October 3, 2022 - 7:00am

To survive, Liz Truss needs to do three things. 

Firstly, she must pull the Conservative Party out of its tailspin. Labour poll leads that start in the upper-teens and go a whole lot higher are not sustainable for a Tory leader. 

Secondly, Truss must retain her authority as Prime Minister. This is distinct from merely remaining in post. It is possible for a PM to be in office, but not in power, which would be the case if she U-turned on her flagship policies. 

Thirdly — and this one is really important — she mustn’t crash the economy again. It’s conceivable that Truss could recover from the events of the last week, but not if they’re repeated. Though the sudden collapse in Sterling has reversed itself, a second nosedive would sink this government for good. 

So, those are the essential requirements. However, while she might achieve any two of these must-haves, achieving all three is impossible.

Let’s start with not re-crashing the pound. If Truss wants to go through with her tax cuts, then the money markets will want to see spending cuts to pay for them — at least in part. That’s economically viable, but politically toxic. How does she expect her MPs to sell a combination of tax cuts for the rich and what looks like a plan to freeze benefits for the poor? Over the weekend, Michael Gove made his disquiet heard — and he’s leading the way for others.

Alternatively, the government could satisfy the markets by postponing the tax giveaway. What the rich would lose in their bank accounts, the Tories might regain in their poll ratings. The more dystopian parts of the deregulatory agenda could be dropped too. However, if Liz Truss cancels her libertarian policies, then what would be the point of her? She would lose her backers, her Chancellor and what remains of her authority. 

The final option is to go ahead with the tax cuts, but to finance them by taking on more debt instead of taking an axe to the welfare state. The mini-budget would be saved and the Tories could avoid annihilation at the next election. However, that brings us back to the economy — and the very real risk of another market meltdown, in which case it’s all over anyway. 

So, in short, this is Truss’s trilemma: she must either sacrifice her party or her authority or the economy. As things stand, she’s gone with the first option. That’s probably her best bet. A Tory tailspin isn’t exactly an ideal context for a Conservative party conference, but compared to the other two options it’s less immediately fatal.

A wipe-out in the local elections next year would be the end of her, but that’s several months in which something might turn up. If growth is higher than expected or the UK clearly outperforms the EU, enough voters could be won round to Trussonomics. 

However, long before that, she’s got to persuade her own MPs to vote for her cuts to tax and spending — which will be tricky because rebellion is afoot. According to Sam Freedman’s latest count, fifteen Tory MPs have spoken against the scrapping the top rate of income tax.

So while Liz Truss has bought herself some time, it’s still running out. 

8 am update: The Chancellor Kwasi Kwarteng has announced a U-turn on scrapping the top rate of income tax, which he said “has become a distraction from our overriding mission”. However, it was in fact emblematic of his government’s overriding mission — and thus the overnight decision represents the beginning of a shift from the first option (sacrificing the party) to the second (sacrificing the government’s authority). 

Peter Franklin is Associate Editor of UnHerd. He was previously a policy advisor and speechwriter on environmental and social issues.