Rishi Sunak: Having gone from hero to zero – can the chancellor go back again?

One of the indices that is as volatile as Twitter’s share price is the Conservative Home cabinet league table. This monthly beauty contest of ministers is a survey of a panel of Conservative Party members that may not be strictly representative, but it accurately predicted the last leadership election and is watched obsessively by those ministers themselves. Last month, Rishi Sunak came bottom.

Until his poorly received spring statement on 23 March, and the report by my colleague Anna Isaac of his wife Akshata Murthy’s non-dom tax status on 6 April, he was usually mid-table and, because he was also so popular with the general public, well placed to succeed Boris Johnson, if anything should happen to him.

Since then, he has been tested as never before. “He’s a lot tougher than people think,” said a friend of his. “All this stuff about how he could have just gone off and spent time on a beach was wrong. If he wanted to spend time on a beach he could do it. He doesn’t need to do this; he has chosen to do it.”

The speculation that Sunak might quit politics was fed by the seven-hour delay in responding to the news on 12 April that he had been issued with a penalty notice for having turned up on time for a ministerial meeting in the cabinet room during Covid restrictions – just as people gathered around sandwiches to celebrate Boris Johnson’s birthday (there is no cake in the photographs in Sue Gray’s report).

I understand that the delay in responding to the penalty notice was because it was unexpected. Sunak, who is known for his preparation and thinking ahead, had not considered the possibility of being fined by the Metropolitan Police, and so had no contingency plan to respond to it – unlike the prime minister, who had resigned himself to the possibility, at least, even if he still hoped to avoid being fined altogether.

It is ironic that the only crime the prime minister was said by the police to have committed was one also perpetrated by the chancellor, to whom the possibility had not occurred, because the event had seemed so harmless.

While Sunak was discussing his response with his aides, it was leaked that he was considering resigning from the cabinet. My soundings suggest that this would not have been a walking away from politics, but a calculation that his ambition would be better served by being seen to do the right thing, the better to make a return to cabinet later. In the end, he decided that, on balance, his interests lay in staying at the top table – knowing that as chancellor he is the second most important decision-maker in government, which would give him chances to repair his reputation.

Call it self-serving or ruthless, it suggests a commitment to public service at the highest level that isn’t going to be deflected by a bout of temporary unpopularity. Sunak always had a keen sense, while he enjoyed the title of “the most popular politician in Britain”, that it couldn’t last, according to those around him. Yet he hoped that he would be given grudging credit for the tough decisions needed to restore the public finances after the emergency was over.

That seemed possible in focus groups of floating voters I saw at the end of last year: many of them were personally grateful to him for saving their job or their small business, while recognising that such largesse would have to be paid for eventually.

Unfortunately for Sunak, the end of one emergency faded messily into the beginning of the next, so that by the time of the spring statement this year he seemed to fall behind events for the first time. Having risen from nowhere at the start of the pandemic, with a nerveless response to an epic crisis that left voters and commentators “aghast with admiration”, in Neil Kinnock’s phrase once applied to Tony Blair, Sunak stumbled.

The spring statement – a fixed point in the Treasury calendar – came at just the wrong moment for him. It was after the first wave of fury over lockdown parties in Downing Street that seemed about to evict Johnson from No 10 until the police investigation started, postponing the reckoning. For a moment, a Conservative leadership contest was a real possibility and Sunak seemed spooked by the prospect of having to run as a tax-raising chancellor against a tax-cutting sloganiser in the form of Liz Truss, the foreign secretary. (Who had been promoted only last September, partly as a counterweight to Sunak’s status, troubling to Johnson, as the heir presumptive.)

Hence Sunak’s failure to realise the seriousness of the threat to him from inflation, only just starting to climb steeply after the Russian invasion of Ukraine on 24 February. Previously it had seemed a post-lockdown blip that would soon be over. By the time he stood to deliver the spring statement it was a spectre scaring millions of people on low incomes. He pressed ahead with his plan to half-reverse the national insurance rise he and Johnson had announced six months earlier, and to pre-announce an income-tax cut for election year, 2024. But he did nothing to add to the measures he had announced the previous month to help people with their energy bills, and so left pensioners and people on benefits with a real cut in income, as general inflation had outstripped the usual uprating.

It was a moment of clanging dissonance. As a compassionate Conservative, he had protected the low-paid and (some of) those on benefits during the pandemic with support including the £20-a-week extra on universal credit. Now he was the other sort of Conservative, obsessing about the basic rate of income tax, and suddenly his wealth became an issue for the first time.

I thought, when he was first marked for future greatness as mere chief secretary to the Treasury, chosen by Johnson to represent him in the TV debates in the 2019 election campaign, that he was too rich to make it to the top of British politics. But it didn’t seem to be a problem when he became chancellor: he was judged entirely on the measures he introduced and the clarity with which he explained them.

Now it is. His wife’s tax status has been changed, so that she now pays UK tax on her overseas income, but the damage has been done by her having benefited from non-dom status in the past. He filled someone else’s cheap car with petrol for a photo-opportunity after the spring statement, rather than one of his own four more expensive ones. And this week he said he would give the £400 grant towards his energy bill to charity and would urge others who didn’t need it to do the same. Awkward.

Yet all this may be a testing in fire through which he needs to pass to prove himself. It is surprising that he thought in January that he could fight a leadership election without disclosing his wife’s tax status to the public – it would almost certainly have emerged during the campaign – but now the wealth issue has at least been faced.

And in this week’s mini-Budget, he has rediscovered what made him popular before. He is back as a Blairite, adopting policies that are so redistributive from those on higher incomes to those on lower incomes that they outbid anything the Labour Party proposes and win the endorsement of the egalitarian Resolution Foundation.

He has put right the error of the spring statement with cash handouts that more or less match the rise in energy bills for lower-income households, and he explained what he was doing in the Commons in such tones of Bipartisan Reasonableness that both sides of the house liked it.

His popularity, both among the Tory faithful of the Con Home cabinet league table and among the general electorate, is likely to recover somewhat, even if he will never again be the wonderworker he once was.

He has realised that Truss with her tax-cutting talk is a paper tiger, and that Conservative MPs and party members don’t actually want tax cuts if they come at the price of austerity. They want the fiscal responsibility of Margaret Thatcher, who put taxes up to balance the books before she started cutting them, combined with a more compassionate approach to people on low incomes. Plus another big Keynesian stimulus to ward off the threat of recession.

What Tory members may have forgotten, too, is that Truss voted Remain. I do not believe they will vote for a Remainer as leader once they have thought about it. That is why I don’t think Jeremy Hunt will win either. I think Sunak remains well placed at the head of a small field of Leaver candidates: Nadhim Zahawi, the education secretary, and Penny Mordaunt, the international trade minister, are the only other two with any profile.

If a vacancy should arise in the next few months, Rishi Sunak is the Comeback Kid.