25 November 2020updated 13 Sep 2021 5:06am

Rishi Sunak made the right calls on jobs and the furlough scheme. But is his luck about to run out?

The question isn't if the Chancellor will impose spending cuts and tax rises to regain control over the deficit, but when.

By Philip Collins

Rishi Sunak, Chancellor of the Exchequer (Photo By Getty)

Rishi Sunak is the last of the fiscal conservatives who is the first of the big spenders. A Chancellor who believes in a balanced budget is the most popular Tory in the land because he has disbursed public money like a middle-period Gordon Brown. The renewal of lockdown postponed the moment that Sunak has to withdraw his largesse. The Budget has been postponed and the spending review, with its announcement for one year only, will postpone it again. The moment, though, will come. The real Sunak will have to stand up one day.

It should be said that, at a time of need, Sunak did indeed stand up. The furlough scheme has staved off insolvency for millions of people. Sunak, and his officials in the Treasury, showed both imagination and alacrity, quite the cachet in this cabinet. Ministers on top of their briefs have no need to bully their staff and, with the addition of a calm and pleasant manner and a clear eye for personal branding, Sunak has become a politician of substance. But he must worry that the ladder on which he has risen is about to be pulled away. He cannot, for long, carry on as that nice Rishi Sunak who hands out cash to the needy.

Imagine the Chancellor that Sunak would already be were it not for the pandemic. A convinced cheerleader for a prosperity-consuming Brexit who only got the Treasury job because, unlike his more principled predecessor Sajid Javid, he was prepared to submit to the scrutiny of Dominic Cummings. The strict fiscal conservative who found every act of the last round of austerity entirely to his taste, who cupped a tin-ear to Marcus Rashford, who wanted a gentler lockdown to get trade moving and who now wants to freeze public sector pay and cut Britain’s contribution to world aid. Winchester head boy, Oxford PPE, blue-chip investment bank. This is such a full-bore Tory curriculum vitae that Sunak would be too great a cliché to cast in a drama.

Yet we are still watching Sunak struggle to maintain the illusion that spending money is what brought him into politics. The military has just had a £16.5bn bonanza and there is a lot of money to find for infrastructure spending, some of it to change the climate of opinion in the north of England and some of it to change the actual climate.

Sunak has promised to allocate £3bn to the NHS to catch up on postponed non-pandemic work, an extra £1.25bn to the prison service, to increase spending on schools by £2.2bn in the next financial year and to provide a further £1.5bn for building the further education colleges of the future. The reversal of the Osborne years is neatly illustrated by the fact that the addition of the promised 20,000 police officers will take the staff back to the 143,000 that were employed in 2010, before the Conservatives took office. It has been a long road, over a decade, to nowhere.

The economic forecasts, though, contain the clue to the conflict that is coming. The Office for Budget Responsibility is forecasting the worst annual growth performance in three centuries. The deficit will be double what it was at its peak after the 2008 financial crisis. Public sector borrowing is likely to be more than £100bn even by the time the next election is due. The share of public spending will rise in this financial year, from 40 per cent to the wartime level of almost 60 per cent of GDP. Sunak has been turned into a modern-day Stafford Cripps, and the strategic dilemma he faces, which he keeps putting off, is how to pay the bills that he is forced to run up.

Spending cuts and tax rises will both be necessary and the Chancellor knows it. The defining question is whether to take that pain soon. Putting off until tomorrow what we fear to do today is always tempting. But an election manifesto that either pledged tax rises and more cuts or, even worse, pretended they were avoidable, will seem a lot less attractive in 2024 than it does now. He will, by then, also have had to decide whether to indulge the requests for agricultural subsidies, university research grants and regional support funding to replace money lost in the Brexit imbroglio. Sunak is apt to brush off the effect of Brexit but he must, as an intelligent and reflective man, worry that he might be wrong. Brexit and Covid together might be the perfect evil alliance. Covid takes out the capacity of the domestic industries such as tourism and retail, while Brexit attacks the traded sectors such as chemicals and manufacturing.

There are troubles piling up and Sunak will either have to change his mind on beliefs he has held for a long while, or there is going to be conflict with his spendthrift Prime Minister. Sunak and Boris Johnson could yet take their place in a litany of conflict that includes Randolph Churchill and Lord Salisbury in 1886; Winston Churchill and Stanley Baldwin over the gold standard in 1925; the whole Treasury team and Harold Macmillan in 1958; Nigel Lawson and Margaret Thatcher in 1989; and Tony Blair and Gordon Brown passim.

Economic trouble might make a famous man of the Chancellor. He is already the most popular Conservative, in that 48 per cent of people who answered YouGov polls between July and October 2020 had a positive view of him and only 17 per cent were negative. Yet 12 per cent have never heard of him and plenty more will know nothing about him. On the other side of a recession, they may know him for different reasons.

When Sajid Javid resigned as chancellor in February, the instant verdict on Sunak was that he was Boris Johnson’s puppet. He has eluded that limiting definition, but it would be too generous yet to say he has truly become his own man. Rishi Sunak has played the part of someone else’s man so capably that it looks like he is not acting. He has done what he had to. In time, he will do what he wants to, and then we shall truly know him.