Boris Johnson has had a torrid few weeks. From a position of political unassailability, recent events have exposed his weaknesses, left him vulnerable and demonstrated that the Treasury is now taking back control.
The Prime Minister has never had a loyal following amongst MPs that he can rely on through thick and thin, as did Margaret Thatcher or Tony Blair for most of their time in office. The relationship has been more transactional rather than ideological or emotional. The party turned to him because he was a unique political brand that could cut through with the public and because he was a proven election winner.
The new MPs in the 2019 intake, particularly those in red wall constituencies, clearly owe their seats to him. But Johnson’s own loyalty to the now former MP Owen Paterson has created a fault line between the Government and the old guard and the ‘red wallers’.
Having been marched up the hill to defend someone who, to most people, appeared to have broken the rules around MPs lobbying for outside interests, a rapid U-turn left them exposed, exasperated and angry.
That anger has quickly been compounded by the backtracking on HS2, Northern Powerhouse rail and social care reform, all of which have been a gift to Labour as a ‘betrayal of the North’ and have undermined the Prime Minister’s central narrative around levelling up the country.
For Tory MPs they signal a worrying a lack of internal challenge, planning and expectation management within the heart of government. They also show the resurgence of Treasury dominance over spending decisions. Johnson’s shambolic speech at the CBI’s annual conference demonstrated another weakness – his tendency to be unprepared and to ‘wing it’.
Trust in the Prime Minister’s judgement, particularly amongst the 2019 intake, has been damaged. With the pandemic apparently receding (at least before the emergence of the Omicron variant) and immigration clearly not yet under control, the public’s view of the Government’s performance seems to be shifting and becoming less forgiving.
Johnson has admitted to his MPs that he’s driven the metaphorical car into a ditch, but has promised to get it out and put things right. He will need to prove to his MPs that he has a grip and is driving with seriousness and care. Otherwise his party might start to think about exercising its reputation for getting rid of leaders who are thought to have become a liability.
Away from the cut and thrust of Westminster politics, the Treasury has published its second stage consultation on the future regulatory framework for financial services. It confirms the Government intends to introduce new, statutory secondary objectives for the Prudential Regulation Authority and the Financial Conduct Authority to support competitiveness and growth. It also proposes to amend the existing regulatory principles to ensure that growth is consistent with the Government’s commitment to achieve net zero by 2050.
HM Treasury will be able to require regulators to review their rules where the Government thinks it is in the public interest. Regulators’ approaches to cost benefit analyses of their proposed rules and of their post-implementation reviews will be strengthened. Whether they will be formally required to consult with Treasury on proposed rule changes before they are public is still to be decided, but parliamentary committees will need to be proactively alerted to published consultations and regulators will have to formally respond to any submissions they make.
The consultation confirms the that the Government plans to have the ability to set specific ‘have
regards’ requirements for particular areas of the market, which regulators will need to consider when making rules in specific areas. That offers individual sectors the opportunity to shape the regulatory framework for their area through engagement with government and Parliament.
However, it has also accepted representations that government and Parliament should be able to require regulators to make rules covering certain matters to ensure important wider public policy concerns are addressed. It therefore proposes to take a power to place obligations on the regulators to make rules in relation to specific areas.
The consultation runs until 9 February. As this and the legislation that will follow will probably lay the regulatory foundations for the next few decades, individual firms and sectors within the financial services industry should keep a close eye on developments and have a voice in the process.