Sensemaker: The quiet coup

Long stories short

• Russia attacked Kyiv with a wave of Iranian-made ‘kamikaze’ drones.
• The UN and African Union warned of escalating violence in Ethiopia’s Tigray region.
• Three Just Stop Oil climate activists were released on bail after throwing soup over Van Gogh’s Sunflowers painting in London’s National Gallery.
• George and Alfred Degiorgio were jailed for 40 years for their part in the murder of the investigative journalist Daphne Caruana Galizia.

The quiet coup

Like Liz Truss, Jeremy Hunt says he wants growth, but he’s also trying to fill a £72 billion hole in Britain’s public finances and in doing so calm the markets. To that end he plans to

• delay indefinitely a proposed cut in income tax
• means-test energy payments from next April
• let corporation tax return to 25 per cent
• keep the top rate of tax at 45 per cent 
• scrap reintroduction of VAT-free shopping for tourists
• scrap stamp duty cuts
• shelve capital projects
• require “additional efficiencies” from every government department

Trussonomics has been euthanised, saving £32 billion. How much of the rest of the hole can be filled by “tailoring” energy payments and demanding public spending cuts is unclear and probably will be at least until 31 October. The political price for Truss will be severe.

MPs are publicly calling for her to go. There are reports that letters of no confidence are already in the double digits. The pound is bobbing up, but only because her departure is baked in. If she stays, all the markets’ bets are off. After 41 days in the job it seems all but inevitable the prime minister who lent her name to Trussonomics and then had to kill it off will be forced out. But it wasn’t just the mini-Budget that precipitated her downfall. 

It was: 

• a series of unforced errors, ranging from the shape of her team to bizarre personal attacks on high-ranking colleagues;
• a frankly ungovernable party, still deeply divided after Brexit with constituents whose needs work against each other; and
• a genuinely challenging economic backdrop shaped by Covid and the war in Ukraine, with little room for manoeuvre after leaving the EU.

The prime minister’s predicament is “almost entirely self-inflicted”, according to one Tory MP.

Political malpractice is certainly part of the story. Truss went into Number 10 on a promise to cut taxes and be more steely than the Iron Lady, only to abandon her chancellor, her economic strategy and an eight-minute press conference in one disastrous Friday. 

She appointed no Rishi Sunak supporters and sacked some, like Grant Shapps, on the basis that they backed the wrong horse rather than any disagreement with their work. 

She has allowed hostile briefing about ministers including Michael Gove, who some felt deserved it, and Sajid Javid, who most felt did not. Former chief whip Mark Harper called out her team for “nasty insults” at the weekend, and he wasn’t alone. “Truss and the vile bunch of snotty kids she employs in Number 10 need to pack their bags,” another Tory said. 

But that sort of venom points to a bigger problem for the Conservatives.

A shattered party. The leadership contest threw a spotlight on intra-Tory divisions and they go deep. MPs may be colleagues on paper, but after 12 years in power there is little left that binds them together. Tory tribes include:

• Red Wall Brexiteers
• Libertarian Brexiteers 
• Blue Wall/One Nation Tories
• Green Tories 
• Culture warriors 
• Malcontents, refuseniks and outgoing big beasts

Factionalism is not exclusively a Conservative problem – look at the still-healing Labour party for proof – but the dysfunction in the so-called party of government has undermined every Tory leader this century.

Brexit is the elephant in the room. Westminster is still traumatised by the three years of political chaos and constitutional soul-searching that followed the referendum, and this means the issue of the UK’s relationship with Europe is danced around rather than grappled with. 

Covid enabled this evasion. Suddenly politicians had something more serious to talk about, and potentially something to unite around. Lockdowns provided cover for the start of the economic damage being caused by the UK’s departure from the EU, and for the failure to locate any sunlit uplands.

Ukraine. The war is invoked incessantly and with good reason by Truss and her allies, because it has fuelled inflation. Like Covid, it has also obscured the damage being done by Brexit, which according to an FT analysis of government figures amounts to £100 billion a year in lost output. 

The reckoning. Phones were “red hot” this weekend with plotting to find a unity candidate as Truss’ replacement, but the mechanism for ousting her isn’t obvious. 

The 1922 executive committee met on Friday evening to thrash out a plan that includes raising the threshold to ensure only one candidate emerges – although sources said no plan was finalised. Thatcherite MPs of the Conservative Way Forward group are understood to be holding a crisis meeting today his week, with former Brexit minister David Frost telling colleagues “things look bleak”. And a grandee – some named Michael Howard, others William Hague – is being lined up to dispatch the prime minister if she doesn’t take the hint. So one way or another…

Change is afoot. Penny Mordaunt writes in a rallying op-ed which does not preclude a future leadership challenge of her own that recent changes have “left our compass spinning… our country needs stability”.

And it is hard to imagine stability with Truss. The Tory crown now looks likely to pass to either Rishi Sunak, Ben Wallace or Mordaunt, although Jeremy Hunt, the new chancellor, is also in the running. Whoever it is will lead a party that seems to have forgotten what it’s for, and – perhaps only briefly – a country that’s fed up with it.  

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CAPITAL ECONOMY, BUSINESS AND FINANCE

Unequal London
The UK’s big retail banks will report surging income from their loan books as a result of rising interest rates this month, as tens of thousands of small and medium-sized London businesses go bust. Barclays, NatWest, HSBC and Lloyds will earn 15 to 32 per cent more in interest payments in the third quarter than in the same period last year, which the FT’s Jonathan Guthrie notes is going to be welcome after years of ultra-low rates, but also awkward. The optics aren’t great as mortgage borrowers suffer, and a desperate government could come looking for a windfall tax. It won’t help anyone that twice as many London-based SMEs have closed so far this year as in Scotland, Wales and Northern Ireland combined. The number, 53,880, is more than 15,000 more than closed in 2017. It’s not clear why the LibDems, who showed the data to CityAM, chose to compare 2022 with 2017 rather than 2019, the last pre-pandemic year, but one thing’s clear to anyone who works in central London. An awful lot of shop fronts have gone blank. 

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TECHNOLOGY AI, SCIENCE AND NEW THINGS

Starlink costs
In peacetime, Elon Musk expects his Starlink satellite internet customers to pay $4,500 each for the terminals that connect them to the system, excluding monthly usage fees. But there is no peace in Ukraine and he doesn’t want to subsidise the service indefinitely. Fair enough, in principle. In practice, as TechCrunch explains, governments are already helping with the cost. How to split it as the war grinds on? In a slightly martyr-ish tweet Musk said he would foot the bill while others profited from the war, which is the right call. But it would also be right for allies to regularise support payments because Starlink works. Ukraine has benefited from access to it and Russia has suffered from not having access to it. Just because Musk is irritating doesn’t mean he shouldn’t be paid to be part of the solution.

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The 100-year life health, education AND GOVERNMENT

Coffey antibiotics
Downing Street is hogging the British political spotlight but keep an eye on deputy prime minister Thérèse Coffey, who is also health secretary. Last month she told a meeting of civil servants she had given out leftover prescription antibiotics to a friend – something which is, as doctors have pointed out, both dangerous and against the law. It came up because Coffey is proposing letting pharmacists prescribe antibiotics without requiring a GP appointment, which could lead to more antibiotics handed out, and with it a greater chance of antibiotic resistance. Experts call the idea “moronic”, and experts may be making a comeback. 

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Our planet CLIMATE AND geopolitics

China’s bridge protest
Last week, banners were hung from a bridge in Beijing reading: “We don’t want covid tests, we want to eat; we don’t want lockdowns, we want to be free.” President Xi Jinping was called a “dictator”. It was an extraordinary – and extraordinarily rare – sign of protest in China, coming days before Xi opened the Communist Party congress, a key political meeting which will likely extend his rule for at least another five years. People who shared images of the banners online had their access to messaging platforms cut off; the man allegedly responsible for the banners was swiftly arrested. In a triumphant speech on Sunday, Xi said the “people’s war” against covid would continue, that China would take “all necessary measures” to secure Taiwan. But he acknowledged the country faced “dangerous storms” ahead. His answer: strengthening party control. 

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CULTURE soCIETY, IDENTITY AND BELONGING

Met police report
Hundreds of officers in Britain’s biggest police force have been breaking the law and getting away with it, an independent review has found, while the internal disciplinary process shows a “systemic bias” against black and Asian officers. In an interim report, Baroness Louise Casey said 1,809 officers had more than one complaint raised against them but only 13 were sacked from the force – one officer is still serving despite facing 11 misconduct notices. Racial discrimination means black officers are 80 per cent more likely to face disciplinary action. Met chief Sir Mark Rowley said he was “appalled by the findings”. There will be more to come when the full report is released early next year. But how many independent reports will it take for things to change?

The week ahead

UK

17/10 – Footballer Mason Greenwood appears in court in Manchester charged with attempted rape; Scottish government due to publish economic prospectus for an independent Scotland; government consultation on new legal framework for defined benefit pensions ends; winner of Booker Prize for fiction announced, 18/10 – Defence secretary Ben Wallace gives evidence to defence committee; TUC conference begins in Brighton; BBC’s 100th anniversary; Mercury Prize for music ceremony; 19/10 – Bank of England’s deputy governor appears as Treasury committee; 1922 committee of Tory MP’s to meet; September inflation figures published, 20/10 – Royal Mail, BT Openreach and 999 operator strikes; Keir Starmer addresses TUC conference; secondary school performance tables released, 21/10 – Plaid Cymru annual conference begins; monthly public sector finances report released by Treasury and ONS; Moody’s due to release it’s UK sovereign review, 22/10 – Rejoin march in London for campaigning to re-join the EU; Avanti West Coast train managers striking 

World

17/10 – EU foreign ministers meet to discuss Ukraine, China and Cop27 in Luxembourg; trial due to begin for Barcelona and Santos football clubs on fraud and corruption charges, 18/10 – Al-Kharsaah solar power plant officially opens in Qatar; Combined Exhibition of Advanced Technologies held in Japan; World Menopause Day, 19/10 – US Federal Reserve publishes Beige Book on economic conditions; Hong Kong chief executive John Lee delivers annual policy address; Apec finance ministers meet in Bangkok; Frankfurt book fair, 20/10 – Turkey and Indonesia interest rate decisions; European Council meeting of EU heads of state in Brussels, 21/10 – Steve Bannon sentencing for contempt of Congress in defying subpoena for January 6 investigation; Orionid meteor shower; Taylor Swift releases 10th studio album, 22/10 – Draw to decide group stage for 2023 football Women’s World Cup in New Zealand; 23/10 – Presidential election in Slovenia; Chinese Communist Party congress closes

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Thanks for reading. Please share this round, send us ideas and tell us what you think. Email sensemaker@tortoisemedia.com.

Catherine Neilan
@CatNeilan

Additional reporting by Giles Whittell, Jessica Winch and Phoebe Davis. 

Photographs Getty Images

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