People can be forgiven for feeling confused. In the week that UK prime minister Boris Johnson steeled the nation for a raft of controls to curb the spread of coronavirus, his chancellor Rishi Sunak declared we must learn to live without fear and that our lives “can no longer be put on hold”.
While Mr Johnson is looking to get through the winter, Mr Sunak’s latest support plan encouraged businesses to make hard decisions on jobs now. In part, this is testimony to Mr Sunak’s presentational skills. For his hastily assembled package was a partial retreat disguised as an advance, a compromise presented as orthodoxy.
The Treasury wanted to end the furlough scheme but was forced into replacing it by Mr Johnson. Nevertheless, Mr Sunak’s alternative is a first stab at weaning the nation, and party, off state support.
As the prime minister faces rebellion on his coronavirus legislation, Mr Sunak has become the darling of his party’s lockdown sceptics. As one senior colleague puts it: “He might as well be that man, there’s a vacancy for the role”. Few doubt his sincerity, but the political gains will not be lost on him.
The split can be overcooked. Mr Sunak knows this is not a simple trade-off and that, unchecked, the virus will shut down the economy regardless of government decisions. But the divergence is real. The chancellor is less frightened of the virus than his leader, who caught it and suffered badly, and more fearful for the future of the economy and public finances.
He is also closer to the party’s traditional economic orthodoxy than the philosophically promiscuous Mr Johnson. Those who advocate pushing back on restrictions and learning to live with risk now have a powerful advocate.
In this, though, Mr Sunak is running ahead of his leader and the country. A recent YouGov poll shows even Tory voters support the latest social restrictions. Mr Johnson is seeking a balanced position in which social restrictions are the price of keeping the economy, the NHS and schools functioning. In meetings with Tory MPs, Mr Sunak argued for a less dramatic response.
His successor to the furlough scheme cuts wage support from 60 to 22 per cent. Viewed from any other perspective this (and other linked measures) would be seen as astonishingly generous. Mr Sunak also pulled off the coup of winning the endorsement of both the CBI and the Trades Union Congress.
Yet there is a cold edge to the plan. If a job can or should be saved, Mr Sunak’s scheme is there to help; if not, he is telling employers to cut the rope now. Those hit hardest will be the unskilled, and those most easily replaced if and when trade picks up. The self-employed, although helped, are left more exposed. (It is unsurprising that a scheme boasting input from the twin pillars of the corporate economy, the CBI and TUC, is so careless of those not on a payroll).
Mr Sunak is dexterous enough to do more, if events show the need. But his limited and less costly package is a defining moment for his party: it sharpens the divide between economic liberals and newer Conservatives who have been taught by Mr Johnson that it is OK to love the state.
In a throwback to the Thatcher era, when declining industries were told to adapt or die, Mr Sunak is reintroducing some financial discipline to a party getting hooked on state intervention. All Tories see the need to throttle back spending, but many are more trenchant in the generality than the particular.
Mr Sunak may also have jumped too early. Mr Johnson’s instinct is currently closer to public sentiment. “We all see that this adjustment is needed but the time for it is next spring,” said one senior Tory. By then, vaccine or no, the UK will be through the winter and mass testing closer to reality.
The current package also looks incomplete. For a plan likely to crystallise painful decisions, there was no extra help for those who end up on benefits or training initiatives. Even the Conservative think-tank the Centre for Policy Studies wants more help for those out of full-time work.
For all that, Mr Sunak is injecting a dose of reality into government thinking. He is also leading Tory MPs where they think they want to go. It remains to be seen whether the party sustains this tough love as unemployment rises. A number of Tories, especially in recently captured northern seats, will have their stomach for economic orthodoxy tested.
But the tough love is coming, by spring at the latest, and it is Mr Sunak who will dispense it. For now at least, Tory MPs expect to be thanking him for it.
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