Rishi Sunak's tenure in charge of the economy ended last July when he resigned due to a difference of opinion with then-prime minister Boris Johnson over the economy. But during his time as chancellor, he is credited with rescuing households and businesses from the effects of the COVID pandemic lockdowns by launching an innovative and impressively timely furlough scheme. He reversed a “small state” approach to become the private sector’s temporary paymaster, spending an unprecedented £70 billion to shorten the recession.
This image of having saved the nation by minimising the loss of national output and employment during the pandemic has outshone the less successful moments of his chancellorship. This includes inadequate fraud-proofing of furlough supports, the coronavirus surge that followed his “eat out to help out” hospitality revival scheme and the discussion of his well-sheltered family finances, according to Alan Shipman, senior lecturer in economics at the Open University.
The economic supports that enabled the furlough scheme have largely fallen away. The government’s long-term borrowing costs, previously close to zero, had risen above 5% by mid-October, even with the Bank of England shoring up demand to keep bond yields down. At the same time, consumer borrowing has also risen in cost, dowsing any hope of a post-pandemic bounce-back of growth-promoting investment.
The UK now faces a worsening credit rating, which is adding to the risk premium (and therefore cost) that investors place on public debt. And consumers are unlikely to spend their way out of the expected recession. Millions are already struggling to meet rising food, fuel and mortgage bills, knowing their energy costs could jump again when the current price cap ends in April 2023.
Mr Shipman says the new government has no room for tax reduction and could be preparing for more painful cuts in public spending instead.
Benefit cuts and wages
Benefits including Universal Credit look set to decrease in real terms next April. Instead of rising at the rate of inflation, to keep pace with how quickly food and everything else is becoming more expensive, Mr Sunak's Government looks set to increase benefits by a smaller amount.
Mr Shipman said: "If Hunt sticks to the Conversatives’ election-winning 2019 pledge of no rises in income tax, VAT or national insurance, the government will probably need to deploy “stealth taxes”. This means leaving working people to be taxed more as their wages rise to keep pace with prices while a four-year freeze in tax thresholds imposed by Sunak is still in place. Social benefits could also be allowed to erode through being raised by less than inflation."
Mr Sunak pledged to uprate welfare payments with inflation in the spring while serving as Boris Johnson's Chancellor - but it remains to be seen whether he'll stick with his promise.
The ex-Chancellor faced uproar last autumn over the decision to cut the £20-per-week increase in Universal Credit that was introduced at the beginning of the Covid pandemic to help struggling families.
NHS
During his failed leadership bid against Ms Truss, Mr Sunak said he would introduce a £10 fine for people that fail to attend NHS appointments in an attempt to tackle the record backlog.
But over the summer leading unions said the policy would "likely make matters worse" and threaten the "fundamental principle that the NHS delivers free care at the point of need".
It is not clear whether the former chancellor will restore the National Insurance hike that was scrapped by Ms Truss in order to earmark funding for the health service and social care in the coming years.
Austerity 2.0
During the summer, the former cabinet minister said he wanted to take a "tough stance" on public sector pay - despite inflation running at a 40-year high and a cost-of-living crisis. Teachers, nurses and civil servants are all threatening strike action in the coming months amid the squeeze on living standards, but it is unlikely Mr Sunak will give them a rise in line with inflation.
He has also said the country must balance the books and Jeremy Hunt, the current Chancellor, has already raised the prospect of spending cuts and fears of a second era of austerity.
Liz Truss's Government had promised to unveil a medium-term fiscal plan on October 31 - Halloween - alongside long-awaited forecasts from the Office for Budget Responsibility. Mr Sunak has yet to say whether this remains the case.
Climate
Despite record temperatures and droughts, the climate crisis barely featured in the summer Tory leadership contest.
But Mr Sunak will have to act rapidly after the Intergovernmental Panel on Climate Change warned earlier this year it's "now or never" to limit global warming to 1.5C.
Mr Sunak has previously said he will stick to the legally-binding net zero target by 2050 but has said he will scrap plans to relax the ban on building new onshore wind farms in England.
It also remains to be seen whether the incoming PM will risk a political row over fracking in the way Ms Truss did.
Immigration
Rishi Sunak said he would do "whatever it takes" to make Boris Johnson's controversial Rwanda scheme work during the summer leadership race.
The plan to deport asylum seekers who arrive in Britain to non-legal routes is divisive, costly and currently on hold due to legal challenges. But it is also popular with Tory members.
In a 10-point plan to fix the "broken" immigration system, Mr Sunak said he would pursue similar partnerships with other countries.
He also vowed to let Parliament introduce a cap on refugee numbers and to tighten the definition on who qualifies for asylum, compared to the one set out in the European Convention on Human Rights.
Mr Sunak also touted the idea of housing migrants on cruise ships, which was reportedly “laughed off the table” by cabinet ministers and officials due to legal concerns and astronomical costs.
Energy bill support
The former Chancellor paved the way for Liz Truss's massive energy price guarantee with payments to households to help with spiralling fuel costs.
Ms Truss went a lot further by capping typical annual household bills at £2,500 for two years. Chancellor Jeremy Hunt has now scaled this back so it only runs until April.
Mr Sunak hasn't commented on the move but he is likely to pursue a more cautious path than Ms Truss.
He vowed to scrap VAT on energy bills in July, in a screeching U-turn as his support appeared to be ebbing away.
It is unclear whether he would stick to this promise.
Foreign aid and defence
Mr Sunak has not committed to match Liz Truss's vow to raise defence spending to 3% of GDP by 2030, an increase on the 2019 manifesto pledge of 2%.
In the summer he said the 2% target was a "floor and not a ceiling" and noted that it is set to rise to 2.5% "over time" but he refused to set "arbitrary targets".
European Research Group chairman Mark Francois told reporters that Mr Sunak did not commit to the 3% target when he addressed the group but pledged that "he would spend whatever was necessary to keep the country safe".
The target is a line in the sand for some Tories, including Defence Secretary Ben Wallace and his deputy James Heappey, who have both indicated they would quit if spending is slashed.
Brexit
Mr Sunak made his Brexiteer credentials a key part of his pitch in the previous leadership race.
He vowed to review 2,400 EU laws still on the statute book, and have initial recommendations for each one on whether it stays or goes, within 100 days.
The current Government has been pushing to rip up these rules, with a new bill to sunset these laws by the end of next year due for second reading in Parliament on Tuesday.
But some of this legislation contains crucial protections, such as equal pay for men and women, food standards and aviation safety rules.
