Rishi Sunak is being warned he risks taking his party further towards disaster by sanctioning a new public spending squeeze in a desperate pursuit of pre-election tax cuts, as more Tories said they feared an election wipeout.
With more infighting erupting this weekend after two huge byelection losses in former safe seats, Treasury officials are examining cuts to public spending should they be needed to fund tax cuts, demanded most vociferously by the right of the party.
However, with new polling seen by the Observer showing little public appetite for raising money through further spending reductions, senior Tories warned that it risked taking the party further away from the concerns of key voters turning to Labour.
John Gummer, the former Tory chairman, now Lord Deben, said the party risked alienating the critical group. “We have to look at the things that the public are really concerned about – they are concerned, for example, about the need for more nurses,” he said. “They’re concerned about radical reform of the health service.
“The priority for most people at the moment is to improve public services to make sure that those who are least well off are looked after and to make it more attractive to work. Conservatives are not dogmatists. And the people who call themselves Conservative sometimes are not at all. The majority of Conservative MPs – and majority of Conservative voters – want a moderate, sensible, progressive party.”
It comes with Tory moderates claiming that Sunak must not turn the party into “Reform UK-lite” in response to the Wellingborough and Kingswood byelections last week. Reform UK, formerly the Brexit party, came third in both seats, prompting demands from the Tory right for firmer action on tax and immigration.
Writing in the Observer, former cabinet minister Justine Greening said concerns that the party could face annihilation should it veer further to the right were valid. “Those who warn that the party faces an ‘extinction event’ at the forthcoming election are right,” she writes. “It’s because, time and time again, the party has consistently chosen to play up to the negative, simplistic, culture wars-driven rhetoric of Ukip and latterly, Reform UK.
“The Conservative party has been heading down a political cul-de-sac for some time. It might have felt like moving forwards, but the reality was different for voters. Now the party is hitting the end of the road. It will be a long way back, but the journey needs to start now.” With the mood darkening on the Tory benches, one former cabinet minister said they increasingly feared a 1997 Labour landslide. “The slogan then was ‘Britain is booming. Don’t let Labour ruin it.’ It didn’t change a thing.” A loyal former minister said: “It’s going to be severe.”
The budget next month is seen as one of the last chances for the Tories to seize the momentum from Labour. With chancellor Jeremy Hunt’s headroom for tax cuts becoming tighter, his officials are searching for spending cuts in the next parliament that could be deployed to fund a further giveaway if necessary.
However, asked how they would like a chancellor to raise money after the election, only one in 10 voters back public spending cuts. Only 17% of those who voted Conservative in 2019 opted for spending cuts. Overall, 41% of voters preferred increasing taxes on business, according to a YouGov poll for the WPI Strategy consultancy. Meanwhile, an Opinium poll for the Observer found Labour has a 15-point lead, down from 18 points last week.
A fierce internal Tory battle has intensified after last week’s byelections. John Hayes, a senior MP on the right, said time was running out for his party to close down the threat from Reform and deliver a “more Conservative” government. “We have the opportunity in the budget to show them we’re on the side of hard-working, law-abiding people – and we’re not going to continue to fund unrestricted welfare payments: we’re going to invest in British manufacturers and British businesses,” he said. “That means backing the high streets, backing British manufacturers, backing British food producers. It needs to be a patriot’s budget.”
However, Damian Green, chair of the One Nation caucus of liberal Tories, said: “Anyone who thinks you can simply add the Reform party’s votes to Tory votes by adopting some of their policies is living in a fantasy world.”
Nick Faith, the director of WPI Strategy, said Hunt would “go down in flames” if he opted to fund tax cuts with lower public spending. “Reducing funding into hospitals, schools and other local services would be the most unpopular thing the chancellor could do,” he said. “That doesn’t mean that targeted tax cuts are an impossibility. But they need to fall within the existing headroom set out by the Office for Budgetary Responsibility. Paying for a reduction in something like inheritance tax via reductions in public spending would literally be the definition of crazy.”
While it has been a bruising week for Sunak, his team does not believe the byelection losses have revealed anything new about the challenge they face. They have also been encouraged by the difficulties Labour faced after ditching its plan to spend £28bn a year on green investment and having to abandon byelection candidate Azhar Ali after he repeated a conspiracy theory about Israel.
“When we put Labour under sustained pressure, there are cracks that we can exploit – people have been reassured,” said one senior Tory source. “Back before 2015, we were losing byelections, including to Ukip. But the mission for us is building an offer at the election that we think people will back as a choice over Labour. We face a massive challenge, but we’re not despondent.”
