The ritualised confrontation of Prime Minister's Questions on Wednesday will be a test of nerves for Liz Truss, who has been in power for precisely five weeks, in what is possibly the most tumultuous start to a Downing Street tenure yet.
Her position has already been undermined by a half-hearted coup plot after a uneasy Conservative Party conference that included a climbdown on ill-advised tax cuts for the highest earners.
Other tax giveaways have still to be costed and there are calls to raise benefit payments in line with inflation, alongside arguments over fracking, immigration and Northern Ireland among her increasingly unhappy MPs.
Ms Truss faces MPs for the first time since Chancellor Kwasi Kwarteng’s £43 billion ($47.3bn) mini-budget tax giveaway unleashed chaos in the financial markets.
Tories returned to Westminster in a restive mood after the break for the party conferences, with their ratings tanking in opinion polls and economists questioning whether Mr Kwarteng’s plans are sustainable.
There was further turmoil on Tuesday after the Bank of England announced that its emergency support operation to protect pension funds would end this week.
Earlier, the bank intervened for the second time in as many days to buy up government bonds, warning of a “material risk to UK financial stability” with “fire sales” of assets if did not act.
But speaking in Washington, the governor of the bank, Andrew Bailey, said there could be no further support beyond Friday and it was up to the funds concerned to rebalance their holdings.
Liz Truss timeline
“My message to the funds involved ― you’ve got three days left now. You have got to get this done,” he said.
After his comments sterling fell back again against the dollar.
Meanwhile, Mr Kwarteng had to endure a further dose of criticism from the International Monetary Fund (IMF) which said that his package of unfunded tax cuts was making it harder for the Bank of England to get soaring inflation rates under control.
The turbulence has been deeply damaging for the Conservatives, with polls suggesting that they face a wipe-out at the next general election. Opposition leader Sir Keir Starmer has taken the threat of a Tory collapse and early general election seriously, on Tuesday appointing a new chief of staff to head Labour’s campaign.
With her generous tax cuts, Ms Truss has taken a huge punt that economic growth will cause interest rates and inflation to drop, confining the current ructions to distant memory.
Ms Truss’s further gamble is that her unpopular policies on house planning, immigration and worker reforms will boost growth, providing higher-paid jobs with greater tax receipts.
If she fails, she is unlikely to survive a year in office. Waiting patiently to benefit from that is Mr Starmer, who will seek to inflict further wounds on the Truss administration at Prime Minister’s Questions on Wednesday.
His targets have grown considerably since Ms Truss’s previous PMQs, the day before Queen Elizabeth II passed away. The National has spoken to backbench Tory MPs for their views on the hurdles that lie ahead.
It’s the economy …
The British generally regard the Conservatives as the party to trust on the economy, but the shock waves from Mr Kwarteng’s tax-cutting mini-budget on September 23 are still being felt.
Interest rates have led to surging mortgage repayments for home owners, and about 1.8 million householders whose fixed-rate mortgage deals are coming to an end in the coming months, the Bank of England is trying to shore up pension funds by spending billions, and there is no sign that inflation running at 10 per cent will ease.
Mr Kwarteng has chosen the inauspicious date of October 31 — Halloween — to outline how he will pay for the tax cuts, with the Office for Budget Responsibility also giving its verdict.
That announcement, brought forward by three weeks, has yet to calm the jittery markets but will be a key moment to propel Ms Truss’ bid for growth of 2.5 per cent in gross domestic product.
Given global turbulence that could prove optimistic.
“It's not happy state of affairs but I actually think the thrust of the government's direction is correct,” a leading backbench MP told The National. “The problem is how Downing Street is getting across its thinking and selling it to MPs.”
Rural blues
Ms Truss railed against the “anti-growth coalition” in her party conference speech, giving herself political headroom to push through housing reforms. This includes designating investment zones where loose planning rules and tax breaks will aim to encourage investment.
Similarly, she wants to restart fracking to meet energy demands, something that could also infuriate her base.
A rural MP told The National that the proposal could awaken a “hornet's nest of rural organisations which are stuffed full of Conservative supporters”, from the Royal Society for the Protection of Birds to the National Trust.
“I've had literally dozens and dozens of emails from constituents who really don't want that, so this issue will be coming very much to the fore,” the MP said.
More workers, more growth
Another poke at the “anti-growthers” was the prime minister’s determination to relax visa restrictions to allow in more foreign workers. But stridently anti-immigration Home Secretary Suella Braverman opposes the plans given the record numbers of asylum seekers already crossing the English Channel, leading to another potential conflagration.
“Suella has got a bit of an argument going on with Number 10 at the moment over this,” one backbencher said. “She also wants to review our participation in the European Convention on Human Rights that causes us a lot of difficulties so there’s a bit of a battle between the home secretary and the PM.”
Northern Ireland breakthrough
With risks come reward, and that is what Ms Truss will be hoping for by engaging with the European Union in a more constructive fashion than her predecessor, Boris Johnson.
That could help the government resolve the Northern Ireland Protocol, concerning the EU border on the island and importation of goods, with a new agreement that will avoid a trade war with the UK’s biggest trading partner. But if the PM concedes too much to Brussels she will upset the Unionists and Brexiteer MPs.
“They don’t seem to be communicating terribly well on this,” said a hardline Brexit MP. “The protocol is bubbling up with the suggestion the government may well be making concessions to the EU on jurisdiction, which will go down very badly indeed with people such as me, because the whole purpose of leaving the EU institutions, but most particularly the European Court of Justice, was over regaining our sovereignty.”
Benefits in line with inflation
In the last week another issue has emerged, with leading Conservative MPs demanding that the benefits paid to the unemployed should increase in line with inflation, a promise made by Mr Johnson. But Ms Truss is in favour of keeping them in line with average earnings, saving the government about £6 billion.
With some in her Cabinet demanding the inflation rise she may well concede, but that will bring its own “political problems”, one of the MPs said.
“Then you will find that people who are working and not getting inflation-linked pay increases, such as teachers, will get very cross with the government and that could be problematic.”
Polls and MPs
Ms Truss’s conference speech bought her some time and space to enact the reforms in which she believes, and if Britain achieves 2.5 per cent growth many of her problems may ebb.
But her MPs' concerns explain why the Tories trail Labour by at least 30 per cent in the polls, why Mr Starmer is putting his party on an election footing and why Conservative MPs are fretting about losing their jobs.
“The prime minister needs to listen to some wise council,” said one of the MPs. “That’s the issue, there has been too much impetuosity and too much anxiety to make a splash.”
