Now, Sunak is indeed in Number Ten, while Hancock (who resigned from Cabinet in June 2021 after breaking the very Covid rules that he had drafted) is in the Australian jungle, reduced to eating the tip of a camel penis, being stung by a scorpion and claiming that being voted I’m A Celebrity campsite leader “more than makes up for” losing the 2019 Tory party leadership election.
One of them leads a government taking advice from George Osborne; the other is doing his best to avoid being punched by Boy George. One has arrived in Bali for the G20 summit where, amongst other bilaterals, he will hold talks with President Biden; the other was last night chosen by viewers to face his sixth successive Bushtucker Trial. As Boris Johnson would say: Them’s the breaks.
The twist, however, is that more than one senior Tory I spoke to over the weekend joked that Hancock is the luckier of the two. “Matt just has to chew on the occasional cow’s anus and try to be hated as little as possible,” said a former Cabinet Minister. “Rishi has to turn round the economy and save the Conservative Party from electoral catastrophe. Honestly, I’d rather be dry heaving in the outback.”
This is a matter of judgment, of course. For a Privy Counsellor to desert his constituents and appear on a reality show built around the spectacle of organised cruelty is quite a humiliation. But it will be forgotten soon enough. Not so Sunak’s premiership, if he fails his own formidable and perhaps insuperable set of trials.
Less contentious is the significance of Osborne’s return to the heart of government as an adviser, in advance of Jeremy Hunt’s Autumn Statement on Thursday. The Chancellor has also appointed Osborne’s former chief of staff, Rupert Harrison, to his own economic advisory council. Sunak often sought the former Chancellor’s counsel when he himself was at the Treasury, and Hunt, though never a member of the Cameron-Osborne gang – a social cohort long before it became a political project – was always regarded as essentially sound by the Dave-and-George axis, being, like them, fiscally conservative and (on most matters) socially liberal.
In spite of what the Conservative Right has always claimed, cutting public spending is invariably an amazingly difficult political undertaking. As Peter Lilley (no bleeding heart liberal) used to say when he was Social Security Secretary in the Nineties: “So you want me to cut £100 million? From which million voters do you want me to take £100?”
In which context: Cameron and Osborne always regarded one of their greatest successes to be one of political language. As it became clear during the financial crisis of 2008-09 that their economic inheritance was going to be tough if they defeated Gordon Brown, they took the risky decision to embrace the problem and talk openly about the pain that lay ahead.
As Chancellor in 1989 and 1990, John Major had made his mantra: “If it isn’t hurting, it isn’t working”. That calculation paid off when, as Prime Minister, he made economic competence the core of his successful general election campaign against Neil Kinnock in 1992.
Cameron, for his part, went even further in April, 2009, warning that a Conservative government would preside over “an age of austerity” – with a candour that many of his own MPs thought might prove to be electoral strychnine. In practice, however, the strategy worked. He and Osborne were pleasantly surprised by the extent to which – according to their own polling – they had forced the word “deficit” into mainstream public language.
Pressed on what the deficit actually was, voters tended to get hazy. But, by 2010, a sufficient number of them had signed up to the idea that it was a Very Bad Thing indeed and one that the next government needed to tackle. This by no means gave Osborne carte blanche to cut public spending as he pleased. But it provided a workable frame for his fiscal strategy.
Scroll forward to 2022 and Sunak – who was not yet an MP during the Conservative-Lib Dem coalition years – finds himself drawing upon Osborne’s experience so that he and Hunt can, as far as possible, ensure that the financial pain they are set to inflict upon the nation on Thursday does not wipe their party off the electoral map.
In the words of one who has been involved in the autumn statement: “The whole thing depends upon recognising what lessons are transferable from 2010 – and which are not. Being honest about the scale of the problem, and ditching Boris’s ‘cakeism’, is essential. But we can’t just unleash Austerity 2.0 as a project. That would be electoral suicide.”
Hence, the ratio of tax rises to cuts will be higher in Hunt’s strategy than it was in Osborne’s. In this respect, he and the PM are constrained by the rhetoric of their predecessors. In October 2018, the then-chancellor Philip Hammond declared that “austerity is coming to an end.” In September 2019, his successor Sajid Javid declared that it was time to “turn the page on austerity”. For Johnson, the “A-word” had always been an abomination and the very last thing he wanted to pursue during his own premiership.
All of which means that Hunt can reset the government on Thursday, but not, in the words of one minister, “restore it to factory settings – as if we haven’t really made any progress since 2010. That just plays into Labour’s narrative of ‘12 wasted Tory years’”
A cautionary example one frequently hears in government circles is that of Jim Callaghan. Though the UK has not yet been forced to seek help from the International Monetary Fund as Denis Healey was in 1976, the IMF’s rebuke to Liz Truss and Kwasi Kwarteng on 27 September, four days after the latter’s disastrous “mini-Budget”, was a chilling moment for senior Tories with any sense of history.
In the words of one Cabinet source: “Rishi absolutely doesn’t want to be the Conservative Callaghan, a tail-end prime minister who becomes a source of pity on the international stage, wrestles with terrible inflation and strikes, and then ends up just marking time until the other lot win.”
In this sense, Hunt’s proposals – a Budget in all but name – will be addressed to a global audience more than any fiscal statement made by a chancellor in recent history. At the Cop 27 summit in Sharm el-Sheikh last week, Sunak was primarily acting as an ambassador for the UK’s economic credibility; this campaign of advocacy will continue in Bali over the next few days. “If the markets and Rishi’s counterparts don’t buy this package,” says one senior Whitehall source, “it’s game over.”
All of which makes Sunak more of a gambler than Truss ever was. Her proposals – unfunded tax cuts, all at once – were self-evidently deranged, as was her populist raving about the so-called “anti-growth coalition” (has it disbanded, I wonder). From day one, she was a kamikaze pilot screaming “Banzai!” and flying into the hull of the battleship of political history. The only variable was when, exactly, the plane would explode. The outcome was certain.
Sunak, in contrast, is being lobbied from all sides – by Cabinet colleagues, backbenchers, union leaders – in a riot of special pleading. The unreconstructed Right, notably Iain Duncan Smith and John Redwood, are urging the PM and his chancellor not to raise taxes, which they see as fundamentally un-Conservative and hostile to economic growth. Other Tory MPs argue, less ideologically, for a more gradual process of fiscal stabilisation.
But Sunak and Hunt have conspicuously chosen to front-load the pain, or as one Downing Street aide puts it, “rip off the Elastoplast in one go.” Some of the spending cuts and tax rises will certainly be phased in, and – in the case of the Energy Bills Support Scheme – government assistance after April will be reduced, but not brought to a hard stop. All the same, the chancellor’s explicit objective this week is to explain and get on with the fiscal root-canal treatment, hoping that his candour and the prospect of brighter times ahead will have some sort of analgesic effect.
As he put it to the BBC’s Laura Kuenssberg yesterday, he has to persuade voters that “there’s a plan to get through this”, meaning the cost-of-living crisis and the markets’ doubts about the UK’s economic fundamentals; that the plan will make the recession “as short and shallow as possible”; and that his measures will steer the economy “through to the other side”.
In party political terms, this week’s proposals owe much to Osborne’s strategy in the Autumn Statement of 2011, which – with the backing of the Lib Dem Chief Secretary to the Treasury, Danny Alexander – committed the coalition to austerity well into the next Parliament.
Strategically, it succeeded in boxing in the Labour leader Ed Miliband and his shadow chancellor, Ed Balls, as they planned their own electoral strategy. Which Conservative cuts, exactly, would they reverse and how would they pay for it? Sunak and Hunt are depending upon Keir Starmer and Rachel Reeves facing comparable pressure after Hunt sits down on Thursday.
The odds are still stacked against the government. First, this is not 2010-11. The Tories have been in power for 12 years, during seven of which they were dependent upon the support of another party (between 2017 and 2019, Theresa May relied upon the votes of the Democratic Unionists). For much of this period, the party has been in a state of Brexit-induced nervous collapse. To an unconscionable extent, its serial and flagrant breaches of Covid rules swallowed up political time and energy in 2021 and this year.
Though Sunak still has a working Commons majority of 69 – what remains of Johnsons’s general election victory – his party is so riven with splits and resentments that, in practice, he also faces a hung Parliament. Already this year, there have been three prime ministers, and four chancellors. The Conservatives’ response to Johnson’s ejection was to embark upon a brutal leadership contest between July and September; to launch a crazed ideological experiment that resulted in the shortest premiership in British history and nearly pushed the UK economy off a cliff; and then (no less crazily) seriously to contemplate Johnson’s snap return to Number Ten. The voters could be forgiven for treating the new team’s claim that the adults are back in charge and everything is now stable and orderly with a degree of scepticism.
Second: how much “waste” is there really in the public sector? If anyone can find it, it is Francis Maude who has been recruited by the PM to look for additional “efficiencies”. But the scope for cuts is dramatically smaller than it was in 2010. As Hunt conceded to Sky’s Sophy Ridge yesterday, “doctors, nurses on the frontline are frankly under unbearable pressure.” The Ukraine conflict means it will be impossible to pare back defence spending. Hunt could raise benefits in line with earnings rather than inflation, or modify the state pension triple lock to save money. But to do so would involve colossal political risk.
He will surely scale down or postpone key investment and infrastructure projects. But this will only compound the problems that Sunak already faces among Red Wall voters, who backed Johnson three years ago because they thought he meant what he said about the “Brexit dividend” and “levelling up”. In this bleak fiscal orchard, there is no low-hanging fruit.
Which means, third, that this autumn statement is axiomatically destined to involve severe political difficulties in the coming months. The Finance Bill which it yields will be challenged on many fronts, not least by Sunak’s own restive backbenchers. The only question about the union disruptions ahead is how extensive and coordinated they are. Clearly, there is little that Hunt is likely to say on Thursday that will make union members any less likely to vote for strike action. The peril facing the PM and the chancellor is that the public will start to ask the most lethal question of all: who governs?
Sunak and Hunt are the kind of politicians with whom, as was said of Tony Blair, you have to take the smooth with the smooth. But their joint shtick – that their duumvirate marks the return of the grown-ups – will only get them so far. In truth, they are both sweating bullets at the casino.
