Rishi Sunak’s luck turns

Today, is Plough Monday, the day in the Medieval calendar when agricultural workers celebrated the end of Christmas and the return to work. As far as Rishi Sunak is concerned, he has had some unexpected blessings as he heads into an election year, a contest to be held at a time of his choosing before January 2025.

The first blessing is the rapid decline in inflation, partly due to a combination of a warm winter and record production from the US oil & gas industry, notably the shale producers. The US is now producing more oil and gas than any other country, ever. The energy transition is critical, but like the rest of Europe, we are dependent on US imports, notably of Liquefied Natural Gas. The benefit has been the return of domestic heating and pump prices to pre-Ukraine levels. Not only that, OPEC’s decline in market share means it no longer controls the oil market, as it did during previous Middle East conflicts.

 Oil and gas production 

However, when it comes to energy, the UK itself continues to have the highest electricity prices compared to the rest of the world and so Sunak can claim no credit for this. On the contrary, his latest energy secretary, Claire Coutinho, shows a worrying lack of interest in her brief. It is true that she has inherited a plan for more exploration licences for the North Sea, but we should not expect much production due to excessively high tax rates.

Where Sunak and his chancellor Jeremy Hunt can claim much credit is in relation to interest rates. Their prudential management of the public finances has encouraged the decline in market interest rates. In that sense, the market has moved ahead of the Bank of England and the fall in gilt yields means you can raise a mortgage at a rate starting with 3% once more.

We should therefore expect economic growth to recover rapidly this year as the effects of cheaper borrowing and stable prices are felt across the economy.

Reform flunks it

The second unexpected blessing is the strange flunking of the Reform Party. This is the renamed Brexit Party, polling at a high of around 10%. It held a press conference last week at which its star player, Nigel Farage, was absent. He is in two minds whether to stand in the election. His reputation has been transformed both by his show on GB News and by his tussle with NatWest Bank about a closed account, over which he won huge sympathy from millions of people who have similarly had dire service from financial companies.

The longer Reform goes on without Mr Farage, the less impact it will have. But even if he does return, the Party has again adopted a flawed strategy of running candidates in every seat, rather than concentrating on particular localities of strength and has combined this with fantasy policies, such as abolishing income tax for NHS workers while also floating its support for proportional representation. Immigration will be a big issue at the election, but despite the antics of the Right, Mr Sunak and the Home Secretary, James Cleverly, are doing their best to tackle it pragmatically.

Mr Bates vs the Establishment

The third unexpected blessing is from the ITV series Mr Bates vs the Post Office, the brilliant drama based on the wrongful persecution of hundreds of Post Office Submasters. Those living abroad may not realise what a big deal this is in the UK. It revolves around the wrongful pursuit of 900 sub-Postmasters for fraud when actually an IT system was at fault. It was a major miscarriage of justice.

It turns out that Ed Davey, the leader of the Liberal Democrats, was postal services Minister during the coalition Government and refused repeated solicitations to do something or launch an investigation. The volume of popular outrage now being blasted at those who presided over this scandal is astonishing and more than one million people have signed a petition to have the former Post Office CEO, Paula Vennells, stripped of her CBE for her lamentable conduct.

A poor performance by both minority parties might save Sunak a few percentage points in the polls, but that could translate into the saving of dozens of Conservative seats in an election.

Labour stalling

The fourth unexpected blessing Sunak is benefiting from is the weakness of the Labour platform. After 14 years and five Prime Ministers, three of whom were catastrophic, the mood in the country is that it is time for a change of people and ideas in Government. Despite behaving very much like a Prime Minister in waiting, Sir Keir Starmer seems oddly incapable of articulating his vision. Instead, he flip-flops around, either saying very little or announcing policies that make no sense, such as adding VAT to education or spending £28 billion per year on “green energy” and removing 100% of carbon emissions from our energy system within six years. This is just not credible or practical. He seems to change his mind all the time.

What Sir Keir should be doing is promising a New Labour-style mission to renew the health service, including social care, closer alignment with the EU single market, cuts in corporation tax for small businesses and reducing the usurious student loan interest rate. Instead, the perception is that he remains stuck in the slow lane of the left-wing intelligentsia, while also pretending not to be so.

It would be perverse to say that Sunak is somehow looking at the possibility of victory this year, given the unpopularity of the Conservative Party and the mess it has made of everything – even what is left of the Royal Navy doesn’t have enough sailors, we have just learned – but we may be looking at a much smaller Labour majority than the 179 achieved in 1997. There could be a whole lot of difference between a Labour Government with a small majority and a big one; and a Conservative Party with 250-odd seats would be in much ruder health than the one which limped into Opposition, having been smashed by Tony Blair 27 years ago.

George Trefgarne is CEO of Boscobel and Partners