Tuesday 28 March 2023

Could Sunak win in 2024? Some think so.

 An article in The Standard by David Cameron's sister-in-law Emily Sheffield has sparked a bit of a debate about what democracy in this country actually is. Ms Sheffield writes: I now think Rishi Sunak is going to win the next election, which you may think is a bit of a long shot, to say the least. Anyway, she doesn't believe all is yet lost for Rishi Sunak and the Tories. Her reasoning (although it's not relevant to what I have in mind) is set out in this paragraph:

"This week we finally saw the Tories expunge the last of the populist poison of Brexit. Boris Johnson may survive the parliamentary committee grilling but he won’t be returning to Number 10. The big rebellion fell flat. Healing Brexit wounds was vital before this country could move on. Just 22 voted against Sunak’s Northern Ireland protocol plan — the longest war in modern politics is done. The Johnson/Brexit bandwagon is over, and Sunak saw it off with quiet deeds not angry words."

Personally, I think she's way off with Brexit but anyway she concludes: "some are whispering it in Westminster: The Tories might win again. And I’m one of them."

You can imagine there was a lot of pushback including the suggestion that if we get a hung parliament, again with the Tories as the largest party, they may not get into government because no other party would work with them. More, the losing parties could form a coalition to govern in place of the Tories.

Tim Shipman suggested it wouldn't be democratic and Ms Sheffield responded:

Shipman later admits it would be legitimate but still questions the public reaction. I don't think any party has won over 50% of the popular vote for years, certainly not since the sixties but the outcome is usually accepted

It raises a fundamental point about whether voters are voting positively FOR something or negatively AGAINST something else. What I do think is that a system of PR would remove any argument since all parties would be represented proportionally to the vote share. Nobody in the Twitter thread seems to raise that.

However, the reason Cameron's SIL is whistling in the dark is because of the economy.

Documents released alongside the budget last week show the tax burden at its highest level for years and heading even higher, to nearly 38% of GDP in 2026-27. This is compared to its long-term average since 1948 of 32.1%. That’s about an extra £150 billion being taken by HMRC in tax every year.

Our problem, if that wasn’t bad enough, is that government spending is even higher. That’s expected to hit somewhere between 43-44% of GDP. The difference is made up by extra borrowing. But you don’t need to be a genius to see that public services at the moment are absolutely at rock bottom.

We have or are heading for European levels of taxation with almost third-world levels of public services. It seems an almost impossible combination but is in fact due to a shrinking tax base.

Getting to see a doctor is like trying to find 'Wally'. The health service is understaffed by 154,000 so God alone knows what would happen to health spending if all the nursing and other clinical posts were ever actually filled. Social care is on the verge of collapse because of staff shortages, which is probably the only way some care homes are surviving financially.

The police and criminal justice system is broken. Crime has fallen says the government - if you exclude fraud but most people don’t bother reporting low-level crime anymore because you’ll never see a policeman anyway.

Defence has been so cut to the bone that some say Putin needs to give us 10 years notice of any plans to invade compared to four hours in the past. We sent a pitiful 12 challenger tanks to Ukraine when the Russians lose that many in two days! We have aircraft carriers with US planes and aircrew because we can’t afford a full complement.

Unemployment has remained surprisingly low, although it’s hard to see how since industry in these parts has been totally hollowed out.

Corporation tax is scheduled to bring in 3.7% of GDP up from 2-2.5% in the more recent past. That's about £30 billion in additional tax extracted from the private sector which might have contributed to productivity boosting investment. 

It would also be fascinating to learn how much money is transferred out of the UK by the giant foreign companies that run many of our utilities in the energy, water and transport sectors. These transfers are often made before tax is paid, disguised as Head Office charges and loans. I really don’t believe Margaret Thatcher thought when she privatised everything that they would wind up in foreign hands with profits enriching other EU member states.

Another reason we have such a bizarre combination of the highest tax and the worst public services is down to terrible productivity and Brexit, although Jeremy Hunt managed to get through his entire speech without mentioning either.

Hunt blames covid and the Ukraine war. The head of the OBR says Brexit is also to blame and he told BBC viewers that leaving the EU had the same order of magnitude impact on the economy as Covid. He was immediately attacked as a lefty anti-Brexit remoaner.

However, in October 2021, Richard Hughes, the OBR’s chairman said Brexit would cost the UK twice as much as Covid so his latest intervention could be seen as slightly more moderate. His critics include Aaron Banks and John Longworth, who all think Brexit is going swimmingly, apparently oblivious to the daily stories of companies complaining, closing, leaving or avoiding the UK, cutting investment, reporting lower profits, and the rest of it.

Needless to say, Longworth offers no evidence for his assertion.

The OBR might be wrong, it’s just a forecast after all. There is credible research that suggests the UK economy is already 5.5% smaller, so the OBR’s figure might even be an underestimate.  The fact our GDP hasn’t got back to the level it was before the pandemic is an indication they’re on the right track.

Brexit has delivered an almighty blow to our economy and it is a permanent hit that will have long-term implications.

So, the idea that Rishi Sunak is somehow poised to turn Tory fortunes around and 'win' the next election is, I am glad to say, for the birds.

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