The honeymoon is over
Next week Rishi Sunak will deliver his first budget as chancellor, in the wake of floods, a derailed Heathrow expansion, simultaneous FTA talks and the sharpest FTSE drop since the credit crunch. His Home Office counterpart Priti Patel is barely holding on after her permanent secretary resigned and announced he was suing for constructive dismissal, while also giving credence to bullying allegations reported by others in Whitehall. And all the while, the science fiction nightmare that is Covid-19 unfolds both in the world and the public imagination.
With local elections in May and the election of a Labour leader in April, the government has its hands full — which is all the more difficult now that those hands are having to be washed for 20 seconds regularly or risk facing the wrath of Matt Hancock.
Budgeting for disaster
The Conservatives went into the 2019 general election with a manifesto promising a true end to austerity and greater public spending than had been seen since Labour left office in 2010. Fiscal rules were implicitly abandoned in favour of ‘levelling up’ and seizing the opportunities it claimed would be unleashed as the UK became an independent trading nation. The government was given a mandate to increase spending while also committing to reducing the tax burden for average and lower earners by, for example, increasing the National Insurance threshold. Then events happened.
The devastation wrought by floods was not, fiscally speaking, something the Treasury was likely to lose sleep over, with officials already expecting extreme weather events, especially flooding, to become more frequent and economically impactful over the coming years. But it certainly wasn’t helpful. Coronavirus however, is the kind of event that contains a few too many unknowns. The range of possible economic scenarios that could be brought about by a viral pandemic, and the consequent effects on markets and public services as well as monetary and fiscal response calculations, are of a different order of magnitude.
If the virus turns out to be very easily spread, more deadly or significantly impactful on productivity, the NHS or Universal Credit, then hard decisions about spending priorities will have to be made. That means potentially deferring or cancelling, partly or entirely, manifesto commitments, only months after promising them. Already, it is speculated that no (genuinely) new headline-grabbing spending commitments will make it to the budget on Wednesday despite pre-Christmas expectations of a post-Brexit bonanza budget.
It is also being reported that Sunak is choosing to delay publication of the long-awaited National Infrastructure Strategy, which was scheduled in the Queen’s Speech to come out with the budget. This would not be a good start for a government looking to deliver for those affected by flooding and the collapse of Flybe, or those left behind voters in red wall constituencies, where transport links are typically woeful.
The government’s new ambition for this budget should be to avoid looking like the wheels are coming off early and instead focus on minimal delivery of commitments while showing reassuring signs of preparedness for the economic impact of coronavirus and the FTA negotiation outcomes. Whether Dominic Cummings will be satisfied with this uncomfortably Hammond-esque approach, given how keen he is to see the UK recast itself, remains to be seen. Investors will hold their breath.
Priti Patel's ugly situation
How long can a minister last when their permanent secretary resigns and takes the unprecedented move of suing for constructive dismissal? How long can they last when other senior officials, past and present, chime in agreement (privately at least) that her ‘leadership style’ was and is a potential breach of the ministerial code and employment law? How long can they last when even many party colleagues seem increasingly reticent to defend her against the allegations? Ultimately how long can they last when all of this is making headlines on a weekly basis?
Time will tell but the government has enough problems, some of which cannot be dealt with if the Home Office isn’t functioning properly, and most of which cannot be seen to be being dealt with if the narrative around the government’s competency is dominated by this story. Though getting rid of Patel risks losing favour with a cohort of hard Brexiteer MPs, that cost is eminently more manageable than seeing approval ratings drop precipitously less than six months into a parliamentary term while trying to put on a strong front to EU and American trade negotiation counterparts.
Following a substantial reshuffle and the resignation of Sajid Javid, Number 10 needs a more stable platform in order to project confidence and authority. Patel has failed to maintain good relationships with the civil service and has become a weak link in what could otherwise be presented (by spin doctors at least) as a united cabinet responding more or less effectively to the biggest challenges of the day.
Labour leadership
One can be forgiven for forgetting all about the Labour Party and its leadership election. Now, as ballots have been out for almost two weeks and with other stories taking the limelight, there is a Labour-sized hole in the current affairs agenda.
As good as silent on the big issues, the party also appears to be beset with administrative challenges in conducting its own elections. There are widespread reports that a very large number of Labour members didn’t receive ballots first time round and had to process reissues. Many have still to receive theirs. This may be partly the result of the influx of new members since December, but whatever the factors are it does not look good or help to reassure those that are worried that Long-Bailey supporters in the current Labour establishment may be conspiring to unfairly frustrate Starmer’s prospects.
The country needs an effective opposition and without one, bad decisions with lasting consequences are not merely more likely, but guaranteed.
Lurking in the background
And, again, because nobody is talking about it: the government still hasn’t published the Intelligence and Security Committee’s Russia Report on Russian interference in UK political affairs. The PM committed before Christmas to doing so once the committee was up and running again as he claimed it wouldn’t be appropriate to do so while it wasn’t sitting (which former chair Dominic Grieve correctly pointed out was a ‘bogus’ excuse). Unlike other committees, the members are nominated by the PM in consultation with the leader of the opposition and the chair is then elected by those members. It appears the PM has been in no rush to see this process completed, which is… interesting.
Rolling on without putting a foot wrong
Some commentators have given the government credit for its response to the Covid-19 outbreak, praising the fact that it seems to have done everything it is supposed to up till this point without any major gaffes. What this analysis misses out is the fact that it has been the civil service that has been running this response. Taking note of the press adoration being poured on chief medical officer Chris Witty in recent days, the PM and his ministers are looking OK on coronavirus precisely because they are letting the experts do their job.
They may be hoping that those same experts will take the flack as the crisis gets worse but that is not how this is likely to play out. Advisers advise but ministers decide, and there is plenty of time and room for the PM and his colleagues to make critically poor judgements and at that point the narrative can change for good.
Taking a wider lens, this is a party that has been in power for a decade and many of the big challenges the country is now facing — including insufficient flood protections, an overstretched NHS and impossibly complicated trade negotiations — are challenges that the party has had a key role in either bringing about or failing to solve thus far. A renewed opposition will be able to make this point to voters over coming years and it may be just enough ammunition to bring Labour back into contention.
The honeymoon is over, and no amount of rhetoric and populism will protect a democratic government from reality.