Will Rishi Skywalker fight the Election with honour – or try to zap Starmer with a sneaky tax trap?

RISHI SUNAK believes a New Year brings ‘a new hope’ – the title of a Star Wars movie of which he’s a great fan. ‘When we read our internal polling and compare it to the external polls, it’s giving us the same message,’ one No10 official told me.

‘There are a lot of voters still undecided. If you look at them, especially the Red Wallers, they’ve been unhappy. Some were unhappy over Partygate, and some have been unhappy that Boris Johnson isn’t there any more.

‘At the moment they’re saying they won’t vote for us. But they’re not sold on Keir Starmer either. Labour’s vote is soft. There’s still all to play for.’

The charitable reading of such analysis is that Sunak is, at heart, an internal optimist. A more pessimistic view is that he is in denial.

But however you interpret it, the latest public polling shows Tory support slumping below 20 per cent. Economic forecasts predict 2023 will be a year of recession. Unions warn it may be a year of industrial strife.

Which is why a number of Ministers have decided it’s time to adopt a new policy: reject optimism in favour of a new realism. And begin to game-plan the best way to lose the next General Election.

‘It’s pretty clear it’s over,’ one explained to me. ‘By the time of the next Election, we’ll have been in power for 14 years. The country has had enough of us. So what we’ve got to start thinking is how we manage things so we don’t just gift Labour 14 years of their own.’

I’M TOLD the Government is basically starting to break down into three camps. First, there are the Saboteurs – MPs and strategists who believe they need to begin setting a series of deadly political traps for Starmer and any future Labour government. ‘Look at what Gordon Brown did,’ one Tory veteran told me. ‘When he realised he was going to lose power in 2010, he started leaving landmines all over the place.

‘The classic example was the 50p tax rate. It served no economic purpose, but he knew if the Tories tried to abolish it, Labour could say, “Look, they’re just on the side of the rich.” And it worked. George Osborne trod on the landmine. And then a few years later Liz Truss trod on it again.’

The Saboteurs are looking at a number of ways to repay the favour.

One suggestion is a dramatic – if fiscally dangerous – cut to the basic tax rate. The theory is that while a similar move destroyed the Truss administration, Sunak and Chancellor Jeremy Hunt have sufficient credibility with the financial markets that they may just about wear it. And if they do, it would paint Labour into a corner.

‘It could be a massive vote-winner,’ one Tory MP said, ‘and even if it isn’t, what are Starmer and Rachel Reeves [the Shadow Chancellor] going to do when they get in?

‘If they pledge to reverse a basicrate tax cut, it would define them as a traditional 1970s-style tax-andspend government.

‘And if they keep it, the Left will start hammering them for being closet Tories.’

Another option relates to spending. Jeremy Hunt has already deferred significant cuts till after the Election. But some MPs think he should go further. ‘Labour want to be seen as fiscally credible,’ one told me, ‘so let’s really test Labour. Let’s put in place some proper public spending cuts and challenge them to match it.’

A second group of Tories are the Fight To The Last Man faction. They also believe the Government is finished, but they calculate that if they save enough seats they can at least shrink Starmer’s majority to the point where it would curtail his and his party’s radical instincts. And to do that, they advocate throwing Sunak’s managerial caution to the wind and embracing a bold new populist agenda.

‘Too many people are feeling politically homeless, and they’re the people we Tories have to be talking to,’ one backbencher told me. ‘We need to start throwing them some red meat. We need to slash taxes, get a grip on the disorder on our streets and crack down on illegal immigration.’

A number of Ministers and MPs welcome the calm professionalism Sunak has brought to the Government after the Truss trauma. But the Last Man devotees believe the PM’s analytical style isn’t suited to the political street fighting to come. And that he has therefore already become expendable.

As one Red Wall MP told me pointedly: ‘Boris said talent is spread evenly across the country, but opportunity isn’t. That’s what we need to tackle. It’s that sort of talk my constituents respond to – and that’s the sort of politics we need to get back to.’

Then there is a third group – one for whom this talk of traps, or a return to Johnsonian populism, is anathema. They are the Ministers and MPs whose credo is Defeat With Honour.

‘You never know in politics,’ a Minister in this tribe told me. ‘There’s always a chance something could turn up. Especially if you keep trying to do the right thing. But anyone who says we should burn everything down so Starmer, as a new PM, would be like Napoleon making his disastrous retreat from Moscow, or we should get Boris back to try to save a couple of Northern seats, is a lunatic. Either would be terrible approaches. They would be a complete betrayal of the principles of public life.’

The Defeat With Honour advocates point to the dilemma that faced PM John Major and his Chancellor Ken Clarke before the 1997 Election. Tory MPs in marginal seats demanded massive tax cuts to save them from electoral oblivion. Instead, Clarke delivered a cautious Budget that helped secure an economic recovery but still doomed the Conservatives to 13 years in the wilderness.

‘Our only option is to take the hard decisions necessary to get the economy and the country back into shape,’ another Minister said. ‘If that means handing Starmer the next Election on a plate, so be it. We can’t just do what Labour did and say, “Sorry guys, there’s no money left.”’

Inside No10, such talk is considered defeatist. Among Team Sunak there is a genuine belief that if they continue with his project-manager, laser-like focus on delivery, the electoral tide will begin to turn.

‘Take a policy such as Levelling Up,’ a Sunak ally said to me. ‘We’re quietly providing £10million for a new community centre here, or £20million for rail services somewhere else. At a local level, that’s starting to add up.

‘Next, we’re going to have some clear statistical proof that we’re finally getting to grips with small boats of migrants crossing the Channel. Then some more evidence that we’re making progress on the NHS backlog. Then we’ll be able to demonstrate we’ve got inflation under control and debt falling. So, in 18 months’ time, things could be looking very different.’

They may. But things could easily be looking a whole lot worse.

Protracted conflict in Ukraine. Another surge of the small-boat flotilla. A worse than anticipated global downturn.

So the Tory realists may be right. The biggest decision facing Ministers over the next 12 months could be how best to lose the next Election. And whether to do so with honour, or without it.

Team Sunak believe the electoral tide will begin to turn