One can only feel sorry for Rishi Sunak. His years at Goldman Sachs and making a fortune running one of his father-in-law’s hedge funds, as well as a sheltered life in the la-la land of California financial speculation, are no preparation for the wretchedly hard decisions he has to take this week.
Just as Liz Truss did, Sunak likes to invoke Margaret Thatcher who doubled VAT and created 3 million unemployed, mainly in the deindustrialised north and midlands of England. Forty years later the regions remain mired in poverty, amid evaporating dreams of “levelling up” thanks to Brexit.
Mrs Thatcher was saved from defeat in 1983 by her victory in the Falklands War and the double folly of Labour MPs in choosing the romantic Left litterateur Michael Foot as Leader. Labour’s candidate for Prime Minister was pro-CND and fought the 1983 election on a Brexit-style campaign to isolate Britain from European markets.
Today Labour has a Clement Attlee-type Leader offering to be an honest Prime Minister after the fantasmagorical Boris Johnson and the fanatical Liz Truss. Sunak is a very polite Wykehamist, an incarnation of Winchester’s “Manners Maketh Man” motto. But he has had to surround himself with ministers like Suella Braverman, Gavin Williamson and Dominic Raab, who are anything but polite to civil servants and remind voters of the worst of the Johnson-Truss era.
Mrs Thatcher undertook necessary reforms of a labour market corrupted by trade union power. Above all she made secret strike ballots compulsory and faced down a giant miner’s strike in 1984-5 led by a Soviet sympathisant who refused to let NUM members hold a strike ballot.
All of the strikes Sunak faces might be called Thatcher strikes. The Royal College of Nursing, the RMT and other rail unions, Post Office staff and now lower rank civil servants in the big PCS union have all voted for strikes in fully secret ballots with clear majorities.
Sunak and his Cabinet have no interest in the politics of 21st century labour markets. They may be blundering into a new winter of discontent, as the strike wave of late 1978 and early 1979 was called.
In fact, Sunak looks less like Margaret Thatcher than Jim Callaghan, Labour’s failed Prime Minister from 1976 to 1979. Sunak, like Callaghan, has to face externally imposed hikes in energy costs. These are caused today by democratic Europe-hating Vladimir Putin, just as democratic Israel-hating Gulf potentates cut off oil supplies to try and pressure the democratic world to hand over Israel to its enemies.
Callaghan, like Sunak, faced double-digit inflation. In the late 1970s, as today, a hapless Governor of the Bank of England exhorted workers not to seek to protect their living standards by accepting wage deals far below the rise in cost-of-living.
Unlike Northern Europe, which had long “tamed” trade unions by incorporating them into a social market economy based on employer-labour social partnership, Britain retained the “them and us “or “Master and Men” approach to workplace relations, dating from the 19th century. In consequence every union felt impelled to support walk-outs by its members, just to protect living standards. Even the middle-class and by no means militant BBC journalists shut down BBC News at home and the World Service for 24 hours in response to a clumsy pay offer by the Corporation’s bosses in 1976.
Sunak, like Callaghan, has no answer to the problem. Callaghan led a party riven by the European question and had himself played to the anti-European gallery in the 1960s and during the Edward Heath government which took the UK into the European Community.
Sunak had to pander to anti-Europeanism to be selected a Tory MP in 2015 and parrots the Johnson-Truss lines on Brexit opening new opportunities to Britain. Meanwhile grandees like the former Governor of the Bank of England, Mark Carney, and the Tory retail magnate, Lord Wolfson, break the establishment omertà and say that Johnson’s hard Brexit is damaging the economy.
Jim Callaghan lost all hope of staying in power when in 1976, like some failed Latin American president, he went running to the International Monetary Fund in Washington to get a loan to prop up the pound and try and stop the UK economy sinking into recession. The IMF demanded a 20 per cent cut in public spending – the traditional response of all banks anywhere to an economic crisis.
Sunak as Chancellor and now Prime Minister has already led the UK into recession and like Callaghan will impose IMF type public spending cuts on the UK. Callaghan did not save Labour by agreeing to IMF type conditionality and cutting the public realm by 20 per cent – well below a figure of up to 50 per cent public expenditure cuts that have emerged in briefings by the Treasury. Sunak is avoiding going to the IMF in Washington to ask for a loan to bail out broken Britain, but as a good graduate of the Goldman Sachs and hedge fund school of financial orthodoxy he is imposing a massive reduction in UK public expenditure.
The result will be the same as under Jim Callahan. Hospitals, schools, road building, the arts, the police will see budgets shrink, public service workers will be told to accept reduced purchasing power to provide for their families. Social anger will grow. And the Tories are even more likely to be punished at the next general election, as Labour was in 1979.
Sunak was not born until after Labour lost power and seems to have very little sense of the political history of the nation he now leads. He is a bankers’ or hedgies’ Prime Minister. Whatever Rishi Sunak may think, his policies are much more Jim Callaghan than Margaret Thatcher. And the man he is up against, Keir Starmer, is certainly more formidable than Michael Foot.
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