With the repercussions of last week’s reshuffle still reverberating, you may have thought this recess week would have been a quieter affair. That wasn’t to be, with immigration, trade deals and finance all up for debate this week.
A consolidated cabinet
Last week’s cabinet reshuffle is all but complete and the centralisation of power in government is all but set in stone, with all four key government posts – the ‘great offices of state’ – held by those who threw their hat in the Vote Leave ring back in 2016. Regardless of the commitments to unite the country, focus on spending in the midlands and the north and crack down on crime, this is still very much a Brexit-focused government and Johnson has structured his cabinet accordingly.
The cabinet is thus united by an optimism about the potential opportunities that Brexit poses, and the UK’s ability to overcome any issues that arise. However, it is also united by an attitude that puts UK sovereignty above legitimate business concerns. Perhaps this should not come as a surprise given Johnson’s famous expletive towards business concerns back in 2018, but for those still nervous about the myriad of hurdles that need to be faced, the prospect of a cabinet all conforming to an unwavering belief in Brexit over and above considerations such as boarder frictions, this will not be reassuring. As an anonymous civil servant wrote in The Guardian earlier this week, “a combative and ideologically conformist approach is spreading fear in Whitehall – and may eventually derail this government’s towering ambitions.”
Back to Brexit
On the other side of the Channel, national ambassadors from the EU met this week to agree their negotiating mandate for the trade talks with the UK. Reports from the meeting indicate that those in attendance – especially France – pushed for tougher language in light of indications that Johnson is rowing back from commitments made as part of the Brexit divorce deal with the EU. Final approval has now been deferred until next week, while official negotiations are due to start in March. An atmosphere of ‘distrust’ is now said to be pervading both sides of the negotiating table with the relationship so reduced that hostilities are now being exchanged over PowerPoint… teams from both the UK and EU are using the slides to ‘call out’ dishonesty on the other side, but the so called ‘PowerPoint Wars’ do neither party any favour when all eyes are on them for the tough task ahead.
In a seeming attempt to all but confirm the fears of businesses, the government’s latest immigration proposal was published this week to widespread media attention. It outlined a closure of UK borders to so called ‘low-skilled’ workers after Brexit and set a minimum salary threshold of £25,600, with flexibility for those with a background in certain areas, such as STEM. In spite of the Twitter outrage and op-eds disparaging the scheme, the points-based proposal has likely received the exact reception hoped for by from No. 10 and its chief advisors.
With the plans triggering countless articles about whether the parents of certain famous faces would have been allowed in to the UK, the Tories have managed to avoid discussion of the numbers they have in mind. The lack of a net immigration target has allowed the government to publish a proposal that demonstrates its pledge to be strict on immigration, while providing the flexibility to adjust and tweak the system as needed over the next parliamentary term. In this manner, Johnson has avoided the trap Cameron set himself back in 2010 when he pledged to reduce net migration to less than 100,000 a year.
That said, the proposal as it stands will have significant implications for both businesses and the public sector, especially for those relying on lower-skilled workers. Business leaders have been urged to ‘act fast ahead of the government’s end of year deadline’ and find new hires amongst the eight million ‘economically inactive’ UK residents. Given that an estimated 88% of those are students, carers, the retired and long term sick, the feasibility of this is a big concern… and one to which our home secretary has not been able to confidently respond in any media interviews this week. An interesting analysis from the Women’s Budget Group has also flagged that in addition to shortages in crucial sectors such as social care, the new system is also likely to favour male migrants over female, deepening gender inequality over a long period of time.
It’s the finance countdown
With yesterday’s removal vans taking away the final Javid family belongings from Downing Street, Rishi Sunak is firmly in the driving seat. But there’ll be no easing in period; this week’s confirmation leaves the chancellor only 18 days to prepare for what is arguably the country’s most important budget since the financial crisis. This is a crucial moment for Johnson’s government to demonstrate that it can be both responsible and open the funding taps for public services. It’s notable that the prime minister has placed his hopes on a relatively inexperienced MP who has spent limited time at the dispatch box. A great many eyes will be on Sunak on the day to judge how he copes with the pressure.
The real issue for Sunak will be whether to retain his party’s fiscal rules (promised during the general election), which state that the Tories must run a balanced budget by the middle of this parliament. But as we saw with last year’s spending review, Johnson and his team feel little obligation to pay more than lip service to their commitments on the economy. The power of the Treasury is now firmly in the hands of Johnson, so it’s highly likely they will be relaxed once again.
A departure from the rules will enable the government to raise day-to-day spending through borrowing, freeing up funds for infrastructure, education, local services and justice, without having to raise taxes considerably or make cuts elsewhere. For fiscal conservatives, it’s a risky move given the full impact of Brexit is unlikely to be seen for another two years, at the very least. Although no-one would argue that public services are not in desperate need of additional funds, the rejection of the Tory ambition to balance the budget – a cornerstone of policy during the austerity years – further demonstrates Johnson’s sharp rejection of his Tory predecessors’ conservative fiscal approach, all the while embracing a seemingly right-wing view towards concerns such as immigration and law in order. As Owen Jones points out in The Guardian, this is almost a complete 180 from the socially-liberal, fiscally-prudent policies the Tory party delivered under Cameron and Osborne.
This week has seen Johnson further align himself with the political sensibilities of the electorate, something that has not gone unnoticed on the left. He is likely to capitalise on this as he tries to double down on his pre-election commitments – to their high spending manifesto, tough attitude towards Brussels, and opening up trade deals across the world. That said, cracks will form as the EU negotiations begin, and it will be interesting to see how the new Labour leader responds. In order to offer an effective opposition a new approach will likely be needed – Johnson’s continuing surge in the polls demonstrates that Labour cannot afford to rest on the same old accusations of under-funding and rhetoric against Johnson’s vision for the nation.