Tory conference is shrouded in gloom – has Liz Truss already sealed her own fate?
A little under four weeks as prime minister and it couldn’t really have gone worse for Liz Truss.
A mini-budget that precipitated a run on the pound (it has rallied a bit since), a £65bn emergency intervention by the Bank of England to prop up pension funds, and the withdrawal of nearly 1,000 mortgage deals from the market in anticipation of a big hike in interest rates later this year.
The Conservatives are experiencing their worst polling since the late 1990s and dozens of Tories are contemplating losing their seats at the next election.
The question for me in Birmingham this week is simple: Has Liz Truss’s disastrous mini-budget already sealed her fate?
Ask Conservative MPs, and there is already a movement to try to oust her. Her insistence that she will not reverse any elements of her budget, regardless of the political toxicity or the clear economic risks, has led some MPs to say privately they want her to go.
“There needs to be policy change and personnel change,” said one senior Conservative.
“There are MPs saying she simply cannot lead us through a general election and MPs are putting forward suggestions to Sir Graham Brady about rule changes.
“One scenario is that MPs decide a new PM and it’s not put to members.
“People are very anxious.”
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When I asked the MP if Ms Truss could survive until Christmas, they told me: “I think it’s probable that she will be gone by Easter.”
‘This plan is not going to work’
A former cabinet member also confirmed that colleagues were working up options to try to remove Ms Truss, as they whispered to me that they might now stand down at the next election in the face of almost certain defeat.
“This plan is not going to work,” they said.
For a new prime minister, who in typical times might expect a honeymoon period rather than the mutterings of divorce papers, such remarks are totally damning and speak to the extremely difficult predicament she now faces.
For, just as I’d never been to a more positive Labour Party conference than the one last week, I’ve never been to a Conservative one so shrouded not just in gloom about the electoral prospects of the party, but palpable anxiety about the Truss administration.
And this is about more than even the existential threat her policies could pose to the Conservative Party.
There is genuine fear too that she might “tank the economy”. As one former senior minister told me after the mini-budget: “It’s madness and I’m scared.”
Already MPs mutter that she will have to change – the policies and the personnel, or face a showdown with her party.
One MP told me there are easily 100 MPs who could rebel against her budget. The political toxicity of abolishing the top rate of tax for those earning over £150,000 a year, while mulling a real terms benefits cut for the four million at the bottom end of the income scale relying on universal credit, is plain to see for many MPs – even if Ms Truss wants to turn a blind eye.
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But it’s not just the politics of her mini-budget, it’s the economics of it.
“We can’t ignore the cost of borrowing line item,” is how one former minister puts it. “What are the fiscal rules?”
If the prime minister can’t prove to the country, the markets, the Office of Budget Responsibility, and her backbenches that her government can achieve 2.5% growth, then the tax measures will have to be funded through debt.
And that has an obvious knock-on effect for families, with those on average mortgages having to potentially pay more in higher mortgage costs than in tax cut gains.
All of it is causing acute anxiety for MPs as they look at the polls and the prospects of their own re-election.
Plenty of those in the Sunak camp are keeping quiet for now, telling me that they want to let this play out and don’t want to take aim at Truss publicly – yet. But two outriders – former cabinet ministers Michael Gove and Julian Smith – are saying publicly what many are saying privately.
This is Mr Gove on Sunday: “I think there are two specific concerns that I have about the unfunded nature of tax cuts and about the 45p tax cuts, which we now have an opportunity to reflect on.”
“And I think it would be wise for us to recognise that they are neither the right economic nor the right political response to the situation that we face at the moment,” he told journalist Christopher Hope at a Daily Telegraph event.
When he was asked whether the policy should be reversed, he didn’t blink: “Yes”.
‘We cannot clap for carers one month and cut tax for millionaires months later’
And this was former chief whip Julian Smith in response to chairman Jake Berry’s warning on Sky News’ Sophy Ridge on Sunday show that Tories who voted against the mini-budget would lose the whip: “The first job of an MP is to act in the interest of their constituents and in the national interest.
“We cannot clap for carers one month and cut tax for millionaires months later.”
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All of it appears to be falling on deaf ears, with the PM and her team adamant that her plan is the right one and the mistakes over the past week were about the communications strategy not the policies.
As one of her key allies put it to me: “The PM gets this past week has been disruptive,” but “she firmly believes her plan for the economy is the right one.
“We’ve been stuck in a world of high taxes, cheap credit, and low growth for too long, with too much focus on tax and spend at the expense of growth.
“That status quo isn’t working, so we have to change course, otherwise we’re consigning the economy and country to long-term decline.
“We’ll do that and manage the public finances responsibly.”
Pro-growth, pro-investment, low-tax. That’s the mantra.
‘There is still so much wastage across various parts of the system’
The PM’s cabinet and top team are also supporting her.
One senior minister pointed out to me on the eve of the conference that such a big change in approach – the biggest shift in economic approach for a generation or more – was “always going to shock the markets” but the principles of leaving more money with individuals and businesses was the right one, as were the efforts – and we’re going to see what this looks like in practice later this year – to cut back on government costs (read: spending).
“There is still so much wastage across various parts of the system,” they said.
But will this government even get that far?
Ms Truss has four days in Birmingham to try and sell her plan not just to her members and MPs, but to the country.
The problem she has is that so many people seem to have stopped listening already.
A PM not for turning and a parliament in which many MPs now think they have nothing more to lose. Strap in.
World
Donald Trump refuses to rule out military force over Panama Canal and Greenland – as he warns NATO to spend more
US president-elect Donald Trump has refused to rule out military or economic action to seize the Panama Canal and Greenland – as he said he believes NATO spending should be increased to 5% per member state.
Speaking at Mar-a-Lago, Florida, Mr Trump made a series of sweeping claims on what his policies could look like when he takes office on 20 January.
He said he believes NATO spending should be increased to 5% per member state, while he also declared US control of Greenland and the Panama Canal as vital to American national security.
The 78-year-old Republican also spoke of relations with Canada, as well as addressing his position on the Middle East and the war in Ukraine.
Sky News takes a look at some of the key claims brought up during the conference.
NATO
Mr Trump claimed “nobody knows more about NATO than I do”, before adding: “If it weren’t for me, NATO wouldn’t exist right now.
“I raised from countries that weren’t paying their bills, over $680bn. I saved NATO, but NATO is taking advantage of us.”
The president-elect also said members of NATO should be contributing 5% of their GDPs (gross domestic product) to defence spending – the previous target has been 2%.
Donald Trump speaking at Mar-a-Lago. Pic: Reuters
Greenland and Panama Canal
Asked if he can reassure the world he won’t resort to military action or economic coercion in trying to get control of the areas, he said: “No, I can’t assure you on either of those two.”
“But, I can say this, we need them for economic security.”
He didn’t add any further detail around Greenland – which he has recently suggested the US should own or control – but he said the Panama Canal “was built for our military”.
He said the canal was “vital” to the country and China was “operating” it.
Mr Trump criticised the late Jimmy Carter for his role in signing over the Panama Canal to Panama during his presidency, saying it’s “a disgrace what took place” and “Jimmy Carter gave it to them for one dollar.”
Canada
A day after Canadian Prime Minister Justin Trudeau announced he was stepping down, Mr Trump said he believed the US’ northern neighbour should become the 51st US state.
He mocked Mr Trudeau by calling him “governor” rather than prime minister.
He argued the US and Canada combined would amount to an “economic force” that would “really be something”.
“There isn’t a snowball’s chance in hell that Canada would become part of the United States,” Mr Trudeau responded.
Israel-Hamas war
Israel has been waging a 15-month war on the militant group ruling Gaza, Hamas, since they launched an unprecedented attack on southern Israel on 7 October which saw 1,200 people massacred and about 250 taken hostage, many of whom remain in captivity.
Mr Trump said: “If those hostages aren’t back by the time I get into office, all hell will break out in the Middle East.”
Nearly 46,000 Palestinians have been killed in Israel’s assault on Gaza, according to Hamas-run health officials in the enclave.
Analysis: Trump’s warning risks becoming less threatening
Ukraine war
Referring to Russia’s ongoing full-scale war against its smaller neighbour, Mr Trump said a “big part of the problem” was Russian President Vladimir Putin had said for many years he did not want Ukraine involved with NATO.
“Somewhere along the line [outgoing President Joe] Biden said you can join NATO,” he said.
“Well, then Russia has NATO right on their doorstep.
“When I heard the way Biden was negotiating I said ‘you are going to end up in a war’ and it turned out to be a war.”
Asked if he would commit to keep supporting Ukraine during negotiations with Moscow, Mr Trump quipped: “Well, I wouldn’t tell you if that were the case.”
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Offshore drilling
Mr Trump repeated one of his favourite phrases from the campaign trail, “drill, baby, drill”.
On Monday, outgoing President Biden moved to ban new offshore oil and gas developments along most US coastlines.
But Mr Trump, who has vowed to boost domestic energy production, said he will undo it.
“We’re going to be drilling a lot of other locations,” he said.
The public articulation by Donald Trump of a new desired target for NATO allies to spend 5% of national income on defence will surely plunge governments across Europe into crisis mode – not least here in the UK.
Britain presents itself to the world and in particular to the United States as the biggest defence spender in Europe and NATO’s most powerful European military.
Yet Sir Keir Starmer has not even managed to set out a timeline for what he describes as a “path to 2.5%” of GDP being invested in his armed forces, up from just over 2% today.
If the prime minister merely sticks to this pledge, he risks being viewed by the new administration as woefully unambitious and not credible on defence.
Then there is the extraordinary threat by Mr Trump to seize Greenland by force if necessary, even though this valuable piece of territory belongs to a fellow NATO ally in the form of Denmark.
The move – were it to happen – would demonstrate the limitations of the alliance’s Article 5 founding principle.
It is supposed to guarantee that all allies would come to the defence of any member state which is under armed attack.
But what about if the aggressor is also meant to be an ally?
The president-elect also appeared to dash any hope of Ukraine being offered membership to the alliance anytime soon – a core request of President Volodymyr Zelenskyy.
Instead, Mr Trump sounded sympathetic to Vladimir Putin’s absolute opposition to such a move.
He said he would meet the Russian president after taking office – reiterating a promise to end the war in Ukraine, though again without spelling out how.
The outbursts came in a lengthy press conference on Tuesday that marked the starting shot in what could be a make-or-break test for NATO – an alliance of transatlantic friends that rose from the ashes of the Second World War.
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European members of NATO, as well as Canada, already took a battering the last time Mr Trump was in the White House – and rightly so.
The US had for far too long largely bankrolled the security of Europe, while the majority of its allies – including the UK – reaped the so-called “peace dividend” that followed the collapse of the Soviet Union and the end of the Cold War, swapping expenditure on defence for peacetime priorities such as economic growth, healthcare and education.
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From 2019: Was this the most awkward NATO summit ever?
Mr Trump made clear during his first term his displeasure about what he saw as Washington being ripped off and vowed to make Europe take its fair share of the burden.
He even warned member states that the US would not come to the aid of an ally that was not hitting at the very least a minimum NATO spending targeting of 2% of GDP – something they had previously pledged to do by 2024 but were slow to deliver on.
Such language electrified allies in a way that even Putin’s initial 2014 invasion of Ukraine, with the annexation of Crimea and attacks in the east of the country, had not.
Yet, with the threat from Russia growing in the wake of its full-scale war in Ukraine in 2022, coupled with conflict in the Middle East and the challenge posed by China, it has become clear that this heightened level of expenditure by allies was still far short of what is required to rebuild militaries across Europe that have been hollowed out over decades.
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Mark Rutte, the new secretary general of NATO, set the stage for what is expected to be another push to ramp up investment when he delivered a landmark speech last month in which he called on allies to return to a “war mindset” and “turbocharge” defence spending.
He said this was to counter growing threats, but observers said it was also a pre-emptive response to the anticipated demands of the next Trump administration.
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‘Ukraine needs more arms, less talking’
Either way, it poses a huge challenge for all allies, in particular for Sir Keir Starmer.
He and Rachel Reeves face a choice: change course when it comes to their top priorities of economic growth, hospital waiting lists and new housing and instead invest more in defence or defy what will doubtless be growing demands from the United States to spend billions of pounds more on the UK armed forces – and maybe even leave the country in a position whereby the US would not come to its aid if attacked.
The Rapid Support Forces (RSF) and its allied militias are committing genocide in Sudan while waging war against the army for control of the country, Joe Biden’s US administration has determined – two weeks before leaving office.
In a statement sharing the designation on Tuesday, US secretary of state Antony Blinken said the RSF and its aligned militias had “systematically murdered men and boys – even infants – on an ethnic basis” and “deliberately targeted women and girls from certain ethnic groups for rape and other forms of brutal sexual violence”.
He announced that Washington would impose sanctions on RSF leader Mohamed Hamdan “Hemedti” Dagalo and seven RSF-owned companies located in the United Arab Emirates (UAE).
Mohamed Hamdan ‘Hemedti’ Dagalo. File pic: AP
The UAE is credibly accused of backing and arming the RSF – something it has strenuously denied.
When reached for comment by Reuters, the RSF rejected these measures and said: “America previously punished the great African freedom fighter Nelson Mandela, which was wrong.
“Today, it is rewarding those who started the war by punishing (RSF leader) general Mohamed Hamdan Dagalo, which is also wrong.”
The RSF has been fighting Sudan’s army for territorial control of the country since war erupted in the capital, Khartoum, in April 2023.
The ensuing devastation has been described as the worst humanitarian crisis ever recorded – with over 11 million people forced out of their homes, tens of thousands dead, and 30 million in need of humanitarian assistance.
Sudan, Africa
In December 2023, Mr Blinken announced that both warring parties had committed war crimes, but that the RSF in particular had committed crimes against humanity and ethnic cleansing.
He mentioned this precedent in this latest announcement, adding: “Today’s action is part of our continued efforts to promote accountability for all warring parties whose actions fuel this conflict.
“The United States does not support either side of this war, and these actions against Hemedti and the RSF do not signify support or favour for the SAF (Sudanese Armed Forces).
“Both belligerents bear responsibility for the violence and suffering in Sudan and lack the legitimacy to govern a future peaceful Sudan.”
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This comes twenty years after then US secretary of state Colin Powell described the conflict in Darfur, western Sudan, as a genocide in 2004.
Back then, RSF leader Hemedti was heading up a lesser-known Janjaweed militia that was carrying out state-sanctioned atrocities against civilians.
He was not held accountable then, and many wonder if this latest designation will have any impact on the actions of forces on the ground.
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