October 18, 2023

The sands of time are fast running out on the current UK parliament. We have just witnessed what will almost certainly be the final set of Party Conferences before the next UK General Election.

In theory this might take place as late as January 2025, but Conservative Party strategists have already earmarked three potential dates next year – 2 May (to coincide with local elections), 20 June (to allow those local contests to test the political temperature) and 3 October (to enable the impact of any economic recovery to be maximised before going to the country).

The Conservatives have been in office since 2010 and the fifth consecutive term they are seeking would be unprecedented in the age of universal voting.  Turbulence has been the new normal in British politics since the referendum of June 2016 when the UK people voted to leave the European Union. Remarkably it has been the Conservatives who have retained office throughout this period, winning two elections and holding office under five different Prime Ministers. However, the political and economic disruption caused by Brexit has been compounded by the adverse impact on the cost of living of the Covid pandemic and the Russia-Ukraine war. Inflation is at a 40-year high, and our national debt has almost tripled since the Conservatives came to office.

After all this upheaval there are now deep ideological and personality divisions within the Conservative Party. Privately most of its MPs expect the next election to be lost; the sense that it is ‘time for a change’ is now overwhelming.  Indeed, the current Prime Minister, Rishi Sunak, implicitly recognises this. His fresh pitch at last week’s Conservative conference was a daring one – to position himself as the candidate of change, rejecting the short-termism of all his recent predecessors. This has clear risks. For one it has antagonised former leaders – everyone understood that there was no love lost between Sunak and either Johnson or Truss, but in recent days David Cameron and Theresa May have also been publicly critical of him.

Sunak is a highly intelligent, diligent administrator never happier than analysing data and spread sheets.  After the chaotic drama of recent years, he offers competent, stable governance.  But in truth he probably lacks the inspirational qualities that are also now needed to revive the Conservatives’ fortunes. The opinion polls have been remarkably consistent since the beginning of the year, and they all point to a crushing Conservative defeat.  The events that are now playing out in Israel and Gaza may also pose a huge threat to short-term global economic confidence and growth. If history is any guide, a surge in oil and gas prices may drag Western economies into a recession over the next year or so, which is likely to be to the detriment of incumbent governments having to seek re-election.

Nevertheless, it is worth remembering that one of the great charms of politics is its sheer unpredictability.  It was only a little over two years ago (May 2021) that the Conservatives won the traditionally safe Labour seat of Hartlepool on a massive swing at a by-election. The confident talk then was that the 2020s would be the Boris Johnson decade and most commentators wrote off the prospects of Sir Keir Starmer, invariably predicting that he would end up as just another name in a lengthening list of former Leaders of the Opposition before Labour eventually made it back into office.

Today the self-same political experts are absolutely adamant that Starmer will win the next election. Perhaps he will – but to his credit he and his team are taking nothing for granted. The tide began to turn on his leadership not only as a consequence of unforced government errors, but when Starmer was able to persuade people of the calibre of Rachel Reeves (Shadow Chancellor) and Yvette Cooper (Shadow Home Secretary) to return to the front bench fold.

They have been followed more recently by a stream of high-flying civil servants in key back-room roles. A further bloc of experienced operators from the Tony Blair and Gordon Brown foundations have also returned to the colours as Government office now appears within their grasp.

One of the reasons we have heard much in recent months about Labour’s plans for constitutional change and blue sky thinking about reinventing the public sector is the implicit recognition that the state of the public finances will give any incoming Labour government very little room for manoeuvre on public spending.

Here is the strange paradox. Since the financial crisis of 2007-08 and the era of stagnant or diminishing living standards UK voters have moved well to the left on economic issues. Today a majority even of Tory voters support renationalising public utilities, such as water and the railways, and introducing wealth taxes for the super-rich. But this falling away of public support for free markets and capitalism has not resulted in people being persuaded to vote for Labour politicians espousing these values. This will lie at the heart of the Labour appeal over the next year which is likely to focus more on stability than radical change.

The strapline of Keir Starmer’s speech at his Party’s conference was a “decade of national renewal”. This echoes recent interventions and interviews from his most prominent and trusted younger generation spokesmen from Rachel Reeves to Wes Streeting and Jonny Reynolds. It is an express call for at least two terms of government.  In the first the offer is to stabilise the UK economy and public services; only in a second term will radical new centre-left investment and initiatives be possible. Ironically after 13 years of Opposition Labour’s appeal is more one of security and stability rather than change. This mirrors the strategy in 1996-97, the last time Labour came into office (under Tony Blair) when the essential message was to change the faces in government but not to do anything too radical in policy terms.

Many of Labour’s most fervent supporters are looking for a much bolder approach. But they are unlikely to get their way.  Instead, the ‘steady as she goes’ strategy is playing out in two other ways. First in the ruthlessly tight grip that the leadership has taken over candidate selection. It is very wary of any internal dissent and wants only compliant centrists to make up the bulk of the incoming parliamentary party. This is a far cry, incidentally, from many new MPs in the 2017 and 2019 intakes who were left-wing activists in the image of the then party leader, Jeremy Corbyn. Many of these MPs have kept their own counsel in recent months, but they will remain a presence on the Labour benches for years to come.

Finally in the area of tax and spend, Starmer and Reeves are determined to take an orthodox approach and will likely emulate Blair/Brown in the run-up to 1997 by pledging to keep to the outgoing government’s budgetary plans. We were then blind-sided by Gordon Brown rustling up some ‘new’ money, so to speak, by altering what appeared to be arcane rules by abolishing substantial tax relief on dividends that pension funds received on their investments. This £6 billion annual tax grab along with the 3G spectrum auction which brought in an unanticipated £20 billion windfall gave the incoming government something to invest. It is worth thinking now about equivalent opportunities that an incoming Labour Chancellor might pounce on to give herself some room for fresh initiatives.

Since writing this economic and political piece, another war has emerged in the Middle East and whilst this might have some short-term effect on the oil price, the major concern has to be for the people of Israel and Gaza and their suffering as a result of the terrible acts of murder and savagery along their northern border.

Written on 11 October 2023 by The Rt Hon Mark Field, former Member of Parliament (MP) for Cities of London and Westminster and Consultant at Buchler Phillips, an independent boutique firm with an impeccable Mayfair London heritage, specialising in corporate recovery, turnaround, restructuring and insolvency.

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