London Daily

Focus on the big picture.
Friday, Jul 03, 2026

From the economy to Rwanda, Rishi Sunak inherits a hefty in-tray

From the economy to Rwanda, Rishi Sunak inherits a hefty in-tray

As crises and party management problems loom, PM must act soon to try to reverse Tories’ poor poll ratings

Rishi Sunak is inheriting a hefty in-tray of issues, with several looming crises and party management problems piling up as he takes the reins as prime minister.

Given he was out of government for about three months, Sunak has not been privy to some of the day-to-day issues filling ministers’ red boxes. So he will have to act quickly if he stands a chance of reversing the Conservative party’s deteriorating poll ratings, and prove he can deliver.

Economy


Calming jittery financial markets after the chaos of the mini-budget will be high on Sunak’s list of immediate priorities, and the government will use its 17 November autumn statement to set out debt-cutting plans. Economists expect about £40bn of savings could be needed. Swingeing cuts would be politically difficult after a decade of austerity, and amid a cost of living emergency.

Whether Sunak approves an inflation-matching rise for pensions and benefits is a vital consideration.

A painted sign directs people to a food bank in Leeds as inflation hits 10.1%.


Sky-high energy bills have pushed inflation to a 40-year high, with households expected to face a further increase in living costs next spring after the government cuts short its energy price freeze.

Home Office


The Home Office must decide whether to press on with the flagship policy to send people seeking asylum to Rwanda. The deal has cost £120m, with more money yet to be paid to a country with a poor human rights record.

The threat of Rwanda has failed to stem the flow of migrants coming to the UK and overwhelming the asylum system. The government is spending about £4.7m a day housing asylum seekers in hotels.

Sunak must also negotiate with Suella Braverman over immigration policy. Despite being urged to ease access to work visas to counteract labour shortages and improve growth, Braverman is keen to limit net migration to “tens of thousands”.

Police funding and pay is also on the agenda but is expected to face further budget cuts. Crime figures continue to soar to record levels, particularly those of fraud, rape and violent crime.

Foreign policy


Sunak’s pre-eminent task is to reassure Ukraine and Washington that his leadership will maintain continuity in the British support for the removal of Russian forces from Ukraine. But he will also have to decide whether, in the interests of party unity, he has to confront Brussels or instead expand on the tentative signs that a new relationship can be established using the European Political Council.

His Hindu heritage has led to glowing coverage in the Indian media, but a trade deal might still prove difficult with the return of Braverman to the Home Office.

On China, Sunak said in the first leadership election that he was willing to close all Confucius Institutes in the country. He is also under pressure from his backbenchers over exports to Xinjiang, and the behaviour of the Chinese consulate towards protesters has inflamed the mood.

Defence


Sunak may have promised Ukraine’s Volodymyr Zelenskiy that Britain’s support for Ukraine will remain “as strong as ever” under his premiership in his first call to an overseas leader on Tuesday, but the reality is that such rhetoric is the easy part. A row over defence spending could yet loom.

Truss’s pledge to sharply increase defence spending to 3% of GDP was not yet reconfirmed by No 10 on Wednesday. Lifting defence spending to 3% from the current 2.1% would cost an extra £23bn in real terms and is not obviously necessary, given other spending priorities and wider pressures on the public finances.

Brexit and Northern Ireland


Talks to end the row over the Northern Ireland Brexit protocol are at a delicate stage and Sunak’s decision to keep the Northern Ireland team in position may help around the negotiating table.

Both the EU and the UK have said they are determined to find a negotiated solution to the dispute before Easter, the 25th anniversary of the Belfast Good Friday agreement, and Sunak will not want to trigger a trade war with the EU by taking unilateral action on Northern Ireland.

But with the DUP’s repeated warnings that they will not return to Stormont unless their red lines in Brexit talks are met, Northern Ireland has the potential to create unexpected booby traps for Sunak.

The union flag flying at half mast at Stormont after the death of Queen Elizabeth II.


If the Stormont executive is not restored by Thursday there is the prospect of an assembly election in December that could entrench polarisation and further erode the power-sharing institutions established by the 1998 Good Friday agreement.

The short-term solution is to persuade the DUP to end a boycott, which means addressing the party’s objections to the post-Brexit Irish Sea border. That complicates the UK’s negotiations with Brussels over the protocol.

Scotland


Sunak has stressed that he wants to “work constructively” with Nicola Sturgeon’s Scottish National party “on our shared challenges” – but the gulf between them is likely too great.

Both await a supreme court ruling expected next year on whether Holyrood can hold a Scottish independence referendum in 2023 without Westminster’s approval: there is no guarantee judges will agree with the UK government that Holyrood cannot do so. The UK may face that divisive vote next October after all.

Education


Headteachers in England are grappling with the sharp rise in energy costs and inflation, along with the 5% rise in teachers’ pay that is wreaking havoc with their budgets. Many heads are already warning of major cuts needed to balance their books.

Teacher retention and staff shortages are also becoming a problem, while schools and universities across the UK are expected to face industrial action this winter over pay or pensions.

Students in further and higher education also face cost of living pressures, meaning that more students may be forced to drop out. Councils fear that cuts in government spending may further imperil special needs and disability provisions already under huge stress.

Health


Sunak inherits an NHS at breaking point, and one experts agree cannot survive further cuts.

How to deliver a “stronger” NHS, as he promised, while slashing funding across Whitehall – including the Department of Health and Social Care – remains unclear.

But urgent action is required to prevent the NHS from collapsing this winter.

There are now more than 132,000 vacancies across the NHS, the number of patients on the waiting list for treatment has topped 7 million in England alone, and emergency care services are alarmingly overstretched. Underfunded social care needs more support, too.

Meanwhile, hundreds of thousands of health workers will vote over the next few weeks on whether to strike over pay. Some are really struggling with the cost of living crisis, and many are jumping ship to better paid jobs in the retail sector and elsewhere.

Environment


Sunak has a lot on his plate when it comes to the environment. First up is the promised review of the nature-friendly farming payments scheme, which was expected this week.

The dormant Cuadrilla shale gas extraction (fracking) site at Preston New Road, near Blackpool.


Sunak has confirmed that the fracking ban would remain as per the 2019 manifesto. This was an easy way for him to win plaudits from backbenchers over the divisive issue.

But he will have to decide his approach to renewables. He criticised solar farms on farmland during the summer’s leadership race but there is a train of thought that he was trying to match the more militant Truss on the issue in order to appeal to Tory voters.

Levelling up


On the face of it, Sunak’s appointment will be welcomed by those who think levelling up is key to fixing Britain’s imbalanced economy. But any enthusiasm comes from a low base: the project stalled for three years under Johnson, despite being his defining policy, and then appeared to be quietly binned by Truss,.

Michael Gove’s return to the department is promising, although tempered by the fact that its key adviser – former Bank of England chief economist Andy Haldane – has decided instead to work with Labour. The most pressing issue facing Sunak here is transport: a truly levelled-up country cannot run on Britain’s juddering, unreliable train lines.

Party unity


After a bitterly divisive leadership race over the last few months, Sunak will have to be wary of making any missteps that risk fracturing party unity too much. Doing so will probably only make the Conservatives poll rating tank further and lead to another break down of discipline in the party’s ranks.

His careful reshuffle, which kept on many of the same ministers who were in Truss and Johnson’s cabinet, was the first step, and reinstating the ban on fracking was a shrewd move designed to stop any further inter-party splintering.

Potential flashpoints Sunak will need to watch out for rebellions on include keeping international aid spending below the 0.7% of GDP target, amendments to the Northern Ireland protocol bill and any threat to the triple lock on pensions. Concerns about his leadership could also build depending on how the Conservatives do in two forthcoming byelections in the City of Chester and West Lancashire, as well as at local elections next May.

Newsletter

Related Articles

0:00
0:00
Close
Luxury bags take over the World Cup: style, status symbol, or just showing off?
UK Parliamentary Committee Launches Inquiry Into Falling Primary School Rolls and Public Service Impact
UK House of Lords Debates Electoral Commission Powers and Political Finance Reform
UK Parliament Considers Expanding Carbon Rules to International Aviation and Shipping Emissions
UK Traffic Commissioner Revokes Hampshire Haulage Operator Licence Over Regulatory Failures
UK Parliament Examines Risks in Public Contracts Awarded to Technology Firm Palantir
UK Competition Watchdog Moves Toward More Flexible Merger Rules to Support Efficiency and Growth
UK Government Seeks Approval for £1.15 Trillion Public Spending Plan Amid Scrutiny Over Department Budgets
UK Parliament Debates Sweeping National Security and Steel Industry Nationalisation Bills
UK Government Issues Formal Apology for Historic Forced Adoption Practices and Announces £4 Million Support Scheme
UK DEFENCE AND TECHNOLOGY STRATEGY TILTS TOWARD SOVEREIGN CAPABILITY AND INDUSTRIAL INVESTMENT
UK ECONOMIC POLICY OUTLOOK SHAPED BY LEADERSHIP TRANSITION AND FISCAL SIGNALS
STERLING STRENGTHENS AMID SHIFTING MONETARY OUTLOOK AND GLOBAL LABOUR MARKET SIGNALS
UK HPV VACCINATION PROGRAM NEARLY ELIMINATES CERVICAL CANCER DEATH RISK IN YOUNG WOMEN
UK EXPANDS PRISON SAFETY REVIEW AS GOVERNMENT SEEKS WIDER SYSTEM REFORM
UK DRIVES DIGITAL ASSETS STRATEGY WITH NEW STABLECOIN REGULATORY MODEL
UK TO EXPAND AI INFRASTRUCTURE THROUGH NEW EUROPEAN TECHNOLOGY PARTNERSHIP
UK LAUNCHES £15 BILLION DEFENCE TECH SHIFT TOWARD ADVANCED MILITARY SYSTEMS
CIVIL SERVICE FACES SHIFT IN POWER STRUCTURE AS REGIONAL GOVERNANCE PLANS EXPAND
WHITEHALL CONSIDERS MAJOR DECENTRALISATION PLAN WITH SECOND GOVERNMENT HUB IN MANCHESTER
UK TARGETS SERVICES EXPORT GROWTH IN TRADE TALKS WITH CHINA AMID GEOPOLITICAL TENSIONS
POLICE WATCHDOG PROBES OFFICERS OVER HANDCUFFING OF DYING TEENAGER IN HAMPSHIRE CASE
UK REGULATORS UNVEIL DUAL OVERSIGHT FRAMEWORK FOR STABLECOINS AND DIGITAL ASSETS
KEIR STARMER ANNOUNCES £15 BILLION DEFENCE TECHNOLOGY BOOST IN FINAL MAJOR POLICY MOVE
ANDY BURNHAM SIGNALS STRICT FISCAL RULES AS LABOUR LEADERSHIP RACE SHAPES MARKET OUTLOOK
POUND STERLING HITS ONE-YEAR HIGH AS BANK OF ENGLAND SIGNALS NO IMMINENT RATE CUTS
UK Government Confirms Rejected Asylum Seekers to Remain Amid Enforcement Challenges
UK-China Economic Talks Focus on Services Trade and High-Value Sectors
Buckingham Palace Revamp Plans Unveiled to Modernise Royal and Public Facilities
Two Dead After Light Aircraft Crash in Essex Field, Investigation Underway
Princess Diana Marked at 65 With UK Tributes Reflecting on Her Public Legacy
England Teachers Face New Pay Cap Rules for Academy School Leaders Under Education Reform
Dublin Security Alert Escalates After Stabbing and Reports of Transport Disruption
UK Government Faces Scrutiny Over £10,000 Asylum Living Cost Contribution Requirement
England Prepares World Cup Knockout Match Against Democratic Republic of Congo
Northern Rail Project Warned of HS2-Style Cost Risks by UK Parliamentary Committee
UK Tightens Asylum Rules as Most Rejected Applicants Expected to Remain in Country
UK Heat Health Alert Issued as Temperatures Expected to Exceed 30°C Across England
Halifax Brand to Disappear From UK High Streets in Lloyds Banking Group Restructuring
England Teachers Receive 6.6 Percent Pay Rise Over Two Years as Schools Warn of Budget Strain
UK Defence Spending Plan Sparks Budget Clash as Regional Infrastructure Projects Face Pressure
Inquest Continues in Northern Ireland into Death of Noah Donohoe in Belfast
UK Travel Industry Calls for Suspension of New EU Border System During Peak Holiday Season
Telegraph Media Group Acquired by German Media Firm in £575 Million Deal Completion
House of Commons Warns Northern Rail Upgrade Risks Repeating High-Speed 2 Cost Overruns
UK Transport Unions Warn of Summer Strike Action Over Pay Disputes
UK Health Secretary Calls Maternity Care Review a “Watershed Moment” for NHS Reform
Nigel Farage Faces Questions Over £270,000 Payment Linked to Gold Marketing Firm
Labour Government Faces Internal Division Over North Sea Oil and Gas Policy Direction
National Screening Committee Invites New Proposals for UK Health Screening Programmes
×