For the first time in British history, the post of leader of the Conservative Party and Prime Minister is held by a Hindu and the son of immigrants of Indian origin who came to Britain in the 60s of the last century. But Rishi Sunak became prime minister not because of Indian origin, but because he managed to convince the majority in the Tory parliamentary faction that he could, firstly, rally the Conservative Party and, secondly, put things in order in the country's economy.
Failure of the Trails
The unity of the party began to crack even during the premiership of David Cameron, who resigned after seeing that the country voted for Brexit (he was against it), then the party abandoned Theresa May, also due to disagreements over Brexit and the agreement conditions for the UK's exit from the EU. Boris Johnson, who succeeded May, although he won the Brexit referendum, and then a brilliant victory for the party in the parliamentary elections, did not contribute to the unity of the party. By the end of Johnson's premiership, the split in the party began to take on a threatening character. The division was no longer on the right and left wings, not on the supporters and opponents of the UK's exit from the EU, but on the supporters of Boris Johnson and his opponents, who turned out to be the majority in the faction, which put pressure on him to resign from the post of party leader .
The economic crisis has escalated in recent years due to covid and the war in Ukraine, but the short term of Liz Truss, who announced tax cuts by increasing the already huge public debt, alerted the markets and destabilized the economy.
Who is Rishi Sunak
Of course, the election of an Indian and a Hindu as prime minister is a milestone in history. But those who only now noticed the appearance of a non-white face in British politics did not follow the political life of Great Britain well.
Anyone who just now noticed the appearance of a non-white face in British politics did not follow the political life of Great Britain well.
The Conservative Party, despite its "conservativeness", has long been breaking stereotypes. In recent years, there have been more and more descendants or immigrants from the former British colonies in the government, and these appointments are made not “according to the order” in order to comply with the so-called diversity (diversity), but for their professional qualities. Already in the government of Boris Johnson, and then in Liz Truss, high ministerial posts, for example, chancellor of the exchequer, ministers of foreign and internal affairs, were occupied by descendants of emigrants with non-white skin color.
One of the brightest and most capable politicians in the government of Boris Johnson was considered Rishi Sunak, who until his high-profile resignation was the Minister of Finance.
He is 42 years old, he was born in the English county of Southampton. His parents are Indians from the Punjab province who lived in Africa. They met in England, where they immigrated in the 60s of the last century. Rishi's father is a general practitioner, and her mother is a pharmacist who owned a small pharmacy, in which Rishi sometimes helped her. And during the holidays, he worked as a waiter at an Indian restaurant in Southampton, where his parents continued to live.
Not being rich, the parents did everything to ensure that Rishi, the eldest of three children, received a good education. They paid for his education at one of the most prestigious (and expensive) schools – Winchester College, after which Rishi entered Oxford University. One of his teachers said that, according to classmates, Rishi always wanted to be the Prime Minister from the Conservative Party, but this caused jokes and ridicule.
Even at school, Rishi wanted to be the Prime Minister of the Conservative Party, and this caused jokes and ridicule.
After working for some time after university at the investment bank Goldman Sachs, he became a partner in one of the hedge funds, and in 2006 continued his education at Stanford University, receiving an MBA (Master of Business Administration) degree from the prestigious Fulbright scholar program, which provides grants for capable university graduates.
By the age of 26, Rishi Sunak was already a successful financier and a graduate of two of the most prestigious universities in the world.
In California, he met his wife Akshata Murthy, the daughter of one of India's richest entrepreneurs, billionaire Narayan Murthy, founder and head of the IT company Infosys. This kinship nearly hindered Sunak's political career. In the spring of 2022, it became known that his wife, an Indian citizen, pays taxes on her overseas income in India, and not in the UK, where she lives, because she has a so-called non dom tax status. Akshata is a very wealthy lady, she owns about 1% of Infosys, which at the current capitalization corresponds to about £700 million.
India does not allow dual citizenship, and there is nothing criminal in the fact that Akshata did not pay taxes on foreign income, but for a British politician this is a rather serious issue. In the end, Sunak announced that his wife got rid of the status of non-dom and henceforth pays taxes in the UK. In addition, it turned out that Infosys had a representative office in Moscow, where, according to Sunak, served customers, mostly Americans. Six weeks after the invasion of Ukraine, the company closed the Moscow office, and its representatives said that Infosys donated a million dollars to help Ukrainians affected by the war. However, claims that the new prime minister is rich and does not understand the problems of the common people will always be put forward by the opposition. Rishi Sunak has insisted in recent speeches that his economic program is driven by a desire to alleviate the burden of the economic crisis and that he will try to make policies that are people-friendly.
Sunak was elected to Parliament from the Conservative Party in 2015, representing the district in North Yorkshire, and three years later received the first post in the government of Boris Johnson – the position of Parliamentary Undersecretary for Building, Communities and Local Government.
Rishi was considered one of Boris Johnson's closest supporters and publicly supported him during the 2019 election campaign. Johnson, heading the government, appointed Sunak as Deputy Secretary of the Treasury, and in 2020 made him Chancellor of the Exchequer. It was not just a gesture of gratitude for support, Sunak, who became the youngest finance minister and the first non-white to hold the post, took him as one of the most competent and educated Tories in Parliament.
Sunak was not lucky: his work as head of the Ministry of Finance fell on the period of a pandemic and lockdowns that hit the economy hard. But he managed. In the midst of the pandemic, Sunak proposed several important and successful measures to support the economy and business. The so-called fairlow scheme (which keeps workers paid during layoffs) has saved many entrepreneurs from bankruptcy, though others have criticized the government for overly harsh lockdowns that have increased public debt to unprecedented levels. In fairness, it must be said that the decision on lockdowns was made by the Prime Minister and the Minister of Health. But it was at this time that Sunak's personal relationship with Boris Johnson began to deteriorate.
After a series of scandals, on July 5 of this year, Sunak, one of the first ministers, announced his resignation from the Johnson government. This provoked the departure of other ministers and members of the administration from the government. The government crumbled before our eyes, about 50 people left it, and in the end Boris Johnson was forced to resign.
When Sunak was one of the first to announce his resignation, Johnson's government fell apart before our eyes.
Rishi Sunak's dream of becoming prime minister has almost come true. During the summer party leadership campaign, he won the largest number of votes in the parliamentary caucus, but many members of the Conservative Party, who had to choose between him and Liz Truss, could not forgive him for Johnson's "betrayal", and they considered Truss's tax cut program more in line with conservative ideology. Liz Truss proposed a traditional conservative program (tax cuts to stimulate economic growth) that appealed to members of the Conservative Party. In addition, Liz Truss tried to imitate Margaret Thatcher, an icon of conservatism, with whom memories of the “golden” years of the Tory party are associated, both in her manner and appearance. Thatcher led the Conservative government for almost 12 years! Some observers saw in Truss's plan parallels with the economic program of the Republicans in the United States and even compared it with "Reaganomics", and apparently, by ideological consonance, managed to dub Truss's program "Trassonomics".
How the premiership of Liz Truss ended, we know. After only 44 days in office, Truss was forced to resign after her tax-cutting program for "economic growth" failed. Markets have sensed that the increase in government debt that Truss's "mini-budget" would lead to would threaten to destabilize the economy definitively.
Sunak, during the first summer campaign for the election of the leader of the party, warned that the Truss program was unrealistic and dangerous, that only in a fairy tale one can cut taxes without explaining how this can be done. Sunak, a financier and realist, insisted that only by curbing inflation could one begin to cut taxes, that there was a great danger to the economy in increasing public debt. In less than two months, it became clear that in many ways, if not all, Sunak was right in warning that the Truss economic program would inevitably lead to a crisis. The Truss plan to save the country's economy really turned out to be a failure, the “mini-budget”, announced by its first finance minister Quasi Kwarteng, brought down the public debt market, the pound exchange rate and brought the pension system to the brink of collapse. Liz Truss could not repeat the words of her idol Margaret Thatcher "the lady does not give back"! She urgently had to hand over the finance minister loyal to her, appointing one of Sunak's supporters, Jeremy Hunt, to this post, who first of all canceled almost all the measures proposed by Truss.
Members of the Tory faction considered the most acceptable candidate for stabilizing the economy and restoring the unity of Rishi Sunak's party. He won the most votes, but the unexpected appearance of Boris Johnson on the stage in the last days of the election race almost mixed the cards. But at the last moment, Boris Johnson, after failing to persuade Rishi Sunak and Penny Mordaunt to step aside and give him the leadership seat, announced that he was withdrawing from the race for the sake of party unity.
For the sake of the same goal – the unity of the party – Rishi Sunak appoints the representative of the right wing, Suella Braverman, to the post of Minister of the Interior. This, according to many observers, was a mistake and led to a scandal that still drags on. Swella Braverman held the same post in the Liz Truss government but was forced to resign after she violated privacy rules and, she said, mistakenly sent several emails regarding classified migration data from her personal email.
The opposition is demanding an investigation into the circumstances of Suella Braverman's resignation from the Truss government and criticizes Rishi Sunak for bringing her into his government just six days after her resignation. Sunak has also been sharply criticized by members of his own faction, who also demand an urgent investigation into this story.
The secrecy and security scandal within the government flared up with renewed vigor after the publication on October 30 in The Mail on Sunday of sensational material that Russian intelligence had hacked Liz Truss's phone in the summer, which could have contained top-secret correspondence. At that time, Liz Truss was the Minister of Foreign Affairs.
Gas, taxes and support for Ukraine
The new prime minister will have to deal with these scandals, but meanwhile, the solution of economic problems does not brook any delay.
“I will correct the mistakes of the past government,” Rishi Sunak promised in his first speech on the steps of Downing Street. Although the emergence of a new prime minister has somewhat calmed the markets (the pound sterling against the dollar, which collapsed to record lows after the Truss “mini-budget”, has risen, the percentage of public debt service and mortgage rates have slightly decreased), markets and the population are waiting for details of what which items of expenditure will be cut and by how much.
Rishi Sunak, while still at the Treasury Treasury in the Johnson government, advocated higher taxes to cover some of the public debt and reduce the amount of payments to service this debt, formed as a result of the pandemic. He announced a 1.25% increase in payments to the national insurance fund for workers to provide for the healthcare system. In addition, he proposed to raise corporate tax from 19% to 25% from April next year. So far this plan has not been cancelled. The only concession Rishi Sunak has made is to reduce the base income tax rate by 4% before the end of the current parliament, that is, until the end of 2024, although these plans may be revised. As a Downing Street spokesman said, "The government's goal is to eventually cut taxes, but long-term plans are now being discussed with the Treasury Secretary."
The extent of the upcoming spending cuts, which both the Prime Minister and Treasury Secretary in his new government Jeremy Hunt have said will be very painful and tough, will be revealed on November 17, when the Treasury Secretary announces a new emergency budget.
The "honeymoon" of the new prime minister will apparently be short-lived.
According to the latest forecasts by independent institutions, economic growth is expected to be much lower than previously forecast, so the amount of savings due to spending cuts could be gigantic. Filling the hole in the budget may require spending cuts of at least £50bn, accordingto the BBC.
Treasury Secretary Jeremy Hunt warned Sunak that gas prices should not fall to their previous levels in the next decade, so a long energy crisis lies ahead, slowing economic growth and budget revenues. The UK now spends £180bn on energy every year. This is 10% of GDP. Before the pandemic and the war in Ukraine, this amount was £40 billion annually.
Will cuts in spending on military aid to Ukraine be affected? As Secretary of the Treasury in Johnson's government, Rishi Sunak is known to have argued on this subject with Secretary of Defense Ben Wallace. Wallace remained Minister of Defense and in the government of Rishi Sunak, and he himself during the election race and on the very first day of his premiership promised to double aid to Ukraine. His first "international" call was to Kiev , during the conversation he promised Ukraine reliable support from the UK. “Both Volodymyr Zelensky and the Ukrainian people can count on our solidarity and support. We will stand shoulder to shoulder with Ukraine,” Rishi Sunak wrote on his Twitter after the call.
Volodymyr Zelenskyy also noted that he had a "wonderful conversation" with the British Prime Minister, that they agreed to open a new chapter in relations between the two countries. Since then, support for Ukraine has been mentioned in Sunak's posts on a daily basis. Even before taking office as prime minister, Sunak promised that his first foreign visit would be to Kyiv.
So far, the new prime minister cannot afford any foreign visits: all his time and efforts will be directed to stabilizing the economy. Although at the last moment he listened to criticism from the opposition and environmentalists and decided to take part in the COP-27 climate change conference in Sharm El Sheikh.