Sunak's Unconvincing Makeover
The prime minister is rushing out long-term decisions without consultation, plans or evidence. This may not end well.
Rishi Sunak's pitch to the country, at least until this week, was that he is a sober technocrat, a detail-oriented numbers guy who could be relied upon to restore order to the national finances in the wake of the Liz Truss debacle. Indeed his ascent to the prime ministership, elected unopposed by a sullen party that had rejected his candidacy just six weeks earlier, was reminiscent of the installation of one of those technocratic governments that are periodically called upon to sort out the mess caused by politicians in crisis-hit European countries such as Italy and Greece.
Yet while Sunak’s safety-first strategy may have served Britain relatively well economically over the last year, it wasn't working for him politically. The result was what we got yesterday, the prime minister reinvented as the dynamic reformer who will use his analytical brilliance to fix long-term problems that governments have ducked for 30 years. To declare himself the agent of change when his party has been in power for 13 years and he was chancellor for two of the most chaotic takes such chutzpah. But what is most concerning is the manner in which he is making these so-called hard choices and the basis on which he is making them.
No way to run a railway
One might have expected that a decision as momentous as scrapping the country's largest infrastructure project in decades, a project that had carried cross-party support since it was first mooted 15 years ago and had been backed by five former prime ministers, that had repeatedly billed as key to levelling up, would be accompanied by robust and detailed policy documents. Instead all that the government provided yesterday was a 40-page document from the Ministry of Transport that had clearly been cobbled together in such a hurry that it put Manchester in the wrong place on a map of Britain and contained plans for two new rail services that already exist. It is shameful that the civil service put its name to it.
There may be a strong case for scrapping HS2. But Sunak simply asserted that the costs have risen to a level at which they outweigh the benefits. There was no new cost benefit analysis to back up this claim, or quantify the benefits that would be lost by scrapping the second stage when so much cost has already been sunk. He also cited changes in working patterns since the pandemic as further justification, though there was no attempt to model the impact of this on future usage and revenues. Sunak promised to spend the £36 billion saved to deliver dozens of other transport upgrades across the North and Midlands, but provided no costs or timelines. Having just scrapped one transport project, why should anyone believe these will get built?
Bogus Emissions
This cavalier approach should come as no surprise. Just two weeks ago Sunak announced that he was taking the “hard decision” of scrapping various net zero policies. Yet the only supporting evidence to justify or explain those decisions were six slides showing how Britain had performed on carbon reduction. What’s more, Sunak had the nerve to accuse previous governments, in which he had served at the highest level, of setting net zero targets without producing a clear plan for delivering them. Yet here was the prime minister reaffirming that same 2050 net zero target while watering down the few concrete measures that previous governments had put in place and failing to provide any detailed plan of his own.
The surest sign of the weakness of the prime minister's arguments on net zero was that he felt the need to spend the last week misrepresenting what he has done. He has told interviewers that he acted to ensure that no one would be forced to swap their car or rip out their gas boilers, sparing them thousands of pounds worth of bills. Yet there was no requirement under the 2030 ban on the sale of new petrol and diesel cars for anyone to sell their existing petrol or diesel vehicle, or indeed prevent them buying a new one on the second hand market. The same was true of the ban on new gas boilers in new build homes from 2025 which won’t affect existing homeowners. In fact, Sunak's action won't bring down the price of a single new car in the short-term but it might mean that electric cars remain more expensive as a result of reduced demand.
Sunak’s Gamble
In the absence of supporting evidence, the suspicion must be that Sunak’s decision to rush out these announcements when parliament is not sitting, and apparently without consultation with industry, local government or other stakeholders, was driven not by the long-term national interest but short-term political calculation. Whether it delivers any political boost to the Tories remains to be seen. Sunak can count on the enthusiastic support of the right-wing press who declared themselves delighted by the U-turns. And it certainly puts Sir Keir Starmer under further pressure to spell out his own reform agenda or risk being painted as the candidate of a failed status quo.
Yet before the voters get to give their verdict on Sunak’s new radicalism, the markets will get to pass their judgment too. The prime minister is betting that investors will buy his claim that ripping up settled policy on long-term challenges is responsible stewardship rather than taking risks with what remains of Britain’s reputation for predictable and transparent policy-making. But he has picked an ominous moment to gamble with his reputation as a spread-sheet driven technocrat. Long-term gilt yields are at a 25-year high, the pound has just had its worth monthly fall against the dollar for a year and wages still rising at levels that suggest the battle against inflation is far from won. If investors start to fear that the populism virus has re-entered the government bloodstream, then Sunak will face some properly hard decisions.