In her first Prime Minister’s Questions, Liz Truss said that before she was anything else she was ‘on the side of people who work hard and do the right thing’. In response, Keir Starmer showed that Labour’s first task was to make clear that she was nothing of the sort.
And I suspect he will have the easier time of it. For a Prime Minister to portray herself as the faithful friend of Big Oil is – how to put this politely? – a ‘brave strategy’ at the best of times. It looks terrible when fuel prices and the national debt are in a race to see which can inflate the fastest.
As I wrote on these pages a few days ago, Labour will regroup after losing the sitting target of Boris Johnson. It will attack Truss for being in the pocket of big business and for taking risks with the nation’s finances. The opposition’s mingling of critiques from the left and right would not normally hang together. However, they make sense in the crisis of 2022.
Starmer began by pointing to the unconfirmed Treasury estimate that fuel companies will make £170 billion excess profits over the next two years. Why should they be allowed to keep money Vladimir Putin has effectively gifted them when working families suffer?
Under Truss’s plans, voters will have to pay for the cost of the subsidies one way or another
When pollsters last asked the question in May, 63 per cent of respondents supported a windfall tax – including a majority of Conservative voters. I suspect more would today. The money for the astonishing subsidies we must find to hold fuel costs down has to come from somewhere, why shouldn’t the energy giants pay their share?
For all her admirable support for Ukrainian resistance to Russian imperialism, Truss and an influential section of Conservative opinion still does not understand that we are at war with Putin. It may be an economic rather than a shooting war, but it is war nevertheless, and no wartime prime minister ought to have the slightest hesitation in requiring contributions from powerful conglomerates engaged in unvarnished profiteering.
It is foolish to make predictions on the first full day in the office of a new Prime Minister, but you can guess how Truss will suffer if she does not change course. Unlike Johnson in the covid crisis, she will not be able to count on the opposition endorsing her policy. Whatever other troubles he faced during the pandemic, the last prime minister did not have to worry about Labour, the Liberal Democrats and the SNP going for the fundamentals of his lockdown strategy in news broadcast after news broadcast, day after day.
Truss will be exposed. She will find herself under constant attack by rivals delivering a simple populist message: don’t make working people pay big business’s bills.
Now I don’t doubt Conservative readers nodded along to her response in the Commons that Labour just wanted to raise taxes, as it always did.
The charge may once have had force, but it doesn’t wash today. Under Truss’s plans, voters will have to pay for the cost of the subsidies one way or another – either directly through higher taxes or indirectly through jacked-up fuel bills. The question is not should there be higher taxes, but who should be taxed.
Nor do I imagine that all the businesses staring at incredible rises in their costs think it is somehow ‘anti-business’ for Labour to suggest that the energy companies should be required to pay back profits they have made at the expense of everyone else
Then we come to the money markets. They are not remotely concerned about the danger of windfall taxes deterring investment. What could push us from an inflation crisis into a full-scale financial crisis is their belief that the government is losing control of borrowing. Truss looks as if she is ready to confirm their fears. She is proposing to fund fuel subsidies with borrowing and then fund tax cuts with borrowing, in particular by failing to go ahead with a corporation tax rise proposed by the former chancellor Rishi Sunak.
Add in the new administration’s reckless willingness to risk a trade war with the European Union over Northern Ireland, and we could soon be at the stage where the financial markets would prefer a Labour to a Conservative government. Don’t raise your eyebrows too high. Advisers to Rachel Reeves, the shadow chancellor, are claiming that significant sections of British business already do.
As I said, it is churlish and foolish to damn a new Prime Minister on her first full day in office. But her defence of the beneficiaries of Putin’s war, her careless unwillingness to protect the public finances, and her indifference to the burdens the crisis has played on the majority of voters suggest that she has already made a monumental blunder.
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