Tory MPs must give the PM their full support

This week’s Tory conference could be the most febrile since the early 1980s, when the wets laid into Margaret Thatcher’s economic policy. Her famous retort, “You turn if you want to, the lady’s not for turning”, has been validated by history: her early budgets restored confidence in Britain, set us towards lower taxes, rising productivity and laid the foundations for the revival of capitalism. But in 1980 the Tories were 16 points behind Labour – a divided, far-Left party – and the economic situation was far worse than today, with mass unemployment.

There can be no doubting Liz Truss’s resolve either. Far from retreating in the face of extreme, hysterical political opposition, market turbulence and an even sharper decline in the opinion polls, she makes it clear in her interview with this newspaper today that there can be no alternative to her free-market medicine.

“The status quo is not an option,” she rightly explains: her mission is to arrest what she correctly describes as Britain’s “managed decline”. The UK is trapped in a death spiral of high taxes, low growth and now stubbornly high inflation, a hangover of the Brown era that none of her recent Tory predecessors truly managed or even sought to correct. Only a dose of shock therapy – some of it highly unpopular, such as the cuts to the higher rate of tax – can cure these pathologies. Her message and ideas are extraordinarily refreshing and welcome.

The PM is right that there can be no alternative. The Tories cannot preside over feeble growth, stagnant wages, deliberately low interest rates and a permanent cost of living crisis and hope to be reelected. Equally, zero growth and inflation of 10 per cent is not compatible with 1-2 per cent mortgage rates and any kind of economic stability: something had to give, and it has, in every economy in the world, including in America and Japan.

Ms Truss’s measures will improve economic growth, create jobs and lead to high wages and living standards. Yet none of this is to deny how badly last week went for the Government and its agenda: the markets descended into chaos and gilts have only been stabilised thanks to Bank of England intervention. Yes, sterling has bounced back. But the chaotic reaction, and the speed at which borrowing rates shot up, was the last thing Kwasi Kwarteng or any supporters of the reforms could possibly have wanted.

The good news is that, contrary to some hysterical pundits or those who seek to destroy the Tories, there is still time for the Government to regain control of the situation. The emphasis must now be on reassurance, communications and campaigning. Some forecasters, such as the Centre for Economics and Business Research, believe that the deficit will be much lower than expected because the tax cuts will reduce revenues by much less, and the cost of the energy bailout could end up a lot lower. The National Institute of Economic and Social Research believes that the mini-Budget will lead to positive GDP growth in the fourth quarter of this year and will raise annual GDP growth to around 2 per cent in 2023-24. The Government needs to sell its plan to every part of the global financial community, from economists to fund managers to investment bankers.

It must also clearly explain how its reforms are already helping the public, including with the cost of energy. Voters hate inflation, and most of the electorate actually wants higher interest rates. The Government needs to explain how it is helping savers and investors. It must also reassure those with mortgages that it remains committed to lower inflation and fiscal prudence, which will eventually keep a lid on yields. As to spending cuts, they shouldn’t just come out of the blue: they must be put in the context of Covid and the Russian war, and be carefully targeted to shield the poor.

It is vital that Tory MPs and members hold their nerve, and give Ms Truss her full support this week. There must be no plotting. These are difficult times, but a party united around the PM’s extraordinarily exciting pro-growth and antiinflation agenda could soon enjoy a resurgence in the polls.