The Conservative defeat this week could have been worse, but that’s not saying much. The re-election of Tory mayor Ben Houchen in Tees Valley, winning the smallest majority in the hotly contested Harlow council election – these are the saving graces for a party that lost hundreds of councillors and another MP this week. There were many signs that the 2019 coalition that propelled the Tories to victory has come fully undone.
What exactly has gone so badly wrong for the Tories is also a hotly contested topic.
Unfortunately for the party, the list of possible answers is long. Houchen’s triumph has been linked to the mayor’s independent nature, and he has often taken a more interventionist approach to the economy than his party has done at a national level. There was a notable lack of love for Rishi Sunak – or even a mention – in the mayor’s victory speech, although the pair did appear together briefly to celebrate Houchen’s victory.
But their joint rally inadvertently made one lesson of the locals even more apparent: the greater the separation from the Tory party, the more successful a Tory candidate might be. It’s something Sunak has learned since he entered Downing Street, with his personal polling often differing from that of the party he leads. While individual politicians may fluctuate in the public’s esteem, the Conservative brand is currently not so lucky.
Why has it plummeted? “To think that a couple of years ago we went after people for sitting on a bench,” one MP says to me. “What were we thinking?”
But it was not so much lockdown that was the source of the problem (frankly, it was popular) as the overt double standards between those in Whitehall and those outside of it.
Voter trust was broken and, from there, things only got worse: an inflation crisis, a lengthening NHS backlog, rising interest rates and a year of strikes.
Recovery from the pandemic has seen a period of acute economic pain as supply chains were stretched and the consequences of money printing began to bite. When voters are looking for someone to blame, it’s usually those in charge.
This helps to explain why the Tory party’s messaging on tax and the economy has fallen on deaf ears. Any good stories (and there have been some) are trumped by the stress and frustration caused by a cost of living crisis and waiting months (if not years) to receive proper medical care.
But the messaging itself has been flawed, too. In the run-up to local elections, the Tories have been trying to craft the narrative that the tax burden is falling and that workers are better off. But that’s not the full truth, which is why it was always bound to fail.
In a seemingly clever move for the Tories, the personal tax burden is falling for the median earner – but it isn’t for workers on the lowest incomes or those earning significantly more.
In its response to the Budget, the Institute for Fiscal Studies estimated that by the end of the next parliament, those earning between roughly £30,000 and £55,000 will see a reduction in their tax bill thanks to the changes brought in since 2021. But those outside of this rather narrow bracket will experience an overall tax rise, partly because the cuts to employee National Insurance (NI) fail to outweigh the freezes to tax thresholds.
So video clips of the Prime Minister pouring milk into a coffee mug revealing “£900” written in sharpie don’t quite pack the punch ministers were hoping it might. That £900 – which accounts for the 4p Hunt has taken off NI so far – may be the average reduction, but most people are not feeling this in the pocket.
This goes some way to explaining why the party hasn’t just failed to get a polling boost from repeatedly cutting taxes, but why they seem to have got no credit at all.
The irony of the Tory tax cut narrative is that there are economic successes the party could point to: the economy is at its most stable point today than at any other time since March 2020. While Britain’s Covid bounceback was not the most impressive, it was better than almost every forecaster predicted, as a surprise revision from the Office for National Statistics last autumn revealed. The economy was back to pre-pandemic levels at the height of the Omicron wave in 2021 rather than 1.2pc below, as was thought at the time.
And while both the rise and slowdown in inflation has been largely out of the Government’s control (as price spirals are a monetary phenomenon and require central banks to take action), it can claim some credit for not adding to inflationary pressure: mainly by resisting calls for more public spending, even if offering up a much more generous public sector wage settlement would have been the path of least (political) resistance.
This narrative is by no means perfect: first, it’s far less enticing than the promise of tax cuts. Constantly reminding the public that you’re taking “tough decisions” also reminds them of the economic pain they’re enduring. What’s trickier, however, is reminding the public how much more stable economic conditions are today without drawing attention to just how chaotic it was just 18 months ago.
Sunak has not been cleaning up the Opposition’s mess, but rather his own party’s. The Covid spending under Boris Johnson and the market backlash to Liz Truss’s mini-Budget – which coincided with inflation hitting its peak at 11.1pc in October 2022 – have been Sunak’s great challenges. He has arguably overcome them faster and with less pain than many other leaders could have done. But undoing mistakes made by previous Tory PMs isn’t much of a winning narrative.
The Prime Minister may also be hesitant to point towards improvements in the cost of living for fear he’ll be lambasted as “out of touch”. It is indeed the case that the economic outlook is improving, but many people are still feeling the strains of the past few years.
So the party continues to push its questionable tax narrative instead. It is perhaps one of the biggest tragedies of Sunak’s premiership so far: he has successfully steadied the ship, but even in the eyes of his own party, it’s not a vote-winner.
