Yahoo News Tension between Rishi Sunak and Boris Johnson? Just wait for the autumn
You can tell it’s summer recess when certain stories take off and run for days. This week’s? Sunak versus Johnson. The Chancellor has found himself accused of being on leadership manoeuvres following the leak of a letter he sent to the Prime Minister calling for an easing of travel restrictions.
It didn’t help that new polling dropped this week showing Tory members favour Sunak to succeed Johnson. A former colleague of the Prime Minister’s observes: “He [Boris] won’t like his approval ratings dropping when Rishi’s are sky high.”
But if they think this is bad just wait until the autumn. Regardless of who leaked the letter on foreign travel, Johnson and Sunak are actually closely aligned on the issue as well as the need to get workers back to the office. Both favour a liberal approach onCovid restrictions. The real friction is over something bigger: tax and spend. The spending review will see Sunak attempt to bring back a touch of fiscal discipline just as Johnson goes in search of a big — potentially costly — domestic narrative for his post-Covid legacy. As the Chancellor grapples with last year’s emergency spending (which saw the deficit balloon to more than £300billion) there are already some big bills coming up for clearing the NHS backlog, school catch-up, courts and a social care solution.
Johnson’s natural instinct is to throw money at tricky situations. “It’s his default,” says one Johnson loyalist. But Sunak is growing increasingly worried about inflation choking recovery. He isn’t inclined to rely on low interest rates much longer. If money is being spent, and the debt piling high, Sunak suspects he may soon be paying billions more to service it. Questions from the Treasury will only grow louder: is this spending really necessary?
But it’s here that Sunak could find himself in the minority. Sunak speaks of “hard choices” but Johnson isn’t famed for saying no at the best of times — let alone when faced with disgruntled Tory MPs ready to rebel at public spending cuts and tax rises.
If there is to be new funding, the Treasury will want to know what pot of money will pay for it. This is why Johnson’s favoured social care plan comes with a planned national insurance hike to fund it. But tax rises are viewed as politically toxic by several senior cabinet ministers who question whether Sunak would really go through with them. Ministers complain privately that the proposed NI hike is regressive and will hurt the working population. As Tom Newton Dunn revealed in this paper on Thursday, the Prime Minister is already so spooked by the Tory backlash that he has asked aides to go over it again to make it ‘sellable’.
So even if internal polling supports a tax rise, the parliamentary party could block it. Ministers are discussing invoking the “Chesham and Amersham defence” in protest — pointing to the by-election in the former safe seat that fell to the Lib Dems. As one puts it: “The last line of defence in places like Chesham and Amersham is the economy. They put up with us because we won’t raise their taxes.”
Tory fiscal hawks prefer to stop spending escalating further. With a self-dubbed anti-austerity Prime Minister like Johnson — more enthused with big infrastructure projects than most of the population — that is unlikely to wash. In his City Hall days, his recovery plan for the financial crash was based on growth. But growth doesn’t magically occur, and with doubts rising about the Government’s commitment to growth initiatives the PM could find himself having made promises without the cash to deliver them.
The next question will be whether to borrow more money, raise taxes, or ditch the promises all together. Increasingly, senior Tories looking ahead to the next election prefer extending the loan. They view spending on the Covid recovery as akin to wartime debt. Johnson’s problem is the Chancellor is not one of them.
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