The former chancellor Rishi Sunak has secured the Conservative party leadership and will face six key questions in his first week. The answers will shape the fortunes of his premiership, his party and the country.
- Will the Conservative Party unite behind him?
We should not underestimate the enmity between Sunak and Johnson. Although Sunak was not the first cabinet minister to resign in the week that Johnson was forced from office—that honour belongs to Sajid Javid—his departure was fatal. He made clear that Johnson lacked the moral character to lead the country, and that his economic ideology was bonkers. This ideology—unfunded tax cuts and higher borrowing—shaped the policies that Kwasi Kwarteng introduced last month, leading to Truss’s ignominious departure from Downing St.
Johnson is not alone on the Tory benches in accusing Sunak of disloyalty back in July. Some MPs are asking: if our new prime minister was willing to undermine Johnson, why should they refrain from undermining Sunak? They might be held back by the fear of a backlash if they are seen to divide the party in a PM’s first weeks, but the extent to which Sunak can achieve some functional degree of unity also depends on the answer to the next question:
- How broadly based will his cabinet be?
Cabinet ministers who backed Johnson include Ben Wallace, James Cleverly, Nadhim Zahawi and Alok Sharma. If Sunak invites them to stay on (though not necessarily in the same jobs) and they accept, it will be a sign that the pro-Johnson faction will toe Sunak’s line, at least for the moment. He can probably afford to dispense with the services of Jacob Rees-Mogg and leave Priti Patel out in the cold without causing too much of a fuss. But if all six end the week on the backbenches, Sunak could be in trouble.
- Will Labour’s lead in the polls start to contract?
Labour’s astonishing lead in recent polls, regularly exceeding 30 per cent, seems unlikely to persist. The key issue is how far it contracts. It was around 10 per cent just five weeks ago, before Kwarteng’s mini-budget. Will it simply revert to that kind of level, giving the Tories some hope of making a fist of the next general election, or will it settle well above 10 per cent?
This turns on the extent to which recent polls have simply reflected the electorate’s view of Liz Truss herself, or whether the dramas of recent weeks have fatally damaged the brand of the whole party. If Labour’s lead shrinks below 20 per cent in the next few days, then the prospects of a Conservative revival will be worth discussing; but if Labour’s lead settles above 20 per cent, then the chances of the Tories remaining in power after the next election will be extremely bleak.
- Will Sunak be able to fend off demands for an early general election?
If Labour does stay way ahead in the polls, the Conservatives will want to delay the next election as long as possible. While Sunak retains a majority in the House of Commons (that is, if Johnson’s supporters don’t cause too much trouble), he has the constitutional right to let the current parliament run its course. But if his party really does now become ungovernable, as some have warned, then there is a real prospect that he would lose a vote of confidence in the Commons and be forced to ask the King for a dissolution and a fresh election.
Even if his hand is not forced in this way, the optics of the Tories changing their leader twice in two months without seeking a fresh mandate from the electorate would be terrible. If the Labour lead drops far enough, Sunak might take the risk of an early election, in order to avoid the ugly sight of him hanging on without public approval. If Labour retains a big lead and there is no vote of no confidence, the chances are that the election will be delayed—and that this very fact will contribute to his party’s unpopularity.
- What budget measures will be announced on Monday 31 October?
We have been told that Jeremy Hunt will stay on as chancellor and stick to his plan to unveil his tax and spending measures next Monday. He has warned of “eye-watering” measures to increase taxes and curb public spending. How severe will these be? Will Hunt and Sunak win credit for being straight with voters and taking the necessary measures to rescue Britain’s economy—or be blamed for adding to the burdens of families already reeling from painful energy bills, higher food prices and dearer mortgages? This will have some bearing on our final question:
- How will the financial markets respond?
The trade-off is simple to describe, but painful for Sunak and Hunt to address. The tougher the measures, the more the financial markets will like them. The pound will rise and interest rates start to fall from their recent heights. These things will reduce inflation and help mortgage-payers—but carry the political risks that would inevitably flow from a brutal return to austerity. But the weaker next Monday’s measures are, the harsher will be the verdict of the financial markets. We can reasonably assume that the measures will be designed to strike a balance: secure the greatest approval from the markets for the least pain imposed on struggling families. By the end of next week, we shall know whether he has achieved his dreams of winning respect from both the voters and the markets.
