Katy Balls

What will Rishi Sunak do as Chancellor?

What will Rishi Sunak do as Chancellor?
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Boris Johnson ends the week with a new Chancellor in tow after Rishi Sunak replaced Sajid Javid in the role. Prior to the reshuffle, Sunak had expected to remain Chief Secretary to the Treasury. Although the Tory rising star had been tipped at one point to be given his own department to run, he had privately made it known that he wanted to stay put and help the Chancellor with next month’s Budget.

Sunak got his wish in part. He is staying in the Treasury. It’s just that he is now the one in charge. So, what does Sunak’s appointment mean for the direction of this government? As I say in iWeekend, although the speed of Sunak’s promotion took even his biggest supporters by surprise, he has long been talked up as a future chancellor. His appointment speeds up a transformation of the Tory party under Johnson – that along with several other key changes reveal the type of government Johnson wishes to lead.

Javid’s time as chancellor was marked by negative stories over his relationship with No 10 and particularly Johnson’s senior aide Dominic Cummings. The sources of tension varied but it tended to come down to a lack of trust and faith in Javid to make No 10’s vision a reality. The No 10 operation pledged big spending and an end to austerity. Javid was keen to make sure that any such spending was measured and came up with a new set of fiscal rules that would dictate the parameters of any spending. They committed the Government to running a balanced current budget, investing no more than 3 per cent of GDP and reviewing the borrowing limit if debt interest begins to rise.

When Javid said something was not possible, the judgement was sometimes met with suspicion in No. 10 over to whether it was really that the chancellor was simply unwilling to do it. So, what will happen to the Government’s spending plans now Javid is out of the way? Sunak has agreed to plans to bring No 10 and No 11 closer together. This had led to suggestions that Sunak will be even more compliant than Javid was. However, there’s reason to believe Sunak is more on No 10’s wavelength than Javid was.

Sunak is viewed as committed to No 10’s levelling-up agenda. There’s also a sense that he could choose to move away from Javid’s fiscal rules. I understand the Chancellor will at the very least consider a new plan. That could allow the Government more breathing space when it comes to its commitments. But there’s one other key takeaway from Sunak’s appointment.

All four great offices of state are now held by Brexiteers. There was a concern in No 10 that even though one-time Remainer Javid and his team said they were committed to divergence there could be concerns if no free trade agreement had been agreed by the end of the transition. As a committed Brexiteer who believes that the greater economic opportunities lie outside of the EU, Sunak will not blink if things get tricky. He will also be backed by No 10 aides equally committed to a clean Brexit.