Why Penny Mordaunt’s pre-rebellion matters

Another day, another Tory rebellion. Liz Truss needs to think of ways to constrain spending and tough decisions lie ahead. One option is to increase benefits in line with average salaries (6.2 per cent), rather than CPI inflation (9.9 per cent). Her aides are preparing the argument. Why should someone on welfare see their income rise faster than someone in work? And with public sector wages rising at just 2 per cent, can government really give a near-10 per cent rise to those on benefits – while saying that there's not enough money to do the same for nurses, teachers etc?

Those around the PM think that, unlike the 45p tax rate cut, this is a tough-love, fiscal-responsibility battle that can be won. 'We have to look at these issues in the round,' said the Prime Minister on the BBC Radio 4 interview broadcast this morning, 'We have to be fiscally responsible.’ So she is considering, at very least, uprating benefits by earnings rather than inflation. But if she’s ready for a fight, then so are her Tory opponents. Intriguingly, Penny Mordaunt now seems to be leading them.

As Isabel Hardman mentioned yesterday, Chloe Smith, the new Work and Pension Secretary, is not using the language of tough love ('protecting the most vulnerable is a vital priority for me and this government'). Damian Green is one of several MPs making similar noises, as is Michael Gove and IDS. So Truss may struggle to get a lean settlement through the House of Commons. That’s why it matters that Mordaunt, the leader of the House of Commons, has declared herself in favour of increasing welfare by inflation. Such open freelancing by a cabinet member is rare and indicates a collapse in discipline.

'I’ve always supported – whether it’s pensions, whether it’s our welfare system – keeping pace with inflation. It makes sense to do so,' is Mordaunt told Times Radio. 'We want to make sure that people are looked after and that people can pay their bills. We are not about trying to help people with one hand and take away with another.' She'll have known – as all cabinet members will know – how unhelpful this is to Team Truss.

Uprating benefits to inflation would be hugely expensive due to the staggering number currently on out-of-work benefits: 5.3 million in total. This figure has yet to be acknowledged by the government (which prefers a more narrow definition of unemployment) and can only be found by interrogating the DWP StatXplore database. There’s a six-month lag, such is the lack of attention to all this. But 5.3 million amounts to 13 per cent of the UK working-age population, rising to 20 per cent in Manchester and Birmingham and 25 per cent in Blackpool. Here’s the breakdown, which we keep updated on The Spectator data hub:

As I’ve argued, the real scandal here is the waste of human potential, more than the waste of money. We have a near-record number of vacancies in the UK – about 1.3 million (hence the pressure to relax immigration rules). To combine this with near-record numbers of people on welfare is, to put it politely, quite a feat. But it’s also a very expensive situation – and one set to become more expensive still. If welfare rates rise far faster than earnings, it further weakens the incentive to work – making one of Britain's hardest problems harder still.

This is a complex and difficult argument to make – and one distinguishing feature of Liz Truss's government is that it struggles to hold such discussions even with the Tory party, let alone the country.  That's why one of the plans being mooted by Truss’s opponents is to handcuff her, perhaps by forcing her to accept a Chancellor who would calm the markets and not collude with her to do things without sign-off from her cabinet (like cutting the 45p tax).

Another plan is for the cabinet to assert itself as a moderating force – and ensure decisions are no longer made by a Truss-Kwarteng duumvirate but in conjunction with the cabinet. This was Mordaunt’s campaign theme (leadership should be less about the leader, she said, and 'more about the ship'). George Freeman, who recently backed Mordaunt's for the leadership, has called for the cabinet to rise up and take back control from Truss.

That's why this other remark from Mordaunt to Times Radio is so interesting: 

“She [Truss] wants cabinet to be a forum where we can really kick the tyres on policy, where we can have frank discussions that aren’t leaked. It should be consultative. We should take decisions together.

Truss wants no such thing. Her premiership has so far been distinguished by major decisions being taken by a tiny number of advisers very much excluding her cabinet. So this is a pre-rebellion from Mordaunt: she is describing a situation she’d like, not one that exists. Perhaps in hope of making a new reality – and having a decent narrative of opposition should she run as leader again. If the Leader of the House becomes leader of the rebellion, then things will certainly get interesting.