Rishi Sunak picks his way through budget minefield – POLITICO

LONDON — “Better than the last guy” might not be quite the tagline every world leader hopes for. It could yet be Rishi Sunak’s winning formula.

The British prime minister, swept into office late last year by wave after wave of Tory psychodrama, has cleared several major hurdles in the space of the past month. His success has even sparked a shocking rumor in Westminster that — whisper it — he might actually be quite good at his job. 

That was the murmur among hopeful Conservative MPs ahead of this week’s U.K. budget, anyway — many of them buoyed by the PM’s recent moves on two long-running sources of angst in Westminster.

First came an apparent resolution to the intractable problem of post-Brexit trade arrangements in Northern Ireland. Sunak’s so-called Windsor Framework deal with Brussels landed to near-universal acclaim.

A week later, Sunak unveiled hard-hitting legislation to clamp down on illegal migration to the U.K., coupled with an expensive deal with France to increase patrols across the English Channel. Tory MPs were delighted. The Illegal Migration Bill sailed through parliament Monday night without a single vote of rebellion.

Then came Wednesday’s annual budget announcement, with Sunak hoping to complete an improbable hat trick. 

It started well, with Chancellor Jeremy Hunt making the big reveal that the U.K. is no longer expected to enter recession this year, as had been widely predicted.

But a series of jaw-droppers in the budget small print show the scale of the challenge ahead. 

The U.K.’s overall tax take remains sky-high by historic standards — an ominous bone of contention for skeptical Tory MPs and right-wing newspapers alike. Meanwhile, millions of Britons’ living standards continue to fall, thanks to high fuel bills and raging inflation. U.K. growth forecasts remain sluggish for years to come.

“He’s chalking up some wins,” observed one former party adviser grimly, “because he’s going to need them.”

‘Workmanlike’

Among all but the bitterest of Sunak’s Tory opponents, there is a palpable sense of relief about the way he has approached his premiership so far.

“It doesn’t mean everything will suddenly turn to gold,” said Conservative MP Richard Graham, a longtime Sunak-backer. “But like Ben Stokes and England’s cricket team, his quiet self-confidence may change what the same team believes is possible.” 

Nicky Morgan, a Conservative peer and former Treasury minister, praised a “workmanlike” budget that would reassure voters and the party there was a “firm hand on the tiller” after the “turmoil” of the preceding year with two prime ministers stepping down, Boris Johnson and then Liz Truss.

Most of Wednesday’s biggest announcements, including an extra £4 billion for childcare and a decision to lift the cap on pensions allowances, were either trailed or leaked in advance. This may have made for a predictable budget speech, but as Morgan put it: “I think that’s probably what businesses and the public need at the moment.”

An ex-minister who did not originally support Sunak for leader said that the general tone of the budget, together with the Northern Ireland deal and small boats legislation, meant that “increasingly it’s hard for hostile voices to pin real failure on Rishi.”

Others, however, fear key announcements could yet unravel. An expensive change to pension taxes was instantly savaged by critics as a “giveaway for the 1 percent.” Headline-grabbing back-to-work programs and an expansion of free childcare will take years to kick in.

Hiking corporation tax was the “biggest mistake of the budget,” Truss ally and former Cabinet minister Jacob Rees-Mogg complained.

Doing the hard yards

Observers note that in the wake of the rolling chaos under Truss and Johnson, the bar for a successful government has been lowered.

“[Sunak] could stand at the podium and soil himself, and he’d be doing a better job than his predecessors,” noted one business group lobbyist on Wednesday evening, having watched budget day unfold.

But even Sunak’s fiercest critics praise his work rate and attention to detail, in sharp contrast to Johnson. Most accept — grudgingly — he has set up an effective Downing Street operation.

Having returned from his Paris summit last Friday evening, the PM kicked off budget week with a whirlwind trip to the west coast of California to launch a defense pact with the U.S. and Australia, arranging a bank bailout along the way. He landed back in the U.K. less than 24 hours before Hunt unveiled the annual spending plan.

“It turns out working like an absolute maniac and being forensic is quite useful,” one of his ministers said. 

Another Tory MP added: “He’s got the brainpower and will do the hours. He’s not good at barnstorming politics or old school dividing lines — but he is good for the politics we have right now.”

There has also been a clear effort to run a tighter ship behind the scenes at No. 10. One veteran of Johnson’s Downing Street said the atmosphere seemed “calm” in comparison.

There are tentative signs that voters are starting to notice.

James Johnson, who ran a recent poll by JL Partners which showed Sunak’s personal ratings are on the up, said the PM’s growing reputation as a “fixer” seems to be behind his recent rally, and that the biggest increase on his polling scorecard was on his ability to “get things done.” 

It remains to be seen if this will shift the dial on the Tory Party’s own disastrous ratings, however, which languish some 25 points behind the opposition Labour Party. “Voters have clearly lost trust in the Tories,” Johnson said. “But if government can deliver … I would expect it to feed through.”

Anthony Browne, a Tory MP elected in 2019, expressed hope that Sunak had begun “changing the narrative” which in turn “could restore our right to be heard.”

Trouble ahead?

Sunak will be well aware that plenty of recent budgets — not least Truss’ spectacular failure last September — have unraveled in the 72 hours after being announced.

And while expanding free childcare, incentivizing business investment and ending the lifetime pensions allowance were all crowd-pleasers for his own MPs, they were not enough to conceal worrying subheadings.

The tax take is predicted to reach a post-war high of 37.7 percent in the next five years, while disposable incomes are hit by fiscal drag pulling 3.2 million people into higher tax bands. Right-wing Tories are not impressed.

Ranil Jayawardena, founder of the Conservative Growth Group of backbench MPs, described it in a statement as “an effective income tax rise,” which will be “a concern to many.”

Net migration is set to rise to 245,000 a year by 2026-27, and will add more people to the labor force than all the measures intended to make it a “back to work” budget, according to the Whitehall’s fiscal watchdog, the Office for Budget Responsibility (OBR). The message is not one Conservative MPs want to hear.

Already singled out by Labour’s Keir Starmer as a “huge giveaway to the wealthiest,” scrapping the lifetime allowance on pensions will cost £835 million a year by 2027-28 while benefiting less than 4 percent of workers. Conservative MPs reply that NHS doctors are one of the main groups to benefit. 

Perhaps most worrying of all, the government’s own budget expects living standards to fall by 6 percent this year and next — less than the 7 percent fall predicted in November but still the largest two-year fall since records began in the 1950s.

There are some problems that can’t be solved by pulling an all-nighter. Ironically for Sunak, whose career was made in the Treasury, his may prove to be the state of the U.K. economy. 

Rosa Prince, Stefan Boscia and Dan Bloom contributed reporting.