Government and the Voluntary Sector, Policy, campaigns & research, Policy

And then there were two…

Here's our Director of Policy and Research, Jay Kennedy, explaining everything you need to know about the Conservative leadership race and how it could affect the charity sector.

Just hours after Boris Johnson bowed out of his last PMQs with a slightly ominous line from the movie Terminator – ‘Hasta la vista, baby!’ – the field of contenders to replace him was whittled down to the final two.

Rishi Sunak, the former Chancellor, and Liz Truss, the current Foreign Secretary, are now making their case to Conservative Party members over the rest of the summer, with the result to be declared on 5 September. The winner will become Britain’s next Prime Minister; the fourth in six years. What could this mean for the charity sector?

The Candidates

It’s quite common for new Prime Ministers to have experience of one or more of the other ‘great offices of state’ such as the Treasury, Home Office, or Foreign Office, and these two are no exception. Both Sunak and Truss served Boris Johnson loyally throughout his term of just under three years – Sunak eventually resigning which helped trigger Johnson’s resignation, whereas Truss remained loyal to the end.

Sunak was relatively unknown before he became Chancellor in the Spring of 2020, on the cusp of the erupting COVID19 pandemic, having only become an MP in 2015. He stepped in to one of the biggest jobs in government just before the whole world changed, and is perhaps best known for the furlough scheme and other support for employees and employers during the pandemic, which saved millions of jobs but also accrued public borrowing not seen since wartime.

During this period the Treasury proved a hard nut to crack for the charity sector. Its thinking and world-view has been very much based on economics and the private sector as the main driver of efficiency, innovation and growth, with little consciousness about the importance of charities, social enterprises, and voluntary organisations. It wasn’t easy, for example, to convince the Treasury that loan finance and VAT deferral schemes targeted at businesses should also be available to the charity sector.

Truss has been an MP since 2010, and has a more varied history across different departments, including Education, the Treasury, and Defra. She served in David Cameron’s Coalition Government and under Theresa May as well as Boris Johnson. She is perhaps best known for her most recent role as Foreign Secretary in the context of the invasion of Ukraine, although in this she has often been upstaged by her own former Prime Minister. Also for putting a forward a Bill attempting (or threatening) to alter the Brexit Withdrawal Agreement governing trade between Northern Ireland, the rest of the UK, and the EU.

Both candidates support Brexit (Truss initially supported Remain in the 2016 Referendum campaign but is now apparently a true believer) and both have been busy burnishing their Brexiteer and fiscally conservative credentials as they try to appeal to the Conservative base. Truss is focusing more on tax cuts – and wants to decrease taxes immediately if she wins – including the rise in National Insurance that is intended to fund social care. She has cited theories like ‘supply-side economics’ which most people thought went out of vogue after the 1980s.

Sunak on the other hand seems to be trying to position himself as the ‘sound financial manager’ of the economy, arguing that the public finances need to be on a better footing before taxes can be cut. Both candidates revere Margaret Thatcher in their rhetoric (and in Truss’ case, in her photo ops), and it’s quite possible that in terms of fiscal and tax policy we could be in for a bit of a time-warp.

Sunak seems like more of a technocrat whereas Truss comes across as a maverick who will take more risks. Despite Sunak’s key role in the Johnson administration, Truss seems like the Johnson continuity candidate. But who knows? Both of them have doubled-down on the government’s reprehensible policy of deporting asylum seekers and refugees to Rwanda, and the culture war rhetoric seems set to continue for the foreseeable future.

Whoever wins, given their stated priorities it’s hard to see how Britain’s creaking public services and the people who depend on them will be improved at least in the short-term. There will likely be pressure on public spending either to bring down borrowing or cut taxes, or both. This will increase the burden that big parts of the charity sector have to shoulder as a result.

The Calendar

The political calendar for the Autumn is already looking more consequential. Early in September, the newly elected Prime Minister will want to move swiftly to appoint a cabinet, and this will give some indications about their style and how they want to lead. It’s possible that nearly-forgotten junior posts like the Minister for Civil Society will seamlessly transition across to the new regime, but the new PM will want to fill the big jobs with their own picks – people whom they believe will be loyal and able to deliver quickly. As both candidates came from the previous cabinet, it’s likely that many of the contenders will be recycled from former cabinet colleagues.

Then, at the beginning of October, we’ll have the Conservative Party Conference, which will likely have a different feel with a new leader. To what degree will the new PM stick with the 2019 manifesto, or shift policy? Will ‘Levelling Up’ be given a rebrand, or boosted? Will the new government make more meaningful moves on the cost-of-living crisis, or throw some tax cutting red meat to the faithful instead?

We may not get a really clear sense of where the new government is going and how much it will diverge from the current path until the next Budget. Last Autumn we had a major Budget statement with a Spending Review, with a more limited update in Spring. With a new leader in place, the Budget usually expected in the late Autumn may now turn into an earlier ‘Emergency Budget’ or more of an in-depth exercise than otherwise anticipated, despite the Spending Review having set the course for next three years just one year before.

Odds on a General Election?

Based on the when the last General Election was held, over Christmas and New Year 2019, the latest date that the next one could be called would be the very end of 2024. Prior to Boris Johnson’s resignation, few were predicting an election earlier than that – but the odds be shortening.

When a new PM of the same party takes over the siren call of a mandate from the public for the new leadership has a way of growing in volume. We’ve been here before: David Cameron resigned after being on the losing side of the EU referendum, and Theresa May called an election not that long after taking over from him. Similarly, Johnson called an election less than six months after taking over from May. Further back, we had Gordon Brown’s decided not to call an early election after taking over from Tony Blair, which many viewed as a mistake. Will Sunak or Truss do the same if they get a bump in the polls?

To sum up, it’s still not clear how much the balance between continuity and change might shift with the incoming government – to some degree this depends on who wins. The signals from both candidates in the election campaign suggest a further shift to the right, but bear in mind many of these messages are about winning over a tiny electorate of party members, not gaining the trust of the whole country.

What can you do to prepare your charity for the future?

From September, there will be further opportunities as well as threats as we move into party conference season and beyond. If your charity is based in an area with a Conservative MP, or has Conservative local councillors who may be voting in the hustings, you can try to get in contact over the summer when they may be in the constituency. Let your MP know what’s going on with your beneficiaries and what they need. Ask that they put questions to the prospective candidates. Here are some tips for dealing with local MPs.

Even if you’re not in an area with a Conservative MP, there’s nothing stopping you from talking to other political parties or candidates – in all cases just make sure you’re not advocating for any candidate personally or for their party. For example, the Labour Party is currently in the middle of a major policy review known as the ‘National Policy Commission, and other parties may be conducting similar reviews, especially given the change in government.

We aren’t in a General Election campaign yet, but we could be in less time than we thought. What solutions should parties be taking up as part of their developing platforms? Now could be a good time to start working up and pitching proposals, and even if your conversations don’t bear fruit immediately, the relationships you start to build could come in useful in the run up to the Budget or beyond.

‘Persistence is as important as being right’

A comment from a senior government advisor that has always stuck with me is: ‘persistence is as important as being right’. Charity folk are used to the revolving door of ministers and officials. Although it can be gutting when a Minister you developed a good relationship with is replaced overnight, the flip side is also true – if things weren’t so great a new face can be an opportunity to start afresh.

Stay focused on what your beneficiaries need at all costs, keep your messages consistent and constructive, keep motivated and persisting, and eventually the stars will align into a more advantageous position for you. Watch this space for more analysis over the coming months.