What Does Sunak Stand For? His Party Needs To Know

(Bloomberg Opinion) -- Britons loyal to the dashing Bonnie Prince Charlie of the exiled Stuart dynasty in the 18th century used to toast “the King over the Water.” In some Tory circles, the new King over the Water is the one the party ditched not so long ago — former Prime Minister Boris Johnson. Perhaps more surprisingly, another large group of Conservative MPs keeps faith with the ousted Queen-in-exile Liz Truss, Johnson’s 44-day successor. 

Can Prime Minister Rishi Sunak and his Chancellor Jeremy Hunt silence the rumblings on the Right? It is a question worrying those ministers and supporters who turned to the moderates in the chaos of last year in hopes of avoiding a looming electoral collapse.

Languishing 20 points behind Labour in the polls, it is only natural that the Tories wistfully recall Johnson’s overwhelming general election victory in 2019. And despite Truss’s crash-and-burn departure from office, a substantial number of party members also look back fondly on her mantra of “growth, growth, growth” to counter a decade of austerity, poor productivity and negligible rises in GDP. Conservatives have fretted about elusive UK growth for many of their 12 years in power. Truss was the first to say she would do something radical about it, and her supporters do not share the “orthodoxy” of the Treasury and centrist media that her prospectus was doomed from the outset.

Neither former Conservative prime minister is prepared to go quietly. In a sleek private club in Mayfair on Monday, Johnson dined Truss. Before leaving for Davos to remind the great and good of his early support for Ukraine, Johnson also unveiled a statesmanlike portrait of himself at the Tory Carlton Club, where he called for tax cuts. The following evening more than 20 MPs calling themselves the Conservative Growth Group echoed his plea for lower taxes and demanded supply-side reforms. Truss was in attendance as an “observer.” A slew of Brexit-supporting industrialists have joined the chorus, led by billionaire Sir James Dyson, who took to the columns of the Conservatives’ favorite newspaper, The Daily Telegraph, to criticize Sunak’s government for making growth a “dirty word” and having a “stupid” approach to business.

Internal Tory dissatisfaction is always an opportunity for renegades on the Right. Lurking in the political undergrowth is Nigel Farage, the former leader of the populist Brexit party, UKIP, whom I glimpsed in the same club within minutes of Johnson. By withdrawing his candidates from the 2019 election, he gave the Tories a clear run in many Labour marginal seats in the North and allowed them to beat the Liberal Democrats in the South. Farage, always on the alert for any betrayal of “his” Brexit legacy, has yet to decide whether he will help or hinder the Conservatives again. The populists make the northern Tory contingent very nervous: They feel Sunak, a former Goldman Sachs banker, can’t cut through with their voters.

Sunak and Hunt, a former long-serving health minister and successful businessman, are serious, fiscally orthodox politicians suited to hard times. Although the sober pair have settled the markets and impressed the UK’s European negotiating partners, their party yearns for more flamboyance. Downing Street’s managerialism holds the fort, but what do the two men stand for other than sound finances? As Labour sent its leader and shadow chancellor to mingle with the global influencers at Davos this week, where is the hope of cutting the opposition’s lead?

The sharks are not yet circling the new leadership — the party has barely recovered from last year’s surfeit of faction fighting and psychodrama — but many Tory MPs are restive. 

Hunt has been signaling that there are unlikely to be tax cuts in his slimmed-down Spring budget although fuel duty is promised not to rise. By then the burden of taxation will have reached record post-war levels. The prime minister argues that the Covid-19 pandemic and Russia’s war in Ukraine mean he can’t offer relief to hard-pressed voters. “You’re not idiots, you know what’s happened,” he told an audience in the North earlier this week, referring to the market reaction to Truss’s unfunded tax proposals.  

Ironically, criticism is mounting just as the UK’s fortunes seem to be turning a corner. GDP grew 0.1% in November, according to new data from the Office for National Statistics, defying economists’ expectations and avoiding a technical recession in the fourth quarter. The inflation figures released on Wednesday showed a marginal dip to 10.5% from 10.7%. Energy prices are falling to levels not seen since the invasion of Ukraine, so Sunak’s promise to cut inflation by half at year’s end looks realistic.  

At Davos, former Bank of England Governor Mark Carney, hitherto a public pessimist about the UK’s prospects, has been upbeat about Britain. Previously, Carney had attacked Truss for “doubling-down” on inequality in her tax-cutting “mini-budget” and condemned Brexit for adding to the cost-of-living crisis. This week, he praised Britain’s institutions for helping the country weather economic shocks. Meanwhile, a PwC survey of global chief executives ranked the UK as the third-best prospect for investment.

Talk to Sunak and Hunt’s allies and they reckon that time is on their side when it comes to the economy. Yet they have yet to refine their appeal to the party and country. The prime minister compromises with competing Parliamentary factions and avoids risky votes that invite rebellions, which means his own beliefs are a bit of a blur.

The Right, for instance, was initially delighted earlier in the week when Sunak vetoed the devolved Scottish Parliament’s Gender Recognition Bill that reduces waiting times for people seeking official approval for a change of gender and lowers the minimum age from 18 to 16. The new law has tangled implications for equalities legislation in the rest of the UK and is unpopular in Scotland as well as England, according to opinion polls. Social conservatives were taken aback, however, when days later, the government announced that it would extend its ban on “conversion therapy” of gay children in England and Wales to those seeking to change their gender too. Was Rishi wobbling on “wokery”?

Sunak and Hunt also see the urgency to get a pragmatic compromise deal with Europe over Northern Ireland’s trading regime, but Brexiteers on their backbenches will revolt against anything that looks like “surrender” to Brussels. The prime minister has made concessions to rebels on planning, online safety and the environment — nothing new here, as Johnson always ducked hard decisions — but at some point, both men will have to show some steel. Otherwise, they’ll appear as placeholders rather than game-changers. 

For now, the noisy exiles, Johnson and Truss, are humming the best traditional tunes — low taxes and growth. Sunak and Hunt may yearn to condemn them as fiscal “idiots” who misread Britain’s troubled political economy, but to see off the threat, they will need a more forthright battle hymn of their own.

More From Bloomberg Opinion:

• Why I'd Pick the UK Pension Over France's: Merryn Somerset Webb
• Burberry and Cartier Need Chinese Shoppers to Start Spending: Andrea Felsted
• Jacinda Ardern Gives the World a Lesson in Humility: Andreea Papuc

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Martin Ivens is the editor of the Times Literary Supplement. Previously, he was editor of the Sunday Times of London and its chief political commentator.

More stories like this are available on bloomberg.com/opinion

©2023 Bloomberg L.P.