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Call it the Rishi Sunak reset week or, to borrow from The Spectator’s Katy Balls, the shore-up Sunak week – the prime minister will be going into this weekend feeling the past few days have been a job well done. 

He has got his flagship Rwanda bill through parliament and is promising a “regular rhythm” of flights will be getting off the ground from July.

He has also got off the ground himself, with a dash to Poland and then Germany, in a show of strength with European allies in the face of Russian aggression.

As the US finally approved a $61bn military aid package for Ukraine, our prime minister announced he’d lift the UK’s defence spending to 2.5% of GDP by 2030.

That would amount to £87bn a year by the start of the 2030s, with the UK spending a cumulative extra £75bn on the military over the next six years.

That of course all hinges on winning an election, which I’ll come to soon, but it is a commitment that throws a challenge to Labour and will delight those in his party who have been calling for increased defence spending for months in the face of growing global threats from Russia, China and Iran.

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‘Fully funded’ defence plan

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In Electoral Dysfunction this week, we discuss whether Rishi Sunak, having been battered for much of his premiership, is finally having a week on top?

There is after all a longstanding tradition in this country that when the chips are down, you jump on a plane to try to go somewhere where you’re more appreciated.

And Ruth agrees this week that this has been “one of the better weeks that he’s had in his premiership” and is fully behind his defence spending pledge, while Jess points out that Labour is committed to the “exact same plan for upping defence spending”.

The difference between the two parties is that Rishi Sunak set out in some detail how he plans to get to that point over the course of the next parliament, while Sir Keir Starmer has said only he wants to get to 2.5% “when resources allow”.

Pic: Ben Birchall/PA
An Ajax Ares tank, an armoured personnel carrier, on the training range at Bovington Camp, a British Army military base in Dorset, during a visit by Defence Secretary Ben Wallace, who is viewing Ukrainian soldiers training on Challenger 2 tanks. Picture date: Wednesday February 22, 2023.
Image:
Keir Starmer only wants to spend 2.5% of GDP on defence ‘when resources allow’. Pic: PA

And that matters because, as it stands, it’s very likely that it will be Sir Keir who is having to decide whether to increase defence spending levels in the next parliament rather than the incumbent.

Cue an election debate on which leader really cares more about defence and, if Sir Keir really does want go toe-to-toe with Mr Sunak on the 2.5%, how does he pay for it?

That will be a discussion for many other days (Labour’s line on this is that the party will hit the 2.5% “when circumstances allow” rather than setting a firm date) as we head into the general election.

But I had to ask Ruth and Jess, why was he on a publicity blitz announcing it now? Was it something to do with the rather large matter of the local elections?

‘Sunak needs to look big’

At this, both furiously shook their heads and looked at me with a touch of derision. “When it comes to the local elections, I want my bins done, I want my schools to be good, and I want my potholes done. That’s what I care about,” says Ruth.

“The people in Birmingham Yardley speak of nothing else but the 2.5% defence spending,” jokes Jess.

“I see why [he’s doing it this week] but actually I don’t think he’s doing for just another example of doing it this week. He needs to look big in front of his party.”

And there are a couple of things to explore in that.

First, the party management issue of a PM very likely to get completely battered in the local elections throwing his party some red meat ahead of that slaughter to perhaps try to protect himself.

PIc: Reuters
German Chancellor Olaf Scholz and British Prime Minister Rishi Sunak attend a press conference, at the Chancellery in Berlin, Germany, April 24, 2024. REUTERS/Annegret Hilse
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Mr Sunak met German Chancellor Olaf Scholz this week

Because the local elections could be bad, very very bad. And that throws up questions about Rishi Sunak’s future and also the date of the next general election.

There is a reason why the prime minister will not be drawn on the timing of the election beyond the “second half of the year”.

While it’s true he doesn’t want to have to “indulge in a guessing game”, as one of his allies put it to me, it’s also true that he can’t rule out a summer election given the unpredictability of next week’s local elections and what could follow.

The Armageddon scenario of losing 500-plus seats, alongside the West Midlands and Teeside mayors, could propel his party into fever pitch panic and possibly trigger a vote of confidence in Rishi Sunak.

Does he then decide to call a general election instead of allowing his party to try to force him out?

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‘A man enjoying himself’

For what it’s worth, he did not appear, in any way to me, as a prime minister on that plane over to Berlin from Warsaw, who wanted to give up the job. He seemed, for the first time in a long time, a man enjoying it and getting on with the stuff he wants to get done.

There is also the small matter of being 20 points behind in the polls. I suspect his instinct is very much to hold on in the hope that things begin to turn in his favour.

Because, despite what the critics say, he does seem a man who genuinely believes his Rwanda plan, welfare reforms, defence spending and economic management are all stepping stones on his path to perhaps winning back some support in the country.

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“June [or July] is just party management,” says one former cabinet minister. “They are not ready for it and the polling doesn’t work obviously.”

Jess sees the flurry as a “his last ditch attempt” of another reset, and says “the Labour party is not worrying” as the PM tries to pin them on Rwanda or defence spending: “Whatever he goes on is absolutely pilloried within seconds,” she says.

But Ruth argues the defence spending was “actually authentic and a real thing”, and says of the expectations for the local elections that “it’s not just going to be a rout, but an apocalypse, that actually at this point in the cycle it works quite well for Sunak in terms of keeping his job at the back end”.

Observing his various grip and grins this week as I trailed after him meeting the Polish PM, the German chancellor and the NATO secretary general, he is a man that really does want to hold on to that job.

The local elections then are probably going to come as a horrible reality check in just a week’s time as this prime minister, riding high from his European tours, is reminded that his time in office looks like it will be coming to an end – and perhaps even sooner than he might have initially planned.

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Most RWAs remain isolated and underutilized instead of composable, DeFi-ready building blocks. It’s time to change that.

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Heidi Alexander says ‘fairness’ will be government’s ‘guiding principle’ when it comes to taxes at next budget

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Heidi Alexander says 'fairness' will be government's 'guiding principle' when it comes to taxes at next budget

Another hint that tax rises are coming in this autumn’s budget has been given by a senior minister.

Speaking to Sunday Morning with Trevor Phillips, Transport Secretary Heidi Alexander was asked if Sir Keir Starmer and the rest of the cabinet had discussed hiking taxes in the wake of the government’s failed welfare reforms, which were shot down by their own MPs.

Trevor Phillips asked specifically if tax rises were discussed among the cabinet last week – including on an away day on Friday.

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Tax increases were not discussed “directly”, Ms Alexander said, but ministers were “cognisant” of the challenges facing them.

Asked what this means, Ms Alexander added: “I think your viewers would be surprised if we didn’t recognise that at the budget, the chancellor will need to look at the OBR forecast that is given to her and will make decisions in line with the fiscal rules that she has set out.

“We made a commitment in our manifesto not to be putting up taxes on people on modest incomes, working people. We have stuck to that.”

Ms Alexander said she wouldn’t comment directly on taxes and the budget at this point, adding: “So, the chancellor will set her budget. I’m not going to sit in a TV studio today and speculate on what the contents of that budget might be.

“When it comes to taxation, fairness is going to be our guiding principle.”

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Afterwards, shadow home secretary Chris Philp told Phillips: “That sounds to me like a barely disguised reference to tax rises coming in the autumn.”

He then went on to repeat the Conservative attack lines that Labour are “crashing the economy”.

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Chris Philp also criticsed the government’s migration deal with France

Mr Philp then attacked the prime minister as “weak” for being unable to get his welfare reforms through the Commons.

Discussions about potential tax rises have come to the fore after the government had to gut its welfare reforms.

Sir Keir had wanted to change Personal Independence Payments (PIP), but a large Labour rebellion forced him to axe the changes.

With the savings from these proposed changes – around £5bn – already worked into the government’s sums, they will now need to find the money somewhere else.

The general belief is that this will take the form of tax rises, rather than spending cuts, with more money needed for military spending commitments, as well as other areas of priority for the government, such as the NHS.

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