‘We are on for a massive defeat’: can the Tories prevent the inevitable?

Even the warmth of a London summer evening and a cool glass of Pol Roger was doing little to raise morale among MPs in Rishi Sunak’s ruling Conservative party, as they contemplated their own political mortality and the threat of a wipeout in a British general election next year.

“I just want the election over and done with,” said one glum Tory MP at a Westminster garden party last week. “At least it would put us out of our misery. I’m trying to find someone to talk to about opportunities after parliament — but who wants to hire useless one-term former MPs?”

A fatalistic mood has taken hold of many in Sunak’s party. “Reality is biting,” says a former cabinet minister. “We are on for a massive defeat. We aren’t talking margins of error in opinion polls any more. The public are tuning out now. They are psychologically exhausted by this government.”

Boris Johnson’s Conservative 80-seat election win in 2019 seems a long way back in the rear-view mirror. Johnson — disgraced for lying to MPs over Covid lockdown parties — is no longer even in parliament. His successor, Liz Truss, last year managed to crash the economy in her 49 days in Number 10.

When the technocratic Sunak became prime minister last October, he promised his party and the country a fresh start. Beleaguered Tory MPs hoped that, at the very least, he would staunch the damage and narrow the gap with Labour. Some even held out a distant hope of recovering to win a fifth successive term in office for the Conservatives.

But instead Sunak has failed to escape his party’s recent chaotic past. New economic clouds are gathering over his premiership, plunging his party into renewed gloom.

Inflation is stuck at 8.7 per cent and interest rates are rising. Two-year fixed mortgage rates have risen above 6 per cent, creating a mortgage “time-bomb” that will detonate in households across the UK as they come off existing deals. With an election due by January 2025 at the latest, the timing could not be worse.

Lord Macpherson, the top official at the Treasury from 2005-2016, noted recently that he could not remember an election “when 18 months out interest rates were still rising steeply”.

While Sunak and his allies yearn for the start of the House of Commons recess, before then they face an important test of the current political climate. On July 20 there will be unwelcome parliamentary by-elections in three Tory seats, which encapsulate how difficult it has been for the prime minister to shake off the past. Opinion polls suggest the Conservatives could lose all three.

Uxbridge in west London is Johnson’s old seat, vacated by the former prime minister. Selby in Yorkshire is the seat of Nigel Adams, who quit in pique after failing to secure the seat in the House of Lords promised to him by Johnson. West Country voters in Somerton and Frome have a chance to replace David Warburton, who quit after a sex and cocaine scandal.

Sunak is widely expected by his colleagues to carry out a cabinet reshuffle in the immediate aftermath of the trio of potential by-election defeats — probably promoting some younger women to freshen up his team — before retreating to the relative sanctuary of the summer holidays.

But the danger for Sunak is that the economic outlook, coupled with opinion polls typically putting the Tories 20 points behind the Labour opposition, create a toxic atmosphere in which defeat seems inevitable, discipline breaks down and every scandal adds to a sense of a government decaying in office.

Sir John Major’s Tory government suffered a similar fate in 1997 after the party had been in office for 18 years. A series of unconnected financial and sexual scandals were wrapped together under the catchphrase “sleaze”, creating the image of a decadent party heading out of power.

Lord Malcolm Rifkind, foreign secretary from 1995-1997, tells the FT there is “obviously a parallel” between the problems that faced Major and the ones that confront Sunak, as voters tire of a struggling government. But he says there is one important difference that makes the outlook even tougher for the current government.

“By the time of the 1997 general election,” he says, “the economy was doing fairly well.”

Narrow path

Can Sunak escape his mounting political problems and bounce back in the autumn? In the words of Isaac Levido, Sunak’s campaign adviser, there is a “narrow path” to victory, but the route is looking increasingly perilous.

The blunt-speaking Australian strategist, according to those in Sunak’s inner circle, believes that the prime minister is the party’s greatest asset, but he can only win if his MPs show some discipline, stop arguing with each other and get in behind him.

Levido believes the patience of voters is wearing dangerously thin. “Isaac says that at some point people are going to look at these people pissing at each other and ask themselves: how can I make this stop?” says one senior Tory.

The best-case scenario sees the economy start to recover in early 2024 with inflation coming under control, creating space for tax cuts in the spring Budget. Sunak would then use his autumn 2024 party conference to claim the country is on the right track before going to the polls.

Polling puts Sunak just behind Labour leader Sir Keir Starmer in terms of their respective approval ratings (Sunak’s rating is around -20) but he appears to be more popular than his party and in recent weeks has shown a more combative edge.

The prime minister views himself as a problem solver, devoting himself to data and detailed meetings with officials, fixing issues such as the toxic post-Brexit status of Northern Ireland or trying to curb cross-channel irregular migration or the staffing crisis in the National Health Service.

Central to Sunak’s political persona is his promise to deliver on “five promises” — which he set out in January — tests on which he invited the public to judge him. But the strategy, initially seen by some as a low-risk political gimmick, is now in danger of backfiring.

The “five tests” have become such an article of faith for leading Tories that in some quarters they have turned into a standing joke. One former Tory cabinet minister says: “Party donors want to know what on earth is going on and all they hear about are the five tests — that Rishi is going to fix it. It has become laughable to them. This is a government of facile platitudes.”

The prime minister’s supposedly easily achievable promise to halve inflation to 5.4 per cent by the end of the year is — as chancellor Jeremy Hunt said in an FT interview last week — “going to be more challenging than we thought”.

Meanwhile Sunak’s pledge to “grow the economy” could run into problems later in the year if the Bank of England continues to push up interest rates and forces the fragile economy into recession. His vow to “cut debt” is harder to assess in the short term.

As for his other two tests, Sunak has promised to cut NHS waiting lists, but they have continued to rise to 7.4mn. The prime minister’s spokesman insisted last week that Sunak had been referring to long-term waiting lists. But for the vast number of sick Britons waiting for an operation — or even see a doctor in a timely fashion — all they experience is a health service in crisis.

Sunak’s promise to “Stop the Boats” has also run into problems in the Court of Appeal, which found his plan to deport people to Rwanda was unlawful. Last Friday saw nearly 700 people cross the English Channel in small boats — the highest number of the year. Provisional figures for total crossings so far in 2023 are only 7 per cent lower than in July 2022.

Rishi Sunak accompanies a Home Office Immigration Enforcement team as they visit a house in north-west London last month. One of the prime minister’s priorities has been tackling cross-channel irregular migration © Simon Walker/No 10 Downing Street

The problem for Sunak is that even if he were able to meet his five promises, they are the tests that he himself has chosen to be judged on: they are not necessarily the tests that voters, fatigued after years of static or falling living standards and crumbling public services, will apply.

However, the other factor which gives some Conservatives hope is that Sunak’s rival Starmer is not exactly Tony Blair, the then youthful Labour leader who swept the Tories out of power in 1997 on a wave of enthusiasm, even national euphoria.

Starmer, by contrast, has negative approval ratings and is viewed by some traditional party supporters as rather negative, dull or liable to change his mind. He recently scaled back a promise to borrow £28bn to pay for a “green prosperity fund”, fuelling claims by Sunak that he is a “flip-flopper”.

“Sunak is the last best chance,” says Rifkind. “If he’s able on a personal level to dominate the election campaign and be clearly superior to Starmer when they meet in front of the cameras, that will be important.” But Starmer also offers reassurance to voters fearful that change could make their lives even worse and has led his party to a sizeable poll lead.

If Sunak is to follow Levido’s “narrow path” to the summit of another Tory electoral victory, most things have to go right. But for now, to the prime minister’s growing frustration, most things seem to be going wrong.

Stubborn inflation

For all the acrimony surrounding Boris Johnson’s defenestration from parliament last month, it was a grim set of inflation data at around the same time that really spooked Conservative MPs. Markets took fright and mortgage rates spiked, amid fears of big interest rate rises to come.

Not only did the higher than expected figure of 8.7 per cent herald more expensive mortgages and the prospect of a possible recession, it also wrecked any hopes Tory MPs had of early tax cuts to point the way to a brighter future. “We will not countenance tax cuts if they make the battle against inflation harder,” Hunt told the FT.

With national debt now standing above 100 per cent of GDP for the first time since 1961, higher interest rates have forced up debt servicing costs, putting further pressure on the public finances. Although few would bet against Hunt cutting taxes in some way in a pre-election Budget next March, his room for manoeuvre is small.

The sense of political escape routes closing has added to the febrile atmosphere in the Tory party, with different factions going public with their own suggestions to Sunak on how he might turn things around.

Johnson and Truss have been happy to advise Sunak to start cutting taxes to boost growth (even if Truss’s own experiment with debt-funded tax cuts ended in economic disaster) while a New Conservative pressure group wants the prime minister to cut net legal migration from 606,000 to 240,000 in 2024.

The plan would involve significant cuts to visas for social care staff and further curbs on student visas, creating serious disruption to the care of the elderly and universities, not to mention adding to pressure in a labour market which is already extremely tight.

The fact that the New Conservatives draw much of their support from Tory MPs representing former working class Labour “red wall” seats is also a symptom of a structural problem which Sunak inherited from Johnson.

To secure his 80-seat majority in 2019, Johnson built a remarkable Tory coalition of traditional wealthy Tory voters in the south and working class, pro-Brexit voters in the north and Midlands. Many Tory 2019-ers representing “red wall” seats want Sunak to fight the next election on issues that they believe resonate with former Labour voters.

Sir John Hayes, a rightwing Tory grandee, agrees that to reflect the “realignment” of the Tory vote, the party should “prioritise immigration, public order, crime and punishment and a culture war”.

Sunak speaks at a PM Connect event at the Ikea store in Dartford last month © Simon Dawson/No 10 Downing Street

The problem is that tough language on migration or trans rights often lands badly with more liberal Conservative voters in the south of England, many of whom have shown signs in recent by-elections of switching to Labour or — more likely — the centrist Liberal Democrats. Levido has counselled caution, warning of the risks of recreating in the minds of middle England the idea of the Conservatives — in the words of former Tory prime minister Theresa May — as “the nasty party”.

Sunak, who represents the northern seat of Richmond, is struggling to hold the two parts of the coalition together. According to Lucy Allan, Tory MP for the Midlands seat of Telford: “We clearly have a southern-dominated government and the team around the prime minister is southern dominated.” She adds: “There are people in the red wall who think they could win and aren’t getting the support they feel they need to do that.”

Tory infighting

Sunak has privately expressed frustration that he is not getting the credit he deserves, not least for what he regards as his achievements on the international stage. He has reset relations with US president Joe Biden and French president Emmanuel Macron and his efforts to end the Brexit-related Northern Ireland impasse have improved links with Brussels.

But Tory infighting at Westminster and the ominous economic backdrop have sapped Sunak’s authority at home. Tory activists who yearn for big Truss-style tax cuts — despite recent evidence to suggest that the markets will not wear them — are frustrated by the prime minister’s fiscal discipline.

Others want the prime minister to show more fight. “We need more ‘politics’ and a bit of opportunism,” says one minister. “There was too much of that with Boris, but not enough with Rishi.”

A survey of Tory activists by the ConservativeHome website this month saw Sunak’s popularity slip into negative territory. “My take is that the dominant emotion is less anger than a deep sense of frustration and foreboding,” says Paul Goodman, the website’s editor.

Sunak hosts the weekly cabinet meeting in 10 Downing Street. Tory infighting at Westminster and the ominous economic backdrop have sapped the prime minister’s authority © Simon Walker/No 10 Downing Street

Sunak is running out of big moments to turn things around. There are probably two big “fiscal events” to change the economic mood, of which Hunt’s 2024 spring Budget is by far the most significant; this year’s Autumn Statement will be held in the shadow of high inflation.

Then there is the autumn 2023 Tory conference in Manchester, a potential showcase for Sunak’s big pitch to the country, but equally a chance for the party to engage in some high-profile infighting. Johnson, with his new column in the Daily Mail newspaper, will be waiting in the wings.

More difficult by-elections loom, including a likely contest in the Tamworth seat of Chris Pincher, a former government whip facing suspension from the Commons for groping two men while drunk. Nadine Dorries, a former minister who tells colleagues she wants to make life as difficult for Sunak as possible, may soon carry out her threat to quit as an MP.

“If the circus doesn’t stop by Christmas it’s over,” says Sir Gary Streeter, a Tory MP since 1992. But for now, senior Tories believe they simply need a holiday. “The mood is glum,” says one prominent MP. “Colleagues think we’re finished. We need to get to the summer recess now.”

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