PM rewards loyalists in mini-shuffle

This is an audio transcript of the Political Fix podcast episode: ‘PM rewards loyalists in mini-shuffle’

[MUSIC PLAYING]

Peter Foster
You know, the UK is like a little iceberg that calved off this regulatory ice sheet that is the European Union. And even if we stand still, the EU is constantly moving.

Lucy Fisher
Welcome to Political Fix, your essential insider guide to Westminster from the Financial Times with me, Lucy Fisher. You heard that the FT’s Peter Foster giving his appraisal of where we are in the Brexit process. Coming up: as Grant Shapps moves to his fifth job in 12 months, what can we expect from the UK’s new defence secretary? We’ll also ask what, if anything, did James Cleverly’s visit to China achieve? And from water quality to food imports, we’ll check in on how the government is dealing with EU rules. I’m joined in the studio by FT columnist and Political Fix regular Stephen Bush. Hi, Stephen.

Stephen Bush
Hi, Lucy.

Lucy Fisher
And FT political correspondent Anna Gross. Hi, Anna.

Anna Gross
Hi, Lucy.

[MUSIC PLAYING]

Lucy Fisher
So first up, as ever. Stephen, what’s caught your imagination this week?

Stephen Bush
My highlight of the week was an interview that the shadow chancellor Rachel Reeves gave with the Sunday Telegraph in which she ruled out any form of wealth taxes. I mean, in many ways I kind of think that the most important subplot of the next 16 months, or however many it is now, is both Labour and Conservatives are going to say a number of things about tax that they will regret. (Lucy laughs) And it’s at this point just interesting to see how tight the straitjacket that they want to put on themselves before having a miserable time in government having to get out of aforementioned straitjacket.

Lucy Fisher
Fascinating. Anna, what’s been your moment of the week?

Anna Gross
So what really struck me is Nadhim Zahawi, who’s currently a serving MP, working with the Barclay family on their attempts to regain control of the Telegraph newspaper. I just think it’s quite stunning to me that a currently sitting MP would be brokering those kinds of deals, like a private transaction like that. And I kind of also question whether the same kind of thing would be done for a different paper.

Lucy Fisher
Very good question. I think for me, the story of the week has been the Ulez ultra-low emission zone cameras being vandalised. Not just that we’ve had sort of vigilantes taking it upon themselves to smash, spray paint and otherwise damage them, but that we’ve had Tory MPs actually backing this move. Iain Duncan Smith saying he’s happy for residents in his east London constituency to destroy the cameras that make the zone operable. So pretty eyebrow-raising to see MPs endorse lawlessness.

So the main political news of the week has been the mini-shuffle. I’m glad we spoke last week about what a reshuffle could do for Rishi Sunak’s government. So we knew this was coming after the resignation of Ben Wallace. I think I can speak for most of Westminster when I say the appointment of Grant Shapps to defence was a surprise. And Stephen, he doesn’t have any defence experience. So why has Rishi Sunak put him there?

Stephen Bush
Essentially from Rishi Sunak’s perspective. Grant Shapps ticks all the boxes he needs. He’s someone who’s not going to fall out with him over defence procurement, defence cuts. He’s not gonna resign angrily saying, you know, our boys are being let down. He’s a loyalist who stuck with him in the first leadership election even when it became very apparent that he was going to lose quite badly to Liz Truss. And he’s someone who’s happy to do a difficult media round and will do lots of Labour-facing attack. Obviously one of the things they have needed for a while is someone to be the face of their anti-Labour message. And so yeah, he is, you know, there are about four other people who could do it. He’s one of the obvious candidates and of course he’s a competent minister. So yeah, that’s why you’d do it if you’re Rishi Sunak.

Lucy Fisher
Yeah. And of course there’s a precedent for the Conservatives deploying their best attack dog in the defence secretary role, isn’t there, from 2015, when we saw Michael Fallon really hammering Ed Miliband over his commitment to Trident. So it feels a tried and tested use of an attack dog. Anna, what did you make of Shapps’ appointment?

Anna Gross
I think I agree with Stephen that it’s interesting that he picked someone who can be so trusted in front of the media, especially considering his predecessor, I think, shot from the hip a bit more. Even just a couple of months ago at the Nato conference in Vilnius, Ben Wallace got into hot water for asking Ukraine to be more grateful about donations it was getting, military donations, and he said that Zelenskyy has a habit for treating allies like an Amazon warehouse. And I think, you know, picking someone who can be really trusted to stick to the messaging is good. And he also seems like the sort of politician that leaders want to keep close, regardless of his allegiances, partly because he’s kind of a very sharp political manoeuvrer. He was brought into Liz Truss’s cabinet even though he’d supported Rishi Sunak’s leadership bid.

Lucy Fisher
Yeah, good point. And I also get the sense he is a pragmatist. So when it comes for the Ministry of Defence’s perennial demands for more cash, or rather the armed forces’ perennial demands for more cash, he will be sort of Treasury-aligned on seeing off those begging bowl entreaties, I expect. Stephen, what about Claire Coutinho, who’s been put in place at the Department for Energy Security and Net Zero replacing Grant Shapps?

Stephen Bush
Well, it’s a pleasingly Gordon Brown-esque appointment, isn’t it, right, in that you have essentially like an ultraloyalist former spad of the prime minister entering the cabinet for the first time. The advantage of doing that is it’s someone who you know is loyal, who you know what their politics are, you know, because, you know, they’ve been a spad and they have that grounding on how to do it. They can actually do the job. But, you know, it’s like that old joke. Those who they first wish to destroy, they promote ahead of the rest of their intake. Just as you know, under Blair and Brown, people resented the people they used to call “the shinies”. So, you know, Ed Miliband, Ed Balls, the spads. There will, of course, be some resentment. But it is essentially taking what can be a very difficult, very important job for the government and going who is the loyalist, most proximate person to me? Someone who used to be my spad. So it’s a pretty routine appointment in lots of ways.

Lucy Fisher
But it is stunning if we just step back a moment. I mean, she has been impressive for the time she’s been in parliament, but it hasn’t been long. You know, an MP for just four years. She’s spent less than one year in government and even then, presiding over two pretty junior ministerial briefs. So this is a huge step up for her, isn’t it?

Stephen Bush
Oh, yeah. And in some ways it reflects on the relative inexperience of the prime minister himself, right, in the way it’s not like a Brown manoeuvre is then what he would do. If you look at the career of, say, someone like Stephen Timms or, you know, into a junior shadow Treasury move, into a slightly senior one and then promoted and promoted all the same way that Osborne would bring up people like Sajid Javid, where essentially he’s done this very accelerated version of that trajectory, which is a big adjustment, of course, for whoever the politician is. But one of the risks within any reshuffle is a bunch of people who are overlooked start going, Oh, am I over? Have I been, you know, overlooked, yadda, yadda, another woman, blah, blah, blah. Which, now although David Johnson is hugely qualified for the job he’s doing, you can kind of see the way that this is that appointment, I think is partly about trying to compensate for that. He did not back Rishi Sunak the first time. He’s a white bloke and he’s, you know, someone from a blue wall seat. So three groups in the parliamentary party that often feel overlooked and a little bit unloved.

Lucy Fisher
And just to remind us, David Johnson is another MP from the 2019 intake who was promoted to fill Claire Coutinho’s former role as children’s minister.

Anna Gross
Yeah, so yeah, another 2019 intake and he’s again sort of seen as one of the rising stars of MPs. He’s also, I think like both the other people marked himself out as a clear loyalist. He supported Sunak during his leadership bid and stepped down from Boris Johnson’s government just after. So I think it’s kind of, it’s again, it’s a really safe appointment. I was just thinking in response to what Stephen said that in terms of thinking about a reshuffle later on in the year, potentially in the autumn, it seems as though the fact that he’s accelerating the rise of some of these younger people suggests that there might not be that many senior people that he can promote safely who he doesn’t find threatening to him.

Lucy Fisher
I think there’s something in that, isn’t there, Stephen, that we’ve learned something about the grip that Sunak has on the party, that at this stage he’s felt only he has the manoeuvre room to do very limited changes, relying on only loyalists. Do you think there will be a wider shake-up later this year?

Stephen Bush
There is still a live conversation in Downing Street about whether or not to have a wider shake-up, as I think we saw with this reshuffle, where the final pieces remained live right until (inaudible). It could still not happen. But if you look at the kind of key delivery briefs, I think they will end up deciding they have to refresh some of those posts.

[MUSIC PLAYING]

Lucy Fisher
Let’s turn eastwards to Beijing. This week, we saw the first visit to China by a UK foreign secretary in five years amid controversy over how close the relationship should be. Foreign Secretary James Cleverly hit back at his critics.

James Cleverly
I fundamentally disagree with those voices, including people I regard as good friends, who feel that we should disengage from China. I don’t think that is a credible option.

Lucy Fisher
That was James Cleverly talking about China hawks on the Tory benches, including Iain Duncan Smith, who said the visit was the latest stage in “project kowtow”. So Anna, do hawks like Iain Duncan Smith have a point? After all, he’s one of five UK MPs who’ve actually been sanctioned by China merely for being critical. Is this a country the UK should really be doing business with?

Anna Gross
I think the hawks are delusional if they think that, you know, we can completely separate ourselves from China or even significantly separate ourselves from China in the way that the US has. That said, I do think the UK government has struggled to present a coherent narrative about what their stance on China is, and I think that that is quite unsettling to businesses and to investors. So a couple of months ago the Intelligence and Security Committee said that the government seems to be unaware of the threats posed by China at home or doesn’t seem to have a full grasp of what they are. I would say that it seems to have even less of a grasp of exactly what business’s exposure is to China and investors’ exposure is to China. And I think that kind of, that comes across. It would be useful to show a clearer signal of what its aims are rather than sort of what the position seems to be and what Cleverly seems to have signalled this week, which is, you know, we’re a bit critical of your human rights violations and we’d like you to do more on the environment, but we’d also like to do business with you.

Lucy Fisher
Well, interesting. I think your verdict is one shared by MPs on the Foreign Affairs Committee who absolutely made that complaint this week that the UK government’s policy on China lacks coherence and clarity. You know, they say the government needs to publish what it is they’re trying to achieve with China because it’s so unclear and kept too close. It’s the ministers even who aren’t across the detail. Stephen, what do you make of Cleverly’s trip this week? What did he actually achieve?

Stephen Bush
Well, he achieved something quite important, which is that before he’d gone, we have this slightly ridiculous situation where essentially the world and its wife has gone to China more recently than a British minister has. You know, we are a small, midsized economy who appeared to be drifting into having a more Sinosceptic position than the United States. And so I would say it’s not a small thing to reorient the UK to China policy according to our location, size — like all of the various limitations on which James Cleverly talked about in his interview with us. That’s a sort of non-trivial achievement.

But the central problem, right, is the reason why none of this gets written down is if you wrote down what the UK’s China policy was, then a large chunk of the Conservative party would start screaming. And so instead you have a China policy, which is basically mumble, mumble, mumble, guys, we don’t think that we can change any of the things you don’t like so maybe we should just focus on economic ties. Mumble, mumble, mumble. Engagement, mumble, mumble. But of course, because civil servants and other ministers can’t set their policy aims based on vague mumbles and hints to papers or on TV, the result, of course, is a mess.

Lucy Fisher
Well, I think James Cleverly would hit back against the mumble, mumble characterisation. He says there’s three clear pillars that he’s articulated: align, protect and engage — align with China where we have shared interests, protect against threats to UK interests and engage on areas of disagreement. And Stephen, just finally, Cleverly said he raised human rights: China’s security crackdown on Hong Kong, the case of jailed Hong Kong pro-democracy campaigner Jimmy Lai, China’s malign cyber activity. That was quite tough, to be fair to them, wasn’t it?

Stephen Bush
Yeah. I mean, look, the argument that seconds after they listen to it, someone in the Foreign Office will phone and not unreasonably put to me is, look, because of the decision to have a very generous offer to people fleeing Hong Kong, a large chunk of the democratic movement is now based in the UK, right? So there is a really obvious reason why the UK kind of is always going to have a more antagonistic relationship with China now than France because there are not a large number of people in the Hong Kong democracy movement in France and they are in the UK. So he was pretty robust, particularly considering all of the strategic imperatives for the UK to slightly unwind some of its more hawkish noises over the last year, year and a half.

[MUSIC PLAYING]

Lucy Fisher
This week, the government confirmed yet another delay to the implementation of post-Brexit border controls on food and fresh products. It’s the fifth postponement to date. Meanwhile, ministers have been taking flak from green campaigners over the decision to scrap some EU rules on water policy. So what to make of it all? I’m joined by the FT’s public policy editor, Peter Foster. Hi, Peter.

Peter Foster
Hi.

Lucy Fisher
So Peter, tell us a bit more about this latest delay to the new UK border regime. What’s at stake?

Peter Foster
So you will remember that we did a trade deal with the European Union.

Lucy Fisher
Yes.

Peter Foster
And that meant immediately, January 1 2021, all of our exports into the EU got subject to the full panoply of checks, export health certificate, checks at the border, etc. For our goods going into the EU, it didn’t work the same way. We’ve constantly delayed the imposition of all these checks on EU companies exporting into the UK. And so what the government announced, finally after years of consultation, is that from January, everyone’s gonna have to start producing the paperwork. And from April, there will start to be physical checks on exports of goods coming from the EU into the UK. Now the danger is, and the worry for the government is, that just as small UK businesses basically couldn’t handle the hassle getting a vet into your bratwurst store or your mozzarella shop to give you a stamp to get your stuff on the lorry, a lot of small EU suppliers will give up on the UK, right? These non-tariff barriers inhibit trade, we know that. Perhaps 40 per cent of the volume of trading relationships between the UK and the EU — a lot of them very small — disappeared almost overnight in Brexit. So after the Brexit deal came into force.

So the government is introducing these checks. It needs to do that partly for biosecurity reasons, partly to level the playing field with the EU, particularly if we’re gonna have a future negotiation with the EU on the trade deal which is coming up for implementation review in 2026. If the pain is only going in one direction, then when you start round the table you’ve got really no reason for the EU to think about streamlining customs control, relaxing the levels of control. So finally, that’s a big step. Now, whether it will happen or not, given the number of delays that we’ve had, well, we’ll have to wait and see. Some of the trade groups before the freight forwarding association was saying that some of the technology for what’s called the single trade window is not necessarily gonna be in shape. It’s not clear how you join trusted trader schemes. There’s a lot of nervousness among business that the systems won’t be ready and there won’t be sufficient engagement with EU businesses to get them ready to bother to trade with the UK.

Lucy Fisher
Well, you point out traders are understandably anxious about themselves preparing for it, about the operability of the UK border. But from the political perspective, there’s also the danger that if EU producers decide not to grapple with all that red tape you’ve outlined, that that will push up food prices in the UK if supply is hampered. And indeed this week the government finally admitted that it would have, albeit a minor, they insisted, effect on inflation.

Peter Foster
0.2 per cent I think the press release said.

Lucy Fisher
Across three years.

Peter Foster
Yeah, but we’ve already had, you know, the big LSE study which showed really significant food price inflation impacts caused by Brexit. That’s a fact of life. If you put friction on trade, it puts up costs. And David Frost said he didn’t believe in non-tariff barriers. Well, you know, three years into his trade deal, it’s pretty clear they exist and it’s pretty clear they’re costly. You know, the reason the government’s not introduced, you know, these barriers is because they’re worried it will crimp supply chains, it will drive up costs, it will make life harder. They’ve always had an excuse. They’ve pushed these back to avoid a crunch over Christmas, actually. But, you know, here we are. It’s 2024 it will be before it all comes in. That’s, you know, a good three and a half years since the Brexit deal came into force. That tells you that these barriers are costly. And, you know, that’s why the government’s been slow to introduce them.

Lucy Fisher
Well, let’s turn briefly to another row that’s flared up this week, this time between eco groups and ministers after the government announced it was ditching some regulations aimed at protecting waterways in order to allow developers to build more homes. So Peter, just explain to us what rowing back has taken place regarding the EU so-called nutrient neutrality rules.

Peter Foster
Right. So there was a ruling from the European Court of Justice in 2018, a Dutch case that created very stringent rules for what’s called nutrient neutrality. So nutrient is phosphates and nitrogen coming in either from domestic sewage systems, also run-off from farmers fields. It causes what’s called eutrophication in rivers. It destroys the water quality, oxygen levels in rivers, and that kills wildlife and biodiversity. Because the rules were so strict, Natural England, which is essentially the regulator, put in very strict rules that, according to the housebuilders federations, were stopping 100,000 houses being built. And obviously we all know we need to build more houses. So what the government announced this week was that it was getting rid of this regulation and was changing the habitats directive or the implementation of the habitat directive as it now appears in UK law to enable these houses to be built without this EU-derived law impacting the decisions for Natural England. And as you said in your introduction, that has predictably caused a massive row with green groups.

Lucy Fisher
And just finally, Peter, you’ve followed the twists and turns of Brexit in painstaking detail. If we step back a moment and treat Brexit as a process rather than a single event, how far through are we?

Peter Foster
You know what, Lucy, I think that’s almost the wrong question to ask, right, because you . . . 

Lucy Fisher
Tell me what I should be asking.

Peter Foster
What? No. Because of the implication of that question is that Brexit is a thing that was going to get done, right? That somehow, you know, you all say (inaudible) we’re 50 per cent there, right, Lucy? It’s all fine, 50 per cent there, and in a couple of years’ time, it will be over. It’s almost the exact opposite of that, right? Which is that companies now are paying whack-a-mole with Brexit. So we talk about the border operating model in the beginning of our conversation. But there’s loads more things coming down the tracks: carbon border adjustment mechanism, the EU imposing carbon taxes, the fact the UK now, UK carbon price is diverging from the EU’s, plastic packaging directive, supply chain monitoring. It’s what I call Brexit 2.0. So actually, there won’t . . . it will never end.

Lucy Fisher
It will never be over.

Peter Foster
Right?

Lucy Fisher
OK. That’s the answer.

Peter Foster
It will never end because, you know, the UK is like a little iceberg that calved off this regulatory ice sheet that is the European Union. And even if we stand still, the EU is constantly moving. And so, if imagine if you’re a business, there is a regulatory gap that emerges between you and the EU and therefore to get your stuff into the EU or to have be part of an EU integrated supply chain, you’re gonna find you constantly come up with more and more frictions as the two things diverge unless a future government intervenes to stop the divergence. And there’s things you can do by legally linking our emissions trading carbon scheme — there’s lots of people who think that would be a good idea. Dynamically aligning on veterinary standards. But then you know, the politics of that, as Stephen will no doubt tell us, are very complicated. Being a rule taker goes against the grain of three decades of narrative on the single market, the Labour party’s not rolling the pitch and the politics of rule taking is still, in my view, extremely difficult and will be extremely difficult even if it makes sense on a spreadsheet.

Lucy Fisher
Stephen.

Stephen Bush
The particularly interesting to me least bit about the politics here is one of the reasons why the Conservatives have particular problems in farm country is that the group of people who are most hit by the fact we keep putting off the date of checks are farmers, right, who face checks going into what was, is their nearest largest market, but whose competitors do not face checks going the other direction. That is OK. It’s not the only reason, but that is part of why the Liberal Democrats were able to win in somewhere like North Shropshire, right, somewhere without much Lib Dem history, is because of that. Now you can see, although it’s — no, I completely agree that Labour is not doing anything like the level of patrolling it ideally would. But there is I think lots of things where that will get — simply because, you know, the Labour party, broadly speaking, has no real interest in most rural constituencies. You can see one of the areas of alignment will happen here is we will just go for dynamic alignment on that kind of thing. But that I think will probably then deepen a Conservative opposition’s internal debate. Because on the one hand you’ll have some kind of committed Brexiteers will be going, no, not, you know, not one dose of dynamic alignment. On the other hand, you have lots of people going, the Lib Dems finished 2,000 votes behind me, all of my farmers are really furious.

Lucy Fisher
Anna, Stephen talked a bit about Labour’s approach on the EU. The europhiliacs in parliament, of course, are really the Lib Dems, but they don’t seem to be talking much about Brussels these days.

Anna Gross
Yes, they don’t. And I think there’s a clear reason for that, which is that the votes they’re trying to win are Conservative votes, and particularly at the moment in rural enclaves. And those were a lot of the time Brexit-voting. And so they’re just basically trying to steer clear of turning away any previously or current Brexit-supporting voters. And, but the result of that is that I think quite a few people, a lot of people, are not really clear on what they stand for because it was their main thing. I checked this a week ago or two weeks ago. On its website it said, you know, we want to rejoin the EU. So they haven’t updated their website. It’s kind of everything they stood for for a while, and now it’s just totally off the agenda.

[MUSIC PLAYING].

Lucy Fisher
Well, before we go, let’s hear your political stock picks for the week. Anna, who are you buying or selling?

Anna Gross
I am buying Michael Gove. So I think his department’s decision or his decision to scrap a nutrient neutrality regulations will play well with quite a few key groups, even though it sat very badly, as you said, with environmental groups. Yeah, it’s obviously something housebuilders are really pleased about. So signals, you know, he’s listening to business, he cares about what businesses care about, but it also plays really well into this new Tory narrative that we’re not going to promote green issues over things that businesses and taxpayers care about and that is gonna end up costing them more.

Lucy Fisher
Well, we’re actually, Stephen going to be quizzing Michael Gove at the FT Weekend and there’ll be a special episode of Political Fix next week. So I promise that was not Anna’s attempt to butter him up before he comes under our magnifying glass. Stephen, who are you buying or selling this week?

Stephen Bush
So partly because fortunately Robert Shrimsley’s not in the pod this week — he would laugh at me for this — I’m going to pioneer the third category of (inaudible) I’m going to hold . . . 

Lucy Fisher
OK.

Stephen Bush
 . . . James Cleverly, because I have quite a lot of James Cleverly in my portfolio. I’ve tipped him (Lucy laughs) as a future leadership contender quite a lot of times in my newsletter and in the paper. And although I, you know, as I discussed I think it’s been a good visit from kind of the UK political interest perspective in terms of the most important electorate for him if he does run to be Conservative leader, Tory MPs, he’s deepened the sense among Conservative moderates that he’s someone they can do business with, but he’s also perhaps created some problems for himself on the right, so although I think he’s still very well placed I’m holding James Cleverly. Who’s yours?

Lucy Fisher
Well, for me this week I thought I would buy Alicia Kearns, who is the Tory chair of the Foreign Affairs Committee. We mentioned briefly her report on the UK’s tilt to the Indo-Pacific this week, which criticised the government on China policy. And it was just beautifully timed, although she claims it’s a coincidence, to land just as Cleverly was flying into Beijing. And I just think there was a lot of sneering about her when she was first selected for that position I think partly because she’s a woman and she’s youngish and people kind of questioned her credibility. But I feel she’s developed a really strong voice. And the Foreign Affairs Committee have had a number of hard-hitting reports in recent months.

[MUSIC PLAYING]

So I think she’s on the up. Stephen, Anna, thanks very much.

Well, that’s it for this episode of the FT’s Political Fix. If you like the podcast, do subscribe. You can find us through all the usual channels to receive episodes as soon as they’re released. We also appreciate positive reviews and ratings. It really helps spread the word. You can find FT articles linked to today’s podcast topics in our show notes. They’re free to read for Political Fix listeners. And don’t forget to sign up to Stephen’s award-winning Inside Politics newsletter. You’ll get 90 free days.

Political Fix was presented by me, Lucy Fisher, and produced by Audrey Tinline. Manuela Saragosa is the executive producer. Original music and sound engineering by Breen Turner. Cheryl Brumley is the FT’s global head of audio. We’ll meet again here, same time, same place next week.

[MUSIC PLAYING]