant electorally than that of Rishi Sunak’s immediate predecessor, Liz Truss. This isn’t to say that the Johnson soap opera won’t damage Sunak — particularly in and around his party — but the former PM’s froth of sleaze today conceals Truss’ more politically potent presence. Tellingly, when it comes to their key attack lines, Labour major on Truss’ fiscal antics rather more than Johnson’s impropriety. 

Having bested Sunak in the summer, Truss’ core mission upon seizing the reins of No 10 was simple: no longer would any concession be made to fears about public finances or concerns about opinion polls — there would be no more apologetic, compromise Conservatism. 

In a bid to carve a new route map for post-Brexit Britain, in the shape of a set of unprecedented, supercharging reforms, then-chancellor Kwasi Kwarteng stood before parliament on 23 September 2022 to announce sweeping tax cuts. Desperate to unchain Britannia after a decade of anaemic growth, no time was afforded to an independent assessment of their economic and fiscal impacts.

Investors were spooked. The pound plunged against the dollar, pensions funds verged on collapse, mortgage costs soared and government borrowing costs skyrocketed. Never before had a fiscal programme been so comprehensively rejected. In the end, the sheer brevity of Truss’ tenure as PM was a consequence of the boldness and stubbornness of her fiscal regime. She began a rapid, ragged retreat which was continued under Rishi Sunak, her successor after only 49 days.

But what an impact those 49 days had. 

When Truss first walked into No 10 as PM, according to Politico’s “Poll of Poll’s” metric, Labour led the Conservatives in the polls by 42 per cent to 31. But after the mini-budget had exacted its political toll, the distance between the two main parties stood at 30 points. The scandals under Johnson — Patersongate, the Pincher affair and Partygate — had given Labour a handy 10-point lead. But it was Truss who set the course for a Starmer majority. 

Today, the Conservatives’ mini-budget polling penalty is still proving difficult to exorcise. As things stand, the difference between Sunak and Starmer’s parties is 20 points and looks set to diverge further as the public digests the news of interest rate rises. Under Johnson, the Conservatives at times showed signs of bouncing back — even amid the fits of psychodramatic chaos. But post-Truss the party languishes in the electoral doldrums. 

The recent local elections further evinced how the Trussonomics disaster had crushed both the foundation of the Conservative voter base in Middle England and the “Red Wall” of erstwhile Labour voters absorbed by Boris Johnson in 2019. Indeed, during her short time in No 10, Truss showed that not only was she unable to compete with Johnson in terms of his appeal in historically unlikely areas — but that she was a core motivator in driving voters back to Labour. Now, although Truss may be gone, this dynamic persists.

The ‘Tory mortgage penalty’

With traders pricing in a rise in interest rates to at least 5.75 per cent, Keir Starmer and his team talk about Liz Truss as much as possible. 

Last Tuesday, during an Urgent Question on developments in the mortgage market, shadow chief secretary to the Treasury Pat McFadden affirmed: “Britain’s homeowners continue to suffer thanks to the Tories’ reckless economic gamble” — referring to the mini-budget. In normal times, the independent Bank of England could be expected to bear the brunt of blame for rate rises and the afflictions of homeowners. But today’s market gyrations, Labour attests, are intimately connected to September’s Trussite implosion. 

No doubt, Truss’s mini-Budget is still indelibly linked to the panic on the markets and mortgage rises. Indeed, according to Labour analysis, homeowners are still being hit with a “Tory mortgage penalty” of an extra £150 every week — or £7,000-a-year. The rhetoric reflects the view of some unimpressed financial analysts in October: the “moron risk premium” was the phrase Britain’s exasperated financier class used to quantify Truss’ impact on the markets. (One wonders if Labour strategists will be so minded to place this £7,000-a-year figure on the side of a red bus at the upcoming by-elections). 

In an opposition debate on Tuesday, Rachel Reeves referred to the “Tory mortgage bombshell” — a slightly altered tagline — a total of eight times. Backbenchers, too, repeated the phrase dutifully. Starmer’s team thinks it can undermine Sunak’s reparation operation with stringent message discipline — tying the present PM’s economic woes to the actions of his fallen predecessor.

It raises the prospect that, ahead of the next election, Truss’ mini-budget catastrophe will weigh on the minds of voters like Back Wednesday and Britain’s exit from the European Exchange Rate Mechanism did in the lead-up to the 1997 election. 

Black Wednesday, which happened almost 30 years ago to the day of the announcement of the mini-budget, essentially sealed the fate of the Major government. Unleashing a currency and bond market crisis, it trashed the party’s reputation for economic competence for more than a decade. The collapse of Trussonomics now looks set to have a similarly dire impact on the Conservative party’s electoral fortunes. 

Ultimately, in a general election next year, I suspect Johnsonite chaos will cut through rather less than crippling rate rises. Indeed, it has often been said that it is a focus on “The economy, stupid” which wins elections for opposition parties. And here it is Liz Truss and her economic legacy which looks set to lose it for the Conservatives in 2024. 

Johnsonian sleaze and the ex-PM’s legacy of lax standards will, of course, be significant at the next election as Labour highlights scandals of Conservative premierships present and past. But it is mortgages and economic incompetence which Sir Keir will major on as Sunak slowly succumbs to Major’s fate.