Sunak urged to reshuffle in favour of Right

PM encouraged to put ‘difficult’ local elections behind him before they have even happened

TORY critics are urging Rishi Sunak to create an “election war Cabinet”, promoting Right-wingers after the local elections, which are predicted to deliver sizeable Tory defeats.

Two Tory MPS have endorsed the idea to The Telegraph, with Dame Priti Patel, Sir Jacob Rees-mogg and Robert Jenrick put forward as possible names for contention. One said: “Lots of MPS are waiting until after the locals to get no-confidence letters in. I would like to see the Prime Minister do a major reshuffle to bring in all sides of the party.”

There is frustration among figures on the Tory Right that Mr Sunak has packed his Cabinet with moderates. They argue that the move does not represent the breadth of the party.

Suella Braverman, who ran for the Tory leadership from the Right in 2022, was replaced as home secretary last year by James Cleverly, widely seen by colleagues as a centrist.

Lord Cameron, the architect of the party’s moderate rebrand to win back power after the New Labour years, was brought back as Foreign Secretary in November.

The second Tory MP said: “The last big reshuffle was seen as culling the Right of the party. Suella leaving was priced in, but with Cameron and others coming in it went down like a lead balloon and was very poor judgment.”

George Osborne, the former Tory chancellor and an ally of Lord Cameron, has also floated the idea of a pre-election Cabinet reshuffle on his Political Currency podcast.

But asked about the idea over the weekend, some Tories critical of Mr Sunak’s leadership downplayed the impact it could have. One said: “It would not make an iota of difference.”

Downing Street is braced for tough local election results on Thursday, with as many as half of the Conservative council seats up for votes expected to be lost.

Mr Sunak appeared to prepare the ground for poor results, telling the BBC’S Laura Kuenssberg that “local elections are always difficult for incumbent parties”.

A band of Tory rebels are preparing to put renewed pressure on Mr Sunak’s leadership in the wake of the results, but how widely their ambitions are shared by colleagues is unclear.

Some have proposed a five-point plan of policy changes – to end the junior doctors’ dispute with a 10-12 per cent pay rise offer, cut legal migration numbers, increase defence spending to three per cent of GDP by 2027, harden laws to lock up prolific criminals, and slash the welfare bill.

A Tory rebel source said: “The country has had enough of broken pledges and distant plans for change or bans they never asked for. It’s a plan for 100 days to show the Government is taking action and cares about what matters to the British people.”

Fresh debate about the policy direction of the Conservative Party will be triggered by the publication of a new report today.

The Future of Conservatism study, co-written by Nick Timothy, Theresa May’s former chief of staff, and backed by Michael Gove, the Communities Secretary, makes a number of proposals.

Writing for The Telegraph, Mr Timothy outlined some of the ideas floated, such as bringing back the Tory promise to reduce annual net migration into the tens of thousands, loosening planning rules to increase house-building and a strategy of “reindustrialisation”. The project is based at the think tank Onward.

Mr Timothy wrote: “We propose not only radically different policies, but a radically different way of thinking about economic policy itself.”

After the turbulence of a global pandemic, war in Europe, trouble in the Middle East – and an aborted experiment in Trussonomics – Rishi Sunak has stabilised the economy. Yet the question of longer-term reform lingers. What must Britain do to increase our productivity, prosperity and security in the decades ahead?

In A Conservative Economy, our new report endorsed by Michael Gove, Gavin Rice and I set out our answer. As part of our Future of Conservatism project based at the think tank Onward, we propose not only radically different policies, but a radically different way of thinking about economic policy itself.

Consensus economists and politicians see policy in terms of wafer-thin efficiency. Global supply chains are cheaper, therefore better, than local production. Comparative advantage – the idea each country should do what it is good at, and buy the things other countries are good at – is unquestioned. Even though unfettered capitalism has the tendency and power to destroy the non-capitalist public goods it depends upon, markets are deemed unstoppable, immovable forces that must always come first and will indeed always prevail.

We disagree. While of course free markets are the most efficient way to allocate capital and generate growth, private investment is almost always more effective than state delivery, and widely shared growth is preferable to redistribution as a means of spreading prosperity, we need to think differently about the purpose of policy.

The nation state provides the best social forum for the promotion of community, good work, solidarity and altruism. It is not a neutral entity to be bought and sold, or made the object of international rent-seeking. Equally we must challenge the idea of maximal economic efficiency – or at least the kind of short-term efficiency sought by consensus policymaking – at any cost. Instead, the objective of policy must be the flourishing of workers, families and communities.

On these terms – indeed even on its own – our existing economic model is bust. Like in many other Western countries, our growth is sluggish, and wages stagnant. Our birth rate is declining, and immigration is rocketing. Investment is low and productivity is poor. We have trade and budget deficits and a large stock of debt. Our exposure to the bond markets means there are no easy short cuts, so tax cuts without big spending cuts, or debt-fuelled spending sprees, are off the table.

At the heart of our problems is a simple truth. We cannot go on consuming and importing more than we produce and export. As the US economist Tyler Cowen noted this weekend, Britain does not make, do or sell enough of that the world needs, nor even enough of what we consume.

Consensus policymakers insist that the trade deficit does not matter. They say we can make up for it by attracting inward investment instead, since the flow into Britain of foreign capital creates jobs and sustains the currency. But our desperate need for foreigners to buy assets in sterling leads to all sorts of perverse outcomes.

The capital we attract is not always productivity-improving investment but extraction and rent-seeking: just look at the treatment of the water companies by their foreign owners. And not only with these most egregious examples, we end up with less control over our economy, and owners who are less interested in taking responsibility for recruiting and training local workers, helping to build up local supply chains, or respecting the environment.

The trade deficit leads to our budget deficit, because to pay for our consumption – unmatched by what we produce – we import the world’s savings. And as we do that, we compound the problem with our unbalanced regional economy.

While London is a net exporter, much of the foreign capital we seek to compensate for our overall trade deficit gets sucked into the south-east – increasing regional inequality and overheating asset prices where they are already unaffordable for many families.

Our solution is the reindustrialisation of Britain. Amid the defeatism and intellectual impoverishment of British politics, it is inevitable that many – not least many of those inside the Treasury and Bank of England – will say it cannot be done. But the argument that high-end services are the limit of our comparative advantage, or that we are in the low-growth late stages of development are clearly absurd. From the United States to Switzerland, many Western countries are richer than us, per capita. Almost all have a more diverse range of industries than Britain.

Now is as good a time as any to pursue reindustrialisation. Global transport costs are high, geopolitical insecurity is a risk, and new technology means we can move production closer to customers.

Brexit – maligned by consensus policymakers as economically damaging – is already leading to the reformulation of supply chains.

But we will need to do far more. As our report makes clear, we need internationally competitive industrial energy costs, which means decarbonisation must come after security and affordability in the so-called energy trilemma.

We need new planning laws with radical zoning policies in the cities and place-based liberalisation to get new infrastructure built. We need more investment, with the profile of public spending shifted, more private saving, and more of our savings directed towards equities not government debt.

We need tax and regulatory reform to remove disincentives to invest and build. We need to end the addiction to low-skill, low-paid immigration, returning annual net migration to the tens of thousands.

We need radical changes to the provision of post-eighteen education and training.

And we need an industrial strategy that maximises our existing strengths, builds up supply chains, encourages high-growth sectors, protects strategically vital industries like steel, and supports industries of importance to specific regions.

Of course we need other things besides – not least more support for parents and families, and a demographic correction caused by higher birth rates – but for Tories in pursuit of a big idea and a plan to revive the country, we believe this is it.

At the heart of our problem is a simple truth. We cannot go on consuming and importing more than we produce and export