UK Prime Minister Truss faces new perils as restless lawmakers return to work

Parliament’s return this week is fraught with challenges for British Prime Minister Liz Truss.

In her first month in office, the 47-year-old prime minister managed to disrupt financial markets, alienate some of her lawmakers and sink the Conservative Party in the polls with the biggest package of tax cuts unfunded in half a century.

Since the Commons last sat, chasms have opened up over the economic direction that Truss and Chancellor of the Exchequer Kwasi Kwarteng are pursuing, and backbench MPs smell the blood.

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After forcing the government to backtrack on its tax cut for top earners, Tory lawmakers are preparing to challenge their leader over plans to cut social benefits, ease planning rules and increase in borrowing.

“When MPs are on holiday there are more limits to conspiracy, but when they return to Westminster they will all be in one place,” said Alice Lilly, senior researcher at the Institute for Government. “It’s going to be trickier.

Truss’ missteps mean that despite a majority of around 70, she finds herself in a position similar to Theresa May – whose backbench MPs frequently held her 2017-19 minority government hostage. Current dissent threatens to thwart the Prime Minister’s plan to spur growth through a massive program of deregulation and tax cuts.

At last week’s Conservative Party conference, former cabinet ministers Michael Gove and Grant Shapps polled restless lawmakers.

Members of Truss’s cabinet expressed dismay when she backtracked on scrapping the 45% rate of income tax, and other ministers advocated increasing benefits based on the inflation – just as the Prime Minister suggested it could reduce them in real terms.

But the greatest danger lies in the backbenches, populated as they are by dozens of former ministers, many of whom have an ax to grind after being sacked by Truss and most of whom have voted against her in this summer’s leadership race.

One MP said backbench MPs are angrier, more determined and more organized than at any time in recent years.

A former cabinet minister told Bloomberg they saw colleagues submit letters of no confidence to Truss at the office of Graham Brady, chairman of the 1922 committee, which oversees leadership elections. They predicted that junior ministers will start resigning in a few weeks. Another MP said they planned to submit their own letter, while two others said they hoped the ‘grey suit men’ – party figures such as Brady – would hold a papal-style conclave to choose a unifying candidate to replace Truss.

Patch rows

Live from the unrest, the Prime Minister had one-on-one conversations with Tory MPs during the conference. Sitting across from them on a couch in her hotel suite, she tried to reassure them that they hadn’t been forgotten and asked how she could gain their support. A female MP said she was quiet but unenlightening and had failed to convince them she would have the nation’s finances under control.

Getting his MPs is crucial for Truss to advance his agenda. The more controversial elements of Kwarteng’s package will not be put to a vote immediately, giving them time to gain support. But other rows are getting ready. Truss wants to relax planning rules to encourage construction in designated investment areas. But that will face opposition from rural Tory MPs, who thwarted planning reforms attempted by his predecessor, Boris Johnson.

And in the coming weeks, the government must decide whether to increase benefits in line with inflation or wages. Truss has indicated that she favors the latter. But at the conference, Ministers Penny Mordaunt, Robert Buckland and Steve Baker all suggested that Social Security should keep pace with inflation.

Truss “needs to almost start thinking about operating as if she were a prime minister with a minority government,” said Lilly of the IFG.

The most memorable moment of the conference was Kwarteng’s cancellation of the high-income tax cut after he and Truss spent days defending it. While some MPs felt that Truss’ conference speech on Wednesday was enough to set naysayers back, others said she simply articulated her libertarian narrative without addressing the elephant in the room: how she would fund her program.

plunge in the polls

Kwarteng says he intends to release a medium-term fiscal plan alongside the Office of Budget Responsibility’s economic forecast on Nov. 23. But he may be forced to do so sooner as Tories fear market uncertainty will drive up interest rates and – more importantly – voter mortgage rates. Conservative chairman of the Treasury select committee, Mel Stride, said it was needed before Nov. 3, when the next BOE rate decision is due.

Parliament’s return on Tuesday sees Kwarteng welcome questions from the Treasury. Then on Wednesday, he will address fellow rebels in the oak-panelled room of the 1922 committee in another attempt to calm nerves.

The dire polls have added to the pressure, with the opposition Labor party holding a lead of more than 20 points in several recent polls. It has left the Tories on majorities under 12,000 increasingly frantic about the need to win back support, one MP has said. Truss must call a general election by January 2025 at the latest.

For now, backbench MPs don’t have a big plan – dissent is largely uncoordinated and scattered among different party factions. Additionally, Truss leadership rival Rishi Sunak – who warned during the contest of market turmoil her plans could trigger – remained silent.

In theory, the prime minister is immune to a leadership challenge in her first year in office. But in practice, Johnson and May were both given the same period of immunity after surviving leadership challenges – and were kicked out early.

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