The Day of Resurrection: Sunak enters 10 Downing Street
Less than 50 days after losing to Liz Truss, having occupied his time, according to sources close to him, with overseeing the installation of a £250,000 swimming pool, hot tub, tennis and gym complex at his home in Kirby Sigston, North Yorkshire, Rishi Sunak will take power without breaking a sweat.
With Sunak as the only candidate, it is likely he will go to see the King later today, or early tomorrow and be asked to form a government as Prime Minister, after formally becoming Conservative Party leader just moments ago.
How did the race to succeed Truss shake out?
Sunak will take office without a vote of the membership that repudiated him just under two months ago. This avoids what was described by many Conservative MPs as the nightmare scenario, where they overwhelmingly backed one candidate, Sunak, and the membership selected another, who had just squeaked onto the ballot, Boris Johnson.
Sunak had quickly become the front runner, as both a ‘unity’ candidate to end the factional infighting within the Conservative Party, and secondly owing to a general belief that he has credibility when it comes to handling the economy in periods of extreme uncertainty. With the money markets having played a significant role in the fall of Liz Truss, being able to command their confidence was just as important in selecting a new Prime Minister to Conservative MPs as that leader being able to command the confidence of the House of Commons.
When Penny Mordaunt announced that she would not put her name forward just before nominations closed, likely as she was just shy of the required 100 backers, the road cleared for a Sunak coronation.
What type of government will Sunak lead?
It is no exaggeration to say that the campaign for the next General Election begins today.
Expect the Government to be a public relations team with a treasury attached: for a politician with an instinctive grasp of optics and how to project an image, this will be a top concern as the Conservative Party trails Labour by around 40 points in most polls.
Rebuilding the image of the party means Sunak has a number of immediate priorities: firstly, ensuring that the positive trend in market confidence in sterling continues, and setting out his fiscal rules which will provide much needed predictability and stability in Treasury policy. It is possible that Sunak will keep to the 31st October plan for a medium-term fiscal statement: however, given the significant criticism received by his predecessor for not involving the OBR in projections, this may well be delayed in the name of ensuring that predictions made have had third-party scrutiny.
Beyond stabilising the economy, he will need to convince the British public that the Conservative Party is the right choice for a historic fifth consecutive term in office: this will require a rejuvenation of his top team, and a new policy platform to draw a distinction with the previous administrations.
Who will be part of the government?
There is a general consensus that Sunak may leave a number of Truss appointees in post – with it widely expected that at least one or two of Grant Shapps as Home Secretary, James Cleverley as Foreign Secretary, and Jeremy Hunt as Chancellor of the Exchequer will continue to provide continuity and credibility.
Beyond that, appointments will be a tight-rope act. The Conservative Party, riven by factionalism, will expect to see representatives from each pew of its broad church around the cabinet table. This will mean balancing Leave/Remain, Trussites, Sunakites, Johnsonites, and the left of the party, whilst maintaining a coherent policy platform.
Likely names to be brought in from the cold include Oliver Dowden, Dominic Raab, and Mark Harper, all key allies – but expect a genuine effort to include a wide range of figures. Former ERG chairman Steve Baker’s endorsement of Sunak as a unity candidate, which signalled to ERG members that they could back him over Johnson, may see him rewarded with his first cabinet role.
Implications for Business
With Sunak’s presence likely to calm the markets, focus can return to the usual work of government: passing laws. In the coming week, BCW will produce a guide to the likely legislative focus of the new government, but there are a number of immediate considerations:
1. The Power of Number 10
A government on a campaign footing, led by a former Chancellor is likely to centralise much of the decision-making to a core team in No. 10. This gives Sunak agility and also takes advantages of his close relationships with Treasury civil servants. Engagement with his advisers, allies, and others within his orbit will be critical. Building these relationships, and couching all policy asks in terms of its value to a government looking for re-election will be the key to success in government relations.
2. Red Wall/Blue Wall
The new administration needs to both protect its recently acquired northern stronghold, as well as its traditional voter base. Consider all your asks of government in this light: is it shoring the party up in its heartlands, or breaking new ground? If the answer is it does neither, you may find bandwidth difficult to come by, even for the cleverest proposals.
3. Laser Focus
This is a government that knows it has a window of just under 18 months to prove itself: it is likely that a technocratic leader like Sunak will want to deliver against a shopping list of policies, and will drive hard to achieve that in the parliamentary time available to him. This will mean early goal setting by this Prime Minister. Getting ideas in front of him and his allies/advisers right away will be critical.