Liz Truss is hoping her conference speech on “growth, growth, growth” will have set a new agenda for her party, drawing a line under the disastrous week of her U-turn over the 45p tax rate and 10 days of market turmoil after the mini-budget. However, she is facing a perilous few weeks and months ahead, with multiple potential crises on the horizon and warnings of a winter of discontent. Here are some of the most difficult and intractable problems. The public finances
The Office for Budget Responsibility’s draft figures on the state of the public finances should have landed on the desk of Kwasi Kwarteng, the chancellor, by the end of Friday. These will shine a light on whether and when it is realistic that tax cuts promised by Truss and Kwarteng are likely to lead to higher growth. And they will give an indication of the impact of more than £70bn of extra borrowing. Those forecasts will supposedly not be published for the next few weeks, until Kwarteng brings forward a further medium-term fiscal plan some time between the end of this month and 23 November. But the government is going to face a battle keeping those numbers secret if they are bad, and the Lib Dems will next week table a humble address asking for their immediate publication. The markets will be looking for reassurance from the OBR, so Truss and Kwarteng may have to look at rowing back more measures from the mini-budget if they want a calm response to the fiscal plan. The threat of winter blackouts This is one of the most dangerous issues for Truss. If people are experiencing rolling three-hour blackouts, the government is likely to see a backlash, even if Russia cutting off gas supplies to Europe is the root cause.
Likewise, if factories and businesses have to curtail operations, it will have a substantial effect on her growth agenda and promise to “get Britain moving”. She has ruled out an energy-saving campaign but the pressure may build on this if power cuts start looking likely. The Northern Ireland protocol Truss appears to be taking a more pragmatic approach to this than her predecessor, with talks restarting for the first time since February and conciliatory language on both sides. However, a deadline of 28 October is fast approaching, with the UK government poised to call an assembly election by that date unless the DUP drops its veto on forming an executive as part of a protest against post-Brexit trading rules. A winter NHS crisis A combination of packed A&Es, waiting list backlogs, delayed ambulances, resurging Covid and difficulty seeing a GP is a toxic combination for Truss’s government. She promised some tough action in her conference speech from Thérèse Coffey, her deputy prime minister and the health secretary, saying she would get on with “busting the Covid backlog”.
But the NHS Confederation has warned the new prime minister will inherit an NHS in its worst state in living memory”, and the squeeze on health spending is set to get even worse given the state of inflation. Russia Truss will have a strong knowledge of the problems facing the UK internationally after her stint as foreign secretary. But Russia’s rhetoric over the possible use of nuclear weapons as it struggles in Ukraine is difficult to respond to. The government has been quick to label it as sabre-rattling, but former minister Tobias Ellwood has called for a more robust statement of the military consequences if Vladimir Putin uses nuclear force. Parliamentary tests Truss may have won the leadership with the Conservative membership but few MPs backed her in the first round and many have expressed reservations about her leadership. In the weeks ahead, some of the Tory rebels may be looking for opportunities to flex their muscles when it comes to legislation. She is not likely to have much trouble with the reversal of the national insurance rise next week, as Labour supports the cancellation of the rise. But any move not to uprate benefits in line with inflation, to relax the planning system, introduce fracking or potentially squeeze public sector spending could see her face considerable opposition on her own benches if they can find parliamentary mechanisms to thwart her. Strikes Trade union ballots over pay disputes are at their highest level for years, with union leaders warning it could all come to a head this winter. There is already a rolling programme of rail strikes, while nurses are currently voting in their first ever Royal College of Nursing ballot on pay, while teachers belonging to the National Education Union are also threatening a strike ballot if the government does not improve its offer.
At the same time, Truss is trying to push through new curbs on strike action – including minimum service laws – and it is all adding up to huge friction between the government and workers. The government is banking on the public being annoyed at the disruption of strikes, but union officials believe there is widespread sympathy with workers getting real terms pay cuts, especially in the NHS.