Times are tough and Rishi Sunak’s leadership campaign is off to an uncertain start

The chancellor offered too little help to impress the general public, and too much for the comfort of some of his MPs, writes John Rentoul

The Treasury plan is clever, paying for about half this year’s increase in energy bills for the ‘vast majority’ of households (PRU/AFP via Getty Images)

It wasn’t the ideal launch pad for a leadership bid, but Rishi Sunak reminded his party that he has at least some of the qualities needed for high office by adapting to an adverse situation. Just when Conservative MPs were asking whether they should dump Boris Johnson and get Sunak in, the chancellor came to the Commons to deliver a big spending statement.

He was there to set out a scheme to help people deal with an alarming rise in energy prices. Considering that he is unlikely to gain much by way of thanks from the voters, who are bound to think that the government help is not enough, he did well.

The Treasury plan is clever, paying for about half this year’s increase in energy bills for the “vast majority” of households, and using a council tax rebate to target help on people on middle and lower incomes. But in a classic Treasury manoeuvre, the larger part of the cost will be recouped by a surcharge on bills over the next few years – a buy now, pay later scheme, as Rachel Reeves, the shadow chancellor, called it.

The difficulty of running for the Conservative leadership in hard economic times – underlined by the Bank of England raising interest rates while he was speaking in the Commons – is that Sunak is the frontrunner because of policies that a lot of Tory MPs don’t like. He is the most popular politician in Britain because he spent vast sums of public money saving jobs during the pandemic.

So Tory MPs who fear that Boris Johnson is now irrecoverably unpopular with too many voters naturally turn to him. But Sunak is responsible for the tax rise that Tories hate. And today’s announcement, although it quietly tried to minimise the addition to the national debt, sounded very much like a “big government” plan to intervene to protect people from the workings of the market.

Indeed, Sunak boasted that this was what he was doing: “The government is going to step in to help people manage those extra costs.” Peter Bone, the MP for Wellingborough, thought it sounded awfully like socialism – putting up taxes and giving the money back to groups chosen by the state.

The chancellor is likely to fall between two stools: the public, who are all in favour of socialism if it means cash for them, and blame him because they will still be £350 out of pocket this year; and the punk Thatcherites on the Tory back benches who think the aftermath of a pandemic is just the time to cut public spending.

Sunak tried to explain to Bone that “it is a Conservative approach to be responsible with this nation’s finances”, to get borrowing down and to fund the NHS, which is “the country’s number one priority”. Bone didn’t look convinced, but his was a lone voice. The chancellor’s hard work canvassing votes for his leadership campaign – I mean, consulting colleagues about the economic challenges facing the country and their constituencies – paid off in a series of supportive comments from the Conservative side of the Commons. Jane Hunt, the Tory MP for Loughborough, announced: “This is quite simply a superb plan.”

We can tell what the prime minister thought of it, though, by his absence. If it was a surefire winner with either Tory MPs or the general public, we know that Johnson would have insisted on announcing it himself. As it is, he knows it is necessary, but was quite happy for his neighbour to bear the brunt of responding to the harsh realities of the international market in natural gas.

The prime minister knows, when commentators say MPs are holding back from demanding a vote of no confidence because of a lack of a consensus about an alternative, that this is untrue. Sunak is the obvious alternative, but what MPs are not sure about is whether he would be a sufficient improvement on the incumbent to justify the turmoil of making the change.

Today’s performance is unlikely to change Tory MPs’ minds. They know Sunak can hold his own in the Commons, and that he is a careful and diligent policy wonk, able to devise and deliver pragmatic solutions in crises. They are just not sure what he would be like on the stump with the voters in a general election – or how effective he would be against a ruthlessly opportunistic Labour campaign.

To keep up to speed with all the latest opinions and comment, sign up to our free weekly Voices Dispatches newsletter by clicking here

His exchanges with Reeves were inconclusive. She complained that his scheme would give people inadequate protection now and that they would still have to pay for it later, which will no doubt find a ready echo in the focus groups. Her position was strong because Labour can rely on a theoretical windfall tax on oil and gas companies to produce the theoretical revenue to allow her to offer a more generous scheme than the chancellor’s.

Sunak and his cohort of supportive Tory MPs tried to explain why a windfall tax is a bad idea – it would deter investment in North Sea oil and gas – but that is a hard message to sell, especially when the other half of the government’s brain is trying to close down the carbon-based fuel industry in 28 years’ time.

It sounds like a subtle observation to suggest that Sunak doesn’t want Johnson to fall yet, because the chancellor would rather the prime minister soak up the unpopularity engendered by higher taxes and higher prices. But it can never be true, no matter how much Sunak insists to Laura Kuenssberg of the BBC that “what your viewers will want from me is to focus on my job”. If you want the top job, you have to go and get it whenever it becomes available. But not enough Tory MPs are ready to draft Sunak yet.