Blain’s Morning Porridge April 2nd 2024: God Save the Tories – No One Else Will

“His maternal grandfather had famously made a bonfire with a valuable portrait of the Marquess of Bute because, he had declared, it was more than a man could stomach to encounter a Tory every morning before breakfast.”

Labour will win the coming election – if they don’t do anything stupid. Tory MP’s futures look bleak after their singularly unsuccessful 14 years in power. Such is politics: voters send failed politicians packing. It’s called democracy. Understanding why the Tories will lose is key to the effect on the UK’s outlook.

I find myself terribly conflicted. Last week I was surprised to receive and invite to lunch with my local Conservative MP – Paul Holmes MP. I found myself genuinely liking him.

He was raising funds to contest the coming general election. He should win the new seat of Hamble Valley even if the polls are correct and the Tories are crushed. A number of the other guests who know me as a somewhat Lefty Economist, Market Strategist and Commentor were rather shocked to see me at the event given my scathing attacks on the present UK Government for its multiple failures in recent years. Yet, the organiser of the event gave me a big wink, and told me I was there to say it like I saw it. Ha ha! Agent provocateur…

Politics matters for markets and the economy. Governments set taxes and spending – and thus the economic consequences that flow from these decisions. It is an institution of state, The Bank of England, that guards against inflation, sets UK interest rates and the pace of the economy, independent by writ of parliament. Politics also sets “tone” for the underlying economy; corrupt politics are one aspect of the economy where “Trickle Down” really occurs.

Recently I’ve been asked by certain parties to refrain from commenting on politics publicly because it might “upset” clients. A recent podcast I participated in was “spiked” (newspaper parlance for binned) because “although politics has an impact on the health of the economy, comment on voter intentions and statistics is difficult to evidence.” In other words… don’t talk about politics and election outcomes.

Bollchocks to that.

Telling it like it is, is exactly what a good commentator should do. Therefore, I will continue to pontificate regularly on politics, markets and the economy. They matter. They have consequences, and they spawn opportunities. The coming UK election will be critical for the UK in terms of resolving post-Brexit relationship, determining how to prioritise fixing the broken infrastructure of the economy, and re-establishing the UK in the Global-order as the threat of global conflict rises.

I have to say it was a very good and interesting lunch. Our local MP, whom I have followed since he was elected in 2019, is an engaging, honourable chap – even though the stupendous degree of political incompetency since Paul won the seat means I now regret giving my vote to Boris Johnson 5 years ago. (Largely on the basis Jeremy Corbyn was just wrong at every single level.)

Paul Holmes is doing an excellent job as our MP – supporting his constituents against the UK housebuilder Persimmon digging a wholly unnecessary quarry in the heart of our village (an act of pure, malicious spite after they were repeatedly refused permission to build rabbit hutches), and he’s taken a genuine interest in local matters including poverty and equality of opportunity. In an economy where electors quite rightly complain the standards of politicians have tumbled, our chap is doing a proper job fighting in our interest and doing it well.

Paul had the decency to resign from a position at the Home Office in protest at “party-gate” and “the toxic culture.. [that] seems to have permeated No 10”. I maybe should not write this, but he is rather proud that Boris called him a w****r following his resignation! I suggested he wears a “Boris Called Me A Wa***r!” badge as he canvasses for the election – it will win him support from many Tories offended by the tousle-haired rogue.

But the mood in the room was not happy – almost all attendees were committed Tories, but many were furious at the ongoing omnishambles that can barely be described as government since David Cameron resigned. As the MP told me, he got it “between the eyes” from the leading Tory in the village about the multiple-humiliations they have inflicted on traditional conservatives. The local grandees were happy to pay for the lunch, but made clear their future financial support for government was not a given. 14 years of Conservative Government, and the nation feels more broken than ever before.

Yet, I reckon our MP succeeded at y’day’s lunch. He pressed the right buttons, was contrite yet defended his position as well as he could. He was charming and forceful. He will raise the funds to contest the election and I expect he will win. The main opposition will be the Liberals – and there is, as yet, no question I am aware of to which the answer has ever been Liberal Democrat. (Sorry LibDems, but that’s the reality in a two-party, first past the post system.)

The organiser has a wicked sense of humour. She asked me to respond to the MP’s speech, and I kept it polite – which wasn’t difficult as our MP is a genuinely likeable chap.

I started with the obvious question: “If Rishi Sunak is such a brilliant Prime Minister, [as he repeatedly said in his speech] then why is the front page of the Torygraph demanding his replacement?” (I always read the Torygraph first each morning – it is important to know what the enemy is thinking.)

It’s a bit like the Football Manager Scenario: when leading Tories feel the need to publicly say what a wonderful leader Sunak is – they are fooling no-one as to his limited political longevity. Sunak was last man standing after Liz Truss destroyed the party’s confidence in itself, but he’s not a long-term bet. The expectation is Sunak will resign as soon as he loses the election and likely beetle off to California. Over the weekend the press suggested he will be pushed after the May 2^nd Local Elections which will hint at the scale of the Tory electoral debacle in a general election.

Asking people to vote for a local boy (Rishi is a Southampton lad) in our constituency is neat, but not everyone is married to the daughter of a leading Indian billionaire. According to the papers, a bunker mentality has seized Downing Street. Sunak is angry and tetchy according to the Sunday Times. Government has effectively closed down. Cabinet meetings are few and far between. No one is actually governing. Junior ministers are getting their resignations in early so they can take private sector jobs without long periods in “gardening leave” after they lose their seats in the coming election.

Why have the Tories failed? There are multiple reasons, not least being Labour failing to be a competent opposition through Brexit and the Corbyn Era. The Conservatives should take note.

I explained how electorates’ faith in the Tories has been chipped away. They don’t look united or focused enough to lead the UK economy to growth. They are bogged down with baggage over the multiple leadership contests, dither since Brexit, disillusionment with the mounting costs of “Broken Britain”, the sense the Tories represent the top 10% and pay lip service to the rest, the danger of right wing populism attracting a large slice of the have-nots to vote Reform, the constant succession of ministers through the key govt positions where they have failed to master their briefs and left nothing fixed. 14 housing ministers in 14 years might explain in part why so many young workers have given up any hopes of owning their own homes.

Economics matters: one part of the subsequent Q&A session was on the hospitality industry – how the higher living wage, taxes and costs were crushing pubs – which our constituency is well served with. I suggested the real issue wasn’t the costs on publicans of selling beer, but how the dramatically slashed discretionary earnings of workers – a result of inflation (always a tax on the poor), higher taxes, higher energy costs, increased council taxes, and wages below inflation – means they can afford less beer, is the real problem for pubs… and all that said as we sipped wine in a marvellous swanky yacht club, of which I am a member.

I suggested the Tories current propaganda of painting Sir Kier Starmer as vacillating between policy decisions, and the Labour Party as dangerous communists only pretending to care about the economy, wasn’t fooling the electorate – every barb the Tories throw can be levelled straight back at them. Angela Rayner may or may not have mistakes on the tax bill after selling a house, but Rishi’s wife was Non-Dom even as he took the Chancellor’s seat. I took issue with comments blaming failing local governments, which are going bankrupt almost daily, as not an result of bad spending decisions, but the Tories having inflicted austerity spending cuts through swinging cuts in support to councils – a stealth cut to spending.

Focusing their efforts on cosmetic policies like the transfer of illegal immigrants to Rwanda and Stop the Boats, or criminalising rough sleepers, might play to their existing right-wing voters (and deter them from defecting to Reform), but leaves them vulnerable to delivery failure. Inheritance Tax gets the 5% of wealthy voters who will vote Tory come hell or highwater, is not an issue for most… although the party will try to persuade them it is..

Repeatedly reciting the myth “Labour can’t be trusted with the economy”, when their own recent record is so appalling, is backfiring on them. The current catastrophic failures of privatised state infrastructure – particularly Water and Rail – suggest the opposite is true: it’s the Tories who should not be given the keys to the Treasury. Let he/she without sin cast the first stone….

In terms of political cycles the last 14 years of Tory Government is ripe for reversal. The next government may or may not be much better – but it’s time to give someone else a chance.

That’s when I dropped my bombshell – at least it was in a room full of Tories – suggesting “it will be better for Britain if the UK elects a substantial Labour Majority”. At present the polls suggest the Tories may drop below 100 seats. Labour may win with the biggest ever electoral swing in their favour, but polls are often wrong, and respondents increasingly hide their true intentions.

Even with a substantial swing vote, Labour  could end up with a majority of just a few seats – in which case Starmer’s new government could be fatally weakened by a small number of left-wing MP’s using their effective veto to determine the government’s path. Effectively it will be no better than what the Tory Reform Group of Right Wingers under the Minister for the 17^th Century, Jacobius Rees-Mogg, did to Teresa May.

In the interest of the nation, Labour need a strong majority. Naturally, my MP, Paul, disagreed with me. Stopping Labour is the main focus of the Tories. But with what? More of the same? I will await with considerable excitement to read the Tories plan to reverse the last 14 years of dither, dissent and directionless wobble, with anything better. I will critique both Parties manifestos ahead of the election – I am not expecting much in the way of laughs…

I suspect Labour are trying too hard to be risk adverse into this election – they are trying to be better Tories than the Tories were with their multiple hedged promises on the economy. I’d actually prefer some radical policies and clearer ideas on promoting growth.

Interestingly, no one asked any questions about immigration (supposedly the big issue for Tory voters) or Brexit – the gift that keeps giving in terms of isolating the UK. The issues that most concerned this small selection of Tory supporters were largely about repealing inheritance tax and the credibility of the party – how can they support it when it has so compromised itself?

I had a chat with the MP after and suggested he should spend the next parliament continuing his good work on behalf of constituents and building up his reputation as a competent politician. When the next electoral cycle turns, he’ll be well placed for the upside. And I reminded him of the importance of an effective opposition party in Government.

What does it mean for markets? That is a yet unclear. The Tories may further collapse following the May 2^nd Local Elections, or they may yet rally into a late Election. However, the likelihood is a new government – and that’s well worth looking towards.

Unfortunately, the lunch left me a difficult moral dilemma: I will support Labour in the election – wholeheartedly – but I like and respect our local MP. I summed up my position at the lunch, telling Paul I certainly could vote for him, but could not vote for his party.. Does the fact he will likely win and he is standing against a LibDem resolve my moral dilemma?

Anyway.. enough politics… more about the opportunities the UK Election will throw up later.

Bill Blain

Strategist – Author of the Morning Porridge

Wind Shift Capital