The scale of Chancellor Kwasi Kwarteng’s task to fix the British economy while convincing his own voters is vertiginous and could be beyond reach, given the muted reaction to his speech at the Conservative Party conference on Monday.
While the markets might have modestly corrected following the turmoil induced by his mini-budget, it is evident that the British chancellor faces a mountainous task in convincing core Conservatives, as the not-quite packed main theatre at the party's annual conference in Birmingham failed to ignite with applause.
The tone was set when Prime Minister Liz Truss entered the auditorium to restrained clapping with at least three quarters remaining seated. It was a raw comment on the poor light in which the government is viewed by its own party, let alone the wider electorate.
Mr Kwarteng’s announcement 11 days earlier of dishing out bountiful tax cuts without them being funded or thought through has been a disastrous start for the post-Boris Johnson administration. One outcome has been some homeowners — who are largely Conservative voters — having their monthly mortgage payments double in the past week.
To some extent the government’s about face on restoring the highest tax bracket to 45 per cent back from 40 per cent had removed some of the toxicity of the highest earners getting the biggest reward.
“What a day,” Mr Kwarteng opened after striding on to stage to a noticeably sedate audience.
“Turbulence — I get it,” he later quipped. There was polite laughter but also glances at phones that showed after a week of plunging prices, there was at least some stability in the FSTE 100 and the pound.
Mr Kwarteng had no option other than to be undaunted by the lukewarm welcome, knowing that failure to turn the economy around in the next few months will cause Conservative support to plummet.
“To grow the economy, we need to do things differently,” he stated without irony.
“We will get Britain moving,” he insisted, repeating the Conservative’s rather insipid slogan.
He made great play of his grand announcements in cutting income tax, corporation tax and national insurance but the applause remained muted.
The front row of Cabinet ministers, including Ms Truss, tried to clap furiously but the humiliation began to tell as few of the 1,000 or so supporters behind followed suit.
But they did come alive when he mentioned the European Union. EU laws had been “holding the country back”, said Mr Kwarteng while promising to “break down the barriers”. The red meat to the party of Brexiteers was duly accepted, but it was a fleeting moment of rapture.
The question is, how credible are the new government’s promises? The great tax giveaway would lead to 2.5 per cent growth in gross domestic product, he insisted.
“We’ve done it before and we will do it again,” Mr Kwarteng said. “Wow!” cried a lone heckler in disbelief.
The unfunded tax cuts — which rely substantially on massive borrowing — are a huge risk, something that business leaders in the audience fully understood.
“This is all very un-Conservative,” one muttered audibly.
Two businessmen who are long-time Conservative supporters spoke to The National before Mr Kwarteng's speech about what they wanted to hear.
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British Prime Minister Liz Truss speaks at the ruling Conservative Party's annual conference in Birmingham. Reuters -
Attendees take their seats before the keynote speech by Ms Truss. Bloomberg -
Chancellor of the Duchy of Lancaster Nadhim Zahawi speaks. PA -
Prime Minister Truss and her husband Hugh O'Leary arrive for day four of the Conservative Party conference. Getty Images -
A delegate wears a red 'Make Britain Great Again' cap. Getty Images -
A member of the audience wears socks with Union Jack colours. Reuters -
Liz Truss and Chancellor of the Exchequer Kwasi Kwarteng visit the construction site of a medical innovation campus during day three of the Conservative Party conference in Birmingham. Getty Images -
Foreign Secretary James Cleverly arrives at the conference. Reuters -
Former home secretary Priti Patel speaks in Birmingham. Getty Images -
A delegate is pictured with a bag displaying pictures of former Conservative prime ministers Benjamin Disraeli, Winston Churchill, Boris Johnson and Margaret Thatcher. AFP -
Mr Kwarteng delivers a speech on day two of the annual Conservative Party conference in Birmingham. Getty Images -
Liz Truss, Chancellor of the Duchy of Lancaster Nadhim Zahawi and Secretary of State for Health and Social Care Therese Coffey listen to Mr Kwarteng speak. Reuters -
Ms Truss arrives for the Conservative Party Conference. EPA -
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Refugees present Tory delegates with 'one-way tickets' to Rwanda during a protest outside the Conservative Party annual conference. PA -
Business, Energy and Industrial Strategy Secretary Jacob Rees-Mogg laughs as he arrives. EPA -
Ms Truss and Mr Kwarteng chat at the opening session of Conservative Party conference in Birmingham. EPA -
A protester demonstrates outside the annual autumn conference. Bloomberg -
Mr Kwarteng gives a TV interview. Reuters -
Protesters march with placards at a demonstration in Birmingham against the Conservative government as the party's conference started in the city. Bloomberg -
The prime minister and members of her Cabinet sing the national anthem at the opening session. EPA -
Penny Mordaunt, Leader of the House of Commons, pays tribute to Queen Elizabeth II. PA -
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Former British prime minister Boris Johnson is reflected in Mr Kwarteng's glasses. Reuters -
A protester holds a placard condemning the chancellor. Bloomberg -
Ms Truss arrives at the conference. Bloomberg -
Delegates take a break outside the venue on the opening day. AFP
“We want to hear a clear path to fiscal prudence,” one said. “They need to plan the growth properly. You can’t just turn on the taps and expect it to flow.”
His friend nodded in agreement, understanding that the impact on the party’s core reputation was based on responsible economics.
“Once you have lost trust, it’s a lot harder to win it back,” he lamented.
As the speech came to an end, the lukewarm applause returned.
“It was very short on detail,” said the first businessmen. “But reducing the corporation tax will help, so those things actually are really good.”
His friend agreed while also bemoaning the lack of detail.
“I thought that we were going to get more substance although I think he did reasonably well,” he said. “But he’s got 100 days to get the detail through and you could tell by the lack of applause that he didn’t fully convince. It’s now just a question of ‘wait and see’”.
Ms Truss will hope that her own MPs and party give her the time to prove her economic gamble rests on solid foundations. If not, her party faces electoral demise, potentially for many years.
She will hope, too, that there will be a good deal more alacrity in supporters jumping to their feet when she makes her speech on Wednesday morning. If she can electrify her audience, then her government may well start the long climb out of the foothills of economic descent.
