Santa or Scrooge? The rise and rise of Rishi Sunak

A fortnight ago I attended a “virtual” book launch to promote the latest offering from Michael Ashcroft, the Tory donor and pollster, entitled Going for Broke: The rise of Rishi Sunak. Lord Ashcroft, a seasoned biographer, pulls no punches. It was he who, in his biography of David Cameron, alleged that the former Prime Minister had inserted a certain part of his anatomy into a pig’s head to gain admission to a secretive Oxford University dining club. His verdict on the Chancellor, to the 800-odd people listening, was that he was exceptionally bright, hardworking and that “no one had a bad thing to say about the guy”. His diligence and competence thus far have marked him out in a supine cabinet lacking in both. The question in Westminster is, not if, but when he will run for Prime Minister. 

Rishi Sunak’s credentials are exceptional. It takes a fair smattering of nous to become head boy of Winchester College, then to secure a First in PPE at Oxford and to go on to win a scholarship to Stanford Business School. Succeeding in the City, first at Goldman Sachs and then at a leading hedge fund, is no walk in the park. The key to his success is not only his conscientiousness, but empathy tempered with calm reassurance. In a crisis, such as the one we now face, people crave credibility and direction, not hyperbole and rhetoric. 

Those qualities were on display again on Wednesday, as Sunak outlined his plans in the Spending Review. The fact that the economic dislocation is so acute that he can only offer a one-year horizon, as opposed to the four to five year view we would typically expect, tells its own story. The Office for Budget Responsibility forecasts a contraction in the UK economy of 11.3 per cent this year, the most severe in 300 years. Borrowing will reach £394 billion this year, equivalent to 19 per cent of GDP. The numbers are mind-numbing, difficult to comprehend, and we will be paying the price for decades.

The key for Sunak, if he is to secure the highest political office in the land once a vacancy arises, is to navigate a minefield of painful choices. He has started by freezing public sector pay, although those earning less than £24,000 will get a minimum £250 increase, while 1.3 million doctors, nurses and other NHS staff will also receive rises. He is wise to the charge that it is easy to clap for key workers on a Thursday evening, as so many of us did earlier this year, and much harder to pay them properly.

He has also cut overseas aid from 0.7 per cent of GDP to 0.5 per cent. This has been condemned by David Cameron, who enshrined the commitment in law when he was Prime Minister, as well as Tony Blair, Bob Geldof and the youth campaigner Malala Yousafzai. But it is likely to chime with a large portion of the electorate. As one Tory minister put it to me, “charity begins at home”.

These early steps indicate that the Chancellor’s instincts are sound, but the more severe test lies ahead, principally around the decisions he makes on taxation. Sunak stated in his Conservative Party conference speech last month that the Tories had “a sacred responsibility to balance the books”. He has previously said that he wishes to respect manifesto pledges not to increase income tax, VAT and national insurance and to maintain the pension triple-lock. But unnecessary rigidity, against a backdrop of a pandemic that offers him a force majeure clause, would leave him little room for manoeuvre. 

In recent months, the Treasury has undertaken plausibly deniable kite-flying to test the queasy political reality of certain tax rises. These point to a potential increase in capital gains tax and a reduction in tax relief on pensions for higher earners. Both will hit Tory voters hard. The Chancellor must also strike the right balance between restoring fiscal discipline in the medium-term without seeking to introduce punitive measures too early, which may potentially jeopardise any tentative recovery. How he navigates this will determine how much his political stock (of which he has sensibly accumulated a considerable amount) will drop, as it inevitably will. It’s easy to be Santa – but much harder to be Scrooge.

For now, he remains the most popular politician in the country. His two political rivals, the Prime Minister and the Labour leader, Sir Keir Starmer, are acutely aware of this. His boss, Boris Johnson, has no appetite for tough decisions. He has ruled out austerity and famously said that his view on cake was “having it and eating it”. The Chancellor will therefore have to tread a fine line of placating the PM, while maintaining his personal reputation for competence. On the other side, elements of the hard Left have already launched highly personal attacks against him.

The scale of the challenge the Chancellor faces is eye-watering. Even though good news on the vaccine front could lead to a sharper-than-expected economic rebound, the structural inequalities that existed pre-crisis, and may have been accelerated by it, will need to be considered carefully. The task is unenviable. How Rishi Sunak responds will give an indication as to whether his meteoric rise will continue. It will be fascinating to watch.

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