LONDON — Liz Truss’ inaugural conference as Conservative Party leader unfolded in shambolic fashion with a major policy U-turn and open dissent from senior ministers. But the hard work’s just getting started as restive MPs return to Westminster.
Fresh from reversing her plan to cut the top rate of tax, the U.K. prime minister is under pressure to guarantee that social security will keep pace with the cost of living — with major divisions in the party bursting into the open over the issue and a cabinet showdown looming Tuesday.
One senior Tory said the tax confrontation had left Truss looking “weak.” Another, asked what the next potential flashpoint is, replied: “Everything.”
Particularly tricky for Truss are the policy areas requiring legislation, with the furore over the top rate of tax demonstrating that her majority in parliament is illusory and could collapse under pressure.
Here are a just a few of the issues which could trip Truss up before the end of the year, rated out of five for difficulty.
1. The mini-budget: 3/5
Truss has already come majorly unstuck over the so-called mini-budget announced last month by her chancellor, Kwasi Kwarteng. It put forward a plan for the biggest tax cuts the U.K. has seen for 50 years, but lacked crucial details on how it will be paid for — sending the markets into turmoil.
The single most controversial element was the abolition of the top rate of tax, now consigned to the dustbin of history. Some critics, such as former Cabinet minister Michael Gove, have indicated they would be prepared to back the budget now that that element has been removed, but other MPs still have concerns.
In particular, they are anxious to see a full fiscal statement and accompanying report by fiscal watchdog the Office for Budget Responsibility, and those documents could be key in determining whether Kwarteng’s program receives parliamentary backing.
It’s a pretty serious thing if a new revolt arises over the budget, because it is a key test of an administration’s ability to govern and could mean either fresh concessions or a showdown with the party.
2. Welfare changes: 4/5
With the cost of living soaring, Truss’ predecessor Boris Johnson promised that welfare benefits would rise in line with inflation — but the new occupant of No. 10 Downing Street has refused to say she would maintain the commitment.
Certain welfare payments must increase in line with inflation by law, but for working-age benefits no decision has yet been made on whether a rise will be linked to prices or wages. Increasing them in line with wages would amount to a real-terms cut.
A Cabinet split opened on this question at Conservative Party conference in Birmingham, with Commons Leader Penny Mordaunt backing an inflation-linked increase while Home Secretary Suella Braverman argued the government spends too much on benefits. The Sunday Times reported this weekend that a Truss climbdown could be coming, but if not, there’s real trouble ahead.
The changes to welfare payments can be made through secondary rather than primary legislation — which is harder to vote down in parliament if ministers want to swerve a House of Commons battle. Yet such a course of action would do little to save the government from a big public fight with Tory MPs who believe slashing welfare when people are struggling is politically tone-deaf.
3. Conor Burns row: 2/5
In the end, it was the mishandling of sexual misconduct allegations against a key ally that called time on Boris Johnson’s chaotic premiership. Just weeks into the job, Truss is facing a row of her own.
The prime minister moved swiftly to sack Trade Minister Conor Burns over allegations of “serious misconduct,” after a formal complaint was made about his behavior at the Conservative Party conference.
The former minister — who lost the Conservative whip, meaning he can no longer sit as a Tory MP — denies wrongdoing. And he said in a statement: “I hope the party will be as quick to conduct their inquiry as they were to rush to judgment.”
The Burns row itself is unlikely to scupper Truss’ agenda by itself, but such cases have a habit of increasing backbench dissent. Truss also faces further tests in how she handles the ongoing suspensions of MPs including David Warburton and Chris Pincher.
While some in Westminster will welcome decisive action against a minister facing an accusation, already there are mutterings from some Conservative MPs about the Burns case. Burns made headlines last week with a frank assessment of Truss’ prospects, and one MP told the Sunday Times: “People think it’s a put-up job by the whips. No complaint was made by the individual.”
4. Planning reform: 5/5
Another statement of intent in the mini-budget was Kwarteng’s vow to reform the country’s planning rules in order to release land and speed up development.
This is seen as one of a number of supply-side reforms needed alongside tax cuts to stimulate growth in the U.K., but it has long been a minefield when it comes to securing the necessary support.
Conservative MPs — especially, but not only, those in leafy seats — tend to experience pressure from constituents to oppose new developments in their area, whether because of fears over the strain on local services, aesthetic concerns, or the impact on house prices.
Proposals drawn up under the previous prime minister to force councils to accept new housing in designated areas were ditched after they ran into heavy opposition from Tory MPs, and it’s not clear how Truss could avoid the same fate.
A Cabinet minister admitted it looked like one of the more “challenging” prospects in the wake of the government’s U-turn at Conservative Party conference.
5. Fracking: 4/5
Concerns are also growing that the government does not have the buy-in it needs to pursue an end to the ban on controversial hydraulic fracturing — known as fracking — for shale gas.
Truss made much of her loosening of fracking rules during her leadership bid. She stipulated that shale gas extraction firms will need “community consent” to start drilling, but has so far refused to provide further details.
Business Secretary Jacob Rees-Mogg is more gung-ho on the matter, telling a fringe event at the recent party conference he would be “delighted” for his back garden to be fracked and deriding those who oppose the practice as “socialists.”
However, he is likely to face fierce resistance from MPs who represent areas identified as potential fracking sites in Derbyshire and Lancashire, some of whom hold ministerial jobs.
One minister said he did not understand why the government is having this argument, particularly while many MPs are fearful for their seats anyway as the Labour Party surges in the polls.
Another predicted the government would simply take an approach “that means it’s never going to be done,” either because the Tories lose power before any drilling actually takes place or because the “community consent” bar is impossible to reach.
6. Immigration: 5/5
Truss refused to commit to a limit on people coming to the U.K. during her leadership campaign, and it’s since been reported she wants to overhaul the visa system to address labor shortages.
This puts her on a collision course with members of her own Cabinet, one of whom stressed they had “made a manifesto commitment to bring numbers down” — as well as the wider party.
Many Tory MPs and strategists regard lower immigration as one of the key tests against which they will be measured at the next election, and any move to liberalize the visa system is likely to encounter fierce opposition.
Truss’ main plan for tackling illegal immigration, which is to deport people to Rwanda, is currently stalled by legal challenges. The U.K. was forced to cancel the first deportation flight in June after the European Court of Human Rights found that the proposal carried “a real risk of irreversible harm.”
7. Deregulation: 3/5
Another central plank of Truss’ offer is to scrap all regulation Britain inherited from the European Union by the end of 2023 and loosen regulation on businesses more generally.
She wants to create “investment zones” where environmental and planning requirements will not apply, in order to encourage commercial expansion, but this scheme has already run into difficulty as civil servants warn it is unworkable.
One official tasked with drawing up the plans described them as “uncapped, uncosted, and irreversible,” pointing out that once the sites are activated businesses may be able to sue if they are changed or scrapped.
Truss also pledged to deregulate the insurance sector by reforming Solvency II rules under which insurance firms are allowed to invest people’s annuities only in extremely low-risk assets.
An industry representative said this was now unlikely as it would have involved a face-off with watchdog the Prudential Regulation Authority — a confrontation for which Kwarteng and Truss now lack the political capital after their poorly received budget.
8. Brexit: 4/5
There was warmer mood music from both the U.K. government and the European Commission last week as hopes began to rise of making progress on the long-running row over the post-Brexit Northern Ireland protocol.
However, officials on both sides warned speculation of an imminent deal was misplaced and Truss’ way forward seems fraught with risk on all sides.
If she reaches an agreement which retains parts of the current system, she is likely to come under fire from the right of her party, many of whom voted for her as leader despite misgivings over her Brexit credentials as a former Remainer.
Already beset by critics from the center or moderate wing of the party, this would be the last thing she needs.
In the meantime, the controversial Northern Ireland Protocol Bill is making its way through parliament, which as currently drafted would give ministers the power to scrap parts of the EU-U.K. post-Brexit deal.
It is expected to run into choppy waters in the House of Lords, where a cross-party coalition of Labour, Lib Dem, crossbench and rebel Tory peers have the power to hold it for ransom.
9. Net-zero: 3/5
Truss has promised to keep the Conservatives’ target of reducing net carbon emissions to zero by 2050 — but she’s less enthused by it than her immediate predecessor, Johnson.
The U.K. prime minister has voiced doubts about the “depressing” spread of solar power “paraphernalia” on agricultural land, will scrap levies on energy bills supporting clean power and home insulation. She’s also intending to issue new licensing rounds for oil and gas extraction in the North Sea.
Green campaigners argue this sends a confusing message, particularly to companies trying to make investment decisions which are tied to the government’s climate policy.
Truss was a reluctant attendee at the U.K.-hosted COP26 summit, and her words and actions at November’s COP27 in Egypt will be closely watched for signs that she is not interested in continuing Britain’s prominent role in climate diplomacy.
At the same time, she has tasked one of her MPs with carrying out a review to ensure that delivering the net zero-target “does not place undue burdens” on businesses or consumers.
The review will report at the end of 2022, and if it recommends any lowering of the U.K.’s climate ambitions, a fierce battle between green-minded MPs and net-zero skeptics will undoubtedly ensue.
10. Scottish independence: 2/5
The fight for Scottish independence isn’t going away. The Supreme Court is set to hear a legal case this week to determine whether the Scottish government has the power to call a second independence referendum without consent from Westminster.
Scottish First Minister Nicola Sturgeon is seeking to hold a new vote in the teeth of the U.K. government’s opposition.
The bid is seen as unlikely to succeed, but it could still present a headache for Truss. If the court finds a referendum can be held, the U.K. faces another massive constitutional battle, a hugely divisive campaign and the potential secession of Scotland.
If a referendum is ruled out, Sturgeon has still vowed to treat the next election as a de facto plebiscite, and Truss — who had sharp words for the Scottish leader during the campaign — must figure out how to effectively oppose the nationalist call to arms.
Annabelle Dickson contributed reporting.
