This week has been a quiet week in politics as the Country mourns the death of Queen Elizabeth II. Parliament is, however, gearing itself up for a ‘fiscal event’ on the 23rd of September when Kwasi Kwarteng will deliver a sort of ‘mini-budget’. The Government has been keen to distance the fiscal event from what might be described as a budget, in part due to how a Government’s formal budget would be required to be scrutinised by the Office of Budget Responsibility (OBR). Prime Minister Truss is evidently of the view that there is no time to waste in reversing the UK’s flailing economy even if it means by-passing the OBR. Sceptics amongst us, though, cannot but think that the delivery of a fiscal event rather than an emergency budget is a way round OBR scrutiny and will bring the so called ‘unfunded’ tax cuts into greater focus.
The measures to be announced at the fiscal event have been a closely guarded secret, though there has been noises coming from The Treasury that Kwarteng will look to remove the cap on bankers’ bonuses. Irrespective of whether this is a smart move to make the City of London more competitive, it is terrible politics. At a time when the country is wrestling with a cost-of-living crisis, it makes no sense to use up any political capital and air time in defending policies of this nature, especially as the Truss Government is on borrowed time with very little room for manoeuvre following a year of scandals, a summer of blue-on-blue attacks, and the party a long way behind in the polls.
Truss can point to the energy price freeze as Conservative pragmatism, stepping in when energy prices threatened to send the economy into recession. However, with Truss having spent the summer talking about tax cuts and deregulation, the bankers bonus story suggests that the Conservatives are set to tack right on the economy with George Osborne style neoliberalism. If the Conservatives do pursue a full-on agenda of free-market conservatism to boost economic growth, it may make voters think that the energy price freeze was nothing more than political expediency, a time when the Tories held their noses as they enacted Conservative Socialism.
As former Prime Minister John Major once mused, the Conservatives could afford to be right wing in the 1980s as Labour were unelectable. This is also true through the 2010s with Ed Miliband and Jeremy Corbyn’s Labour devoid of credibility. With Keir Starmer, there is, however, a viable alternative for centre voters and herein lies the crux: Labour can no longer be described as ‘far left’ and as Labour tack to the centre so must the Conservatives.
With less than two years to go before the next election, the Conservatives have to somehow turn the economy around to avoid sleeping walking into a loss at the next General Election, whilst showing voters that they understand their needs and are on their side. With the current international instability and economic uncertainty, I don't think the Conservatives are going to be able to reassure voters and give them the security they crave by rolling back the state and pursuing more neoliberalism. This is something that Boris Johnson recognised keenly - he sensed that the Country was tired of the austerity years and through initiatives like the Levelling Up agenda (which Dominic Cummings described as simply ‘build shit in the north’) sought fiscal loosening.
Fiscal loosening and the proper funding of public services must remain part of this Government’s agenda if the Conservatives wants to hold together the coalition of voters which gave it its largest majority since 1987, namely pensioners, non-graduates, the working class, and blue-collar non-city dwellers. In the run up to the election in 2024, I think the Conservative Party should follow the winds which carry swing voters and shore up its 2019 vote rather than impose any kind of economic dogma. Today’s politics should be one of pragmatism and if the Conservatives don’t get this then it is a sign that they are losing touch. Friday’s fiscal event will reveal a lot about whether this Conservative Government is an ideological one or whether it will seek to harbour voters in the centre ground.
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