FTI Consulting Public Affairs Snapshot – A new Prime Minister: what to expect from the Sunak government

Speaking at Conservative Campaign Headquarters this afternoon, Sunak said he was “humbled and honoured” to have the support of his parliamentary colleagues, before acknowledging the “profound economic challenge” the country faces and citing the need for “stability and unity”. He finished by pledging that it was his “utmost priority” to bring the Conservative Party and the country together, by serving with “integrity and humility” and working “day in and day out” to deliver for the British people.

Sunak’s cabinet and ministerial appointments will give an indication as to how he intends to tackle internal divisions. He will need to reward loyalists who backed him not only in recent days, but over the course of the summer leadership campaign too. He will also need to extend an olive branch to some of his former rivals, detractors and supporters of other candidates in an attempt to claim authority through unity. That said, Sunak is expected to appoint ministers along more meritocratic lines than Truss, with the need for competence apparent to all. There will be winners and losers, of course, and some of those cast to the backbenches are unlikely to be enthusiastic cheerleaders for the incoming Prime Minister.

In recent days, Sunak has received significant backing from across all wings of the Conservative Party. He has attracted support from one-nation figures such as Michael Gove and Tom Tugendhat, as well as securing the backing of former Boris Johnson loyalists from the right-wing of the party including Priti Patel and Suella Braverman. Whilst many of Truss’s backers still harbour substantial doubts about Sunak, there is widespread acceptance that the party now faces a stark choice: “unite or die”, as Sunak reportedly told MPs shortly after his election victory this afternoon.

The incoming Prime Minister’s team will have no choice but to get straight down to work and deliver a tough, but fiscally necessary, approach to government, something that has arguably not been seen since the premiership of David Cameron. Indeed, the new administration will be confronted with a dual challenge: to address the severe domestic issues left unsolved by Truss, whilst also mitigating the acute damage she managed to cause during her six-weeks in the job. That said, the approach won’t simply be a reversal of the Truss administration’s priorities. It will focus on restoring – in both reality and perception – integrity, competence and professionalism to the heart of government. Sunak’s new ministers will be instructed to show the public that the Government isn’t broken and that it can deliver on the pledges it makes.

On the key question of the economy, Sunak’s priority will be to distance himself from Truss’s cavalier approach and emphasise the need to get inflation under control. He is expected to reaffirm Jeremy Hunt’s commitment to fiscal discipline and responsible public finances, whilst pledging to grow the economy “sustainably for generations to come”. This will likely involve revisiting departmental budgets and ensuring they are delivering on their aims in the most efficient ways possible. This will see challenging questions around public spending cuts needing to be addressed and navigated with thoughtful agility. With Hunt looking likely to remain in post as Chancellor, he and Sunak will have to work closely to make sure that any changes that are required are properly communicated. With a medium-term fiscal statement coming on 31 October, their first test is not far away.

A Thatcherite to his core, Sunak is also likely to assert that cutting taxes is a question of when, not if. But that day is unlikely to be anytime soon. He will take the view that responsible tax cuts can only come once inflation has been stifled, and that such measures must never be financed by using the country’s credit card. Feeling vindicated in the wake of the disastrous mini-Budget, Sunak now has the chance to say “I told you so” to his critics and prove that his plan for Britain’s fiscal future is one that can deliver both growth and stability.

On regulation, although there are similarities that exist between many of their policy aims, Sunak will again prefer a more calculated approach than Truss – one that engages more with MPs and industry. During the summer leadership election campaign, Sunak pledged to “scrap or reform” all remaining “EU law, red tape and bureaucracy” by the end of 2024. Specifically, he said he would revise GDPR, creating in its place “the most dynamic data protection regime in the world”, repeal financial services regulations such as Solvency II to “trigger a Big Bang 2.0”, and introduce a “streamlined, single approval service for UK clinical trials”. It remains to be seen, though, how much of the deregulatory agenda has been tainted by Truss’s self-implosion, and whether it will have to be shelved in the interim in order to re-enforce the narrative of a more moderate approach to government.

Such a consideration also stems from a wider recognition that, with a limited parliamentary timetable and a General Election just two years away, there is a need to use the Conservatives’ large majority in the House of Commons to deliver a feasible policy agenda, rather than to focus on long-held aspirations that come from the party’s more right-wing backbenchers. A key example of this would be the clash between planning liberalisation and strong environmental regulation. Whilst Truss favoured the former, Sunak will favour the latter and seek a more consensus-based approach to issues like housing. Indeed, on environmental policy more generally, Sunak will likely seek to restore the Conservatives’ strong environmental credentials and is likely to feature net zero more prominently as a policy objective than Liz Truss.

As for the opposition parties, they will use this moment to try and gain as much momentum with the public as they can. Labour will continue to lead calls for an immediate general election, asserting that a “revolving door of chaos” will remain at the top of government until the country can have its say. However, following the Johnson administration’s repeal of the Fixed-term Parliaments Act the power to call an election is now the prerogative of the Prime Minister, and the likelihood that Sunak chooses to go to the polls with the Conservatives polling at historic lows is practically nil.

Another attack will focus on the general disarray brought about by recent events. On Friday, Keir Starmer compared his party’s offering to the Conservatives, saying: “What matters is what happens to this country … and there’s the contrast: more of this chaos, or stability under a Labour government.” However, whilst this would have been a potent attack against Liz Truss, a Sunak administration poses a more complex challenge for Starmer. Truss played into Labour’s portrayal of a Prime Minister out of touch, whilst Sunak is objectively a capable operator who has an aura of credibility. Truss focused on tax cuts for the wealthiest, whilst Sunak wants to uprate welfare in line with inflation. Truss designed a support scheme that capped energy costs for everybody, while Sunak has always favoured an approach that targets support to the most vulnerable.

Even so, Sunak does not come without baggage. The optics of such a wealthy Prime Minister taking over during a cost-of-living crisis are not ideal, nor is the fact he was also the recipient of a fixed penalty notice from the Metropolitan Police over Partygate. Then there are the former questions about his use of a US green card, as well as criticisms around his family’s tax affairs. Whilst Sunak certainly has legitimate retorts to such attacks, he will find himself without room for further setbacks with the public’s patience already wafer thin.

Whilst the incoming Prime Minister inherits what many consider to be a poisoned chalice, there is a widely held view among his colleagues that Sunak represents the best possible medicine the Conservative Party could hope for. He remains an undeniably formidable political operator and an impressive communicator, and he has already demonstrated, as Chancellor, his ability to meet the challenges of the moment and build support in Parliament around votes on challenging issues.

Sunak may well be the serious leader the Conservative Party – and the country – has been yearning for, but will his efforts to restore integrity, trust and professionalism arrive too late? Only time can tell. One thing, however, is without doubt: the Conservative Party had a choice this week between prioritising a triad of credibility, stability and electability, or indulging in further chaos. They chose the former, and it is now up to Sunak to reward their trust and prove they made the right decision.