‘An electoral liability’ – business loses patience with PM

“A confederacy of dunces,” sighed Crispin Odey, delivering his verdict on the MPs vying to dethrone Boris Johnson and lead the Tory party.

The hedge fund kingpin, once one of Johnson’s biggest backers, had just finished a long lunch with an old contact and was in devastating form.

“Who would you really want to run the Tory party?” said Odey. “Each of them has blown it. It’s come too early for some of them. I have no regard for Boris. He has never followed through on any policy. He was my friend until Brexit was done and then he just cut me dead.”

The Brexiter, who made hundreds of millions of pounds betting against sterling in the wake of the vote to the leave the EU in 2016, represents a growing chorus of leading business figures – from across the political spectrum – who have lost patience with the prime minister and the Tory party.

“I expect politicians to be appalling and to behave badly but even by their standards he behaves badly,” said Odey, frustrated that Johnson has not delivered the no-holds-barred Brexit he wanted to see, adding he concurs with the “anger” vented by the PM’s former adviser, Dominic Cummings.

Sir Philip Hampton, the former chairman of Royal Bank of Scotland, drugs giant GSK and Sainsbury’s, said traditional good relations between big business and the Conservatives had become increasingly frayed.

Business leaders have clashed with the government over the handling of Brexit and Covid in recent years, and relations have failed to recover from Johnson’s reported “f**k business” retort in 2018 to bosses’ concerns over a hard Brexit.

Hampton said: “Since the financial crisis, the Tories have been less clearly the party of business. The windfall tax [on energy giants] just underlines that.“Boris has become an electoral liability. Do the Conservatives think he will help or harm them in the next general election? Most of the signs are he is not helpful to them.”

Under Johnson and his chancellor, Rishi Sunak, the Tories have been on a tax-raising spree, in part to fund the huge pandemic bill. With corporation tax to begin rising to 25% from next April, that will contribute to the biggest UK tax burden since the 1950s.

Hampton was also unconvinced by many of Johnson’s business policies, such as the privatisation of Channel 4. “Channel 4 is a success story and not a burden to government. It’s a bit like the crown marks on pint glasses, it doesn’t seem a terribly important issue to go after.”

Phones4U founder John Caudwell, the billionaire Tory party donor, said he was frustrated that his repeated calls for investment in big infrastructure projects, an apprenticeship drive and a tax-free zone to create a “renewables energy city” had fallen on deaf ears.

He believes Tory infighting has damaged attempts to repair the economy post-Covid and said “more focus on unity and economic recovery is needed”.

“We are almost certainly facing a recession,” he said. “The government has two choices: one is to carry on tinkering with the economy. The other is visionary with a bright future.

“Rather than prudence we need to borrow on an unprecedented scale and invest wisely, productively and profitably.”

Sir Martin Sorrell, the advertising executive and chairman of S4 Capital, said Johnson “hasn’t tried to cultivate business like previous incumbents, like [David] Cameron and [Nick] Clegg”. “It doesn’t bode well, does it?” said Sorrell, who has been glued to the news coverage in recent days. “Businesses want firm action to deal with the issues so I think it’s just raised the level of uncertainty and probably made people more hesitant.”

Johnson did, however, find support from two familiar figures. Conservative peer and JCB chairman Lord Bamford, whose family and businesses have given about £14m in cash and gifts to the Conservative party since 2001, was one of several donors who signed a letter on Monday night calling on Tory MPs to give him their “unwavering support”.

He said in a statement: “At a time of huge geo-political uncertainty with the war in Ukraine, and with inflationary pressures threatening to undermine post-Covid economic recovery in the UK, our country needs leadership and Boris Johnson is the best person to do that job right now.

“We need to remember that the decisions taken on the big issues, particularly around the pandemic and Ukraine, were the right decisions. The prime minister should now be given the support he needs to deliver for our country on the economy, making the most of our Brexit freedoms.”

Meanwhile, Gerard Lyons, former policy adviser to Johnson when he was mayor of London, was optimistic that the prime minister could survive, despite the huge rebellion. “He needs to pull some policy levers in order to keep the confidence of his fellow MPs,” Lyons said. “If he pulls the right levers and they work he can fight the next election.

“Housing needs to take centre stage initially with the aim of turning ‘generation rent’ into ‘generation buy’. But he also needs to address the squeezed middle and reduce the overall tax burden. Whether that waits until the budget remains to be seen. I think it should happen before then.”

Paul Dales, chief UK economist at Capital Economics, said Johnson may “double down on Brexit” and “loosen fiscal policy further to try to boost his political standing”.

He added: “That may result in a weaker pound, a stronger economy and higher inflation for longer, which would support our view that the Bank of England will raise interest rates from 1% to 3% next year.”

With the Tory party in turmoil, businesses frustrated and a cost of living crisis eroding consumer confidence, time is not on Johnson’s side.