The Tory conference smells of burning rubber as the new government makes a screeching U-turn on tax, writes Sean Ledwith

Liz Truss went on the Kuenssberg programme on Sunday to display her finest Thatcherite armour-plating and boldly declare she was standing by the massively controversial scrapping of the 45p top rate of tax. The new Prime Minister’s only concession to political reality was the go-to of weaselly Tory politicians that there had a communication failure: “I do accept we should have laid the ground better, I do accept that and I have learnt from that and I will make sure that in future we do a better job of laying the ground.” Although she didn’t say the exact words of her role model, it was evident Thatcher’s infamous ‘The Lady’s not for turning’ moment was on the tip of Truss’ tongue.

Humiliation

Overnight, Truss and her gormless Chancellor, Kwasi Kwarteng, obviously had a major rethink and decided that it was, in fact, not just a communication problem and that the whole policy would need to be junked for the sake of self-preservation. A humiliated Chancellor lamely told the Tory conference in Birmingham: “I can be frank. I know the plan put forward only ten days ago has caused a little turbulence. I get it. I get it. We are listening and have listened, and now I want to focus on delivering the major parts of our growth package.”

Sweet revenge

Truss and Kwarteng’s inevitable U- turn followed a storm of criticism erupting even from within the ranks of the Tory Party. With gleeful relish, Michael Gove, who backed Sunak in the leadership contest, told Kuenssberg that he was not convinced by Truss’ claims that her tax cut was viable and that her policy was “not Conservative”. As if that was not humiliating enough, former Transport Secretary Grant Shapps popped up to exact his political revenge on the PM who had ditched him a few weeks ago: “This politically tin-eared cut … has managed to alienate almost everyone, from a large section of the Tory parliamentary party taken by surprise to the City traders who will actually benefit.”

Febrile

The rumour mill at the Tory conference in Birmingham was in overdrive with suggestions that there was the real possibility that Kwarteng’s botched mini-budget of 23 September might actually be voted down by Tory MPs when parliament resumes next week. Gove and Shapps speak for the majority of Tory MPs who didn’t back Truss in the leadership contest, and who understandably suspect her wooden style and emotional illiteracy might cost them the next election. The febrile atmosphere in the party was exacerbated by Chief Whip Jake Berry’s thuggish threat that any Tory MP considering not supporting the cut in the top rate would have the whip removed. Presumably this now applies to Truss and Kwarteng themselves!

Hubris

The latter will be lucky to survive in post till Christmas. Apart from this current debacle, the Chancellor showed a stunning lack of political nous with reports that he was quaffing champagne with hedge-fund managers shortly after delivering the mini-budget last month. The hubris of Truss and Kwarteng is symptomatic of a section of the ruling class that think they can rub our noses in the dirt and get away with it.

Off the scale arrogance

Their arrogance is so off the scale that the more experienced members and institutions of the elite are fearful that it will trigger major resistance from below. Even the IMF, hardly a bastion of socialist thinking, last week denounced the Truss-Kwarteng tax plan as unhinged, and suggested they look for an ‘opportunity for the UK government to consider ways to provide support that is more targeted and re-evaluate the tax measures, especially those that benefit high income earners … Furthermore, the nature of the UK measures will likely increase inequality.’

Joe Biden’s Commerce Secretary similarly expressed the anxieties of the global elite that the British Tories’ demented obsession with tax cuts could even drag the entire world economy closer to the precipice of recession: “The policy of cutting taxes, and simultaneously increasing spending, isn’t one that is going to fight inflation in the short term or put you in good stead for long-term economic growth.”

Class warriors

More sober voices among the ruling class have clearly played a role in forcing Truss and Kwarteng to row back on part of their reheated Thatcherite agenda. We should be under no illusions, however, that this is anything other than a government fanatically committed to waging class war from above. The plans to cut corporation tax, lift the cap on bankers’ bonuses and curtail even further the right to strike remain in place.

Truss is also determined to push up defence spending to 3% of GDP in her recklessly confrontational approach to the Ukraine war. We cannot rely on marginally less demented sections of the elite to save us from Truss and Kwarteng. A surge of resistance from below, as displayed in last weekend’s impressive Enough is Enough demonstrations around the UK, is also essential to thwart this latest generation of Tory class warriors.