Could the Tory turmoil get even worse?

When the time came, Liz Truss was resigned to her fate. After presiding over 44 days of economic and political convulsion — interrupted only by a period of national mourning following the death of Queen Elizabeth — Britain’s prime minister knew she had to quit.

“She had no choice,” says one ally, who witnessed the political demise on Thursday of the country’s shortest-serving prime minister. “In the end, I think she was relieved.” Truss discussed her resignation with her husband, Hugh O’Leary, before walking out into a grey Downing Street to announce it to the world.

Some of her staff cried, but few tears were shed elsewhere. Truss had subjected Britain to a high-borrowing, tax-cutting, libertarian experiment which fell apart on its first contact with reality. The markets recoiled, Tory poll ratings collapsed and her government imploded.

Truss’s resignation marked a defining moment in the tumultuous era of post-Brexit British politics, the death of the dream held by the Conservative right of turning the country, freed from the bureaucratic grip of Brussels, into a free-market nirvana.

“We set out a vision for a low-tax, high-growth economy that would take advantage of the freedoms of Brexit,” Truss said in a brief resignation speech. “I recognise though, given the situation, I cannot deliver the mandate on which I was elected by the Conservative party.”

But if Truss’s resignation marked the end of something, it is not clear what comes next. Tory MPs will on Monday begin the task of choosing a new leader and Britain’s fifth prime minister since the Brexit vote of 2016, yet bitter divisions remain in a party once renowned for being a pragmatic, ideology-spurning, election-winning behemoth.

It is not uncommon to hear Tory MPs talk of a wipeout at the next election, expected in 2024, on a scale familiar to the Canadian Progressive Conservative party, which in 1993 lost all but two of its seats. On Friday, a new People Polling survey put the Tories on 14 per cent, the party’s lowest rating in British polling history.

For Truss and her colleagues, there is the indignity of being on the receiving end of pity from former EU partners. “We want, above all, stability,” said Emmanuel Macron, French president, speaking at a European summit this week.

‘The promise of Brexit’

As the world watches on with astonishment, the big question is: could the political turmoil get any worse?

On the face of it, that might seem unlikely. Right from the start, Truss had a fragile political base. Although she did not win the support of a majority of Tory MPs in the leadership contest, she immediately introduced a range of radical policies, which had been years in development by rightwing think-tanks and propounded by Tory supporting newspapers, but which had not been endorsed by the electorate.

It was the culmination of the Brexit project supported by many on the right, which linked notions of “sovereignty” with the idea that once freed from the EU — viewed on the right as a supranational, regulatory monster — Britain could chart a route to a future as a small state, low tax, lightly regulated economy.

Until now, the Tory right had blamed others for thwarting what former prime minister Boris Johnson had called “the promise of Brexit”. In doing so he picked fights with many of the country’s institutions: the BBC, the judiciary, even parliament itself were judged to be standing in the way.

Truss went further, attacking the British economic institutions that serve as a guardrail against reckless policymaking and to maintain market confidence: the Bank of England, the Treasury and the independent Office for Budget Responsibility.

The Brexiters, including the born-again Eurosceptic Truss, were now in charge and in a position to deliver their vision. Having hobbled the economy by imposing barriers to trade with the EU after Brexit, the pressure was on to deliver new signs of economic dynamism.

Truss set about cutting taxes on the wealthy, to the disdain of Joe Biden, US president, who said that “trickle down economics” never worked. Regulations, like EU directives that protected wildlife habitats from development, were to be repealed in “investment zones”. Developers would be freed from stipulations that they should include affordable homes in their plans. An EU cap on bankers’ bonuses was scrapped. Fracking for shale gas would resume.

Truss said she was ready to be “unpopular” but had not anticipated that her programme would make her that unpopular. Conservation groups vowed “direct action”, the markets took fright at Truss’s massive borrowing plans and started a fire sale of UK gilts, and the prime minister’s approval ratings plummeted to record lows.

Even Truss started to recognise the limits of the government’s approach. When Jacob Rees-Mogg, the Brexit-supporting business secretary, proposed a bonfire of EU workplace rights, an ally of Truss described the ideas as “half-baked and unworkable”. City of London regulators pushed back against her drive to water down EU financial rules.

As her premiership fell apart, Truss tried to find new bogeymen who she insisted were derailing the post-Brexit revolution, blaming an “anti-growth coalition” that included people with podcasts, Scottish nationalists and north London liberals.

But many Brexiters now blamed her. Lord David Frost, former Brexit secretary, who had backed Truss and praised her “mini” Budget, which included £45bn of unfunded tax cuts, ended up calling for her to quit. Gerard Lyons, a pro-Brexit economist who advised Truss, said: “You’ve got to take the markets with you.” One Tory MP said simply: “She has ruined it for the Brexit project and free marketeers for a generation.”

“No one should or can be happy about the political and economic turmoil in the UK,” tweeted Michel Barnier, the EU’s former Brexit negotiator — and a former nemesis of the Conservative right. “Not all of these difficulties are due to Brexit, but I am convinced that Brexit makes everything more difficult.”

In the dying days of her premiership, Truss acknowledged that her plan was doomed. After sacking her close colleague Kwasi Kwarteng last week, her new chancellor, Jeremy Hunt, ripped up most of the unfunded tax cuts. A new era of fiscal conservatism, embedding the right’s hated “Treasury orthodoxy”, has been decreed by the markets and whoever becomes the next prime minister is likely to pay obeisance to them.

Some in the party hope that the country is keen to move on from some of the sharp ideological debates of the past few years. “What is happening is that a lot of people are finally aware that competence, not ideology, is of critical importance,” says Bim Afolami, a Tory MP.

But if Truss’s catastrophic premiership has diluted her party’s enthusiasm for rightwing ideological solutions, the Conservatives remain deeply divided and riven with long-running personal feuds. Iain Duncan Smith, a former leader, wrote in the Daily Telegraph on Friday that his party was becoming “ungovernable”.

The shadow of Boris Johnson

Much of the public, at least according to a near-unanimous show of hands on the BBC’s Question Time programme on Thursday, is eager to see a general election. But the Conservatives seem unlikely to oblige, given they are currently trailing the Labour opposition by more than 30 points in some polls.

In the meantime, voters are forced to watch while the same Tory MPs and party members who chose Truss as prime minister on September 6 have another go. Some Tory MPs fear that politics could become even more turbulent than in recent weeks.

Boris Johnson, Britain’s 55th prime minister, harbours hopes of becoming its 57th, his allies at Westminster doing the sums to see whether he can muster the 100 votes required to make it on to the ballot paper in Monday’s round of voting by MPs for a new party leader.

“Hasta la vista, baby!” Johnson said in July, in his last Commons appearance as prime minister before he was forced out of office by Tory MPs. Less than two months after he left Downing Street, with 60 ministers quitting in protest at his conduct, Johnson is eyeing a comeback from his holiday retreat in the Dominican Republic. “Stay on the beach,” advised David Davis, former Brexit secretary.

If Johnson makes it through the MPs’ ballot and his name is submitted to the Tory members it is likely he would win, given that he retains star appeal among a large number of Tory voters. But many Tory MPs would refuse to serve under him; some have even threatened to quit parliament.

Johnson also faces a parliamentary inquiry into whether he misled MPs about the “partygate” scandal; if found guilty, he would be suspended from parliament and could face a by-election. While many in the party believe Johnson is still a vote-winner, the risk is that within months it could be scrambling to find Britain’s 58th prime minister.

Those Tory MPs wary of Johnson hope that either Rishi Sunak, the former chancellor, or Penny Mordaunt, Leader of the House of Commons, will prevail. Like Johnson, both are Brexiters but neither is an ideologue; fiscal conservatism, with Hunt at the Treasury, would return.

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But Sunak is regarded by “Borisites” as treacherous — his resignation as chancellor in July helped to trigger Johnson’s downfall. Some on the Tory right regard him as some kind of “socialist” because he put up taxes to 70-year highs during his time as chancellor following the massive public spending during the pandemic.

Mordaunt might come through the middle as a compromise candidate, but she is untested in high office: her appointment might risk repeating the Truss experience.

In the meantime, Britain is facing a grim winter, with the prospect of tax rises and austerity in Hunt’s fiscal statement, 10 per cent inflation, a wave of strikes, soaring energy costs, a hospital crisis and warnings of power blackouts.

Gary Streeter, a Tory MP who served as a whip in John Major’s dying government in the 1990s, says the mood in today’s Tory party is “far worse” than anything he saw back then.

“We have to take a long hard look at ourselves,” he says, warning that if his party proves incapable of governing, the public clamour for an early election will become irresistible. “We’re not there yet — but we’re not far from it.”