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Dare Boris Johnson sack Rishi Sunak?

The chancellor’s disastrous spring statement has set a timebomb ticking under the prime minister. How will he react?

Photo: The New European

When the chancellor is one of the more popular members of the Cabinet, it’s a sign that you’re living through unusual times.

The structure of the UK government is such that the prime minister has very little departmental support behind him, but is the one who wants to push for big, splashy action and the government spending to support it.
The chancellor, meanwhile, has the institutional strength of one of the best-resourced and most prestigious departments behind him – but his role is to hold the purse strings and say no to all but the most obviously worthwhile spending.

It’s a dysfunctional form of government, but it’s the one the UK has chosen for many decades. So it was a lucky break for Rishi Sunak, in a way, that he was chancellor when the Coronavirus crisis hit.

On the downside, he became the most lavish spending treasurer in the history of the UK – entirely against his own political background and instincts.

The government introduced a furlough system, help for many (but not all) self-employed people, and lots of business breaks to prevent the total collapse of the economy. He even boosted universal credit, a vital lifeline for those on low incomes during the crisis.

In a radical break from the norm, the Treasury was the department behind the popular and effective Coronavirus interventions, while the Department of Health, prime minister, and virtually all of the rest of the machinery of government totally fumbled its Coronavirus response.

The zenith of the chancellor’s popularity was probably the summer of 2020, when Rishi Sunak put his personal signature on “Eat Out To Help Out”, an ill-fated plan which subsidized eating out through that summer – even as Coronavirus cases slowly ticked back upwards, eventually tilting the country into a further lockdown. Pictures of Sunak’s smiling face dishing out plates of food to happy diners (the work of his personal photographer) were all but inescapable.

Ever since then, though, the once wildly popular chancellor has presented a series of problems – but different ones to different people.
For Boris Johnson, Sunak presents an obvious challenge: in time-honoured fashion, the chancellor is all but openly gunning for his boss’s job, doing little to stop stories leaking about his internal opposition to Johnson’s plans, and kyboshing key Johnson policies.

For the Conservative party, Sunak presents a series of challenges. Is he actually an economic liberal, a tax-cutting chancellor who will give the base what they want? He says he is, but the meagre tax cuts he has offered have been more than offset by his hikes – Sunak not only oversees the highest tax take in history, but has raised taxes more in one term than any other chancellor. Does Sunak want to cut taxes or is he too fixated on balancing the books – what can Tories say on the doorstep as elections loom?

Both of those shrink into nothingness when compared with the problems Sunak presents to the nation. Sunak is a chancellor who is hiking taxes in the middle of the biggest cost-of-living crisis in 80 years – and is set to oversee the largest fall in living standards since 1950. Rather than step up to the challenge, his response seems to be clever-clever tinkering and bragging about falling debt. How do families on the breadline feed themselves and heat their home in the economy over which Sunak provides?

All of which unites a nation in asking one clear question: How do you solve a problem like Rishi?

Let’s start with the most serious problem: the country has a chancellor who is more concerned with maintaining his reputation for fiscal discipline, and for tax cutting – clearly with one eye on the Conservative base and a future leadership contest in mind – than he is on navigating the country through a crisis.

Coming into the Spring Statement, the chancellor had announced a small council tax giveaway and a mandatory self-loan of £200 to tackle a near-unprecedented energy crisis in April. That crisis had got much worse in the meantime – but absolutely no new help on energy prices was offered.
Instead, the chancellor cut fuel duty by 5p per litre for a year – a move that costs £5 billion. This is usually politically popular, though grossly unfair: more rich people drive than poor people, and rich people also drive further than poor people.

So this does nothing to help those who are struggling, while boosting pollution. In a triple-whammy, fuel prices are rising so fast that they had risen 7p in the week before the Spring Statement – meaning the chancellor had spent £5 billion on a token gesture that drivers won’t notice or appreciate.

European countries have already taken much more significant measures to tackle energy prices. France has introduced a price cap much more aggressive than the UK’s – which will force its state-owned energy provider to take a £7 billion hit.

Spain has introduced a windfall tax on energy, while Germany has suspended a surcharge on energy bills to fund renewable energy, but will continue to subsidise renewables through central government funds.
Elsewhere, the chancellor boosted a bailout fund for families facing destitution, administered by councils, by £500m for this year. Independent estimates suggest around 1.3 million extra families will be in this position thanks to this year’s cost of living crisis, meaning the chancellor has offered slightly less than £5 support, per year, for these desperate families.

On national insurance, Rishi Sunak tried a con job up there with any street hustler trying to take your cash while convincing you that you had a fair shot of it. Sunak is still hiking national insurance on working people and their employers by £12.5 billion, starting from April. He insists this money is absolutely vital to fund the health and social care systems.

At the same time, Sunak offered a big (and long overdue) ‘giveaway’ in the form of raising the amount you can earn before you start paying national insurance – meaning that from July, it will be the same level at which you start paying income tax.

This won’t start until July, meaning that low-income people just have to take the pay hit for three months, but will cost around £6 billion – leaving the question that if that £12.5 billion was so vital for the NHS, why has he just spent half of it?

At the same time, despite inflation soaring, Sunak has played an extra little card trick – keeping the threshold at which people start paying income tax and higher rate income tax the same in cash terms. This sounds like a small thing, but means as people get pay rises to keep up to inflation (or usually to fail to do this), the Treasury gets a bigger slice of the pay. This gives Sunak a surprise bonus windfall to Treasury coffers.

Instead of doing something to help people on Universal Credit, or low-income pensioners, with the cost of living crisis, or to do something to help with spiraling energy prices, the chancellor decided to use it to pre-announce his election giveaway: a tax cut in 2024, which will help absolutely no-one in the meantime.

The chancellor is a man sitting atop a fire engine, with a dozen more in reserve, and access to helicopter support, looking at a wildfire – and deciding to offer up a single super-soaker to tackle the roaring blaze.
The problem for us as a nation is clear, but the problems for the

Conservative Party are mounting. Sunak got perhaps four hours of good press after the Spring Statement, before independent analysts such as the Institute of Fiscal Studies pointed out how little the statement had to offer.
By Wednesday evening, even papers such as the Telegraph and Express were pouring scorn onto just how little Sunak had offered. Given neither is known for its support of government largesse, it is clear the chancellor missed the moment.

For the Conservative Party, facing huge local and regional elections in six weeks’ time, the chancellor has created a whole new doorstep problem for them. The Tories were quietly benefitting from a huge focus on foreign affairs in the media – which let the public quietly forget the many recent failings of their government. Now, they have to defend this Spring Statement on the doorstep.

It is possible Sunak is cynically aware of that: a bad enough set of local results might prove the final straw for Conservative MPs, leading to a challenge on Johnson. This would be an extraordinarily calculating move, but in politics anything is possible.

This leaves the challenge for Boris Johnson: Sunak is challenging the prime minister as blatantly as is possible while remaining in the Cabinet.
Levelling up, allegedly the top priority of the Johnson government, helmed by his closest ally, got barely a mention and not a penny from the Spring Statement. The extra spending announced last autumn for government departments is now being eaten up by inflation, with no extra money on offer. Johnson’s political agenda is dead, killed by Sunak and the Treasury, daring him to make a next move.

If Sunak’s Spring Statement is allowed to stand, Johnson will have to accept the death of his political agenda and one of the worst cost of living crises in the modern world laid at his door, and at the indifference of his government.

Dare he move on his chancellor – and would he win if he did?

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