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The crisis chancellor trying to save Britain from economic cataclysm

Rishi Sunak has lived a gilded life and risen rapidly in politics, but now he is grappling with a once-in-a-century crisis as the country faces recession and even depression.

 

Rishi Sunak had just 27 days to prepare his first Budget after replacing Sajid Javid as Chancellor of the Exchequer on 13 February. Faced with unprecedented challenges – Brexit, the Conservatives’ election commitment to “levelling up”, and the gathering coronavirus crisis – he unveiled the biggest fiscal stimulus package in almost three decades.

Within another week that £30bn giveaway had been swept aside, rendered utterly obsolete as coronavirus brought the British and global economies crashing down. On 17 March Sunak was forced to announce emergency measures on a scale never previously seen in peacetime, and ten times bigger than those he had announced in the budget. On 20 March, just nine days after his first Budget, he unveiled a third package of extraordinary steps to protect jobs and businesses that was, he said, “unprecedented in the history of the British state”. 

Phrases such as “baptism of fire” and “thrown in at the deep end” do not begin to describe Sunak’s predicament. At 39 he is one of the youngest and least experienced chancellors this country has ever had. Eight months ago he was just a junior housing minister. Fifteen months ago he was a back-bench MP.

Five years ago he was a hedge fund manager whose political experience was confined to volunteer work and a think tank report or two. Huge responsibility now rests on the slight shoulders of this grandson of immigrants. The survival of thousands of businesses, indeed our very way of life, now depends largely, though not exclusively, on his stewardship of the British economy over the coming months.

Sunak has many talents. He has a razor-sharp and inquiring mind. He swiftly masters briefs, and is an assured – if not sparkling – media performer. He is polite, personable and popular far beyond the bounds of the Conservative Party. He is believed to be Westminster’s richest MP, but has no airs and graces. 
Insiders say he has restored morale at the battered Treasury, earned the respect and affection of his civil servants, and brings the best out of the bright young people around him. “If you can find someone who doesn’t like him and think he’s capable of the job I’d be surprised,” a former aide told me at the time of the Budget.

But who is Rishi Sunak? 

His public image seems carefully curated. His website and social media posts are full of platitudes and pleasing photographs, but reveal little of substance. He seldom talks about himself. When he does, he tends to retell the same few stories – his debt to his industrious parents, his encyclopaedic knowledge of the Star Wars movies, his addiction to Coca-Cola, his love of Southampton football club and its legendary star forward, Matt Le Tissier. 

This much is known. Sunak’s grandparents were Punjabi Indians who arrived in this country in the 1960s after living in British colonial East Africa. His maternal grandfather worked for the Inland Revenue and was awarded an MBE.

His parents were not political, but embodied traditional Conservative values. They worked hard, prospered and bought a modern detached house in a leafy cul-de-sac in Southampton’s affluent Bassett district. They raised two sons and a daughter, of which Rishi is the eldest. His father, Yashvir, was an NHS doctor with a surgery in the Upper Shirley area of the city. His mother, Usha, ran a nearby pharmacy until she sold it in 2014. As a teenager Sunak helped her with the accounts and learned, he said, how changes in taxes and national insurance contributions affected small businesses. 

He was raised and remains a practising Hindu, and speaks basic Punjabi, but plays Norman Tebbit’s notorious “cricket test” with a totally straight bat. Interviewed last October on Nick Robinson’s BBC podcast, Political Thinking, he recalled watching England play India at Edgbaston during last year’s Cricket World Cup and feeling, “I was one of 20 people in the stadium supporting England. I had an England shirt on… I have an enormous pride in Britain.”

Of his parents he said: “Their general view was they were going to work really hard and provide a better life for their kids… Education was everything. That’s an ingrained value in my family. That’s how to provide a better life.”

They sacrificed much to send both sons to board at Winchester, one of Britain’s oldest and most expensive public schools. Initially Sunak wore second-hand uniforms and found the institution “completely intimidating”, but has also said it was an “absolutely marvellous place”. He played cricket and football, developed a love of economics, and edited a school newsletter called Quelle. He was head of Bramston’s House and head of school.

A Winchester contemporary said he was “a Mr Perfect type of guy… a bit of a goody-two-shoes” who didn’t smoke or break the rules, but a “very nice bloke” with it. He had abundant energy, self-confidence and ambition. “Even at school he was saying he was going to be prime minister one day… I don’t know how flippant or serious he was but he said it on more than one occasion.” 

In an interview with two schoolboys from his constituency Sunak revealed his equivalent of Theresa May’s youthful romp through wheat fields. He smuggled a tiny television into the school for the 1996 European football championships, cheered wildly when England scored in one game, and turned round to find a master standing in the doorway.

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At Lincoln College, Oxford, he avoided student politics, preferring the investment society. “Understanding how the economy works, understanding how businesses work, how to support them, how to help them grow – that intellectually I find incredibly fulfilling,” he has said. Having earned a First in politics, philosophy and economics, he spent three years as a junior analyst with the investment bank Goldman Sachs. He then obtained an MBA as a Fulbright Scholar at California’s Stanford University, joined a leading hedge fund called TCI, and left with several colleagues in 2009 to form another hedge fund firm, Theleme Partners, which was set up with an initial £700m in funding.

Sunak’s website biography skims over his City career, mentioning only that he “co-founded a large investment firm, working with companies from Silicon Valley to Bangalore. Then I used that experience to help small and entrepreneurial British companies grow successfully”.

His reticence could be because being a hedge fund manager is hardly a vote winner. It could also be because that was a slightly questionable period in Sunak’s career. 

In 2007 TCI launched an aggressive campaign to force the sale or break-up of the Dutch Bank ABN Ambro in order to maximise shareholder value. That led to its sale to Royal Bank of Scotland, which was major factor in RBS’s collapse during the following year’s financial crisis. While the government spent more than £45bn bailing out RBS, TCI’s 19 partners – Sunak among them – shared profits of nearly £100m from ABN Ambro’s sale. Chris Hohn, TCI’s founder, told the Financial Times that Sunak “had nothing to do with the bank investment. I led that.”

The campaign against ABN Ambro was also led by Patrick Degorce, a former French naval officer who had co-founded TCI. Degorce was subsequently implicated in the Goldcrest tax avoidance scheme. He was ordered in 2013 to repay £8m after a tribunal found that he had purchased film rights for inflated sums so he could offset the losses against tax, a decision upheld in subsequent appeal hearings. When Degorce left TCI in 2009 to found Theleme, several other TCI partners joined him, including Sunak. 

The Treasury denies that Sunak had any involvement in the Goldcrest scheme, but John McDonnell, the shadow chancellor, insists he “has questions to answer about his past activities and associations”.

Sunak grew rich through his work, but even richer through his marriage in 2009 to Akshata Murthy, whom he had met three years earlier while they were both Stanford students. Her father is Narayana Murthy, founder of the technology giant Infosys and one of India’s wealthiest man. Akshata, a fashion designer, reportedly has a 1.4 per cent stake in Infosys worth roughly £180m. 

Sunak lists just a single flat on the MPs’ Register of Interests, but he is only required to declare properties from which he makes financial gain. In addition to that flat in London’s Old Brompton Road he and his wife own a five-bedroom mews house in Kensington said to be worth nearly £7m; in his Richmond constituency they have a £1.5m Georgian mansion, replete with 12 acres of grounds and an ornamental lake, in the village of Kirby Sigston; and there is an apartment in Santa Monica, California, registered in Akshata’s name. 

Their wedding took place in the Leela Palace, a five-star hotel in Bangalore, and the several hundred guests included corporate titans, the cricket star Anil Kumble, and the Karnataka state governor. But Sunak’s philanthropic parents-in-law preach simplicity, and by the standards of India’s super-rich it was a relatively modest affair. Local gossip columnists noted that the South Indian vegetarian food was served in traditional fashion on plantain leaves, not silver plates.

Narayan Murthy approved of his son-in-law, telling his daughter in a letter: “When I met Rishi I found him to be all that you had described him to be – brilliant, handsome and, most importantly, honest. I understood why you let your heart be stolen.” 

The couple have since given Murthy two young granddaughters, Krishna and Anoushka, and the admiration appears to be mutual. After winning election to parliament for the first time Sunak cited advice his father-in-law had given him – “Live your life with integrity and try to do the right thing”, and, less seriously: “In God we trust, but everyone else needs to bring data to the table.”

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Sunak has said he was moved to enter politics by his parents’ example: “I just saw what an impact they had on the community. I thought that was incredibly inspiring.”

In 2014 he applied to be the Conservative parliamentary candidate in Hertsmere, north London, but was beaten by Oliver Dowden, David Cameron’s deputy chief of staff. He then applied for the rural constituency of Richmond, a rock-solid Tory seat that William Hague, the former foreign secretary, was relinquishing.

He was an improbable contender: a southerner with no connection to Yorkshire. He had no agricultural background, and being a Hindu did not eat beef. He was of Indian descent and Richmond was 97 per cent white (he jokes that he and his family comprise the constituency’s entire immigrant community). But Cameron was at that time seeking to reach out to the British Asian community, and it is widely believed that Sunak was shortlisted at the prompting of either Hague, a fan of Sunak’s, or Conservative Central Office. “He was 100 per cent parachuted in,” a local journalist told me.

There was already a clear front-runner – Wendy Morton, a former chair of the Richmond constituency association and local councillor. But Sunak prepared meticulously and dazzled the selection meeting that October. “He blew all the other candidates out of the water,” one local Tory said. 

It probably helped, too, that Richmond’s two previous MPs were Hague and Leon Brittan, both cabinet ministers, and that the association would have been seeking another potential heavyweight. “They wanted Rishi because he was obviously destined for greatness and immediately came over as being brilliant,” said another local journalist.

Sunak still had to win over Richmond’s somewhat sceptical voters. He drove around the constituency in a Volkswagen Golf. He visited cattle markets and milked cows. He mastered complex agricultural issues such as milk pricing. Photos were posted on Sunak’s website of him in the Dales, beside dry stone walls, outside pubs, meeting shopkeepers, watching cricket.

“Although I’m not from Yorkshire they were immensely relieved to learn I was not from Lancashire,” Sunak joked later. He had to explain to one farmer that hedge fund management did not involve cutting hedgerows. Introduced to another as Hague’s successor, the farmer allegedly replied: “Ah yes, Haguey. I like him. Good bloke. Bit pale though. This one has a better tan.”


Testing times: Rishi Sunak observes testing for respiratory viruses, Leeds General Infirmary, 20 March

 

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Sunak was duly elected to parliament in May 2015 with a majority of 19,550, his billionaire father-in-law having flown from India to deliver leaflets. The “Maharajah of the Yorkshire Dales”, as Sunak was dubbed, swore his MP’s oath of allegiance on the Hindu Bhagavad Gita. He used his maiden speech to lavish praise on Hague, his constituency and the UK for the welcome it gave his family. He showed his Punjabi grandfather around the House of Commons, and the old man had tears in his eyes. Thereafter the ambitious young MP worked hard, ticked all the right boxes and avoided controversy.

He secured a place on the environment, food and rural affairs select committee. He wrote reports for right-leaning think tanks – on Britain’s ethnic minorities, the virtues of free ports, and how retail bonds could help small businesses. In his five years as an MP he has not once voted against the government. 

He built a strong support team in his constituency, and posted accounts of his activities whose banality was matched only by that of his weekly column for the Darlington and Stockton Times. “I always love visiting local schools – like Bolton-on-Swale St Mary’s Church of England Primary. Wonderful children, great staff. Altogether Outstanding…” reads a typical recent example from his Facebook account. Interestingly, he claims for staff expenses as an MP but not for travel or accommodation – perhaps because he is too wealthy to need to. 

In 2016, Cameron called the referendum on Britain’s European Union membership and Sunak was forced to choose sides. It was “by far the toughest decision I have had to make”, he said after opting for Leave.  

He approached the issue analytically not ideologically, and with a long-term perspective, he explained to the BBC’s Nick Robinson. The pace of change around the world was accelerating. Britain would be able to respond better outside the bureaucratic EU. “Having the flexibility and nimbleness to react and adapt to that changing environment would be of enormous value to us,” he said. 

His supporters insist he is a true Brexiteer, albeit a pragmatic not an ideological one. They cite his decision as an example of political courage and independence because it meant breaking with his patrons – Cameron, Hague and the then chancellor, George Osborne. 
But there is an alternative reading. He would have had a good idea of what his constituency thought. “Undoubtedly, he would have known it was going to go for ‘Leave’,” a local journalist said. He also announced his decision just three days after Boris Johnson declared his support for Brexit, and four days after Michael Gove. A trained analyst, he would have realised that the odds on the country voting to leave had risen sharply.

“I was pretty shocked when he voted for Brexit,” a former Conservative MP told me. “I don’t think he really believed it. I thought it was a political gamble to please his constituents, and a good way to get to the top of the party.” 

The former MP added that Sunak had had second thoughts after declaring for Leave, fretting that it would damage his political career if Remain won. He need not have worried. Britain, and Richmond, voted to leave, and Sunak was re-elected in the 2017 general election with a 23,000 majority. Last December he won a 27,000 majority – bigger than Hague or Brittan ever managed. 

In January 2018 Theresa May made Sunak a junior minister in the Ministry of Housing, Communities and Local Government under then housing secretary Sajid Javid. “He immediately stood out as very smart, very capable and on top of his brief,” said a source who worked closely with him. He was tough but pleasant, assured without being arrogant.

The same source described how Sunak pushed through the “unglamorous” Changing Places initiative to create specially adapted toilets for the severely disabled in public places. It was an initiative that “went to the core of his Conservatism – people who can help themselves should, and those who can’t we need to look after… There were no votes in it, no backslaps from No 10, but he grabbed it with both hands. He decided it was the right thing to do. He was just so enthusiastic about it.” 

Sunak voted three times for May’s doomed Brexit deal, and faced another fateful decision after she resigned last summer. He was close to two of the contenders to replace her – his former boss Javid, who had moved to the Home Office, and Michael Gove, whom he had supported in the 2016 leadership election. Both courted him, but he chose to back Johnson despite his hard-line promise to “crash” Britain out of the EU without a deal if necessary.

“I was even more shocked when he came out for a showman like Boris in the leadership campaign,” said the former Tory MP, who expressed disappointment that Sunak had not made “a more principled decision” and opted for a relatively moderate Brexiteer such as Javid or Jeremy Hunt.

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Sunak would have chosen Johnson for practical reasons, a source familiar with his thinking told me. The Tories were in a desperate situation, with parliament deadlocked over Brexit, the party split and public support evaporating. “What Rishi will have done is weigh it up. Who’s most likely to deliver Brexit? Who’s most likely to win? Who’s going to be the best prime minister?” 

Sunak was one of the first young, mainstream Tory MPs to back Johnson. He and two colleagues, Robert Jenrick and Oliver Dowden, wrote a gushing article in the Times on 5 June 2019 arguing that only Johnson had the mettle and charisma to deliver Brexit then galvanise the nation, and that he was “a proven winner”.

“It was a hugely significant moment. That’s where the momentum really began to build for Boris,” said Ameet Gill, Cameron’s former director of strategy in No 10 and a friend of Sunak’s. 

A lot of MPs, particularly young ones, would have thought “if he’s good enough for Rishi perhaps I should take another look”, another senior Conservative told me. 

Sunak’s support did not end there. He went on air to defend Johnson against charges that he was avoiding scrutiny, though he manifestly was. When Johnson won, he made Sunak Chief Secretary to the Treasury in July last year.
In last December’s general election Sunak again proved invaluable to the prime minister. While other ministers were hidden away, Sunak did the morning broadcast round and campaigned hard in northern “Red Wall” constituencies. He was always reliably on-message. “He’s never committed an act of news,” a former special adviser said admiringly.

Sunak twice appeared as Johnson’s proxy in televised debates on BBC and ITV. Though insiders said he was extremely nervous before those debates he performed creditably, dutifully trotting out the distinctly dubious party line in almost identical words on each occasion: that Britain needed to “Get Brexit done” so that it was no longer “stuck in neutral” and could focus on the NHS and all the other things voters are concerned about.

At the end of the BBC’s debate he and Rebecca Long-Bailey, his Labour adversary, gave each other a little-noticed hug, which says something about his general affability.

It is hard to believe a fundamentally decent man like Sunak has not had qualms about Johnson’s conduct as Prime Minister – the prorogation of parliament, the expulsion of senior Tory Remainers, the inflammatory language, the attacks on the judiciary and BBC, the bullying culture over which he and his chief strategist, Dominic Cummings, have presided. But he has kept his counsel. 

If he is concerned about the way Brexit is turning out – the acrimonious negotiations, the danger of no deal, the threat to Britain’s unity, the ugly social divisions, the poisoned national discourse – he has not shown it. 

A moderate former Conservative MP told me: “He’s incredibly loyal and aware of the party line, and not interested in the sort of agonising I and my friends would engage in when we stood in the lobby and wondered if we had voted the right way.

“People who worked on the Leave campaign said he was absolutely Dominic Cummings’ go-to person as somebody who could be entirely trusted to deliver whatever message Cummings gave him, that he was absolutely the most reliable cipher and there was no risk at all he would go off-message or have an independent thought. You would not expect him to now.”

Javid, who was Sunak’s boss again at the Treasury, fell foul of Johnson and Cummings because he resisted their pressure to ease his fiscal rules on reducing national debt and to ramp up public spending. He resigned as chancellor because, he declared, “no self-respecting minister” would accept Johnson’s demand that his Treasury advisers be replaced by Downing Street’s. Within hours his deputy had done just that. As Sunak returned from No 10 to the Treasury, a reporter shouted: “Are you the Prime Minister’s puppet?”

Sunak’s supporters argue that he would have accepted the merger of the Treasury and Downing Street operations in part because he is very close to Liam Booth-Smith, an adviser who is head of the new joint unit. And they firmly reject the idea that he is Johnson’s puppet. “I don’t think he would do something he thought was wrong just to curry favour. I just don’t think that’s in him,” said Ameet Gill. 

“He will be very robust in private but totally loyal in public… He’s not going to be pushed around by anybody. People shouldn’t think he’s not got a core of steel,” said a former aide. 

He could prove that by demanding that Johnson announce a step whose necessity is becoming daily more obvious: requesting an extension of the Brexit transition period to spare British industry yet more trauma.

But, Brexit apart, the economic cataclysm that is coronavirus has rendered the issue of the Chancellor’s independence irrelevant. Javid’s fiscal rules already belong to another age. As Sunak has said: “This is not a time for ideology and orthodoxy.”

The challenge now is not how to pay for 40 new hospitals, 50,000 extra nurses and an additional 20,000 police officers – as per the Conservatives’ manifesto pledges – or how to divert more funds to the North and Midlands. It is how to prevent what will inevitably be a deep recession turning into a depression; how to prevent hundreds of thousands of businesses from collapsing and millions from losing their jobs; and how to ensure that when the coronavirus pandemic passes there is an economy left to revive.

There is a long, long way to go, but Rishi Sunak has made a good start.

Despite his relative youth and inexperience, he has projected confidence, authority and compassion. At times he has outshone Johnson. It is not hard to imagine that he could one day become Britain’s first ethnic minority prime minister. 

Martin Fletcher is a New Statesman contributing writer and a former foreign editor of the Times

This article appears in the 25 March 2020 issue of the New Statesman, The crisis chancellor