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UK Politics: Is Liz Truss being prematurely written off?

Paul Krishnamurty
06 September 2022

Liz Truss may well exceed historically low expectations

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As the betting implies a relatively early exit from office, Paul Krishnamurty takes a contrarian position and says Liz Truss is well capable of exceeding low expectations...

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Never before has a new Prime Minister faced such a challenging in-tray. Britain's economic forecasts, even compared to struggling rivals, are grim. A winter of discontent looms large. The events of 2022 have slaughtered the Tory brand and the party is deeply divided following the removal of Boris Johnson.

Much of the commentariat, including plenty who were once on the side of any Tory, deride her policies and obsession with image. The polls are dire, implying Truss was a worse choice than Rishi Sunak. The betting signals are grim, too. The odds in our new Liz Truss Exit Date market imply she has around a 30% chance of still being in office come 2025.

NEW Westminster Voting Intention:
CON 33% (+3)
LAB 43% (-1)
LD 11% (+1)
SNP 4% (-1)
GRE 3% (nc)
Others 5% (-1)
*Changes are in comparison to Survation polling July 8th 2022
Details: https://t.co/OdVvBPdZNo pic.twitter.com/0M22kNQPvI
-- Survation. (@Survation) September 5, 2022

So, should bettors buy into this narrative and back an early exit? Or could this be another opportunity to take a contrarian position, because the market is too stuck in the moment, not factoring in the potential for fortunes to change?

When I first put up Liz Truss for PM 15 months ago, she was a 32.031/1 chance, whereas Rishi Sunak and Keir Starmer took out around 45% of the book. The key to successful betting on politics is thinking ahead, trying to forecast the trajectory of events and their effect.

During the leadership contest, I couldn't have been more scathing about Truss' chances among the wider electorate. I stand by the argument that she was an inferior pick to Sunak or Penny Mordaunt but, on reflection, that may have been prematurely dismissive.

Will there be a honeymoon?

It is standard procedure for the British public to give incoming Prime Ministers a honeymoon. Boris Johnson almost doubled the Tory share in opinion polls when assuming power in 2019, and won a big majority before the year was out. In Theresa May's early days, the Tories hit new highs in the polls, around 50%. When Gordon Brown replaced Tony Blair in 2007, he swiftly turned a deficit into a big lead.

Current polls do not point to a repeat for Truss, which must be a worry, but that may well be a reaction to the leadership contest and government inaction on the cost of living crisis. It is heavily briefed that Truss will freeze energy prices for consumers and businesses until the next election. That could be transformative.

Energy price freeze to prove a vote winner

The commentary around politics is driven by a small, ultra-engaged section of the public. Political professionals, journalists, activists, those of us addicted to Twitter. Whatever our politics, we've known and worried about soaring gas prices for months. We've discussed potential solutions and gamed out scenarios. To us, the government's inaction has been frustrating and a sign that they have become clueless about politics.

However to the less engaged public - the overwhelming majority of voters - this has been less of a political subject than simply a source of terror. Voters wondering whether they will lose their savings or even homes. In that sense, it is reminiscent of the early days of Covid, when the government scrambled to react and the most doom-laden predictions entered the public conversation.

What ultimately happened is that - irrespective of the reality or how ultra-engaged politicos perceived the government's performance - the Conservative Party were rewarded by voters.

Remember Covid and the vaccine bounce

There was a 'vaccine bounce'. That providing a vaccine was a basic function of government, replicated by all our neighbours, was irrelevant. The public were grateful for the furlough scheme and for what they perceived as politicians taking their fears seriously, delivering responsible messaging every day. Indeed, around the world, incumbents prospered in the short-term from Covid.

Assuming the energy price freeze materialises, Truss may very well get a similar boost from relieved consumers and business owners. It may define her and provide a bank of goodwill, as the furlough scheme and vaccine did with Sunak and Johnson for some time. That bank would be hers to squander. I very much doubt she will make the same mistakes they did.

Labour's lead is soft

Also, do not overestimate Labour's position. Their poll lead was not hard-won. It was handed to them by Johnson's corruption, shambolic government and constant lying. Labour are merely in a similar mid-term position as they were in 2013, or 1990. In those scenarios, Ed Miliband and Neil Kinnock went on to lose the next election. Keir Starmer is yet to prove he is a winner, and has not sealed the deal with the electorate.

In order to win most seats at the next election, they need to gain at least 70 seats from the Conservatives. That is a tall order for any opposition party, let alone to achieve the 124 seats required for an overall majority. Those tasks will be made harder by boundary changes.

Ukraine support will help Truss build her brand

By the time that election comes around, today's narratives will be ancient history. It is easy to imagine an alternative, in which Truss is rewarded for her vocal support for Ukraine and opposition to Vladimir Putin. If Russia's invasion fails, (as I expect), those who opposed them most vociferously will be able to claim some credit.

A scenario where the forecast economic disaster doesn't quite materialise and the bank of potential Tory voters survive with their wealth in tact. Where almost any policy failure can be blamed on the war, or the fallout from Covid.

In that scenario, the all-important swing voters may grow tired of hearing Labour and other opposition politicians complaining. The Tory transformation to English nationalism could bear fruit from the never-ending stand-offs with the EU and SNP. Extreme-Right policies such as trafficking migrants to Rwanda could appeal to enough of the target audience, spread efficiently across the country.

Granted, this is a positive take for Truss and the Tories. Alternatively, an ever more right-wing government, shorn of its best communicators, could cement the so-called 'progressive alliance', which votes tactically to punish the Tories across the land. Both scenarios are very much in play. My point is merely to urge caution before dismissing the Truss regime.

Back Truss to survive until 2025

Regarding the exit date betting, I think 2025 or later is under-rated at odds of 3.1511/5. I do think the next government will be led by Keir Starmer, even if Labour don't win quite enough seats. I can't envisage the Tories being propped up by any other party.

However the election probably won't take place until late 2024. If Truss does lose, and resign, there will be a protracted leadership contest that will last longer than the one just finished, due to the Christmas break and lack of urgency in finding a replacement. So by backing 3.1511/5, we may well be simply backing her to survive until the election. A good value bet.

Follow Paul on Twitter and check out his website, Political Gambler.

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Back 2025 or Later in Liz Truss Exit Date @ 3.185/40

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Prices quoted in copy are correct at time of publication but liable to change.

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