Rebecca Gaskill shares her thoughts on the government reshuffle

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Rebecca Gaskill, ICON's Policy and Business Impacts Analyst

There was a radical change when he first came to office. Of the 29 Ministers in Theresa May’s cabinet, 18 were replaced either through resignations or direct firing.

The restructure was compared to Harold Macmillan’s infamous reshuffle of 1962.

The speed and scope of Boris Johnson’s changes did not attract the same level of criticism as the McMillan move, sending the message that he wanted to declare his authority and express the change in direction to a hard Brexit.

Boris has promised to ‘promote a generation of talent’ with there being an expectation that more women will be promoted to a variety of roles.

Pro-Brexiteers and Boris’s personal supporters have been rewarded with promotions.

His former leadership rival, Michael Gove, was tipped to be the new President for COP26 in Glasgow after the sacking of Claire O’Neill (formerly Perry), the former head of the summit.

However, he kept his position at the Duchy whilst Alok Sharma became the Secretary of Business Energy and Industrial Strategy and the new President of COP26.

Andrea Leadsom’s sacking and replacement by Alok Sharma was not a surprise; along with Esther McVey, Andrea contested Boris for leadership last year.

While the great officers of state were supposed to keep their jobs (Home Office, Foreign Office and Treasury), a surprise came in the changing of the Chancellor of the Exchequer.

The most critical change was the resignation of Sajid Javid as Chancellor in an argument over “Spads” and the allegations of leaks from these Special Advisors.

Cummings had previously incensed Javid last summer by firing one of his advisers and having her taken out of Downing Street. This has been a part of a wider campaign by Cummings to prevent briefing leaks he’s blamed on number 11, which have made him especially infuriated.

Javid was furious about the ultimatum received from Cummings to essentially become ‘Chancellor in name only’. His replacement, Rishi Sunak, will work alongside an economic advisory board which will answer to number 10.

His appointment may usher in a change in Treasury spending. Under previous Chancellors, (Hammond and Javid), there has been a conservative output which is in opposition to Boris Johnson’s high investment agenda.

Boris wants more borrowing and more spending. This may be more akin to the pre-recession Brown era.

The Pound rose sharply after the Javid resignation, as markets concluded that the purse strings are likely to be loosened.

This drastic change of leadership may lead to a reduction of fiscal responsibility. Austerity has become an outdated concept, because of the low interest rates.

However, the growth forecast has been revised lower than Sajid had originally estimated. The Bank of England predicted a growth in GDP of 0.8%, revised down from 1.2% so there is less money coming in than Sajid hoped.

It’s not unreasonable to predict that the next budget will be the most profligate conservative budget to date. Whether this will translate to a return from the loaning voters from the north to the Conservatives in the next election or a sprint back to labour remains to be seen.

So, what does all this mean?

A rise in spending could translate to investments across the board. Boris has already indicated that he plans to invest 80 billion in infrastructure projects in the north, primarily transport.

The PM has agreed on the controversial High-Speed Rail 2 he also plans to reopen a number of Beeching routes that were cut in the 1960’s as a return to the northern voters who loaned him their vote.

Now that Sajid is gone it will give Boris free reign to increase the NHS and social care spending that he promised during the general election. He had committed £5000 per pupil into every secondary school, but this seems to be the end of his education spending.

With an urgent need for him to fulfil his social care plan investment in social care seems imminent.

While Boris has committed to a net-zero by 2050 target he has outlined that he will invest the majority of his environmental spending in promoting public transport and reducing the number of petrol and diesel vehicles on the road.

The key spending from the PM looks to be fulfilling his promise to his northern voters while alienating his key voter base by reducing high earners 40% pension tax relief.

Whether this makes him more electable at the next election or a one term PM will be established at the next election.