Rishi Sunak and Boris Johnson might put on a united front – but the tensions between them are palpable

When Rishi Sunak and Boris Johnson were arguing over how to fund a £36bn boost for health and social care, the chancellor formed an unlikely alliance with Jeremy Hunt, whom Johnson unwisely refused to recall to the cabinet last month. He wrongly still sees Hunt as an enemy because he made it to the run-off against him in the 2019 Tory leadership contest.

Johnson would have carried on borrowing but Sunak insisted on a tax rise to draw a line under the borrowing spree during the Covid-19 pandemic and begin restoring the Tories’ credentials on fiscal responsibility. After looking at the opinion polls, Johnson opted for a straight rise in national insurance contributions. Sunak, however, spoke approvingly in private discussions about Hunt’s call for an earmarked health and social care levy. He won the argument.

The prime minister and chancellor are inevitably putting on a united front here at the Tory conference in Manchester. Sunak paid tribute to “my friend, our leader” but the tensions between them are palpable. Earlier today, Sunak dismissed as an old joke his quip that he wanted to take away Johnson’s credit card. Johnson recently joked about demoting Sunak to health secretary after he challenged Johnson to relax foreign travel restrictions. They were both half-joking, but that means they were also half-serious.

The latest uneasy truce between the pair is over tax. Tory activists are worried that the party has lost its reputation for low taxes. So both Sunak and Johnson, in private meetings with Tory MPs, are dangling the carrot of promising tax cuts before the next general election. A bit shameless when next April they will impose the health levy and a largely forgotten freeze in tax thresholds that will further squeeze pay packets. Plus a hike in corporation tax after the Tories spent years trumpeting the benefits of cutting it. Johnson wants to redraw a traditional dividing line with Labour, which would be unlikely to match proposed Tory tax cuts – though Labour will accurately point out that Johnson broke his 2019 manifesto pledge not to raise taxes.

In his conference speech, Sunak acknowledged Tory activists’ anxieties that tax rises are “un-Conservative”, insisting: “Yes, I want tax cuts. But in order to do that, our public finances must be put back on a sustainable footing.” This was a nod towards lower taxes after – rather than before – the next election, while presenting himself as the guardian of the Tories’ credentials on fiscal responsibility.

Indeed, a mischievous observer might view the chancellor’s attack on Labour as also a coded reminder to Johnson: “Unfunded pledges, reckless borrowing and soaring debt... Anyone who tells you that you can borrow more today and that tomorrow will simply sort itself out just doesn’t care about the future.”

Sunak announced an extra £500m to help people find jobs, on top of £500m to help vulnerable households this winter, which leaked out last week. But the £1bn cost is a fraction of the £6bn he should have spent on maintaining the £20-a-week uplift in universal credit, which ends on Wednesday.

This will compound the cost-of-living crisis for 6 million people. Sunak’s strategy, as he put it, is that “the only sustainable route out of poverty is a job” so he rewards workers rather than the jobless, but many of those on universal credit are in work. His budget on 27 October might tweak the work allowance so people keep a little more of every extra pound they earn but the impact would be marginal.

Sunak’s warm response from the conference hall confirmed that, despite the rise and rise of Liz Truss, the chancellor remains Johnson’s heir apparent. He gave a polished performance in a round of media interviews this morning. His position is another source of tension with Johnson, a king who doesn’t want any princes waiting in the wings. Sunak also knows that the frontrunner can become a target for their rivals and often doesn’t win the Tory leadership race.

The chancellor said today there was no “magic wand” that could wave away the supply chain problems in the real world outside the warm conference bubble. Johnson is gambling that rising wages will eventually provide an antidote to the shortages and the valid criticism they are partly caused by Brexit. But there wasn’t much in Sunak’s speech to encourage a skills revolution to help those leaving his successful furlough scheme to fill the huge number of vacancies.

The risk is that companies will hike prices to fund higher pay and this will fuel inflation, already set to remain at more than 4 per cent into the second quarter of next year.

Sunak worries more about inflation than Johnson does; it could blow his plans to rebalance the public finances off course. “Rishi is rightly worried about the extra cost of servicing government debt,” one cabinet minister told me.

As ever, Johnson is hoping it will be alright on the night. But wiser Tories here in Manchester worry that voters in the red wall might not feel better off financially by the next election. That would be a big problem for Johnson.