27.10.2022
Tories in a hole
Rishi Sunak may have been crowned by MPs, writes Eddie Ford. But he faces a near impossible task of uniting his chronically divided party, let alone solving the economic crisis
For a brief moment, the impossible almost seemed possible - Boris Johnson becoming prime minister again. But he did not have the numbers, of course, despite claiming the backing of 102 MPs and trying to get us to believe that he nobly stood down in the name of party unity, as pursuing the contest “would simply not be the right thing to do”.
As we know, not only did Johnson drop out of the race, but so did Penny Mordant - so the Tory grandees got the coronation they wanted, albeit after a bit of a scare. Almost surreally, Rishi Sunak is the third Tory prime minister in less than two months and the fifth in six years.
Clearly, it is not without significance that Sunak is the UK’s first British-Asian prime minister. Nor is it unimportant that he is the first practising Hindu to lead the country - his victory sealed during the Diwali festival, when worshippers pray to the goddess, Lakshmi, for prosperity and success. Indeed, many Hindus in India hailed Sunak’s victory as a moment of pride.
At the age of 42, he is the youngest prime minister in more than 200 years. A lot of records are being broken. Yet in many ways Sunak is a reversion to a clichéd Conservative type: he was head boy at a public school, then studied politics, philosophy and economics at Oxford - training ground for an astonishing number of Britain’s political elite.1 For good measure, he did a week’s work experience at Conservative Party headquarters and his economic policy has been described as being based on a Silicon Valley belief in the entrepreneur. For him, growth does not come from unfunded tax cuts - or expanding the role of the state, for that matter. Rather, it comes from creating the conditions for the private sector to grow. In that sense, you could regard Sunak as the most Thatcherite prime minister since the woman herself - despite being forced by the pandemic to introduce a ‘socialist’ measure like furlough and generally raise taxes.
As everybody knows, he is the richest man in parliament and is married to Akshata Murty, daughter of an Indian tech billionaire - the two of them having a combined fortune of £730 million. No cost-of-living crisis for them, as they splash around in their £400,000 swimming pool.
In an extremely brief public statement on October 24, Sunak told the Tories to “unite or die” - saying he would put an end to the party’s psychodrama and focus on “policies, not personalities”, hardly an original thought. MPs who spoke to Sunak over the weekend said he was not prepared to make any spending commitments - including on defence, which the departed Liz Truss had promised to increase. Sunak went on to say the country would “face a profound economic challenge” and therefore what is urgently needed is stability - he promised to make it his “utmost priority to bring our party and our country together”.
When speaking earlier to Tory MPs in private, he was even franker about the challenges ahead - talking about the “existential threat” to the Conservative Party from the fallout of the last months of economic turmoil. This is no exaggeration, when you look at recent polls, some of them having Labour on just over 50%, with the Scottish National Party becoming the official opposition - not the Tories. An extraordinary development, even if it is only a poll and not an actual vote. Sunak has no intention of holding a general election, of course, but, when it happens, a Labour landslide is quite conceivable, at least as things stand now.
According to one of Sunak’s key allies, former home office minister Victoria Atkins, he will return the party to the policies of the 2019 manifesto - focusing on ‘levelling up’, ‘combating crime’ and continuing with the type of legislation started under Boris Johnson. But has he told this to Jeremy Hunt? The chancellor has talked about making “eye-wateringly” difficult decisions to fill the financial black hole - like raising taxes, huge cuts in public spending and a return to austerity, even if this time it would apparently be done in a “compassionate” way. This is not what people voted for in 2019, especially in the so-called Red Wall seats, and is guaranteed to be deeply unpopular - in turn making a Labour victory even more likely.
Sunak has now completed his reshuffle with the stated aim of bringing the various factions together in one cabinet - quite a task. He immediately booted out Jacob Rees-Mogg and Brandon Lewis - both widely regarded as wildly incompetent. Three of the top jobs went to current office holders: Jeremy Hunt as chancellor, James Cleverly as foreign secretary and Ben Wallace as defence secretary. Both Wallace and Cleverly are supporters of Boris Johnson, so keeping them in place is seen as an olive branch to some of the senior MPs who did not back Sunak. Michael Gove returns as levelling up secretary, a position he held under Boris Johnson. Of course, Gove - along with the new business secretary Grant Shapps - were key organisers of the rebellion against Truss’s plans to cut the top rate of tax for the highest earners.
Perhaps the most noticeable decision was the reappointment of Suella Braverman as home secretary only weeks after she was forced to resign for a security breach - a move widely interpreted as “payback” for her endorsement of Sunak, when Johnson still threatened a comeback during the leadership race last week.
Very roughly speaking, the new cabinet could be described as a Tory coalition encompassing senior figures from the left, right and centre of the party. We will find out fairly soon whether it is built on sand, when the prime minister and chancellor start making “difficult decisions” on the economy, swingeing energy bills and much higher prices for basic foods. Showing the severity of the crisis, on October 26 it was announced that the Halloween fiscal statement - designed to stop the markets going into another downward spiral - will be delayed until November 17. Sunak has a very bumpy ride in front of him.
Judgement
Returning to Liz Truss, why did she last only 49 days? Socialist Worker thinks it has the answer: “The bankers used their power against Liz Truss” (October 18). This is surely wrong. We had a mini-budget that promised to abolish the cap on bonuses for bankers in the City of London, abolish the 45p top tax band, with handouts galore - the richer you were, the more you were going to benefit. You would have thought a banker would have welcomed Kwasi Kwarteng’s fiscal event - not turned against it.
It is a mistake to talk, like Socialist Worker, about the power of bankers - Marxists have to deal with a higher level of abstraction - meaning going back to capital (see Paul Demarty’s article opposite). Marx talked about capital being the real god of bourgeois society, by which he meant not simply that individual capitalists worship capital: but capital takes on the form both of being the master of the individual capitalist (including individual bankers), but also possessing an ‘independent’ nature in its own right. It is like a vampire that is never satisfied with sucking surplus value out of the immediate producers. It is driven by self-expansion - which includes forcing, or attempting to force, wages down towards zero, but at the same time wanting to expand consumption.
In other words, it was capital that oversaw the judgement on Kwarteng’s mini-budget, not individual capitalists or bankers. What we actually had with the Liz Truss experiment was £100 billion in terms of the energy price cap guarantee, plus £40 billion in unfunded tax cuts. Basically the judgment of the market - capital - was that such an economic policy was completely unfeasible, given the current circumstances, despite all the fantastic claims from Truss and Kwarteng that it would lead to 2.5% annual growth rates, and so on. Capital judged that unfunded borrowing on such a scale would actually lead to economic contraction. Hence the panic that saw the drop in the pound, rising interest rates in terms of government gilts or bonds, etc - and a speedy Bank of England intervention to stop a financial meltdown.
Kwarteng was removed by the prime minister, even though he had been her right-hand man for years, to be replaced as chancellor by ‘Mr Sensible’ in the shape of Jeremy Hunt - who publicly humiliated Truss by reversing almost every single key measure in the mini-budget. You did not have to be a genius to work out that Truss was finished from that point onwards. Everyone knew it - it was just a question of when, not if, and it was always going to be sooner rather than later. It was not politically possible to have a prime minister sacking a chancellor despite agreeing with everything he said and fully signing up to his mini-budget - logically she was sacking herself. It was an absurd situation that was especially compounded by the fact that Truss said she “approved” of Hunt’s financial statement, even though it completely trashed the previous budget which she also approved. Yet we all know that the original idea was to have tooth-and-claw trickledown economics, regardless of the disastrous results every time it has been tried. With her plans completely rejected by the market and therefore most of her MPs, she could not carry on as prime minister. To put it another way, Liz Truss was not forced out by a bankers’ plot.
It is worthwhile remembering that, at the time the mini-budget was delivered, the head of the Confederation of British Industry - not a banker, but head of industrial capital - thoroughly endorsed it because as an individual he believes in trickledown, tax cuts, incentives for the rich, etc. But, no, as we have seen, capital as a thing had a different judgement. It is not just a question of individual bankers in the City of London, New York, Hamburg, etc - it is a global system which passed judgement on Liz Truss and the mini-budget.
This fiasco poses an interesting counterfactual. Okay, a million to one possibility, but what if Jeremy Corbyn had won the 2019 election and John McDonnell had delivered a ‘radical’ budget? Exactly the same judgement that happened to Kwasi Kwarteng’s mini-budget - except that the actual personifications of capital (political representatives and state actors) would have got in on the act to derail and crash the British economy within days. Not only would the market have delivered its verdict on such a budget: so too would Mike Pompeo, the CIA, MI5, the media, etc. The fact of the matter, however, is that there was no possibility of a Jeremy Corbyn government; but if we stretch our imagination, bearing in mind what happened to the Kwarteng budget, we would have seen such a reaction from the market a thousand times over to a left-reformist government - whatever McDonnell is now saying about how he would have avoided such a situation.
He is either a fool or a liar, but I suspect the former.
eddie.ford@weeklyworker.co.uk