Rishi Sunak has had a pretty poor time as Prime Minister so far and public confidence in him and the wider Tory party is at a low. With opinion polls so low we are introduced to Rishi Sunak’s 5 promises.
In an attempt to win back the public’s trust he has made these promises that he maintains will set Britain back on a course for prosperity.
The only problem is he will have to go against everything he believes in to achieve his lofty goals.
What Are Rishi Sunak’s 5 Promises?
In a speech that has already been met with widespread derision from across the political spectrum, Rishi Sunak has made 5 concrete promises to the British electorate.
They are:
- Halving Inflation in 2023
- Grow the Economy
- Reduce National Debt
- Improve NHS Waiting Times and Gat Patients the Care They Need
- Reduce the Level of Illegal Immigration into the UK.
By any government’s standards these are big promises, by a government in the position of Rishi Sunak’s government position they are monumental.
They are achievable though, but at the cost of Rishi Sunak’s personal ideology. Let’s look at each promise in turn.
Halving Inflation in 2023 – Rishi Sunak’s 5 Promises
Currently (as of January 2023) the inflation rate in the UK is 10.7% according to the Office for National Statistics (ONS).
Half of that inflation rate is 5.35% by December 31st, 2023.
There are two ways to reduce inflation – one of which isn’t available to Rishi Sunak.
The two ways to reduce inflation are:
- Limit money supply (reduction of issuance of currency).
- Increase Bank of England base rate.
Both ways are under the remit of the Bank of England who frankly mishandles both.
For complex reasons that would take a whole article to explain in detail, the Bank of England can’t really curb the amount of money it is printing to the point inflation would be half what it is now.
They can however raise the base rate.
The Bank of England has always had a 2% inflation target and for as long as I can remember they have ALWAYS FAILED to meet it.
What Does the Bank of England Base Rate Need to Be for Halved Inflation?
But 5.35% isn’t 2% and a substantial rate hike alongside a slight reduction in money printing will certainly do the trick.
How substantial you might be asking? Well, honestly, it would need to be a rate hike that closes in on double digits. Current predictions are the Bank of England will raise the base rate to 6% by spring. But those predictions were made on the basis that inflation would fall gradually, not drastically as they would need to in order to meet the 5.35%.
I expect the Bank of England to have a base rate close to 9% by Summer/Autumn time if not higher in order to get inflation down to the desired 5.35% in time for the promise to be met.
If energy supplies continue to be impacted by ongoing conflict in Ukraine and inflation rises further, you can expect a base rate of over 10%.
What That Base Rate Means for Ordinary Folk?
Well, first and foremost, everyone that has taken a tracker mortgage in the last 2 years is going to be in for a nasty surprise.
And this is going to be a big problem as tracker rate mortgages have been the most competitive mortgage products with fixed rate products having higher interest rates.
Those renting won’t be spared the agony of these increased costs either as most landlords have Buy to Let mortgages. When a landlord’s mortgage payment increases, a tenant’s rent almost certainly follows.
Absent of additional government intervention these increased costs will result in some people being evicted from properties and more repossessions as people can’t afford to keep up with their mortgages.
The cost of borrowing will also increase aside from mortgages.
Grow the Economy – Rishi Sunak’s 5 Promises
This must be the thorn in Rishi Sunak’s side as the only way to encourage growth in the economy is to reduce taxation on said economy.
You can’t expect investment and growth with tax rates that cripple businesses and individuals.
Rishi Sunak will have to adopt a Liz Truss style of economics to realise any meaningful growth in the economy.
Growing the economy means enticing foreign private investors into the country and providing incentives for businesses to trade. Both aspects are hampered by high taxation.
After all, why would you invest in a country with heavy taxation if you can invest elsewhere and get a greater return on investment.
The good news on this promise is the reduction in tax will ease the burden of the hiked interest rates whilst also curbing spending (which causes inflation). People will be glad for the tax break to offset against their mortgage and rent and won’t spend money carelessly knowing how strained their monthly expenses will be if further base rate increases occur.
Personally I will gain tremendous satisfaction watching Rishi Sunak drag himself to the table, tail between his legs and face full of disappointment when he concedes Liz Truss had a good idea on taxation.
What Rishi Sunak absolutely can not do and succeed on his 5 promises is increase taxation.
Reduce National Debt – Rishi Sunak’s 5 Promises
This was a bit of an ambiguous promise and I am not entirely sure what he meant by reducing national debt.
It could mean one of two things:
- Paying down some of the existing debt,
- Not continuing to borrow on previous levels.
I suspect it is the latter, but I am hoping it is the former.
The good news is by reducing taxation across the board the treasury will receive more money from tax. Sounds counterintuitive, but it’s true.
First, anyone not paying their fair share because the tax burden on them seems unfair are more likely to contribute.
Second, lower taxation invites new investment which in turn means new parties to pay tax.
As a result of growing the economy in this way, it is realistic to expect a reduced need for government borrowing and even the ability to pay down some of the existing debt.
Improve NHS Waiting Times and Get Patients the Care They Need
This one has me a little stumped.
Currently the NHS is completely broken. Not a little bit broken, but absolutely rotten from it’s core all the way out to its once glossy exterior.
Nurses are on strike.
Ambulance staff are on strike.
GPs aren’t seeing patients face to face.
Mental Health services are practically non-existent.
Hospitals are run down.
Waiting lists are extraordinarily long.
Dealing with the NHS Strike Action
I am uncertain what Rishi Sunak can do here. He can’t pay the Union’s demands because there is no money left in the public purse to do so.
Perhaps he is hoping they will reduce their demands in line with his 5.35% inflation target. It has been reported the government tabled a pay rise of 5% to the unions.
Either way, he hasn’t got the wiggle room to give pay rises above 5% and being honest, 5% is probably well over government spending capacity.
Dealing with the NHS
There are two ways to sort out the troubles with the NHS:
- Drastically cut public spending from other government programs,
- Privatise the NHS.
Rishi Sunak doesn’t have the balls to privatise the NHS although it is the only long-term solution to the Healthcare problem we have in the UK.
That leaves massive cuts from other areas to prop up the NHS for a few more years.
Privatisation is absolutely inevitable – the NHS is far too expensive to operate at a reasonable capacity on taxpayer funding and it has always been the case.
It has become more pronounced in recent times because population growth has increased the burden on the system. This has been compounded by the fact people are now living longer and requiring long term care in later life.
I expect the privatisation of less contentious areas of government spending – namely the BBC and Channel 4.
How Public Funds are Spent
Currently by far the most expensive expenditure of public funds is the NHS which dwarfs all other expenditure.
Second is education. Some education is already privatised with the likes of the Catholic Church and Church of England operating in private capacity. But it is wholly unlikely the government will move to privatise education further as it would be deeply unpopular.
Third on the list is Scotland. Yep, Scotland receives more in taxpayer funding for their devolved parliament than our armed forces. I can see Rishi Sunak allowing a second independence referendum to allow Scotland to leave the union and free up a huge chunk of taxpayer money.
Fourth is business investment such as grants and incentives for businesses, which will be left untouched because you don’t want to cut business spending at a time you are seeking to grow the economy.
Fifth is defence, which will be left untouched because it would be suicide to cut defence funding when there is a tyrant hellbent on restoring the Russian Empire and sailing armed vessels past the coast of Britain.
Sixth is transport, which I can see being fully privatised. The reason being that currently public transport networks are all on strike and the public sentiment to those striking is not positive. Train drivers are already overpaid and the public would not bat an eyelid if swathes of public transport were fully privatised.
The rest of government expenditure is too low to make a real impact on propping up the NHS for another 5-10 years.
What I Think Will Be Cut
In my opinion, Scotland will be granted a second referendum and if the exit it frees up money for the NHS. If they remain I am sure a big discussion will be had about the SNP and their misuse of public funding for referendum campaigning which seems an appropriate excuse to scale back Scotland’s funding.
I expect free school meals and other costly small government expenditures to be cut completely.
As far as public transport is concerned, the general public already pay fares to use it so it will make no odds or ends if most of it is privatised.
Lastly, I can see the Channel 4 and maybe even the BBC being sold off.
All in all it will keep the NHS operational for a decade or so before it derails completely.
Some NHS Services May Be Privatised
It may also be the case that behind the scenes as is the case currently, some additional services may be privatised in order to ease the burden on the public purse strings.
Though the government won’t admit to that.
Reduce the Level of Illegal Immigration – Rishi Sunak’s 5 Promises
Of the 5 promises, this is the easiest to implement and it is a bit of a wonder as to why something meaningful hasn’t been done sooner.
All it takes to ensure this is prevented is by having robust policies and systems in place that are fully enforced.
Sending illegal immigrants to Rwanda for example might be controversial, but will certainly act as a deterrent. No one in their right mind is going to cross from the relative comfort of France in order to be shipped to Rwanda.
And that about sums up my analysis. What do you think? Have I missed something or got something wrong?
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