Bim Afolami is MP for Hitchin & Harpenden.
As the Prime Minister said at Cabinet on Friday morning, it is “half time” in this Parliament. We have two more years to deliver on our election pledges before shaping up for the next election. Covid has basically taken up the vast majority of this Parliament so far, not only preventing us from focusing on our wider domestic agenda (though, very importantly, we have delivered Brexit), but also creating new problems, such as lan extra £350 billion in public debt and huge NHS waiting lists.
By two years from now, levelling -p needs to be noticed on the ground, people need more money in their pockets, and public services need to be consistently improving. Is this going to be straightforward to deliver? In a word, no.
The Government reshuffle was a significant start on moving forwards. Much has rightly been made of the importance of Michael Gove’s new beefed-up MHCLG – now LUHC: the department for Levelling Up, Housing and Communities – with responsibility for housing, local government, devolution and the Union.
Education has severe challenges, from the difficulties of our exam system to the need to rebalance public spending from our universities towards the further education sector. Both Michael Gove (LUHC Secretary) and Nadhim Zahawi (Education Secretary) are extremely capable, with very good new junior ministers in their departments – in particular Neil O’Brien in LUHC and Alex Burghart in Education. But the stakes are high. If these departments fail over the next two years, the Government will fail too. We don’t have long to start delivering.
However, the most important domestic department for the next two years is the Department of Health. The public has gradually grown to trust us with the NHS, ignoring the propaganda from the Labour Party and the doctors’ and nurses’ unions. The most significant aspect of the Health and Social Care Levy which passed the Commons last week was the implicit realisation that the political risk of potential NHS failure is even worse than the risk of being seen as a Conservative Party who broke a manifesto commitment not to raise taxes. (Even though a pandemic was not in the manifesto!)
The NHS’s problems are of acute public and political importance. Since the start of the pandemic, the number of people waiting for NHS treatment in England has grown by a fifth. Some 5.3 million people were waiting for treatment in May 2021, up from 4.4 million in February 2020. There has been a particularly sharp increase in the number of people waiting for longer than a year.
Yet the number of people on the waiting list is expected to rise much further. Sajid Javid has warned that it is ‘going to get a lot worse before it gets better’, and could grow to 13 million.
The challenge here is monumental, and the department is also pushing through the Health and Care bill, which it seeks to remove barriers to integrating services to improve health outcomes and reduce health inequalities.
On top of all of this, we are not fully out of the woods on Covid yet, and doctors warn of a difficult winter with significant flu and RSV cases. This is a Department that may hold the fate of the Government in its hands.
The economy is facing its own headwinds too. Yes, we are bouncing back after Covid – according to the International Monetary Fund’s latest World Economic Outlook report, the UK economy will expand seven per cent this year, a sharp increase from the 5.3 per cent predicted in the Fund’s previous report in April. This is fastest in the G7.
However, the ghost of inflation past stalks us. I wrote about this here (in June, and worries about rising prices and costs of living are growing. One key aspect of inflation is energy prices, especially in the winter. Household energy bills are to rise after prices on the UK’s wholesale electricity market soared to a record high last month. The average market price reached £107.50/MWh – up 14 per cent on July, and well above the previous record of £96/MWh recorded in the run-up to the 2008 global financial crisis.
Last month, the industry regulator Ofgem announced it would lift the maximum price cap on energy deals by more than 12 per cent, after a sharp rise in the market price for gas and electricity. This increase is driven by a rise of over 50 per cent in energy costs over the last six months, with gas prices hitting a record high as the world emerges from lockdown. Coupled with rapidly rising costs for many foodstuffs, cars, and consumer goods (largely due to a combination of global macroeconomic factors), it is likely that most voters will feel a real pinch this autumn.
The Just About Managings (remember them!) will have a much tougher time. This will be especially the case if the Bank of England seeks to spike the rise in inflation in the coming months with a rise in interest rates (though at the moment I think this is unlikely). Shortages of certain foods and other key goods, largely due to damaged supply chains after Covid and not enough HGV drivers, are growing in the short term. This not only likely to put up prices, but also become a very visible and real problem for ordinary people who just go about their daily lives without thinking much about politics: i.e. most voters. This will come at political cost, particularly if the press builds up public anxiety about Christmas shopping which leads to a degree of stockpiling.
The difficulties with rising prices and energy bills will coincide with the much awaited Net Zero strategy (expected in mid-October) followed by COP26 in November. The net zero strategy will have to answer the knottiest questions on the environmental agenda such as: how are we going to replace boilers in millions of homes or better insulate buildings? How are we going to manage the shift away from petrol and diesel cars?
Whilst I am confident that there are huge economic opportunities over the medium term, in the short term there will be certain costs. Though these costs are a necessary part of implementing this critically important task of getting to net zero, being seen to impose greater costs at a time of rising prices will be politically challenging.
The next year brings rising prices, higher energy bills, and NHS difficulties. This will not be an easy atmosphere for the Government, and the Party, to operate in.