The message the Tories want you to leave their conference with is that they are the party of prudence. The party of fiscal responsibility who will make the first ‘serious down payments’ on the size of the state, as shadow chancellor Mel Stride explained at a Spectator drinks reception last night.
Today, he will set out his plan to achieve that. Stride will ‘recommit’ his party to ‘fiscal prudence’ by announcing £47 billion in savings for the public purse. Those measures include:
- Welfare reforms that will include stopping claims from people with ‘low level mental health problems’ and foreigners and reversing any lifting of the two-child benefit cap to bring the welfare bill down by £23 billion.
- Cutting 132,000 jobs from the civil service to save £8 billion.
- Making £7 billion in savings from the foreign aid budget.
- Ending £3.5 billion on asylum hotels and £4 billion on council housing subsidy.
The Shadow Chancellor will say that his party ‘will never, ever make fiscal commitments without spelling out exactly how they will be paid for’. Great. Trouble is there remains a rather large and expensive herd of elephants in the room: pensioners.
In the exhibition hall of the Conservative conference in Manchester there’s a wall-sized sign celebrating the fact the Tories’ campaign against the winter fuel allowance cuts contributed to Keir Starmer’s u-turn. Defending a cash bung to the elderly – that many of whom do not spend on heating – doesn’t seem something the party of ‘fiscal prudence’ should be particularly proud of.
Then there’s the triple lock. The Tory/Lib Dem guarantee that the state pension will rise by the highest of inflation, wages or 2.5 per cent – now projected to be three times more expensive by the end of this decade than was originally planned – is a large part of why Britain seems to be heading for bankruptcy. But Stride, and his party, ‘remain fully committed’ to it. They do not have the political bravery to take something so generous away from their core voters. You perhaps can’t blame them, but it flies in the face of any claim to be the party that will get a grip on state spending when you’re not prepared to touch the largest part of the welfare budget.
In an attempt to deflect from that fact, and to win over the young, a Conservative government, Stride will announce, would give young people £5,000 National Insurance rebates towards the cost of their first home when they get their first full-time job as part of a plan to ‘reward work’. But that is little compensation given this generation will toil to keep growing payments to the retired that they have literally no chance of receiving themselves.
The Tories do have a path towards electoral salvation and they have correctly identified that it’s an economic one. With public spending up from 34 per cent of GDP in 1990 to a whopping 45 per cent of GDP this year, a tax burden at postwar highs, and twice the defence budget being spent on debt interest it’s very possible that come the next election we really do hit a fiscal crisis. The bond markets could finally say ‘no’ and, faced with a choice of a Labour party unable to get spending cuts past their backbenches and a Reform party making spending promise after spending promise, fiscal prudence from the Conservative party may become an attractive offer to a sufficiently large chunk of the electorate. But for that message to land it surely must be consistent. No exceptions.
The other problem is that whilst the message of spending restraint and shrinking a ballooning state is one the faithful in Manchester smile at, it requires disavowing the work of the previous three Conservative regimes. In tax and spend terms it could be argued Britain has been through five years of socialist government – from Boris Johnson’s lockdown furlough, to the billions Liz Truss spent on subsidising energy costs.
For the fiscal prudence strategy to work, the Conservatives would have to stand for a much small state with resolute commitment. It would mean proper austerity that touched everyone. Pensioners included. Taking that step to abolish the triple lock might seem like political suicide now, but waiting until the bond markets force Britain’s hand risks defanging the Tories chance to make the only claim voters might listen to come the next election.
Michael joined the Coffee House Shots podcast, with Tim Shipman and Lucy Dunn, live from Manchester – what did they make of Mel Stride’s speech?
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