Sunak's steady approach

This is my last column of 2022, the only year the UK has had three serving Prime Ministers and a year at which the speed of events brought challenge and forced change.

This time last year we were hearing news about the new Omicron variant of COVID. There was worry that it would be a dangerous and fast spreading strain. Flights to different countries were banned and some restrictions were being brought back in. In fact, the Government was being criticised for not being tough enough with so-called independent SAGE, remember those Covid alarmists, were asking for “an immediate circuit break to then enable limited mixing from 25th to 28th December”. In other words, Christmas was at risk for the second year running.

All the restrictions ended on 24^th February, people might not have noticed the date because it was the same day that Russia invaded Ukraine. There followed a series of sharp price rises in commodities which added to the inflationary pressures already in the system. The Government responded with more public spending on one-off grants and a subsidised energy price cap to shelter the public from the sharpest of the price increases in domestic energy bills.

Against this background the media and opposition parties were in full fury against Boris Johnson for his so-called ‘Partygate’ contraventions of covid rules, culminating in a fixed penalty notice for the Prime Minister and a subsequent no-confidence vote and later his departure from the job. The mini-premiership of Liz Truss followed and now we have Rishi Sunak, a Prime Minister who can do his sums and tackles problems with cool pragmatism. In my view the right man in the right place at the right time.

As we end the most difficult year for the Conservatives since 1997, it is worth considering the future.

Rishi Sunak has understood one thing, the economy is the most important thing to get right and the key to unlocking success is to tackle inflation and bring it down. For that reason, his recent budget curbed the Liz Truss tax-cut giveaway and strengthened the Government’s income by freezing tax-free thresholds. Tax cuts are instinctively Conservative but so is ‘sound money’, or in simpler terms, living within your means. After years of rising public debt due to Covid measures, including furlough, and energy price support, the new PM has made responsible choices.

Now there are strikes, and Labour is slightly on the back foot too, does it back the strikers or back the public? In the NHS, it is easy for a Labour politician to sidestep the core issue and blame the Government, but harder for Rishi Sunak to tell it like it is by saying of the nurses’ claim: ‘19% is clearly unaffordable’. The nurses have the benefit of a pay review body to which they can give evidence. The ambulance workers are going to be substituted with armed forces personnel when they strike. The Army cannot strike, neither can the police or prison officers. Perhaps a no strike rule for all emergency services is the right way forward, providing pay can be determined independently by a pay review body.

On rail workers, border force personnel, and in the NHS the media barely challenges the unions. When cuddly trade union leaders appear on TV to claim the strikes are about supporting public services they are allowed to get away without the central issue, their pay claim, being scrutinised. Part of this is exceptionally poor management communication. The disputes are being dealt with by organisations like rail companies, that have been given the freedom to run things by the Government but are perfectly content to allow their disputes to be debated in the media and political arena rather than on their own merits. I’d like to see the Rail Delivery Group (the rail employers organisation) explain its position to the travelling public as often as Mick Lynch explains his.

The Government is there to legislate for, not to run the railways. It is there to set out objectives for the NHS, not to run every hospital ward. It is a regulator, through OFCOM, of postal services, not a participant. Rishi can take some action, he can claim a mandate from the Conservative election manifesto to take legal powers to blunt the effects of strikes by introducing laws that are widespread in Europe to ensure minimum service; I notice Labour loves a European approach on subjects like human rights but not on rules for industrial action!

This week has been one of difficult economic news, we have had poor growth data, the latest unemployment figures, the latest inflation figures, and today we will see what the Bank of England has to say about interest rates, which are likely to go up again.

However, the darkest hour is before dawn; inflation will fall, interest rates do affect people with a mortgage, but they are fewer than 30% of the population, meanwhile savers are seeing a resumption of more normal trend rate of return on their money. Employers still have vacancies, and many can weather the downturn by offsetting them, rather than making redundancies.

Rishi Sunak will even enter the New Year with some recovery in the opinion polls, the latest Savanta ComeRes poll showed a halving of the Labour lead. Labour’s recent policies have hardly set the world on fire; half-baked reform of the House of Lords does not address the big economic issues of deficit, tax and inflation. Steady Sunak is all about credibility with the markets and common sense with the public, he has a calm and rational approach that should gain support over time as the results start to pay off in the months to come.