Jeremy Hunt has spoken on tax cuts – but is his party listening?

The best tax cut right now is a cut in inflation, Jeremy Hunt said. He was speaking to tech business people in the City of London, but his words were addressed squarely to Conservative MPs.

Some of them have proved oblivious to the biggest real-world demonstration of practical economics recently staged by the government of a rich democratic nation. They want tax cuts at any cost. When Liz Truss tried to deliver them, it turned out that the cost was that the markets went into meltdown, taxes had to go up and the government needed a new chancellor and then a new prime minister.

What was the lesson of that, do you think? For Truss herself, according to a “colleague” of hers, apparently, it was: “Liz believes that the policy was right but that she didn’t get the political backing she needed.”

This is Tory Corbynism. Not just that the right policy is something that is considered to be outside the mainstream, opposed by elite, establishment opinion, but also that this bold and heroic mission has been sabotaged by a fifth column in the leader’s own party. Coincidentally, in the cases of both Jeremy Corbyn and Truss, the saboteurs were “Blairite” MPs in their respective parties.

Tory Corbynites seem more impervious to practical refutations of their beliefs than the Labour variety. Labour Corbynites still complain loudly that Blairites worked secretly to stop their leader winning the 2017 election, but after the emphatic defeat of 2019, they have retreated from public view with almost indecent haste.

Tory Corbynites, on the other hand, have responded to the utter destruction of their political ideas by saying that they were basically right – just one or two details of implementation (trying to do too much at once) needed to be tweaked, and the interference from agents of Rishi Sunak needed to be repulsed, and we would now be in the land of low-tax heaven. Truss, spotted having lunch in Westminster this week with Mark Littlewood, director of the punk-Thatcherite Institute of Economic Affairs, is expected to make a speech setting out this argument before the Budget on 15 March.

No surprise, then, that Hunt felt the need to get out ahead of her and try to explain reality, again, in his speech today. Inflation is a problem, he said. But it was hard for him to be much more explicit, because disunity is also a problem, as the prime minister was reminded last week when he told a Conservative audience in the North West: “You’re not idiots.”

It was a compliment that backfired, because there are so many Tory MPs who believe in precisely what Sunak was calling idiotic, namely “tax cuts now”.

So Hunt tried the opposite course, of appeasement. Instead of explaining that unfunded tax cuts would spook the markets and push up interest rates and therefore inflation, he said he too wanted low taxes. Or, as he put it, “the most competitive tax regime of any major country”.

But that means restraint in public spending, he explained, in a message ostensibly directed at a fiscally incontinent Labour Party. He quoted a made-up number compiled by Tory HQ by putting a price on anything said by any Labour frontbencher that suggested that life could be marginally better under a Labour government.

It was a message actually intended for his own MPs. If they agreed that Labour couldn’t have a free lunch, then neither could the Tories. The effect on government borrowing of (largely imaginary) Labour spending plans and of Trussite demands for tax cuts would be the same.

But too many Tory MPs aren’t listening. If the chaos in the markets and the collapse of Truss’s premiership didn’t convince them that her policy was unsustainable, then some mild and coded words from a chancellor they regard as the enemy within won’t do it.

Most Tory MPs know that they cannot have tax cuts in this Budget, but there are two overlapping minorities in the parliamentary party – the Trussites and the Johnsonites – who don’t want to hear what Hunt is saying. That makes the normal business of government difficult for Sunak and Hunt, like trying to drive a car with the handbrake on.