BIRMINGHAM, ENGLAND - OCTOBER 05: Prime Minister Liz Truss speaks during the final day of the Conservative Party Conference, on October 05, 2022 in Birmingham, England. This year the Conservative Party Conference will be looking at "Getting Britain Moving" with more jobs and higher salaries.  (Photo by Jeff J Mitchell/Getty Images)
UK PM's budget balancing could push more Britons into poverty
03:00 - Source: CNN
London CNN  — 

Spare a thought for British Conservative members of parliament.

The governing party of the United Kingdom thought they had it bad with scandal-stricken Boris Johnson wrecking their poll numbers and turning what was once called the natural party of government into an exploding clown car.

But having spent an enormous amount of energy removing a reluctant Johnson from office this summer, exhausted MPs say his replacement, Liz Truss – just 37 days into the job – seems hellbent on making the bad situation worse.

After her mini-budget – which proposed unfunded tax cuts, huge government borrowing and let energy companies off from a windfall tax – sent the pound tumbling and caused all manner of wider economic chaos, they are faced with the grim reality of having a leader they deem to be more damaging than Johnson but will be even harder to replace.

On Friday morning, Truss’s finance minister, Kwasi Kwarteng, flew back from the US earlier than expected, fueling speculation that the government is braced to make a humiliating u-turn on tax cuts and that Kwarteng is at serious risk of losing his job. Downing Street also said Truss would hold a press conference later in the day.

“Even if you think she’s awful, we can’t replace her this soon,” a former cabinet minister and Truss supporter tells CNN. “I am not optimistic about the future, but we need to try and ride this out and learn from the mistakes.”

The mistakes in question were, most MPs agree, terrible communications from the government and trying to do too many things too fast, without being adequately funded.

“They committed to huge spending, rightly, to help people with energy bills, then immediately started talking about tax cuts,” a senior Conservative says. As a result, they are not “even getting credit for spending a load of money. When you announce policy like this you have to roll the pitch like mad. Why didn’t they roll the pitch?”

In a meeting with her backbench MPs on Wednesday night, Truss was urged to reverse elements or in some cases wholesale reject the controversial mini-budget that Kwarteng, presented just three weeks ago.

The government was forced to U-turn on one of the most controversial aspects of the mini-budget, a cut in the top rate of tax, just over a week after it was announced, despite Truss having defended the policy mere hours before the announcement.

She defended her economic policy, which left the room feeling “like a wake” and “horrific” according to one MP present.

Liz Truss and finance minister Kwasi Kwarteng have faced weeks of pressure following the mini-budget.

“Nobody cared what she said because they didn’t think she can do anything sufficient to fix the problems she now embodies. And yet she managed to make it worse,” says another MP who was at the meeting.

Truss has defended her government’s policies as the best way to promote growth and investment in the UK economy. She believes that cautious economic orthodoxy has prohibited growth for years and that her tax cuts will lead to a boom in inward investment.

That argument might seem odd to those who followed the actions of the Bank of England, who had to buy up huge amounts of government debt in order to stabilize markets. The program of buying debt is set to end on Friday, but there is speculation that the program will continue and that the government might further u-turn on its own economic policies.

The misery among Conservatives has snowballed for many, who now feel that losing their seats and the next general election is the most likely outcome.

“Anyone who thinks Truss can unite the party is absolutely delusional,” says a senior party adviser. An influential former government aide told CNN that even MPs with large majorities have started approaching them for career advice.

What can Conservatives do?

While getting rid of Truss – the Conservatives fourth leader in just over six years – seems very unlikely in the short-term, it is being discussed as a real possibility for the medium-term. Minds are currently focused on October 31, when Kwarteng will present a fiscal plan, explaining how he intends to balance the measures announced in the mini-budget.

“Ignoring the insane optics of doing this on Halloween, if they can present something coherent that calms markets then I think we have a bit of breathing space and can try to ride it out,” an influential Conservative backbencher told CNN.

But if Kwarteng fails to settle nerves, things could turn very fast. It is possible that MPs will call for him to be sacked. However, doing so could also be dangerous for Truss, who is ideologically tied to her Chancellor to such an extent that cutting him loose would be a tacit acceptance that she too has failed.