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Sunak's political headaches

01 November 2022

By Sara Price

Sunak’s first week in office was never going to be smooth sailing. After an extended period of political and economic turmoil, he comes to power needing to deliver economic stability and policy certainty. We’ve taken a look at three core challenges currently facing the Prime Minister.

  1. Public Finances Black Hole

Brace for impact. Tax rises are on the horizon.

With a fiscal black hole of round £50 billion, the autumn statement on 17 November is set to signal a further squeeze on people’s finances.

Both the Prime Minister and the Chancellor have agreed that the solution to the deficit is through tax rises and spending cuts. Everyone will have to contribute in the years to come, not just those who are better off. While Number 10 has warned of the scale of the challenge ahead and the Chancellor has already unpicked Truss’s mini-budget, the impact of the autumn statement will still be a shock for households.

The government borrowed billions to support households and businesses during the Covid-19 pandemic and more recently with energy bills. But to cover this level of borrowing, the Treasury needs to do more than look to cut spending if they are to balance the books

Hunt is considering a split of 50% tax rises and 50% spending cuts. Putting a figure on it equates to around £25billion from the taxpayer. If we consider the austerity years under Cameron and Osborne, the former Chancellor used an 80 / 20 split for spending cuts and tax increases, meaning the burden this time round weights heavier on the taxpayer.

This gloomy financial outlook will have an impact on the Prime Minister’s polling. Coming into office, Sunak managed to settle the markets and restore some faith with Conservative voters. Recent polling has showed a voter preference for a Conservative government led by Rishi Sunak to manage the economy over the Labour leader Keir Starmer. Sunak is regarded as competent and popular in compared to his predecessor Liz Truss. However, Labour still lead in the polls and the pending squeeze on households’ finances is likely to impact on the Conservative favourability ahead of the next general election.

  • COP27 and the climate agenda

With an overflowing in-tray of domestic issues, including the autumn statement, last week it emerged that Sunak would not attend COP27 in Sharm el-Sheik next week.

This has gone down badly with climate change groups, the opposition and Conservative environmental MPs. Given the UK is the current holder of the COP presidency, not attending COP27 throws into doubt the UK’s commitment to the net zero agenda under the Sunak government.

However, with former Prime Minister Boris Johnson reportedly planning on attending, Sunak’s first U-turn in office may be on the cards. Johnson’s potential involvement in COP27 may be an effort to maintain his profile on a global stage but has the consequence of undermining Sunak at what would be his first world leader event in office.

Missing COP27 frames Sunak as not prioritising climate commitments or the importance of the achievements made by the UK in their Presidential role.

  1. Suella Braverman fighting for survival

The question on everyone’s lips – how long can Suella Braverman hang on as Home Secretary?

Her time in office has been anything but easy. First she broke the ministerial code and subsequently resigned over sending a draft written statement on migration from her personal email. The fallout from this is still being debated and examined. Secondly, her reappointment has been met with fierce criticism with many viewing her position as a reward for backing Sunak in the leadership contest and an effort to appease the right of the party. Thirdly, her rhetoric on asylum seekers “invading” the south coast and claims she blocked the use of hotels to ease the pressure on Manston asylum processing centre throws into doubt her competence in the role.

The challenge is to draw a line under the negative stories and move the narrative on. The Home Office and Number 10 will be looking for an intervention to distract the media and refocus on policy delivery, particularly on cutting immigration by the next election.

In the Commons yesterday, Braverman dug her heels in stating "there are some people who would prefer to be rid of me. Let them try!” Strong sentiment but Sunak is standing by Braverman at the moment, with the cavate that the situation is just about tenable unless further mistakes are made.