James Forsyth

The Tories abandon fiscal conservatism at their peril

Truss is betting the house on growth. It's an almighty risk.

The Tories abandon fiscal conservatism at their peril
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And then there were two. Rishi Sunak and Liz Truss now go to the membership. There’s much talk today about how brutal this contest will be. Penny Mordaunt’s supporters were arguing this morning that people should vote for her to avoid pitting these two against each other. But that would be false comfort. The argument between Liz Truss and Rishi Sunak is one that the Tory party needs to have.

On one side stands Sunak, who I have known for many years. He cleaves to the old Thatcherite position that the first thing to do is to get inflation under control. He believes that you don’t get something for nothing: you can’t cut taxes unless you are controlling public spending. On the other side is Truss who wants £30 billion of tax cuts now, is promising no return to Osborne's austerity, and wants defence spending up to 3 per cent of GDP by the end of the decade. Truss’s argument is that growth will take care of things. It is a mighty gamble.

Fiscal responsibility has been the Tories’ anchor for years and it is a real danger for them to abandon it. If tough choices are not necessary, then Labour will tend to be better at offering voters what they want. For example, if the Tories can tell the public that the state will stop them from needing to sell their home to pay for social care and that no taxes will need to cover it, why can’t Labour do the same – and then some?

In the coming weeks, as ballot papers go out at the start of next month, the Tories will have to decide whether they want to remain the party of fiscal conservatism or not.