Akhil Vaani | Rishi Raj in Britain: Challenges and opportunities for the island nation

After the ceremony of kissing the hand’s, in an audience with King Charles III in the room 1844, of the Buckingham Palace on Tuesday, 25 October, Rishi Sunak was appointed 57^th Prime Minister of the United Kingdom.

Sunak has the dubious distinction of becoming third UK Prime Minister in a nano-span of seven weeks. He is also the fifth premier in six years, youngest to don the mantle in two hundred years and the wealthiest Prime Ministers of the country ever.

Sunak faces two immediate unenviable tasks- first is to unite the battered and bruised, fractured and faction ridden Conservative Party (his war cry to Tories is ‘Unite or Die’) and the second, navigating Britain through its gravest economic crisis in a generation.

Difficulties of being Rishi Sunak

Life and times to come for the new Prime Minister is one of difficulties galore-

Firstly, on 25 October, the day Sunak, had audience with King Charles III and was appointed the 57^th Prime Minister of UK, ‘the Guardian UK’ while dubbing the occasion as truly historic added further:

“In 1969, the late Queen’s chief financial manager, Lord Tryon, (in a note sent two months before Queen investing her son Charles as the Prince of Wales) told a Home Office civil servant that ‘it was not, in fact, the practice to appoint coloured immigrants or foreigner to certain roles within the royal household. People from ethnic minority backgrounds were, however, allowed to work as domestic servants.’

Indeed, UK has seen rapid social and political transformation in half a century since then. This is best exemplified in ‘King Charles, receiving the Tory leader, Rishi Sunak, a British of South Asian origin and practising Hindu, to form a government and become Britain’s 57^th Prime Minister’

The Guardian rightly has elaborated further, ‘Sunak attended a palace that would not have hired his grandparents – who arrived in the UK in the 1960s – into any important positions…and as he arrived at Downing Street in his car following his audience with the king, there were boos and heckles from the crowd. Others waved to him.’”

Sunak is destined to face much greater scrutiny than any of his fifty-six predecessors to the post, including Benjamin Disraeli, the first British Prime Minister of the Jewish origin.

Secondly, Sunak’s ascendency as Prime Minister, the fastest sprint in modern times, from entering the House of Commons in 2015 to the premiership in 2022 indubitably has been a legend, one of a fairy tale; but he faces insurmountable headwinds, because notwithstanding the fact that in recent years there has been radical change of politicians of colour being appointed to senior cabinet roles including the key posts of chancellor, home secretary and foreign secretary, before Sunak-‘UK  never had a black or brown prime minister before’.

It makes the ascendency of Sunak’s as Prime Minister no doubt a historic moment for multiculturalism and racial equality in UK, but his colour and the religion, in itself are sufficient causes for the media, tabloid, the electorate, and opinion makers to keep him on notice, more so because Sunak’s elevation has not been based on an election even by the Tory rank and file- ‘Sunak is a selected and not elected PM’ or to paraphrase what Angela Rayner the deputy leader of the Labour Party puts as– His is  a coronation not an election.

Thirdly, barely seven weeks ago, Sunak was comprehensively beaten by Liz Truss in the Conservative party’s leadership contest. Now. after emerging victorious in a leadership contest that was fast-tracked out of the wreckage of her ultra-nano premiership, he is the Prime Minister.

In five days of nerve-racking Tory internecine battle preceding his elevation, Sunak had to brave the dramatic aborted comeback bid of Boris Johnson and his other competitor, Penny Mordaunt, pulling out of the leadership race moments before the nomination’s deadline ended.

Had Penny managed to get endorsement of hundred Tory lawmakers, it might would have been the waterloo moment for Sunak for the second time. Both Johnson and Penny are still there lurking around, and Sunak will need more firepower, agility, and statesmanship during his premiership than he mustered during the weeklong Tory drama that catapulted him to the premiership

Fourthly, it is baptism by fire for Rishi Sunak- he is anointed to the crown of thorns at a time of profound political and economic crisis for UK, amid the chaos of economic instability, soaring inflation, stretched public finances and industrial unrest.

It is expected from Sunak that, he will pull Britain back to more mainstream policies after failed experiment in trickle-down economics of his predecessor, which rattled financial markets, sent pound in a tailspin and damaged Britain’s fiscal reputation, with an unfunded hole of ￡40 billion left as parting gift of Liz Truss. He has zero margin of error.

Fifthly, more than the colour of his skin, it is the extremely privileged upbringing of Sunak that may prove to be his Achilles heel. As ‘The New York Times’ puts squarely, ‘it is Sunak’s elite education and extreme wealth that have drawn scrutiny — and become something of a political liability in a society famously divided by tensions over class.’

For the uninitiated, Sunak attended the elite Winchester College, a private boarding school in Britain, which costs ￡43,335 a year to attend, then studied Philosophy, Politics and Economics at Lincoln College, Oxford, graduating with a first in 2001 and further acquired MBA degree in 2008 from Stanford University, where he was a Fulbright scholar.

Before entering House of Commons in 2015, Sunak made a fortune in finance, working for Goldman Sachs and two hedge funds.

Sixthly, Sunak is the wealthiest Prime Ministers in Britain’s history. Times London estimates that mere wealth of his wife Akshata Murty based on her stake in Infosys is worth $700 million, is more than the wealth of late Queen Elizabeth II, whose personal wealth was estimated at about $460 million as per 2021 Sunday Times Rich List.

Also, the combined wealth of King Charles II and Queen Consort Camilla at $340-$395 million pales in comparison to the wealth Sunak enjoys with his wife (more than $800 million) which ranks them among 250 wealthiest British people or families.

As per the Guardian, Sunak this year became the first frontline politician to ever be included in the Sunday Times Rich List of the UK’s wealthiest people.

It has led to British tabloids dubbing Sunak as ‘Rishi Rich’ and doubts have been raised whether, given the exalted richness, whether the multimillionaire Prime Minister would ever be able to relate to the ordinary Britons grappling with a once in a lifetime cost-of-living crisis, more particularly because he is, about to preside upon the tough measures to pull the country out of a deep financial hole and avoid a recession.

The Wall Street Journal, just reported on 27 October that before Sunak, the previous richest Prime Minister was Edward Stanley, an aristocrat who led Britain in the second half of the 18th century and had a personal fortune in excess of £7 million, according to the Guinness Book of Records. Considering inflation since the last year of his government 1868, his fortune would be worth about £613 million in today’s money, according to the Bank of England’s inflation calculator, which is much less than the wealth of Sunak.

It clearly puts Sunak at the back foot and as one Labour Party lawmaker said poignantly in the Commons, on Sunak’s first day in Commons as Prime Minister, that an average nurse in the state-run National Health Service (NHS) would have to work 20,000 years to accumulate the same riches as Sunak.

Given the difficulties of being Rishi Sunak, it will be extremely tight rope walk for the premier in days and months to come. Earlier this year, he already faced extremely rough weather with two exposes threatening his political career. Almost.

First, that Sunak held a US Green Card that allowed him to take a work and settle there any time.

The second, that his wife had saved millions of pounds a year in taxes by claiming “non-domiciled” status on dividends from her shares in Infosys. Though Sunak surrendered his Green Card and announced that his wife would pay taxes in Britain on her overseas income, substantial damage was done already, that ghost of scandal returned on his first day as Prime Minister in Commons, with the Labour Leader harping on the non-domicile tax controversy once again.

Humongous challenges facing Sunak

The challenges facing Sunak are legion-

One, the very first challenge, he faces is political – to keep the Conservative party flocks together – ‘the house of Tories in order.’ He has already ticked the early boxes right, with assertions like ‘Unite or Die,’ ‘We have just one chance’ and by forming a cabinet ostensibly based on the principles of ‘unity, experience and continuity’ reaching across party divide and restoring several ministers to their previous departments after the chaos of mass resignations and rapid-fire changes in prime ministers. He has collected the best possible available talent.’

It is a task well begun. Nonetheless, the imponderables subsist because in a faction ridden house of Tories these are still early days, with one disgruntled face already sulking and roaring her head- ‘his competitor for the job Mordaunt, who almost forced Sunak into a run-off with rank and file of Tory membership and who did not get what she aspired for – the post of the Foreign Secretary.’

Two, clearly Sunak faces the continued political challenge of legitimacy having been selected by a little under two hundred Tory Law makers as against millions of voters. The opposition Labour and even some backbencher Tories, are already up in arms asking for General Elections. Sunak will have to tread this political landmine with abundant care.

Three, The Economist puts it succinctly – Sunak inherits a ‘mountain of problems, including an economy in disarray, a winter of strikes, a looming energy crisis and a health-care system under strain’

Four, the biggest challenge facing Sunak is on the economic front, though his arrival has already calmed and soothed the market, stabilised Pound and has returned sanity to the 10 year and 30 years bonds. The PM has opened his gambit carefully with the assertion “I will place economic stability and confidence at the heart of this government’s agenda. This will mean difficult decisions to come,”

Sunak has clarity regarding the planned cuts in public expenditure as he emphasizes that he will “not leave the next generation … with a debt to settle that we were too weak to pay ourselves,” “and that he will unite the country not with words but with actions.”

Fifth, despite the Chancellor Jeremy Hunt having junked much of the disastrous ‘mini-budget’ of Liz Truss (that led to her mighty fall making her the shortest-lived UK Prime Minister), one of the toughest challenges before Sunak is to get out of the mess of ￡40 billion fiscal blackhole by 2026-27 which is the creation of Truss.

It will require difficult spending cuts and will be ultimate test of his character as to how Sunak accomplishes this impossible task, keeping the cuts as humane as possible duly protecting the vulnerable.

One definite feasible way out is to keep the defence spending at 2% of GDP which is estimated to provide a saving of ￡157 billion in an eight-year time frame. Other options of going back on the promises of raising the benefits with inflation or suspending pension triple-lock are fraught with the danger of pitting premier him against the Tory MPs early in the premiership. But Sunak must walk the talk if he has to save the economy.

Six, spending cuts on expenditure have a limit and will go only this far. Sunak faces Hobson’s choice, when it comes to increasing the taxes at least in the short term, and not only on the rich but across the board duly protecting the vulnerable. A feasible way out is to reverse the cuts brought in by Truss to national insurance and reinstate Sunak’s earlier plan of raising 1.5% levy to fund financially crippled NHS.

Seven, as Sunak himself says, Britain is in throes of a profound economic crisis with the challenges spanning economic instability, soaring inflation which at 10.1% are at four decades high, country at the cusp of entering into recession while Bank of England pursues its hawkish agenda of aggressively increasing interest rates, stretched public finances (as seen above), and looming public sector industrial unrest. All these need tailor made responses with the eventual aim to bring the country back to the growth age.

Eight, Sunak faces spate of industrial unrest- ongoing rail and dock workers’ strike; looming strike of seventy thousand staff at 150 universities; fresh strike of royal mail workers over pay; ambulance, BT, and outreach workers’ strike. These are hell of headaches facing the new incumbent of 10 Downing Street. It assumes critical importance because it was the working-class voters who guaranteed the Conservatives landslide victory in 2019.

As such a profound challenge facing Sunak, is how piggybacking based on the performance of his government amid prolonged economic crisis, ultimately the Conservative Party is able to manage reconnecting with the voters, it attracted in 2019.

Nine, the critical challenge immediately gripping Sunak, is the energy subsidy in the era of increasing prices due to uncertainties of Ukraine war, particularly how to reverse the Liz Truss energy price guarantee beyond April while taking a humane view of who gets the subsidy, to what extent and till when. This is a life and death situation for have nots.

Ten, challenges are unending and include fixing the critical issues that NHS is grappling; addressing the thorny issue of immigration; to continue to have a coherent policy to support Ukraine in the war and finding workable win-win solution to the Northern Ireland Brexit deal to avoid a trade war.

Lastly, the most important task before PM Sunak, is to address the headwinds facing British economy in a composite manner, to bring the country back to the path of sustainable growth because nothing less will work eventually.

Conclusion

Amid humungous challenges facing his government, Sunak has an inbuilt advantage that unlike Truss, he has the trust of a majority of Conservative MPs. And, under British law, as long as a party can command a parliamentary majority, it can continue in power for up to five years before calling an election.

And despite recent defeats in by-elections Tories still have a working parliamentary majority of seventy-one, meaning that Britain’s next general election could conceivably come as late as January 2025.

It is one last half chance available to Sunak to ensure through the performance of his government to stop the free-fall of the Conservative party without a parachute.

Stakes are high but if Sunak is able to pull through the miracle, then despite the blunders and scandals of Boris Johnson era and despite the implosion to the premiership of Liz Truss, which left the Conservative poll numbers sinking to historic lows, Sunak still will have two years to restore confidence among voters.

Indubitably, it is the Conservative Party’s last chance to save the government in 2024 by staying united and bringing the nation to a higher level of sustainable growth.

Sunak has two years to steady the ship and restore the Conservative’s dire poll ratings to something more competitive. He is a safe pair of hands, having won wide praise for handling economy during Covid-19 pandemic, helping businesses and citizens with big government spending programs that saved lives and livelihoods.

Sunak has his task cut-out: To bring calm to the choppy English Channel and to usher in the era of sustainable and equitable growth amid confusion and chaos. If he succeeds, Britain and Conservatives will swim else both will sink together.

Good news is, Sunak has started well with focus on ‘professionalism, integrity and accountability’; with unequivocal ban on fracking; talking big on educational reforms, planning to stay put with defence expenditure at 2% of GDP and refusing to guarantee pension triple-lock (a guarantee brought in by Truss that the state pension will rise every year by which ever is highest of inflation, of earning growth or 2.5%) the ending triple-lock will save ￡11 billion for 2024-25.

Sunak has also warmed early to the immigration reforms including a new treaty with France to stop the menace of small boats crisis and reducing the time to decide the 80% claims of asylum seekers to six months from present 480 days’ time it takes.

Most importantly, Times London reports on October 28 that he is engaged with Chancellor Hunt, to secure a surplus of ￡ 10 billion to convince the market he can balance the books as he confronts a “massive fiscal blackhole”.

The Prime Minister is targeting upto ￡ 50 billion in spending cuts and tax rises in expectation that the independent Office for Budget responsibility will warn of recession next year.

Not surprisingly then Sunak already has a salutary impact on the market and currency, which have recovered to what they were before Truss’s mini budget and in the process, Sunak has also narrowed the gap with Labour reader in his popularity as per the latest poll.

Best of luck Rishi Sunak!

The author is a Multi-Disciplinary Thought Leader with Action Bias and an Impact Consultant. By passion he is a keen watcher of changing international scenario. He works as President Advisory Services of Consulting Company BARSYL. Views are personal and do not represent that of this publication or the company where he is employed in.