Introduction
MPs’ return to Westminster last week marked the start of what is set to be an intense autumn of political activity that will largely define the landscape on which the next general election will be fought. The irony of “back to school” week coinciding with the news that a number of schools across the country were at risk of their ceilings collapsing was not lost on political commentators or cartoonists, many of whom took advantage of the easy metaphor for the state of the public realm and Tory electoral prospects after 13 years in government.
Whereas Rishi Sunak’s Government appears beset by successive crises and is struggling to assert itself, in contrast, Labour leader Keir Starmer has burnished his credentials as Prime Minister in waiting with a successfully executed Shadow Cabinet reshuffle. With Labour enjoying a sustained poll lead of around 20 points, is a Labour government inevitable?
EGA assesses the political dynamics in both main camps and maps out key milestones coming up over the autumn—including three further parliamentary by-elections—and consider what businesses should look out for and how to approach their political engagement ahead of the general election.
Tories: Gearing up for a fightback or just going through the motions?
With the economy and cost of living topping the list of voters’ concerns, the Government seems unable to get on the front foot. Last month’s upward revision to the country’s GDP has negated an opposition talking point about the UK’s economy still being smaller than pre-pandemic, but it has not translated into any tangible political rewards. More recent economic data has been a mixed bag at best—wages have now finally caught up with inflation for the first time in two years, but on the flipside, growth continues to be anemic (and on a negative trajectory), unemployment is up by 0.5%, and mortgage arrears are also on the rise.
Meanwhile, the concrete issue in schools has prompted a wider discussion around the lack of investment in public services infrastructure, which is favorable terrain for Labour. While the public line is of electoral success not being out of reach, and privately Conservative party strategists point to the number of people who say they haven’t yet made up their minds, the overwhelming mood in the party is one of despondency.
Sunak and his top team know that they need to reboot their operation if they are to reenergize the party and take the fight to Labour. However, the Prime Minister played for time the other week, conducting a limited reshuffle that saw Grant Shapps taking over as Defence Secretary from Ben Wallace. In Shapps’ place, Sunak promoted his close ally Claire Coutinho to the role of Energy Secretary. A wider reshuffle is expected in the coming months to assemble a more election-facing Cabinet, and in the interim, the No.10 political team has been bolstered with the appointment of a new Director of Strategy and the recruitment of several seasoned campaigners.
With the election fast approaching, the party is split into a number of different factions, with many believing it is already a lost cause. Attention is steadily turning to the post-defeat leadership election, as individuals vie to set the party’s future direction. Potential candidates are already working on this, holding policy forums, setting out their stalls in long op-eds and interviews and—naturally—trying to recruit supporters.
Meanwhile, having finally resigned her seat, Nadine Dorries is on a one-woman mission to take down Sunak. She is set to publish a book about the “conspiracy” that brought down Boris Johnson (headed, in her view, by Sunak). Dorries and the remaining die-hard Johnson supporters do not hold any hope of taking control of the party, but they can still inflict considerable damage.
All in all, the outlook is bleak. The 2019 electoral coalition appears to have fractured, meaning there will be few safe seats in 2024. Supporters are disillusioned with a perceived lack of vision, retail offer, and strategy from CCHQ and No.10. There is frustration that Sunak’s priorities, such as Maths until 18 or the upcoming Global AI Safety Summit, regardless of their own merits, will not translate into meaningful domestic political gains. Ultimately, beyond those closest to him, there is no long-term loyalty to Sunak, though the lack of credible alternatives means his position is not seriously in peril.
How will Sunak try to get back on the front foot?
The broad baseline expectation therefore is of a Labour government, and this will increasingly shape the political landscape over the next year. The parties are already in election mode and the media are already looking at Labour and their key people as the likely next government with all the extra scrutiny that entails. Other actors, from civil society to business to foreign governments and even the civil service, are also planning for change. It is not inevitable, however, and certainly not to the extent that polls are currently suggesting. A range of outcomes are still in play, from a huge Labour majority to a narrow one to one where Labour needs the support of other parties to govern.
The economic outlook will be what matters most. Addressing the rising cost of living will need to be the focus between now and the election. If the government can point to lower inflation and higher growth it will enable them to more credibly argue that electing Labour would be a risk. We are already seeing the foundation for this line of attack with hostile scrutiny of Labour’s record where they are in power themselves, from London Mayor Sadiq Khan’s ULEZ scheme, the struggles of the NHS in Labour-run Wales, and the bankruptcy of Labour-run Birmingham City Council (even though councils across the country are facing similar pressures).
Nailing the two upcoming political set-pieces will also be crucial. The Autumn Statement will need to be credible while also giving Tory MPs and voters some cause for cheer—potentially a pathway towards future tax cuts—while also setting up clear diving lines with Labour. The King’s Speech will need to set out a positive legislative program while also setting political traps for Labour which can then be leveraged during the election campaign. While the scale of the challenge should not be underestimated, the above strategy offers a chance of making the next election a competitive one.
In terms of timings, conventional wisdom in Westminster has been that Sunak will wait until late 2024 in the hope that something will turn up that will help the Tories. However, some party strategists are leaning towards a May election. This would instill a greater sense of purpose and avoid a final few months in office against the backdrop of another bad set of local election results and a summer spike in small boat crossings across the Channel combining to create the perception of a government that has run out of ideas and is waiting to run out of road.
Labour: Starmer assembles a team for the election…and beyond
The political season kicked off with Westminster gripped, unusually, by a Shadow Cabinet reshuffle. Starmer’s personnel changes showed him flexing his muscles to shape an election-ready team. He will say that this is a group of politicians ready to begin fixing Britain’s problems from the moment they take office. But their first challenge is to put forward a compelling, alternative vision—not just to oppose but also to prepare.
The changes are extensive and certainly tilted the political balance of the Shadow Cabinet—moving those with experience of the Blair and Brown years to more high-profile positions. But it is also worth remembering that the wider picture has not changed. The five key missions—economy, health, education, crime and net zero—remain at the core of the Shadow Cabinet. They will be the focus for a Labour government, and we are getting a clearer picture about the choices Labour would make.
There are high profile roles for Pat McFadden, to run the general election campaign, Darren Jones, until recently the Chair of the Business Select Committee, as Chief Secretary, and promotions for Liz Kendall (DWP), Peter Kyle (DSIT) and Thangam Debbonaire (DCMS). And there is the hidden reshuffle with Sue Gray, the former Whitehall Mandarin, finally taking up her role as Chief of Staff. Gray’s role is getting Labour ready to deal with the knottiest problems. On a day-to-day basis she will aim to instill greater discipline and sharpness when it comes to decision-making.
Two interventions this week aim to further portray Labour as a government in waiting. From the leader’s office, Starmer is travelling to European capitals seeking agreement for plans to deal with illegal immigration with a focus on cross-border law-enforcement to tackle the organized crime gangs that fuel people smuggling. Meanwhile, freshly minted shadow Deputy Prime Minister Angela Rayner has been setting out Labour’s ambitious employment rights agenda which includes sectoral, collective agreements in some low paid areas, rights for employees from day one, banning “fire and rehire” practices and zero-hours contracts, and repealing recent trade union legislation.
It all amounts to a big change in energy from the opposition. They are getting their people, campaigns, and policies ready, not just for the election, but also for government.
What this all means for business engagement
Sunak has made repairing the relationship with business one of his priorities as evidenced by his appointment of former Morgan Stanley executive Franck Petitgas as his lead business adviser. Economic credibility is central to Sunak’s pitch and building positive business sentiment, which leads to fresh investment, is a crucial component of that. He has also empowered government departments to lead the business engagement with their sectors rather than having everything led by No.10.
Despite some notable progress, including stabalizing relations with the EU, as well as delaying the introduction of certain new regulations, overall, this remains a work in progress. The Government is definitely spooked by Labour’s outreach to business but believes that only they will ensure the UK remains competitive and that once in power, Labour’s interventionist tendencies will come to the fore. They see this as a key dividing line and, as such, there is appetite across Government to understand the practical barriers businesses experience to growth, innovation, and investment, even if there may be limited time and capacity to meaningfully address these ahead of the election.
The best time to engage with Labour was yesterday but the second-best time is today. While the party’s key shadow ministers and advisers now have less bandwidth for introductory meetings, they are keen to understand how their policies would impact business and work with business to refine these so that they can be rolled out quickly and effectively. They are genuine about wanting a dialogue with business to address the problems they would inherit on day one of a Labour government—from breaking out of the low growth/high tax dynamic to improving public services and public infrastructure to accelerating the green transformation. Key to all of these will be increased private sector investment and innovation, so Labour will be keen to hear ideas for how to bolster these.
By-election previews
Rutherglen and Hamilton West (October 5)
This will be a straight fight between Labour and the Scottish National Party who will be hoping to hold on after a series of damaging scandals in recent months. Labour has played down their chances, but it will be privately disappointed if it doesn’t take the seat. This will be widely seen as a warm-up for next year’s general election north of the border, specifically whether the Scottish Labour election machine is up to the task of taking back its former heartlands. This in turn would lower the number of seats Labour needs to win directly from the Tories in the rest of the UK to form a majority.
Mid Bedfordshire (October 19)
Nadine Dorries’ eventual resignation fired the starting gun on this by-election in a contest that will be overshadowed by Dorries’ stinging resignation letter to the Prime Minister. The Tories have no choice but to fight this by-election with everything they’ve got, and it’s shaping up to be a three-way contest which sees both Labour and the Liberal Democrats eyeing victory. The Conservatives have a real fight on their hands, but it’s not implausible that they narrowly hold the seat given that, unlike in other recent by-elections, the non-Tory vote looks set to split.
Tamworth (October 19)
Perhaps the ugliest by-election on the cards, the previous MP Chris Pincher resigned following allegations of sexual misconduct in a scandal which precipitated the end of the Johnson era. The seat is somewhat of a bellwether: it sits in the deeply Conservative heart of England and has only ever been held by Labour when they had an overall majority. Labour will be feeling optimistic—they need a slightly smaller swing (21.3 points) than they achieved in Selby and Ainsty (23.7 points). The Conservatives have also not helped themselves by picking a general election candidate currently serving as an MP for another constituency, meaning their by-election candidate will be a placeholder.
Calendar of key milestones
Liberal Democrat Party Conference (September 23-26)
Ed Davey has re-energized the party since its disappointing performance in 2019 with four by-election wins. He will rally the party faithful as they look to take on the Conservatives across swathes of Southern England, from regaining the party’s Leave-voting heartlands in the South-West to winning rapidly growing graduate-rich areas in and around suburban London. He may also indicate how he would look to work with a potential Labour government and set out areas of commonality.
Conservative Party Conference (October 1-4)
This might be Rishi Sunak’s first and only conference as Prime Minister and party leader. If he has any hope of continuing in the role, he will need to bring together his fractious party and instill a fighting spirit—something he has been accused of lacking in the past. Expect a conference that is much lighter on policy and serves as a launch pad for the party’s election campaign themes and vision going forward.
Labour Party Conference (October 8-11)
Starmer’s leadership has been defined by caution and a focus on addressing his own party’s political vulnerabilities while the Conservatives make their own mistakes. Expect to see this approach maintained at party conference—Starmer will want to avoid any sense that he thinks the next election has already been won and that he is, as the expression goes, measuring the curtains at No. 10. Setting out some policy detail, a clear alternative, and the party’s more positive election offer will certainly feature. But it will be tempered by realism about the state of the country Labour would inherit, a desire to project economic credibility, and to avoid raising unrealistic expectations.
Global AI Summit (November 1-2)
Seen by some as the Prime Minister’s vanity project, the first ever global AI Summit (being held at Bletchley Park) will bring world leaders together to discuss the risks and regulation of AI. Sunak will be hoping that his perceived wins on the world stage from earlier this year will continue.
King’s Speech (November 7)
This will be Sunak’s final opportunity to spell out his Government’s legislative program before the general election next year. Downing Street will be keen to use the State Opening of Parliament to give the Government—and the Conservative Party—some direction as accusations of stagnation continue to swirl. Expect popular “quick win” policies which can safely land in the next 12 months to appease voters. Do not expect major reform packages or anything deemed vaguely controversial for a fractious coalition of Conservative MPs which could risk a rebellion or legislation not getting through.
Autumn Statement (November 22)
Twelve months on from his inaugural markets-calming Autumn Statement, Chancellor Jeremy Hunt will return to Despatch Box facing another grim economic outlook. Already the expectation management machine is in overdrive with briefings that tax cuts are off the agenda. That said, the more sober Autumn Statement could pave the way for a more optimistic budget where any improved economic forecasts could give the Chancellor the political and fiscal space to pull a few rabbits out of his hat and give voters some positive reasons to consider voting Conservative.
