UK General Discussion: Rishecession

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When the media are using terms like “lowest value since the days of Pitt the Younger”, you might have made a slight miscalculation.

And in the middle of Labour Conference too - giving the opposition a chance to respond in real-time, in news-ready clips in front of a supportive audience.

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And in the middle of Labour Conference too - giving the opposition a chance to respond in real-time, in news-ready clips in front of a supportive audience.

Shadow Chancellor's speech today as well lol.

Now that’s some timing. Wonder how many last-minute changes Reeves and her team have made this morning…

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Of all the articles that have been written on UK politics this year, Matthew Lynn’s Spectator piece last month might age the worst. The first paragraph:

Who is Sunak kidding with his warnings about sterling?
There will be a run on sterling. The gilts market will be in freefall. And the FTSE will tumble as global investors take fright and sell off every form of British asset. It might take only a few days, or the government might stagger through until the end of September, but before long Liz Truss and her new Chancellor Kwasi Kwarteng will have been forced to call in the IMF to stabilise a collapsing economy. That is, at least, according to the former Chancellor Rishi Sunak. With just a few desperate days left in his doomer leadership campaign, he has declared his opponent's tax and spending plans so wild and reckless they risk a full-blown sterling crisis of the sort we have not seen since the 1970s.

https://amp.spectator.co.uk/article/rishi-sunak-s-petulant-attempt-to-start-a-run-on-the-pound/amp

Sure, we aren’t about to call in the IMF - but man, the schadenfreude.

[Torrain]

Of all the articles that have been written on UK politics this year, Matthew Lynn’s Spectator piece last month might age the worst.
https://amp.spectator.co.uk/article/rishi-sunak-s-petulant-attempt-to-start-a-run-on-the-pound/amp

Sure, we aren’t about to call in the IMF - but man, the schadenfreude.

Yes.

He tweeted this

https://mobile.twitter.com/telebusiness/status/1574353295413501952
Which makes me fear this will now happen.

Man. I had a brief skim of the article, and it's almost impressive how inconsistent it can be, while retaining a staggering level of self-assurance. To summarise:

• The Kwarteng budget will drive growth.
• Growth will be popular
• It might lead to a bust
• It probably won't because the fundamentals are OK
• But it might.
• Turkey is a good example
• Scratch that, Turkey is a bad example
• Eh, Truss will probably lose the 2024 election anyway, so none of this matters.

The Telegraph is such a frustrating paper - competent at investigative journalism, and basically c**p at most other stuff.

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UK's Virgin Money, Skipton temporarily withdraw mortgage products - emails to brokers
British lenders Virgin Money and Skipton Building Society on Monday temporarily withdrew their mortgage ranges for new customers because of the volatility in sterling funding markets, according to emails sent to brokers.

"Following a number of changes in the market, we have made the decision to temporarily withdraw all our products for new customers at 8pm tonight," Virgin Money said in its email to brokers, seen by Reuters.

Everything is fine. It's only 3.6 roentgen. Not great. Not terrible.

[Torrain]

Polling over the past few days has been quite something. Since the weekend, we've had polls from Redfield & Wilton, Deltapoll and YouGov, who poll weekly or biweekly. All have Labour at 44-45% and the Tories on 28-31%. Redfield's 13% lead is the largest they've recorded for Labour, as is YouGov's 17% lead.

This parliament has been an odd one for polling. A post-election honeymoon for the Tories built into a historic lead, thanks to a COVID bump. That lead dissolved after their first round of PPE contract scandals, and the first whispers of partygate around Christmas 2020. They recovered as the vaccine programme got underway (and benefitted as Labour had a terrible summer with the Hartlepool by-election), but the Matt Hancock debacle heralded a polling decline only sped-up by the resurgence of partygate.

The Tories haven't recovered the lead since last Christmas, and any hopes for a new-PM bounce seem to have evaporated. Short of an out-of-nowhere conference bump, it looks like we're settling into an extended period with Labour in the lead.

It's big turn-around compared to polling in the last few cycles. Corbyn never took a consistent lead over the Tories (basically trailing throughout his leadership), and while Milliband led in the aggregate for much of the coalition years, his leads were often only a few points over the Tories, and melted away during the election.

I guess it could be a mirage - Kinnock soared ahead as Thatcher's premiership collapsed, falling back to parity with the Conservatives as Major established himself. But Major was elected to steady the ship - Truss was elected to "run fast and break things". And like all PMs, Truss is likely to become less popular over time, not more.

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In less serious news, I'd like to bring you all what is perhaps the worst hot-take of the week. You've heard Tories blame poor economic performance on "the last Labour government". But are you ready for pundits blaming *drumroll* the next Labour government?

https://twitter.com/andrew_lilico/status/1574533068626579463

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The IMF have taken the rare step of issuing a written intervention - which even reporters at the  BBC have described as “a humiliation”.

We are closely monitoring recent economic developments in the UK and are engaged with the authorities. We understand that the sizable fiscal package announced aims at helping families and businesses deal with the energy shock and at boosting growth via tax cuts and supply measures. However, given elevated inflation pressures in many countries, including the UK, we do not recommend large and untargeted fiscal packages at this juncture, as it is important that fiscal policy does not work at cross purposes to monetary policy. Furthermore, the nature of the UK measures will likely increase inequality. The November 23 budget will present an early opportunity for the UK government to consider ways to provide support that is more targeted and reevaluate the tax measures, especially those that benefit high income earners.

In response, the Treasury released the following:

"We have acted at speed to protect households and businesses through this winter and the next, following the unprecedented energy price rise caused by Putin's illegal actions in Ukraine. Our Energy Price Guarantee saves households £1.000 on average and we're halving business energy bills through the Energy Bill Relief Scheme.

"We are focused on growing the economy to raise living standards for everyone and the Chancellor has announced he will publish his Medium-Term Fiscal Plan on 23 November which will set out further details on the government's fiscal rules, including ensuring that debt falls as a share of GDP in the medium term.

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Errr…

https://twitter.com/edconwaysky/status/1575128310740389889?s=21&t=7-GH7t0gSXZKOTyW_3MDiQ

How the hell has Truss crashed the economy and investor confidence this fast? When Cummings referred to Truss as a human hand grenade, he was right on the money.

[Torrain]

As you'd imagine, this absolute charade has had a detrimental effect on Tory unity. And, far from the discipline we've seen from Labour over the past week, most Tory MPs seem to either be venting their anxiety on Twitter, or briefing against the PM to their local journalist.

A small selection:

• Backbench MP Simon Hoare has directly compared the situation to Black Wednesday (the last run on sterling, for those playing the home game), ending with "This inept madness cannot go on."
• Former Chief Whip Julian Smith has responded to Lord Frost (a brexiteer ally of the PM) downplaying the crisis by screaming into the void.
• Government ministers are briefing that Kwarteng is about to be fired.
• Party Whips are calling around to see if they can get any Sunak supporters to attend party conference

Anonymous hot-takes from the backbenches:

• "Politically this is extinction level for us. It's all over"
• "There's a vacuum of leadership and empathy"
• "This is like 2008 but worse. We’re messing with the very fundamental principle of providing a home for your family. That’s why it’s different: it’s real stuff"
• "It is actually incredible that the UK central bank has had to step in to protect the UK from the actions of the UK's own government! I mean, just think of that for a moment!"
• "I don't think is sustainable. I predict the Chancellor will get the sack and it will unravel from there."
• “We are just a protectionist racket right now - a gang of marauding ambition - not a serious party”.

And Truss hasn't spoken publiclly in six days. Can't believe I thought things would settle down once Johnson resigned.

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Liz Truss is basically what happens when you combine the introverted awkwardness of Theresa May, the complete incompetence of Boris Johnson, the hatred of poor people of David Cameron into one Margaret Thatcher wannabe and then remove all residual charisma with an industrial strength garden hose.

In simpler terms, she’s got Ted Heath’s awkward personality, with Heath’s terrible luck, and Heath’s economic incompetency. We can only hope that, like Heath, she’ll call an early election in desperation, and accidentally lock herself out of power.

[Torrain]

The BBC have stitched together the Truss interviews into a single podcast, for those who are interested:
https://www.bbc.co.uk/sounds/play/p0d3flmh

Apologies to non-UK posters, it'll be region-locked to here, like most online BBC content.

Edit - here’s a 10 minute supercut of the highlights/lowlights: https://m.youtube.com/watch?v=_q0rlT-5oxE

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https://mobile.twitter.com/BritainElects/status/1575522731101245440
https://mobile.twitter.com/Survation/status/1575522804644007941

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It’s such an absurd lead that if you plug the numbers into a seat predicting tool, it basically breaks the system, and produces insane maps that look like this:

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Truss keeps telling us she wants to be Thatcher, but maybe she’s been a Kim Campbell tribute act all along.

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Poetic justice - thy name is Sunak.
https://mobile.twitter.com/peterfranklin_/status/1575530158899052546

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Remember Truss told us she wanted to hit the ground from day one? The monkey’s paw is delivering…https://mobile.twitter.com/ElectionMapsUK/status/1575795008711831553

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This has to be some sort of record, surely.

Source:
https://yougov.co.uk/topics/politics/survey-results/daily/2022/09/30/fee3a/1
https://yougov.co.uk/topics/politics/survey-results/daily/2022/09/30/fee3a/2

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It’s notable that the insane Labour lead is no longer “a single poll”, but a trend replicated across most of the mainstream polling trackers:
https://mobile.twitter.com/ElectionMapsUK/status/1575874214170484737

For context, the Wikipedia polling aggregate now looks like this:

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https://twitter.com/lewis_goodall/status/1575894055636160515?s=20&t=E-Yan0OFI7weC3rkXyJFUA

Would this constitute loss of supply or is this too minor an issue to meet that standard?

There’s not a simple answer to that… I can try and give an outline, but it’ll be fuzzy around the edges.

The Commons voting down the Trussenomics package wholesale (with the final vote killing the bill) would likely represent a loss of confidence. That would require at least 35 Tory MPs torpedoing their careers, and breaking a three line whip, in the knowledge that they would likely be deselected, which would be unprecedented. If that were a possible outcome, Truss wouldn’t call a vote on it in the first place.

The Goodall proposal probably isn’t that though - here an amended version of the package, stripped of the least popular Kwarteng proposals via bipartisan amendments (likely sponsored by a Tory grandee to avoid procedural issues) would be passed by the Commons. That’s still wild, but at least half-way plausible.

An amended budget would be humiliating for Truss, but wouldn’t necessarily be read as a loss of confidence (May arguably suffered worse defeats). Westminster will however be very febrile if the Government can’t pass an unamended budget, so things could start moving pretty fast, and produce some extreme outcomes.

Please - take all of this with several pinches of salt. Financial procedure in the Commons is notoriously complex, and I don’t have a copy of Erskine May to hand, so this might be full of holes. If anyone’s got a better idea of the conventions here, I’m more than happy to eat crow (again).

*

One final point. While financial bills and King’s Speeches are defacto confidence motions, any bill can be turned into an official confidence motion, as a nuclear option to get it passed. John Major famously turned the Maastricht Treaty bill into a confidence motion to force his MPs to vote for it. If Truss bundled the measures into a single bill, with a confidence rider added, she would get enough votes to pass it by default (see Xahar’s comment about turkeys voting for Christmas), but sacrifice a ton of political capital, and the final shreds of political goodwill left.

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Jesus. There were some polls showing up to 55%?

YouGov has Labour on 54% and Omnisis has Labour on 55%

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Breaking: Labour conference has endorsed proportional representation.

It will never happen unless there's a hung parliament, and then only maybe. Otherwise, the neo-Blairites will just party like it's 1997 again.

A Lib-Lab confidence and supply agreement (or formal coalition) is the only election outcome that favours a move to PR. That was a fairly plausible 2024 outcome for a while (arguably the median outcome for a few months), but seems more remote now.

[Torrain]

Simon Clarke, Secretary for “Levelling Up” and Housing has given a rather choice interview to the Times.

He says: “My big concern in politics is that western Europe is just living in a fool’s paradise whereby we can be ever less productive relative to our peers, and yet still enjoy a very large welfare state and persist in thinking that the two are somehow compatible over the medium to long term.

“They’re not. We need to address that precisely because in the end, if we want those strong public services then we are going to have to pay for them. I think it is important that we look at a state which is extremely large, and look at how we can make sure that it is in full alignment with a lower tax economy.” Put simply, Clarke is making the case that tax cuts need to be matched by significant cuts in public spending, particularly the welfare budget.

I’m not sure which part of this is most ill-judged, politically. Is it the part where he argues that we have to slash the remaining welfare state to afford these tax cuts, which make materially little benefit to the average Brito ? The part where he suggests that the past decade was a “paradise”? Or just openly calling the voters fools.

All in all, the full interview essentially boils down to “get ready for a new age of austerity” which is perhaps the most audacious line to take, in the face of the current political situation, and the self-inflicted wounds of the past week.

https://www.thetimes.co.uk/article/3af81bca-40e4-11ed-a7af-c587dcb7526e?shareToken=ed55fa6281e9a2a98250588e9239b5fc

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Opinium have 23% of 2019 Conservative voters switching to Labour! (which under their de facto projection methodology is only a 19% Labour lead)

It's a huge shift - not only is it the largest Labour lead under the current Opinium methodology, it's a huge shift in position from the last poll on Sept 3rd. We're currently looking at a 47% Lab, 27% Tory split. In the prior poll it was 38% Lab, 34% Tory.

Source article for numbers and graphic: https://www.theguardian.com/politics/2022/oct/01/voters-abandon-tories-as-faith-in-economic-competence-dives