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Analysis
From the economy to Rwanda, Rishi Sunak inherits
a hefty in-tray
Guardian
staff
As crises and party management problems loom, PM must
act quickly to try to reverse Tories’ poor poll ratings
Wed 26 Oct
2022 21.17 BST
Rishi Sunak
is inheriting a hefty in-tray of issues, with several looming crises and party
management problems piling up as he takes the reins as prime minister.
Given he
was out of government for about three months, Sunak has not been privy to some
of the day-to-day issues filling ministers’ red boxes. So he will have to act
quickly if he stands a chance of reversing the Conservative party’s
deteriorating poll ratings, and prove he can deliver.
Economy
Calming
jittery financial markets after the chaos of the mini-budget will be high on
Sunak’s list of immediate priorities, and the government will use its 17
November autumn statement to set out debt-cutting plans. Economists expect
about £40bn of savings could be needed. Swingeing cuts would be politically
difficult after a decade of austerity, and amid a cost of living emergency.
Whether
Sunak approves an inflation-matching rise for pensions and benefits is a vital
consideration.
Sky-high
energy bills have pushed inflation to a 40-year high, with households expected
to face a further increase in living costs next spring after the government
cuts short its energy price freeze.
Home Office
The Home
Office must decide whether to press on with the flagship policy to send people
seeking asylum to Rwanda. The deal has cost £120m, with more money yet to be
paid to a country with a poor human rights record.
The threat
of Rwanda has failed to stem the flow of migrants coming to the UK and
overwhelming the asylum system. The government is spending about £4.7m a day
housing asylum seekers in hotels.
Sunak must
also negotiate with Suella Braverman over immigration policy. Despite being
urged to ease access to work visas to counteract labour shortages and improve
growth, Braverman is keen to limit net migration to “tens of thousands”.
Police
funding and pay is also on the agenda but is expected to face further budget
cuts. Crime figures continue to soar to record levels, particularly those of
fraud, rape and violent crime.
Foreign
policy
Sunak’s
pre-eminent task is to reassure Ukraine and Washington that his leadership will
maintain continuity in the British support for the removal of Russian forces
from Ukraine. But he will also have to decide whether, in the interests of
party unity, he has to confront Brussels or instead expand on the tentative
signs that a new relationship can be established using the European Political
Council.
His Hindu
heritage has led to glowing coverage in the Indian media, but a trade deal
might still prove difficult with the return of Braverman to the Home Office.
On China,
Sunak said in the first leadership election that he was willing to close all
Confucius Institutes in the country. He is also under pressure from his
backbenchers over exports to Xinjiang, and the behaviour of the Chinese
consulate towards protesters has inflamed the mood.
Defence
Sunak may
have promised Ukraine’s Volodymyr Zelenskiy that Britain’s support for Ukraine
will remain “as strong as ever” under his premiership in his first call to an
overseas leader on Tuesday, but the reality is that such rhetoric is the easy
part. A row over defence spending could yet loom.
Truss’s
pledge to sharply increase defence spending to 3% of GDP was not yet
reconfirmed by No 10 on Wednesday. Lifting defence spending to 3% from the
current 2.1% would cost an extra £23bn in real terms and is not obviously
necessary, given other spending priorities and wider pressures on the public
finances.
Brexit and
Northern Ireland
Talks to
end the row over the Northern Ireland Brexit protocol are at a delicate stage
and Sunak’s decision to keep the Northern Ireland team in position may help
around the negotiating table.
Both the EU
and the UK have said they are determined to find a negotiated solution to the
dispute before Easter, the 25th anniversary of the Belfast Good Friday
agreement, and Sunak will not want to trigger a trade war with the EU by taking
unilateral action on Northern Ireland.
But with
the DUP’s repeated warnings that they will not return to Stormont unless their
red lines in Brexit talks are met, Northern Ireland has the potential to create
unexpected booby traps for Sunak.
If the
Stormont executive is not restored by Thursday there is the prospect of an
assembly election in December that could entrench polarisation and further
erode the power-sharing institutions established by the 1998 Good Friday
agreement.
The
short-term solution is to persuade the DUP to end a boycott, which means
addressing the party’s objections to the post-Brexit Irish Sea border. That
complicates the UK’s negotiations with Brussels over the protocol.
Scotland
Sunak has
stressed that he wants to “work constructively” with Nicola Sturgeon’s Scottish
National party “on our shared challenges” – but the gulf between them is likely
too great.
Both await
a supreme court ruling expected next year on whether Holyrood can hold a
Scottish independence referendum in 2023 without Westminster’s approval: there
is no guarantee judges will agree with the UK government that Holyrood cannot
do so. The UK may face that divisive vote next October after all.
Education
Headteachers
in England are grappling with the sharp rise in energy costs and inflation,
along with the 5% rise in teachers’ pay that is wreaking havoc with their
budgets. Many heads are already warning of major cuts needed to balance their
books.
Teacher
retention and staff shortages are also becoming a problem, while schools and
universities across the UK are expected to face industrial action this winter
over pay or pensions.
Students in
further and higher education also face cost of living pressures, meaning that
more students may be forced to drop out. Councils fear that cuts in government
spending may further imperil special needs and disability provisions already
under huge stress.
Health
Sunak
inherits an NHS at breaking point, and one experts agree cannot survive further
cuts.
How to
deliver a “stronger” NHS, as he promised, while slashing funding across
Whitehall – including the Department of Health and Social Care – remains
unclear.
But urgent
action is required to prevent the NHS from collapsing this winter.
There are
now more than 132,000 vacancies across the NHS, the number of patients on the
waiting list for treatment has topped 7 million in England alone, and emergency
care services are alarmingly overstretched. Underfunded social care needs more
support, too.
Meanwhile,
hundreds of thousands of health workers will vote over the next few weeks on
whether to strike over pay. Some are really struggling with the cost of living
crisis, and many are jumping ship to better paid jobs in the retail sector and
elsewhere.
Environment
Sunak has a
lot on his plate when it comes to the environment. First up is the promised
review of the nature-friendly farming payments scheme, which was expected this
week.
The dormant
Cuadrilla shale gas extraction (fracking) site at Preston New Road, near
Blackpool
The dormant
Cuadrilla shale gas extraction (fracking) site at Preston New Road, near
Blackpool. Photograph: Christopher Furlong/Getty Images
Sunak has
confirmed that the fracking ban would remain as per the 2019 manifesto. This
was an easy way for him to win plaudits from backbenchers over the divisive
issue.
But he will
have to decide his approach to renewables. He criticised solar farms on
farmland during the summer’s leadership race but there is a train of thought
that he was trying to match the more militant Truss on the issue in order to
appeal to Tory voters.
Levelling
up
On the face
of it, Sunak’s appointment will be welcomed by those who think levelling up is
key to fixing Britain’s imbalanced economy. But any enthusiasm comes from a low
base: the project stalled for three years under Johnson, despite being his
defining policy, and then appeared to be quietly binned by Truss,.
Michael
Gove’s return to the department is promising, although tempered by the fact
that its key adviser – former Bank of England chief economist Andy Haldane –
has decided instead to work with Labour. The most pressing issue facing Sunak
here is transport: a truly levelled-up country cannot run on Britain’s
juddering, unreliable train lines.
Party unity
After a
bitterly divisive leadership race over the last few months, Sunak will have to
be wary of making any missteps that risk fracturing party unity too much. Doing
so will probably only make the Conservatives poll rating tank further and lead
to another break down of discipline in the party’s ranks.
His careful
reshuffle, which kept on many of the same ministers who were in Truss and
Johnson’s cabinet, was the first step, and reinstating the ban on fracking was
a shrewd move designed to stop any further inter-party splintering.
Potential
flashpoints Sunak will need to watch out for rebellions on include keeping
international aid spending below the 0.7% of GDP target, amendments to the
Northern Ireland protocol bill and any threat to the triple lock on pensions.
Concerns about his leadership could also build depending on how the
Conservatives do in two forthcoming byelections in the City of Chester and West
Lancashire, as well as at local elections next May.
Reporting
team Aubrey Allegreti, Rajeev Syal, Richard Partington, Patrick Wintour, Dan
Sabbagh, Lisa O’Carroll, Rory Carroll, Severin Carrell, Richard Adams, Andrew
Gregory, Helena Horton and Josh Halliday
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