21 Feb 2020

Political poker: the PM shuffles his cards

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The cabinet has been re-shuffled. And so, after the strong hand dealt to the Prime Minister by the voters in December, he has now swapped a couple of cards in the pack and is set for the political poker which unfolds at home and in Brussels in the year ahead.

The departure of Sajid Javid from the Treasury was a jolt to everyone, including No 10, though the aftershocks were probably felt most keenly by Rishi Sunak, whose promotion was the standout moment of the day. A lot of attention has been given to his successful City career and his meteoric political rise, boosted in recent months by his very clear support for Brexit. Oh, yes, and there’s the small matter of having to deliver a Budget less than four weeks after his appointment.

That is a deadline to concentrate the mind of even the most experienced cabinet minister, never mind someone who was not in Parliament five years ago. Helpfully the system is well primed to support him on the Budget. So, without diminishing the scale of the tasks he faces in finalising the key decisions, getting to grips with the detail and mastering the political presentation, we can be confident the Treasury will deliver a solid framework and the necessary backup for their new leader.

The greater challenge for Mr Sunak will be to resolve the tensions between No 10 and No 11 on the political direction of travel – if the pre re-shuffle reports were in any way accurate, the fiscal blend of taxation, borrowing and spending was not settled between Messrs Johnson and Javid. Clearly the Prime Minister is impatient to power up his infrastructure and public spending commitments and was willing to sacrifice Mr Javid to signal to everyone where political authority rests. In time the traditional (dis)equilibrium between Prime Minister and Chancellor may re-assert itself, but for now No 10 rules.

The finance minister’s curse has not been limited to Horse Guards Parade in recent weeks. In altogether different circumstances, the Scottish Finance Minister, Derek Mackay, also resigned. This happened on the eve of the Scottish Budget, making Kate Forbes, his successor in Holyrood, perhaps the only person in the UK to think the new Chancellor has it easy, with the luxury of a whole month (as opposed to her 12 hours) before debuting at the Despatch Box.

Mr Mackay’s departure has been taken in the Scottish Government’s stride so far, notwithstanding his seniority and unofficial status as a front runner to succeed Nicola Sturgeon as First Minister. Morale in the SNP, which might otherwise have been severely dented, has been sustained in recent weeks by some polls which show independence enjoying majority support (even if by the narrowest of margins). In truth, the opposition parties north of the border have, by and large, not been troubling the SNP’s dominance - which makes the election of Jackson Carlaw as successor to Scottish Conservative leader Ruth Davidson, an important moment. He has his work cut out.

There is another leadership election underway, of course, this time across the whole of the UK. Labour’s leadership contenders have now been whittled down to three, with Sir Keir Starmer firmly established as the front runner.

This is not really following the script drafted by Jeremy Corbyn’s supporters in the aftermath of the election defeat in December. The key appears to be the willingness of the Shadow Brexit Secretary (as was) to sign up wholeheartedly to a continuity agenda, which has allowed him to court Mr Corbyn’s loyal followers successfully. But it is a strategy which has dismayed many observers, including a former Labour cabinet minister I caught up with this week, who doubted Sir Keir would earn a flexible enough mandate to steer the party back towards the centre at anything other than glacial pace.

And in one final piece of news, we have now left the European Union. The moment itself was fairly subdued, in truth, and the ‘implementation period’ means there is little change for now, as the EU rulebook has been rolled over until the end of the year. Meantime we are stuck in dead air as formal negotiations are still a few weeks off, although both sides continue to rehearse their lines loudly.

In these preliminaries, the Prime Minister pitched hard for an award for Best Brexit Screenplay with his recent speech in Greenwich. Few others would make the case for Brexit by linking Michelangelo, Harrison’s sea clock (critical for knowing where you were on the oceans in the centuries before GPS), Superman’s alter ego, Clark Kent, and haggis. As well as making the case for diverging from Europe’s rules without diluting standards. For his part, the EU’s Michel Barnier is probably wise to be keeping to his ‘level playing field’ script rather than escalating the rhetorical stakes.

Next week I will take a more detailed look at where things are positioned on each side of the Channel and what that means for the sector and business more generally. I promise there will be no further haggis references when I do so.

Michael Moore
Director General, BVCA


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