Picture by Simon Dawson / No 10 Downing Street

The rise of ‘alternative budgets’ shows Rishi Sunak is trapped

There is a new phenomenon taking the SW1 scene by storm: the “alternative budget” — a fiscal plan produced by some dispossessed faction and designed, at once, to focus minds on a chosen subject in government and to posture and position as antagonists press ahead with their own proposals. 

The “alternative budget” trail was blazed, of course, by none other than Liz Truss. The former PM is not one to shirk an opportunity for fiscal innovation and in October it was reported that she, acting vicariously through her “Growth Commission” think tank, would be penning a series of fiscal proposals to compete with the government’s. 

With the Autumn Statement set to be delivered by the chancellor tomorrow, the Trussite wonks kept their promise to an ever-grateful nation and unveiled a plan to reverse “stagnation” in the British economy last week. Truss, nominally the convenor of the group, was among those who attended the launch of the “growth budget”, alongside close allies Jacob Rees-Mogg, her former business secretary, and Lord Frost, once Boris Johnson’s Brexit negotiator.

Among the measures being proposed by the commission are cutting corporation tax from 25 per cent to 15 per cent and unfreezing tax allowances. The group argues its proposals could boost GDP by 23 per cent and household incomes by £26,000 by 2044.

Still, TrussGrowth Commission is a curious collective. The former prime minister is not herself a member — but her intellectual patronage is keenly felt, both in personnel and policy terms. For example, Julian Jessop, that high priest of Trussonomics and Institute of Economic Affairs fellow, is among the assembled free marketeers. The grouping also boasts a tangible transatlantic tilt, as it assembles American economists mainly connected with the libertarian Mercatus Center. 

In one sense, the Growth Commission is Trussonomics retreating to its intellectual and institutional homesteads: the realm of secretive policy institutes and think tanks. The flickering free market flame needs nurturing, Truss has long-calculated — having done such damage to her cause last year. The commission, therefore, is intended to operate as a kind of chrysalis chamber, wherein the messaging of British libertarianism will be protected, honed and eventually propelled back into mainstream thought. 

And, on its free-market crusade, the commission is supported by its de facto sister organisation the “Conservative Growth Group”. The Conservative Growth Group is a parliamentary caucus helmed by former environment secretary Ranil Jayawardena but, again, convened by the former prime minister. Thus the conclave, which has the backing of around 60 MPs, can be expected to take up the commission’s policy offering in the weeks to come. 

But the group faces keen competition within the Conservative Parliamentary Party, including from their foremost factional antagonists: the One Nation Conservatives.

In fact, those much-denigrated fifth columnists, charged with leading consecutive coups last year, have their own fiscal plan — leaning headstrong into Liz Truss’ strategic playbook with apparent unabashed apostasy. 

Yesterday the grouping, headed by former de facto deputy PM under Theresa May Damian Green, published its own set of policies in a bid to drag the party back to the centre ground. Among the proposals are ideas to tax second homes that are not registered as such or made available to rent, making it easier to build housing above railway stations; and allowing first-time buyers to use their pension funds towards a deposit.

The group’s new document said the plan would “help the government reclaim the support of millions of voters who are undecided about the next election but who have supported the Conservative Party since 2010”. 

Stephen Hammond, the MP for Wimbledon and a member of the One Nation group, subsequently told the Times: “For too long we have been too quiet and these ideas are the fresh start of renewal for our caucus.”

This, in essence, is the one nation Conservative group saying the quiet bit out loud. Rather like the increasingly isolated “soft left” in Labour, one-nationers nominally make up a “faction”, but they have taken far from enthusiastically to “factionalism”. They are “wet” by name and, typically, wet by nature. 

But grouping appears to have concluded that their relative collective quiet over recent years — as abbreviated antagonists have amassed in the European Research Group (ERG), the Northern Research Group (NRG), the New Conservatives, the Common Sense Group (CSG), the Net Zero Scrutiny Group (NZSG) and now the Conservative Growth Group (CGG) — has spurred the political tides against them. In fact, before Hammond’s round of self-reflection yesterday, Damian Green had already argued in an article for the Times last September: “Maybe we have been too quiet for too long”.

An “alternative budget”, therefore, is an immediate consequence of the grouping’s newfound willingness to flaunt its parliamentary muscle. And it is far from an isolated example: last week, Green compared ex-home secretary Suella Braverman’s Rwanda “Plan B” tests, outlined in the Telegraph, to “what Putin and Xi do”. 

Viewed in full, the former first secretary of state’s pre-Autumn Statement media round has provided a forum for him to intensify his attacks on his party right colleagues. He has even urged the government not to pursue a “full fat” approach in dealing with the small boats crisis; Green prefers a more measured, “semi-skimmed” strategy. The one nationers are limbering up it seems — slowly and supported by tortured analogy — to the Conservatives’ factional fracas.  

Step back, and this pre-Autumn Statement debate, as moderate and right-wing wonks battle it out with their respective alternative budgets, is illustrative of Rishi Sunak’s enduring party-management travails. And, as the one nation Conservatives rediscover their confidence, the PM’s problems in and around his party look set to intensify. 

What is more: the apparent entry of the one nation Conservatives into the intra-party debate is symbolically significant. Because it was this vast collective of moderate MPs — far more so than the Braverman-backers who swung behind Sunak after her endorsement in October — who enabled him to become PM. 

But the prime minister has since been seen to abjure on the vision of his parliamentary patrons. Indeed, despite the elevation of Lord Cameron of Chipping Norton last week, the PM has opted to side with his party right at moments of heightened pressure. Sunak’s speech yesterday, which hinted at tax cuts to come, may be the latest example. 

These “alternative budgets”, therefore, speak to a well-rehearsed truth: that Sunak is ideologically unmoored in his party and without a factional anchor among his backbenches. He is trapped between competing visions, reductively of “right” and “moderate” elements, as he struggles to hone his own vision for the party. The two key events of last week, with the appointment of David Cameron as foreign secretary and the subsequent reaction to the Supreme Court’s Rwanda ruling, probably speak further to this dire dynamic. 

The prime minister hence seems trapped in his party, unwilling to wholly embrace one section of the Conservatives’ factional tapestry. All the while, backbench groupings manoeuvre — sometimes in the background and at others in the foreground — with one eye, surely, on a potential leadership contest to come. 

Josh Self is Editor of Politics.co.uk, follow him on Twitter here.

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