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Sunak’s Fiscal ‘Stability’: Who Pays the Immense Price?

Staff writer Ben Evans on what can be expected from the Rishi Sunak premiership over the coming months.

Double digit inflation, ballooning public debt, persistent strike action, and a bitterly divided party. These are but a few of the challenges that the UK’s youngest post-war Prime Minister (PM), and first of South-Asian heritage, faces within his first 100 days. We now know the makeup of Sunak’s ‘big tent’ cabinet and the general ideological direction. For sure, the debt will be cut, and inflation stemmed, but we should seriously consider the incredible economic price that must be paid in order to achieve the much desired economic stability.

Sunak’s ‘Big tent’

Earlier this week, the new Prime Minister consolidated his power with his new cabinet and opening remarks. Here’s the rundown.

Sunak retained both Jeremy Hunt as Chancellor and James Cleverly as Foreign Secretary. These appointments were to be expected. Both men are respected in their departments, and in the case of Hunt they share similar ideals over how to approach the current economic crisis.

The controversial re-appointment of Suella Braverman to the role of Home Secretary has created a huge level of backlash. Braverman was sacked only a week before the cabinet announcements, for breaking ministerial rules by sending important security details from her personal email address to private contacts. In Prime Minister’s Questions (PMQs) the Leader of the Opposition, Sir Keir Starmer, mockingly contrasted Braverman’s actions and subsequent re-appointment to Sunak’s initial pledge of “integrity, professionalism, and accountability”. It’s fair to say this early move has been a step back in achieving those aims. Although it should be stated that Braverman’s endorsement of Sunak was crucial to his rise and thus her controversial re-appointment appears crucial for party unity.

Those who were loyal to Rishi Sunak throughout the recent Tory psychodrama have been rewarded with cabinet posts. These include the new Deputy Prime Minister, and Justice Secretary, Dominic Raab, and the return of Michael Gove to the ‘Levelling Up’ brief. Raab was instrumental to the running of both Sunak’s leadership bids, and Gove’s persistent undermining of Liz Truss weakened her premiership from the start, significantly contributing to Sunak’s ascension. In addition to this, Oliver Dowden, whose resignation as Conservative Party chair in June marked the beginning of the end for Boris Johnson, will make a return to the frontbench.

In the same vein, Liz Truss loyalists have been demoted – the former Deputy PM Therese Coffey received a serious demotion to the Environmental Brief, and ministers Brandon Lewis and Kit Malthouse were removed altogether. The cabinet is now more representative of the ‘broadchurch’ Conservative party. This is in keeping with Rishi Sunak’s call to “Unite or Die”; however, with broader representation could come more opposition and rivalry to Sunak’s power.

The new Prime Minister has focussed on experience and representation over pure loyal allegiances – this is certainly a welcome break from the previous two administrations and from it we may see an increase in the quality of governance. Overall, it’s fair to say the new Prime Minister has been inspired by John Major’s philosophy of it’s best to have the “bastards” ‘inside the tent, pissing out, rather than outside the tent, pissing in’; in the case of Suella Braverman this is certainly true. Sunak’s fledging Cabinet is discussed mid-reshuffle on the inaugural episode of our ‘Manestream Media’ podcast.

‘Austerity 2.0’

Rishi Sunak’s first few days in office effectively reversed the entirety of the Truss government’s short-lived reforms. Of course, the most significant shift has been on the economic front. Sunak and Hunt are both fiscal conservatives, with a lazer focus on balancing the budget and reducing inflation. There are two levers at their disposal to achieve this – taxation and spending.

The Chancellor has pushed his fiscal statement back to the end of next month; however, it’s looking like the new package will seek to close the deficit with a 50/50 balance of tax rises and spending reductions. It is rumoured that Hunt will order at least 2% real terms cuts for each department, with some reports stating up to 7%. They’ll never admit it, but this is as aggressive as the austerity measures from the Cameron-Osbourne years of 2010-2016.

Undoubtedly, the debt must be brought down. If confidence in the British Government’s ability to pay off its debt falls, the future costs of borrowing could soar. However, the rapid plan of debt reduction put forward by Sunak is a huge price to pay for the British people, especially on top of the ensuing ‘cost of living emergency’.  Already the defence spending rise has been abandoned, and so has the commitment to the Pensions ‘Triple-Lock’. There is certainly more to come, and if each department must find ‘efficiency savings’, that means that the NHS and our education system will be affected.

Sunak will have to be very careful; both these services cannot sustain real term budget cuts at present. NHS waiting times are currently at record highs, and nurses have taken a real-terms pay cut of 20% since 2010. In addition, an exodus of up to 1 in 3 teachers over the next 5 years is predicted. In pursuing short-term debt reduction, Sunak is putting at risk our public services, which are the cornerstone of social mobility, and worker productivity in Britain. He’s claimed to be in favour of ‘levelling up’, but these economic choices will weaken the NHS and over-stretch our schools. When put into the context of the U-turn over Northern Powerhouse Rail (the proposed high-speed Liverpool to Leeds line), it is truly difficult to see how this rapid pursuit of debt reduction is at all consistent with improving the gaping inequalities in the UK.

At the next general election these should be the political battlegrounds that Labour will target the most, though they themselves will have to come up with a solution to this desperate economic crisis and ballooning national debt.

‘Back to Basics’

Regarding other areas of policy, the picture is vaguer. The Home Secretary dreams about seeing planes full of migrants being sent to Rwanda on the front of the Daily Telegraph. Her ruthless and, what could be termed psychotic, approach to immigration, in addition to Dominic Raab’s opposition to the Human Rights Act 1998 (which ties UK law to the European Convention on Human Rights), could see the Rwanda deportation scheme finally take off. In addition to this, there have been promises of tougher sentences for ‘disruptive’ protesters, such as the recent ‘Just Stop Oil’ activists.

Regarding the environment, the PM begrudgingly re-introduced the ban on fracking, and is committed to ‘net-zero’ by 2050. Sadly, this commitment is looking similar to his commitment to ‘levelling-up’, in that it appears entirely inconsistent with his agenda of rapid debt-reduction. The necessary rise of green energy sources will require significant investment during this decade for it to be successful. There’s only been a few solid pledges regarding this and very little action.

Sunak does appear in favour of nuclear power, and offshore wind, but refuses to use inland energy sources such as solar or onshore wind. As the government matures, and ministers learn their briefs, more policies will be available, but currently these are all ‘guestimates’ and so should be taken with a pinch of salt.

A move of both historical precedence and geo-political significance 

The Indian Prime Minister, Narendra Modi, hailed the rise of Sunak to the top job as a “living bridge” between the two nations. This is because Rishi Sunak is of course the first British PM of South-Asian and Hindu heritage. Potentially, the broadly positive response by world leaders is a sign that the UK may start to be taken more seriously than it has been over the previous few years, as Sunak demonstrates an air of confidence and direction for Britain.

Yet it should be noted that Sunak has just as many issues abroad as he does at home with economic pressures constraining the UK’s response regarding the Ukraine-Russian War, the tensions in Northern Ireland regarding the Protocol seriously harming EU-UK relations, and the need for global cohesion regarding the climate crisis. Hopefully, we’ll see a more pragmatic attitude towards Europe to promote some much needed co-operation, as more than ever global democratic unity is so desperately required.

To be frank, the majority of this piece illustrates my personal estimates for a potential Sunak government. The Prime Minister’s meteoric rise to No. 10 has meant that ‘Dishy Rishi’ still lacks some sort of ideological identity. Stability looks like the buzzword of the hour, and that’s probably what we’ll see.

But will things get much better? Not for a while I’m afraid, but maybe, just maybe, things won’t get too much worse either. That truly is how low the bar fallen since the catalogue of catastrophes Boris Johnson and Liz Truss presented. It is interesting that one of the main criticisms of Sir Keir Starmer, and Labour, for years has been his ‘boring’ demeaner and now Sunak is attempting to tone down the Conservatives’ once quite colourful pitch.

One final point. Regardless of politics, this is a moment of pride for Britain, to have a political system in which all ethnicities can rise to the top. This is not guaranteed around the world, and it should be treasured. It is a testament to the success of affirmative action, and hopefully many more people of colour will be inspired to partake in politics and give their hugely valuable contributions. Sunak may not mean that representation equals action, but his sheer presence may inspire someone to bring forward the truly transformative changes needed to craft a fairer and more equal Britain.



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