From a strictly fiscal perspective, the government’s decision to U-turn on the cut to the 45p top rate of income tax is essentially meaningless. What was a £45 billion tax-cutting budget that sunk the pound, set off gilts and required an emergency intervention by the Bank of England is now a £43 billion tax-cutting budget. Of course, politically, it is quite a revealing moment.
Before we start, a reality check: the prime minister had no choice. Liz Truss was haemorrhaging support from various factions within the Conservative Party to the extent that she seemed certain to lose a vote on the matter. The good news for her is that eventually has now been averted.
But while the bleeding may have been stopped, Truss cannot turn back time. She can and will be portrayed by her opponents, both within and without, as someone who wanted to cut taxes for the richest while cutting public services in the middle of a cost of living crisis.
The real revelation is just how shaky the prime minister’s authority appears. On the face of it, this should be her moment of maximum political capital. Truss just won a leadership election and can command a 75-seat majority in the Commons.
But this is more like Schrödinger’s majority – simultaneously commanding and brittle. Not only because barely 10 per cent of Tory MPs need to rebel in order to defeat the government, or even that after 12 years in office, the number of former ministers is perilously large. But because it is not entirely clear the extent to which this is a majority for the sort of policies Truss and her chancellor want to enact.
And now that the Conservatives trail badly in the polls, how many wavering MPs in marginal seats (going by this YouGov survey, that is most of them) can be counted on to vote for anything even vaguely controversial or unpopular?
It must be said, for a self-proclaimed conviction politician, Truss changes her mind rather a lot. Even before the 45p rate, there was the issue of regional pay during the leadership election and of course her ‘no handouts’ position on support for households. It is not difficult to see planning reform and immigration liberalisation – two policies that might *actually* boost GDP – fall next.
Indeed, Home Secretary Suella Braverman told the Sun on Sunday that there are “too many low skilled workers coming into this country,” and that the government would stick to the 2019 pledge to lower net migration.
The chances that Truss was going to be to able go to the electorate in 2024 on a record of mass greenbelt housebuilding and high levels of immigration were never especially high. Today’s U-turn renders them even more remote.
In the comment pages, Rob Rinder reveals everything you ever wanted to know about Yom Kippur (but were too hungry to ask). Meanwhile, did you know creases are the new fashion must-have? Fortunately, the always immaculately attired Melanie McDonagh bursts this particular bubble, noting that “only a very small number of cognoscenti will realise the slept-in look is intentional.”
And finally, it’s five stars for Cézanne at the Tate Modern. The king of the fruit bowl is back and yes, he’s brilliant.
