Strikes, Budgets, Brexit and elections: a look ahead to 2023

Paul Johnson

Hello, and welcome to a new year and, most excitingly, a new season of the IFS Zooms In! I'm Paul Johnson, director of the Institute for Fiscal Studies, and today we're going to try to look ahead at 2023. What should we expect? What challenges will the government face this year? And will we be able to tackle the numerous crises we are currently facing? I'm delighted to be joined today by two experts in their fields. Dr Hannah White, who's director of the Institute for Government, and Professor Anand Menon, director of the UK in a changing Europe.

Couldn't find two people better qualified to talk about what might happen over the next year. I think we're all probably combined in hoping it'll be a less exciting year than the year that we've just left behind. But we know that there are going to be a number of crises that we're still dealing with, as well as, no doubt, new ones to come. But perhaps the best place to start is, as ever, where we are. 2022 as we know was a pretty difficult year for some reasons, not much to do with us, President Putin invading Ukraine has had repercussions across the Western world, and has been part of, though by no means all of, the reason for the high inflation and cost of living crisis that we're facing. And then of course we have the extraordinary political instability of goodness knows how many prime ministers, chancellors, and probably hundreds of secretaries of state over the past year. Hannah, can we at least expect something a little bit more calm on the political front this year do you think? 

Hannah White

I think we probably can. I think at least we can probably assume that the Conservative Party's appetite for regicide has been sated, for the time being. I think, you know, frightening though it may seem everybody's already quite fixed on the date of the next election, which will have to happen by January 2025, depressing though that may seem.

Paul Johnson

God help us. 

Hannah White

 And the idea of another change of leader between now and then is I think well, when we say it would be unwise, I think many of the things we've seen in the last year has been possibly unwise as well. But yeah, so I think we will experience probably a calmer period, I think actually, I've already noticed some of the media feeling a little bit uncomfortable with the prospect of boring government coming up, and maybe a bit more technocratic styles of leadership that we might be going to see. Sunak and Starmer, but I think the rest of us might rather welcome.

Paul Johnson

And how much authority does Rishi Sunak have over his government at the moment? Is he able to do what he wants to do? If we know what it is that he does want to do?

Hannah White

Well we're getting a little bit more idea, aren't we, after his speech at the beginning of January, I think that's a really good question and I was thinking about this and thinking he's getting quite an anomalous position, as a new Prime Minister, you would normally expect someone who's just come in to, you know, have a bit of a honeymoon period, to have lots of support from their backbenchers. But actually, he's come in in these very specific circumstances after you know a long period of Conservative governments as the latest in the succession of Conservative prime ministers with a whole lot of people on the backbenches, over half of whom have held ministerial office since the start of the Conservatives being in power, many of whom don't feel a great deal of loyalty to him, don't think that they necessarily have a great deal to gain from supporting his leadership, may fear losing their seats at the next election, and therefore think that perhaps they have more to gain by rebelling, by defending the interests as they see them of their constituents, which may diverge from what Rishi Sunak wants to do. So, I don't think he's going to have an easy time and far from what other new prime ministers might have been able to expect.

Paul Johnson

Yes, so not much of a honeymoon period. Anand what are your predictions for the for the next twelve months? 

Anand Menon

Well, I mean overall on the surface, at least, it will be a more stable politically than last year. But I think one of the interesting things about what's happening in our politics is there's a sort of long term secular realignment going on and that makes for instability. One of the curious things is we just don't know who the Conservative Party is for anymore. Is it for that coalition that Boris Johnson put together in 2019? Is it for a more recognisably pre-Boris Johnson Conservative electorate? And you know Boris Johnson changed the composition of the Conservatives voter base quite fundamentally, he basically built a leave coalition. Rishi Sunak seems to be aiming to do something a little bit different, but whether or not he can cobble together what looks like a decent electoral coalition remains to be seen. But because of that churn, politics is going to remain unstable even though we might not see the levels of sort of top-level instability we saw last year, there is still a lot of change going on in the world of politics. And I think as Hannah says, as we sort of enter the electoral cycle, both parties are going have to think very carefully about who precisely it is they're trying to appeal to. And one of the curiosities is I'm not sure either party is yet entirely certain about who their main target should be. 

Paul Johnson

In current circumstances I wonder to what extent we should be looking or not at the way that the economics is driving the politics, if that's not too much of a Marxist way of describing things. But clearly part of what happened with the Brexit vote was that we'd had six years of fairly stagnant living standards, we've gone through the financial crisis, we're now coming into, as Hannah horribly reminded us, an election in a couple of years’ time, with the cost-of-living crisis, the OBR suggesting that incomes over last year and this may have their worst couple of years, pretty much, on record. I mean to what extent is that cost of living crisis going to be driving everything in politics over the next year or two? Or is it overblown? Is this something that actually most people, despite what you see in the news, aren't going to be seeing as driving their politics? 

Anand Menon

I think I think it will drive our politics, if you look at the Ipsos issues index then economics dominates that now in a way that it hasn't for quite a while, and that has several interesting implications. One of which, sort of in my area, the focus on economics is changing how people think about Brexit. One of the most interesting trends last year was the rising number of people who now think Brexit has been bad for the economy. In some ways it has to be said unfairly, I think people are attributing to Brexit stuff that has nothing to do with Brexit, but be that as it may, a focus on the economics means that people reinterpret what Brexit is, and what it has done to us. The second thing that's quite interesting I think about the economic crisis is there is a danger that the cost-of-living crisis obscures the fact that we're also living with the implications, as you intimated, of ten years of sclerotic growth of ten years of low productivity, that there is a long-term problem hidden behind the short-term issues around the cost-of-living crisis. And one of the rather depressing things about our politics is that no one seems to have an idea how to address that longer term problem. 

Paul Johnson

It's really tough, isn't it? Because it's easy for politicians to say, actually it's easy for us to talk about tax policies and welfare policies and public spending and what that does to the debt and all those sorts of issues, but actually articulating a growth policy or an industrial strategy, or a set of policies which will lead to higher productivity in the long run is extraordinarily hard. I mean, you've got the Liz Trust sort of vision, at least of low tax and low regulation, as a way to growth. But every industrial strategy we've seen over the last decade and more have tended to be kind of vast inchoate documents, of things for space, and things for metal, and things for biotechnology and it doesn't add up to anything very much that anyone can see. But presumably, Hannah, this is something that Rishi Sunak is going to have to try, both to come up with, and to communicate over the next year not least, as you say in the context of an election?

Hannah White

Yeah, I think that's right, and I think you know when you asked earlier whether, you know, economics is going to be a focus, I think it is really for two reasons. One, because of his past experience as Chancellor, you know he's going to tend to see his government through an economic lens, I think. But also, because all MP's are going to be through their post bags, you know, their approach and their interests are going to be shaped by the experience of their constituents. And even if, you know as you say not everybody is feeling the impact in the same way, I think the extent of the impacts, and the universality of the you know the breadth of people who are being affected is going to mean that this is a high priority. 

But as you say, it's not an easy thing to communicate. At the Labour Party conference last year, Labour's starting to sort of talk about their great British energy idea, starting to sort of try to talk about sort of green jobs and these sorts of things. But I think, as you say, the idea of articulating to the electorate, what a growth strategy would look like in the merits of one growth strategy as opposed to your, you know, what your political opponents are trying to argue, is very difficult to communicate. So, you know, in terms of sort of retail policies, that you can take to the electorate, Liz Truss’s sort of vision of talking about growth, and you know, and very broad brush terms how she thought we could get there is, you know, is about as far as you can get, I think in terms of something that might or might not be persuasive to the electorate.

Paul Johnson

And one of the problems actually is that a lot of pro-growth policies aren't very popular. I mean, we know that reforming the tax system, reforming the planning system, building roads and airports, all those sorts of things are good for growth, but people don't like them. And indeed, even this government and many before it have tried to do things on planning, they've tried to do things on tax, and they just can't do it because their backbenchers won't wear it, and the backbenchers won't wear it because important sections of the electorate won't wear it. And the same is true of a closer relationship, arguably, with the European Union, whatever the pros and cons of Brexit, it wasn't a pro-growth policy. Anand where are we going to get on - I mean is the economics going to become more important in driving policy on our relationship with Europe over the next couple of years? Or is that going to remain well in the background because of the political need to continue to be seen to be diverging and being tough and so on?

Anand Menon

I mean, that's the key question, isn’t it? I mean there are two interesting trends that I take from the last sort of few post referendum years. Firstly, because of political instability, the long term has meant Friday, hasn't it? I mean, you know, no one's thinking beyond you know, can the government hold on, can we get through this week? And actually, there's been such chronic short termism that has badly affected policy making. And the second, I suppose is in in some ways Brexit was a triumph of politics over economics. It was, you know, forget your forecasts about GDP and all that, we don't care about that, we want to do things differently, we want to take back control. And this might be the year when economics starts to reassert itself.

But as you said, Rishi Sunak faces a battle here. So, if you take, you know the flagship piece of legislation that's going to the Lords soon, I think, which is the EU law repeal bill, Hannah can correct me on what it's called I'm sure I’ve got that totally wrong? But that is a very, very clear choice. For some on the Tory benches that is what Brexit is all about, we scrap all those EU regulations, we get them off the statute book by the end of 2023. And that means several things. One they claim it's pro-growth, though the arguments are less than convincing.

Two, politically, they say that makes it impossible for a Labour government to take us back near the European Union. If we fundamentally diverge by then, then actually Labour won't be able to drag us back into the EU's orbit, so it's a very sort of ideology of Brexit argument. Against that is the economic case, which was business wants stability, business did not want a regulatory black hole at the end of the year. And we don't want to risk a trade war with the European Union for breaching the level playing field conditions of the trade and cooperation agreement. I suspect, Rishi Sunak’s position is the latter, that is to say, we need to focus on the economy. His problem is whether he's politically strong enough to force that through in the teeth of what will be opposition from some parts of his parliamentary party.

And the final thing I'd say is we just don't know how strong that Brexit Wing of his party is at the moment. Parts of it are in government, like Steve Baker, and parts of it are distracted by other things, whether it's China or net zero, there are other agendas out there. So, actually I suspect at some point in the weeks or months to come we will see a stand-off between the Prime Minister and the Brexit ultras, if I can call them that, with the Prime Minister trying to argue we need to prioritise the economy, and this sort of Brexit ideology stuff is going have to wait until the economy's back on an even footing. 

Hannah White

Because the other thing that links the question of, you know, growth in the economy and Brexit is the question of immigration, and the tightness of the labour market and the extent to which that might be, you know, affecting the economy. I actually really interested in your view Paul on whether the government is going to come under pressure over immigration policy and whether it's likely to move on that between now and the next election? Because, you know, if it is the case that you know the difficulty of bringing in workers into certain industries is going to be holding back the economy, if that's a quick fix in some ways for growth, is that something which it might be worth Sunak moving on? Or similarly as Anand's been saying, will the right wing of his party prevent him doing that?

Paul Johnson

Well, it's clearly been a lot of division within the party, and indeed within at least the previous cabinet on that. Though the reality, of course, is that we have been running a pretty free immigration policy in terms of the numbers of people coming in, over the last couple of years, and the, you know one of the few bright spots in the Office of Budget Responsibility forecast for the next two or three years was that they've upped their forecast for number of immigrants, net immigration, and that was a non-trivial part of where they got growth from in the last couple of years of their forecast. But you identify this kind of really big issue which we just haven't been used to in the UK for, probably since the 1960s, which is essentially a shortfall in the number of people looking for worker, an inadequately sized labour force. And you know I grew up being told of the, you know the good old days in the 1950s and 1960s when you could, you know, wander out of school at fourteen or fifteen and wander straight into a job because everyone down the street was desperate to recruit. Well, it's not so different now, if you kind of wander into pretty much any hospitality establishment, they're desperate to take you on, not to mention social care. So, this is a very unusual economic situation for us, at least in the last couple of generations, and part of that, though only a part of it is, is related to the lack of freedom of movement from the European Union.  

One of the other big focuses of the government at the moment is trying to get domestic workforce back into work. The, particularly, people in their fifties and sixties who seemed to have left the workforce in droves over the last couple of years, Chancellor, the Secretary of State for Work and Pensions, it seems to be one of their top two or three priorities to try and do things to bring them back, though that's a really hard thing to do. The levers that government has to make big differences to those sorts of individual decisions are pretty limited. Actually, their biggest ally and that might be the cost-of-living crisis that people left the labour force a year ago and have suddenly seen the value of their pension or assets or what have you diminished by 10%, and that may be something which does help to bring them back. But you know in most areas of course that increase in inflation has been pretty incredibly hard to deal with.

One thing I will say sort of slightly boastfully is that about this time last year, or maybe a couple of months in, I said the hardest thing the government have to deal with through the year is public sector pay, and public sector workforce. And that certainly seems to be likely to remain true over the rest of this year when inflation is so high and spending numbers are so tight, it's not surprising that that's blown up in a quite extraordinary way. I mean Hannah where do you see that going? I mean, with the nurses, teachers, ambulance workers, railway workers, I mean, we've got strikes – again it feels like my childhood in the 1970s when this was the big news all of the time. How can government respond to this? 

Hannah White

I think it's really interesting, because as you say, it used to be much more, you know than in the 1970s, and so we had a sort of a decade of this, and it was very much the norm. But for this generation of politicians, it's actually something quite new to have to deal with, and they're not kind of, we don't have a set of politicians who have lots of experience of having to, you know, to try to resolve these sorts of disputes. And yet at the same time, you know it is for them, you know, a really unwelcome set of intractable issues to have to be dealing with when they would like to be putting forward a positive agenda. And I think we've seen, started to see maybe if you sort of chinks of light this week with sort of possible concessions in certain areas. The government moving away from its initial sort of position, which was very much to say you know, you've had your deals for this year, you know we're not going to negotiate over this year, maybe we can talk about next year. Which certainly you know, from the nurses and so on, point of view was not an adequate answer. But you know, I think it's tricky because as you say, you know, the government will feel that as soon as they give ground in one area, you know, even if it's you know in relation to a workforce that the population you know has a lot of sympathy for, and so on, they are setting a precedent for others, and they are worried about letting the public sector pay bill get away from them.

Paul Johnson

Yeah, and just to remind people this is, I mean this is big money. I mean well over £200 billion a year on the public sector pay bill, so every couple of percent on that is significant amounts of money in the context of, let's not forget, a world in which we are still borrowing very large amounts by historic standards. The national debt is continuing to rise, and we've got this horrible combination of high borrowing, taxes rising to historically unprecedented levels, and yet spending still feels terribly constrained. And that's partly because growth has been so dreadful, it's partly because we've got such a very high bill for debt interest and it's partly, of course, because we're still trying to recover the public services from more than a decade of very poor, well not growth, but actually cuts in quite a number of areas. I mean, Anand, do you have a sense of where the electors are on this? I mean where are people on both the sort of strikes and their sympathy for public sector workers, and in their views of where we need to be on public spending? 

Anand Menon

I mean at the moment it seems that there is a degree of public sympathy for the strikes, and I think, you know, as you were just saying, there is a sense that actually this isn't just an immediate crisis, but this is the result of stagnant wages over a decade or more for some of these public sector workers, so that sympathy remains. If I were the government, I'd be looking at a strategy, I think, that tries to settle with some groups while not with others, I think nurses are the obvious ones where showing a little bit of generosity and trying to settle quickly, I think, would be politically sensible, while perhaps being less flexible when it comes to, say, the railway workers. I mean that sort of divide and rule strategy strikes me as a logical one for the government, and we'll have to see where public opinion goes. But for the moment I think, there is such a widespread perception that the government is handling the economy badly, and I think that partly feeds into an understanding, at least, as to where the strikers are coming from. You're certainly not getting the sort of public backlash against the strikes that I think the government was rather hoping to see quite early on. 

Paul Johnson

One of the curiosities in all of this, I mean thinking about public sector pay is it's absolutely right that public pay has done even worse than private pay over the last decade and going back to your point, Anand, about this all coming off the back of a poor decade. The last fifteen years have been the worst fifteen years for earnings growth since the industrial revolution, probably, I mean, you know the data in the 1800 isn't brilliant. But you know from what we can tell, this has probably been about the worst fifteen years for earnings growth, you know, since the Napoleonic Wars. And that's in the private sector, in the public sector it would be even worse, because public pay is still below where it was in 2010, which is that genuinely extraordinary, and it's not surprising that public sector workers are so frustrated by that. But part of the frustration with all of this is that the value of their pensions remains extremely high. We've seen some stuff in the press recently about how if you actually look at the overall remuneration of nurses and so on that she looks pretty competitive, because you have to add about a third, if not more, to their pay to get the real value of their remuneration. But again, this feels like one of those politically difficult things to address. 

Hannah White

I think that's right and people, you know, see nurses having to resort to the use of food banks, you know people are much more concerned with the day-to-day ability for people to live in a style to which you would think somebody with a sort of professional qualification, a job with significant responsibility should be able to live. Bringing into the argument, ah, but you know when you retire in thirty years’ time, you know, you will see the benefit of this, is quite a difficult argument to square, I think, when you know, to the nurses on the picket line. 

Paul Johnson

Indeed, and there there's an obvious case for rebalancing here, which is to raise pay and reduce pensions, but unions are inevitably suspicion of that. But it is extraordinary, a low paid person in the NHS, can easily retire on a pension, their NHS pension plus state pension, which is higher than anything they ever earned during their working life. I mean that has to be an insane way of designing any kind of remuneration strategy. 

Anand Menon

Absolutely. And, of course, the other thing that holds this debate is the question of retention, white is of course, you know, this government was elected on the manifesto of increasing the number of nurses and, you know, you need to pay people enough to keep, to attract the people you need to do the jobs. So, at the moment, both in teaching and in the health service it appears like this is not the case, so there is a very strong case, I think, for thinking about the pay settlement of some of these public sector workers, because ultimately, we're failing to attract people into those jobs. That's going to have spill over effects on the economy itself. 

Paul Johnson

But of course, there's also, the governments facing - we are in a world in which the public and private sector are competing against each other for workers and may end up squeezing out private sector activity or making the labour force position there even more difficult.  

We've mentioned that there's an election in within two years, but before an election, we're going to have, you know, at least a couple of budgets. Bizarrely, we didn't have any budgets last year, and this is something that is sort of a shock me when I realised towards the end of last year, we had a Spring statement, and a mini budget, and an Autumn statement and various fiscal events, we didn't have any actual budgets. But we do know we're going to get a budget in March, and you know, I ought to be the one answering this question, but I'm going to ask it instead of answering, because I'm sort of, I'm slightly at sea in terms of thinking about what is Jeremy Hunt going to be thinking about in March in terms of announcing his budget? He's incredibly constrained, we've just talked about the difficulty of the, of public pay of the situation with the public finances about where we are with tax about how spending is constrained, he did a lot back in November when he was partly setting about completely finishing the undoing of the mini budget, and partly setting out some plans, perhaps that's a little a little generous, to get the public finances back on the control within the next five years. But that was essentially about saying, well after the next election we'll think about making some spending cuts, over to you, Rachel Reeves. But we do have a budget and he can't really do nothing in that budget. So, Anand first, what do you think we're going to be looking at from that point of view?

Anand Menon

I have to say I feel this is a slightly absurd situation where you're asking me this question. 

Paul Johnson

But I'm looking for inspiration. 

Anand Menon

I mean, hand on heart, I mean, I would turn it back to you and say what do you expect? I mean, I think, you know, from a political science point of view, what is interesting is whilst, as Hannah says we've got two years before we have to have an election, it’s always possible that the Conservatives might decide to go early. I think it's very unlikely the Conservatives will decide to go early, but I think, you know everything from here until the election is going to be increasingly political in nature. And I think this will be a budget where at the very least  the Chancellor has to signal his intention down the line to start bringing taxes back down, even if he's not able to do so then, and to try and put Labour in as difficult a position as possible when it comes to what they say in contradistinction to what he says. So, I think the politics will absolutely dominate this, which isn't perhaps what you as an economist want to hear, I don't think it's what necessarily is good for the national economy, but I think you know the starting gun was fired with those two speeches by Starmer and Sunak. We are, whether we like it or not, edging towards an electoral cycle, so, the most I will commit myself to is saying that this will be a budget with very strong political signals, and I'll leave you to deal with the economics. 

Hannah White

And I think I shall take the cue from that Anand and build on that, I mean, I think the difference between now and the Autumn is of course that Jeremy Hunt has had some time in the Treasury to sort of get his head round the numbers, to think about things, you know, in in a bit more detail. I mean, as you say, he very much put off the difficult questions about budget cuts and so on to further off beyond the next election. But you know, in some ways that was sensible in that we sort of do need to know where we've got to by that point to know exactly what we should do. And it absolutely would have been the wrong thing, before Christmas, to suddenly announce a lot of very specific things which you were going to do without having had a chance to sort of get your head into the numbers.

But I mean my assumption, and what I'm observing already, is that what the government is doing instead of thinking about how it's going to spend money, and splash the cash, which it obviously can't do, given the situation you've described Paul, it's thinking about all the inexpensive or cost-free things that it can do. So, I think it's notable that you know one of Rishi Sunak’s five people's priorities that he set out was to pass legislation on small boats. So, passing legislation is not entirely cost free, we have to pay the salaries of the MP's, but you know, it's he didn't actually commit to cut the numbers of small boats crossing the channel, he said that he would pass legislation on it. I think we will see an increasing number of things where the answer is to pass a bill, to be able to politically talk about your priorities, rather than spend money.

And then there are other things, like for example, we haven't heard very much from Rishi Sunak about the levelling up agenda, but things like you know, more devolution deals, mayoral combined authorities, these sorts of things which are about sort of changing structures, changing governance, which enable you to talk about how you're sort of pushing power down, you know, out of what out of Whitehall and Westminster and so on, but don't actually cost you very much because you're just shifting budgets around, those are the things we expect government to be focusing where it can. 

Paul Johnson

Well, that certainly makes sense to the point of view of where they are both fiscally and politically. But my question was a genuine one about the budget, it does seem to be the room for manoeuvre is remarkably limited, both politically because there's no way they'll be able to get anything vaguely controversial, I presume, through their own backbenches, but also fiscally because they may want to be announcing tax cuts, but miserable sods like me will then stand up and say, well, you can't really afford it. Except that I see the politics, they can promise them and then it becomes a problem for Labour to say, well, we're going to raise taxes because this doesn't work. But I look forward to that with interest. 

Anand Menon

It is worth noting, I think, because it is it is quite striking that that one of the prices that the Conservatives paid for putting together that leave coalition in December 2019, was having a coalition that was fairly united on things like Brexit, or whether footballers should take the knee or not, or whether certain statues should be pulled off walls, but actually quite profoundly divided on the fundamentals of economic policy. That you know, there is a tranche of Conservative MP's and you can call them the Red Wall MP's if you like who are quite in favour of greater investment, a more active state who aren't necessarily prioritising cuts in welfare benefits, and there are traditional Tories. And they both sit inside the same political party, and I'm not sure I can remember seeing a governing party that agreed less on the fundamentals of economic policy, and that makes Rishi Sunak’s job which is already difficult as you said, given the economic situation, politically and nightmare as well. 

Paul Johnson

Well, let's move on from that, then to the two speeches that you've both referred to that probably didn't make much of a splash beyond Westminster, that from Rishi Sunak and Keir Starmer, and the visions that they were setting out. I mean obviously both constrained by the politics and by their own parties, but could, can you set out for those of us like me who are genuinely sort of struggle with interpreting these sorts of things, what were the visions that were that Sunak and Starmer were trying to get across there? And how are they going to build on those over this year?

Hannah White

So, I mean, I think Sunak got better on of it, didn't he? Because Starmer’s was immediately overtaken by Harry and Harry’s revelations. But I mean I think Sunak was trying to do two things, one was to sort of set out what he felt was a relevant, to the people, and yet sort of achievable scorecard against which he would like to be judged. Whether the electorate accept that as means by which to judge him, but he was trying to set out five things, I think, that he thought conceivably he might be able to say he'd on some measure made progress towards by the next election. Which meant you know, tying down to some sort of specifics around cutting inflation, NHS waiting, this going in the right direction and as I said earlier some legislation on small boats. At the same time, I think the second half of the speech was an attempt to sort of, say, well, you know it isn't just about these specifics, you know, I have a vision to refer people to his back story a bit to try to sort of introduce himself I think to the electorate who might not know him for much more, as he said, than you know the furlough scheme and those sorts of things. Although you know there was there, was relatively little concrete around that sort of future vision.

Starmer I think in some ways sort of had the easier, has the easier job in that you know he doesn't have to say specifically how he has, how he is going to, you know to solve the day-to-day sort of crises which are afflicting government now. Although I think I would have liked him to have been a bit more concrete, I think it's sort of very tempting for the Labour Party, because they are ahead of the polls not to be, not to set out too many specifics around their policies which might either get stolen by, you know, if they're good ideas, get stolen by the Conservatives, or trashed, or, you know, criticised and set up people who might be opposed to them. So, there's a tendency to talk in relatively sort of broad brush about a sort of, a changed vision, there was a lot about sort of devolution of power again, things linked to the Brown Commission, which we saw before Christmas. But as I say, I think given the concrete nature of the challenges that a lot of the public are experiencing, big visions without a lot of concrete detail behind them are going to start so to feel a bit thin quite quickly. 

Paul Johnson

And that's rather how both of them felt, wasn't it? I mean, it was very hard to get anything terribly concrete from them, for the reasons that we've discussed. I mean, Anand, in terms of the - I mean, we've talked about the problems that Rishi Sunak has with his party, it's been remarkable observing Labour where we've seen at least publicly, very little in the way of division in recent times. I mean are the Corbynites dead or just sort of keeping their heads down at the moment? 

Anand Menon

I mean, I think Starmer has been quite efficient at weeding them out of the party, and out of positions of influence in the party, he has reformed the Labour Party. And I think in some ways that the Labour Party is the mirror image of the Conservative Party, they're very comfortable talking about economic policy because actually, the party is genuinely pretty united over its approach to economic policy. They're far less comfortable talking about the things the Tories are comfortable talking about, which are things like Brexit and those value things. So, a cost-of-living crisis where no one's that bothered about Brexit, but everyone's talking about the economy, suits Starmer pretty well. I mean beyond that, what I'd say is, you know they were both in a sense doing the same thing. They were both trying to come across as competent, they were both trying to come across, if you like, as not Boris Johnson, though in slightly different ways. You know I'm the person who will do grown up politics, address real issues, do it in a sort of grown-up way, and deliver for you. Sunak was saying it by means of his five pledges, Starmer was doing it by means of saying, and I'll do it far better than the Conservatives have managed over the last fifteen years, but I'm not Boris and I'm not a conservative was in a sense that the message that they were, that that he was putting forward.

What strikes me about both of them is the similarities between them. I just don't get that sort of visceral sense of politics from either the Prime Minister or the leader of the opposition. They both have quite dry technocratic visions for the future, I just don't get that sense of sort of real visceral political engagement from either of them, and that is why, you know, as you see in some of the polling that whilst you know Labour have a healthy lead, no one is particularly inspired by anyone at the moment. There's a sort of there's a, a sort of vast public, kind of meh about the state of our politics at the moment. No one seems to be able to sort of provide that inspiration that I'm sure some leaders in my youth managed to do, but maybe that's just me looking at my youth through roasting to spectacles. 

Paul Johnson

Which is interesting, isn't it? Because they both got ideological backgrounds. I mean, Sunak was a, you know, a leaver, you know a true believing leaver pre-2016. Starmer was genuinely very left wing certainly at some points in his life, so it's not that they are not political and just technocratic by any means.

But this, it's going back, let's spend just the last couple of minutes on Labour you said, Anand, that you felt the Labour Party was united on its economic policy, but can you give us a sense of what that economic policy is? Because I mean they've clearly deliberately been not telling us too much, but are they united, as it were, just against where we are? Or do you see some, do you see some real signals as what they would actually do were they to win an election in eighteen months’ time?

Anand Menon 

Well, I think the Green New Deal that Rachel Reeves announced not the last party conference but the one before was genuinely a big deal. That is to say, they had a serious amounts of public money to be used to invest in green technologies and the like. I think that, though it's sort of slightly being forgotten, curiously, since you gave that speech, is potentially a very, very big deal. But beyond that, no, you're absolutely right, Labour are playing their cards very, very close to their chests, we're getting very few details on policy specifics from them.

What I meant when I said they were relatively united is in broad brush ideological stance, the Labour Party is pretty much all in the same place. That it is, you know, in favour of an activist state, that it's not in favour of the kinds of deregulation that some in the Conservative Party want to see, that they're more or less on the same page on the big picture stuff. When it comes to the details, there'll be all sorts of fights within the party, which I think is one of the reasons why Kier Starmer has held off revealing many of those details to us as yet. As the election approaches, and for reasons that Hannah just outlined, that Labour Party is cagey about saying too much too soon. We're going to have to hear more from them, and I think at that point, Starmer is aware that there are going to be some battles to be fought and won within the party as well as with the Conservatives. 

Paul Johnson

And Hannah do we think that will happen this year, or is that going to wait until next? 

Hannah White

I think that the Labour Party will draw, will have to draw some conclusions about what it's going to be, what its platform is going to be the next election this year, in terms of their processes for developing policies and agreeing their policies and so on, they’ve got a big conference in July and you know, it's, this is where the process starts to crystallise and then of course, we'll start to see some things I should think at the party conferences in September. And even if we get another set of party conferences before the next election in, so that would be in 2024, I think you know the broad outline of where the parties are going to be making their main arguments will already be clear by the end of this year 

Paul Johnson

Well, we should probably finish this with the inevitable question about predictions for the coming year. Anything at all that you think might, or indeed, might not happen over there over the next year? Where do you think we'll be in a year's time, entirely free, but something predictive? 

Hannah White

I mean, I think the thing that for me was - I was disappointed was absent from the speeches, and so maybe this is a prediction of something that won't happen, but I'd be really interested in Anand's view on this, is, was about making progress in Northern Ireland. And the absence of government in Northern Ireland is a, you know, is a really significant problem for the UK, we've obviously, you know, we've talked about the, you know, the difficulties for both parties in relation to Brexit, but we have the you know, the big anniversary of the Friday Agreement this year, and you know the if we aren't in a position to resume government in Northern Ireland by that point, I think that will be a, you know that should be seen as a major political failing on the part of the UK government.

Anand Menon  

I absolutely agree that that would be an inditement of the British Government. The only problem is I find it very, very hard to see, if we can use the language of game theory at Windset that incorporates the bottom lines of all the various parties, whether it's the DUP, whether it's the Conservative Party, the European Union. What remains to be seen is whether that part of the Conservative Party that decided it was wedded to sovereignty, that means that the European Court of Justice should play no role in this, is powerful enough to force Sunak to back down, and I think if they are then a solution will remain elusive. 

I'm not sure Sunak is fireproof. I think the Conservatives will think long and hard between before changing leaders again, but I think it is conceivable that if they have a horrible set of local election results in May that some manoeuvring will start. The saving grace I think is the seats that will last, the seats that are being fought in May were last fought at the time when the Tories did very badly, so the Tories might escape by looking like they've done rather well simply because they did so badly the last time around. The other thing I'd say is you know, obviously we're very focused on what's happening inside the country at the moment, but I do have a sense that in 2023 international events, whether that is what's happening in Ukraine or what happens over Taiwan and how China decides to conduct itself, are going to be a major feature of the political landscape over the next twelve months.

Paul Johnson 

And to end on that note, I wonder whether some of the international events may start to change the economic context here, if we're sitting here in a year's time, we may just be thinking that the next government will inherit something less disastrous economically. We've already seen that gas prices have fallen, well expectations of gas prices have fallen a lot even since the November Autumn statement, with China opening up, they're going through a difficult period with COVID at the moment, but actually that might help with supply chains, and the forecast for some parts of the world in terms of growth during 2023 aren't too disastrous. So, to end on a positive note I wonder whether we'll be thinking in a year's time that actually, Rishi Sunak’s ambition that the economy is growing will be met, and things will start to be getting a bit better and helpful, I guess then, both for the government going into an election, but also for the Labour Party if it wins the next election, rather than inheriting something as disastrous as it looked like they might inherit on the most recent set of forecast. So, an unusual note of optimism from me on that one.

Hannah White and Anand Menon, thank you so much for starting off our new series of the IFS Zooms In so fantastically. That really was incredibly, incredibly interesting and we should do this, at least annually, at least. And thank you, everyone, who's been listening to this episode of the IFS Zooms In. To see more of our work at the IFS please do visit www.ifs.org.uk, where you'll find a huge amount of analysis, and research, and publications, and articles and so on. And if you do want to further support us, do consider becoming a member for as little as £5 a month, you can find out more in the episode description and on the website. See you next time.