(Bloomberg) -- Rishi Sunak’s cabinet trudged up the gravel path at the British prime minister’s country residence on Thursday prepared for an awkward afternoon.
Sunak had invited his top team to Chequers for what was supposed to be a morale-boosting awayday 50 miles (80 kilometers) from the noise of Westminster. But his three-month old government was in a rut. Weeks of strikes have disrupted daily routines and even put the lives of British voters at risk while the drumbeat of poor economic data shows the country will get little respite in the short term and there’s little spare money to address problems before an election less than two years away.
But the prime minister was armed with research to show the situation was still salvageable - if his cabinet could set aside their differences and focus on tackling the country’s problems.
In the days leading up to the meeting, tensions and disagreements over the direction of the government had at times boiled over in private meetings between the ministers now gathered beneath the dark, enormous portraits of English aristocrats in the 16th century manor house, according to people with knowledge of the conversations.
To make matters more awkward, there was one guest that some didn’t feel should have been there: Conservative Party chairman Nadhim Zahawi is fighting for his political life after a week of revelations about his tax affairs and several ministers said privately that he should already have done the decent thing and quit the government.
To focus minds, Sunak had brought in his polling guru Isaac Levido. Gathered around a long table, with the Buckinghamshire countryside shrouded in the grim January weather, the Australian political strategist explained to the cabinet how they could still overturn the opposition Labour Party’s commanding poll lead and hold on to power for a historic fifth term.
This account of their discussions is based on conversations with several people present and other officials who were briefed on the meeting.
Drawing on his work with pollsters and focus groups, Levido set out in uncompromising detail the public’s dim view of Sunak’s Tory government. There is a widespread feeling among the public that nothing is working in Britain at the moment, he told the people whose party has been running the country for more than 12 years.
But he also had one crucial reason for optimism.
Voters do not feel particularly strongly about electing a Labour government, Levido said. They just want a government that can get its act together and sort out the myriad problems facing the country.
One minister described the presentation as the most realistic strategy they had heard yet for how the Tory party could avoid what most see as an inevitable defeat at the next election. But Levido left them in no doubt that their margin for error has all but disappeared. Everything has to go right now, the minister said.
The focus of their efforts is the five-point strategy that Sunak has set out to get his beleaguered government back on track: to halve inflation, grow the economy, cut debt and NHS waiting lists, and stop the treacherous flow of refugees crossing the Channel from France in tiny boats.
Sunak told his Cabinet those five priorities were “the foundation on which the government can help build a better future – restoring optimism, hope and pride in Britain,” according to a statement provided by Downing Street after the meeting.
Health Secretary Steve Barclay told the room that the National Health Service on Monday will publish a plan to cut waiting times for ambulances and emergency rooms. This would mean allocating billions of pounds to improving ambulance response times over the next year, ensuring people suffering from strokes and chest pains are reached within 30 minutes on average.
One person present said that is the single most important policy commitment the government could make, since everyone there knew someone who had been affected by an inability to access NHS services and that situation couldn’t go on.
Home Secretary Suella Braverman told the room she would seek further deals with the French government to help stop migrants before they set off across the water for the UK. Braverman also signaled she will unveil legislation by the end of February that she vowed would stop the boats and enforce the removal of undocumented migrants to third countries.
Of Sunak’s five pledges, tackling the Channel crossings is the one that can be most directly tackled with legislation rather than extra money, Braverman told her colleagues, promising that new laws would deliver a dramatic reduction in numbers.
Levido’s polling showed that the issue of small boats Channel crossings was a double-edged sword for the Conservatives. A clear majority of the public agreed with the government’s hardline rhetoric on illegal immigration but voters also feel the government hasn’t managed to make any real impact on preventing the crossings.
Afterward, one cabinet minister said that Braverman’s political future would stand or fall on whether she delivered on her bold pledges. The minister speculated that if the new laws provoked battles over the European Convention on Human Rights then the government would fight the next election promising to leave the ECHR.
Chancellor of the Exchequer Jeremy Hunt delivered a briefing on the economy, telling the room that the green shoots of recovery were beginning to show. He confirmed inflation has passed its peak and has so far fallen quicker than expected. That was largely thanks to lower than expected energy prices, which he said would see inflation fall below 7% this year at least.
Inflation in food prices, goods and services remains stubborn and is in danger of becoming entrenched, the chancellor said, describing this as the main risk to the economy. That means that getting inflation below 5% will be difficult, he warned. The independent fiscal watchdog, the Office for Budget Responsibility, forecast in November that inflation will fall to 3.8% by the end of this year, from a high of 11.1% in 2022.
However, Hunt warned that the government not to give in to calls from right-wing Tory backbenchers for immediate tax cuts to drive growth. Officials have been privately scathing of MPs who supported former Prime Minister Liz Truss during her brief and disastrous period in charge and are now renewing calls for policies that triggered a run on the pound.
Hunt described what he called stickiness in wage inflation as the primary problem, as well as a shortage of workers and the number of people who have dropped out of the labor market, a problem he plans to address in the Spring Budget. Wage growth has been higher than expected, he said, telling ministers negotiating pay deals with striking trade unions that they cannot offer inflation-busting salary increases.
One cabinet minister present said they believed Hunt was effectively giving the green light to wage deals where pay rises are limited, but showing the Treasury would oppose excessively generous offers. Hunt would rather see ongoing strikes than persistent inflation, higher interest rates and a longer recession, the minister said.
Levido summed up the challenge by saying that it is essential that the cabinet can now enjoy an extended period when they are seen to be governing well without scandals or incompetence. He told them their fortunes remain in their control and that the outcome of the next election was not a foregone conclusion, but that they had to be more focused, more disciplined and to deliver better results.
Throughout the discussions, the scandal-hit Zahawi kept quiet.
After the formal sessions the ministers mingled and lounged on sofas on the creaking floorboards of the large Chequers drawing room and resolved to put an end to the distractions. They swapped stories of how the former chancellor had told them he had done nothing wrong and that his taxes were all sorted.
In the car on the way back to London, one minister commented with a degree of surprise that morale had indeed been boosted by Sunak’s gathering and wondered out loud if this visit to Chequers would prove to be Zahawi’s last.
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