DAN HODGES: Why Dishy Rishi is turning into Ruthless Rishi, the Iron Chancellor

Dishy Rishi is about to be put on furlough. ‘People have lost perspective,’ an ally of the Chancellor tells me. 

‘We’ve spent £350billion protecting the economy, but we’ve now reached the point where this isn’t even registering.

‘Someone said to him last week, ‘Why aren’t you doing anything for the theatre?’ We’ve given the theatres £1.6billion. Things are going to have to change.’

As Covid threatens to plunge Britain into a double-dip lockdown, Sunak is only too aware he cannot simply turn off the spending taps. 

But over the past few weeks, he’s become increasingly concerned that the country – and even some of his own colleagues – have started to believe there is an unlimited supply of public cash to be thrown at the coronavirus crisis.

‘We can’t chuck people to the wolves,’ a Minister explains, ‘but everyone is going to have to start to realise that over the medium term this sort of spending can’t continue. It’s not economically sustainable and it’s not politically sustainable.’

So as he prepares for a combined autumn Budget and spending review, Dishy Rishi is set to be replaced by Ruthless Rishi.

The Government will continue to provide support. But, as an ally frames it: ‘We’re going to get back to a situation where every pound we spend is going to have to be replaced somewhere else.’

To reassert fiscal prudence, Sunak had been eyeing the ‘triple lock’ on pensions introduced by David Cameron and George Osborne. But I understand Boris Johnson has baulked at unpicking such a totemic policy commitment.

So instead he will be looking for other significant – and politically explosive – savings. First there will be a major squeeze on public-sector pay.

‘It just wouldn’t be right if 16 per cent of the workforce were seeing big pay increases just at the time when everyone else in the economy is having to tighten their belts,’ a Minister explains.

There will also be a freeze on welfare. Ministers have been working on a worst-case scenario of four million unemployed as the existing levels of support for businesses and workers begins to unwind.

Some remain hopeful that a jobs apocalypse on this scale can be averted.

But they believe that whatever final toll Covid wreaks on employment, there is no scope – or public appetite – for an uprating of individual benefits.

And I’m told there’s significant Treasury pushback on Boris’s cherished Operation Moonshot – or Operation Moonf***, as some of the more hard-bitten Treasury civil servants have started branding it.

The Chancellor is said to be supportive of investment on health measures that can get Britain safely back to work.

But he is resisting releasing huge amounts of public money on what could turn out to be nothing more than a bottomless petri dish, until tried and tested technology is available to support the programme.

Over the past few months, Sunak’s growing legion of fans on the Tory backbenches have come to view him as something of a fiscal magician – a swirl of the cape and flourish of the wand, and their constituents’ problems vanish in a puff of smoke.

But even though he is aware there will inevitably be damage to his personal brand, he is said by friends to have decided it’s time to present his colleagues with some harsh economic truths.

‘This Dishy Rishi stuff has got a bit out of hand,’ an ally concedes. ‘We’re facing a serious crisis. And were going to need to introduce a note of reality into all this.’

This chimes in part with the Chancellor’s own personal ideology. As a 15-year-old, he used to do the accounts in his mother’s pharmacy. ‘He’s been balancing the books since he was a teenager,’ says a friend.

He also spent the summer flicking through Nigel Lawson’s memoirs.

‘He tells me he’s a Lawsonian,’ one MP tells me. ‘He’s very hot on fiscal responsibility.’

An example of this is Sunak’s growing alarm at the UK’s debt-to-GDP ratio, which now exceeds 100 per cent.

‘Rishi is very, very worried about how vulnerable this makes us to even small variations in interest rates,’ a Minister reveals. ‘He thinks we’re in a very precarious position.’

But there is also a political calculation behind the Chancellor’s desire to damp down expectations that Britain can painlessly spend its way out of the Covid crisis.

Sunak is one of a growing number of Tory MPs who are becoming worried there is insufficient ‘blue water’ between them and Keir Starmer’s increasingly effective Labour Opposition.

‘There is not enough fiscal demarcation between us and Starmer,’ a Sunak supporter says. ‘We’re Conservatives. We’re going to have to draw a much clearer line between ourselves and Labour on the economy and spending.’

All of which is why Sunak has begun a major charm offensive of Tory backbenchers.

Last week saw the growing discontent at Boris’s faltering leadership explode into open revolt over the statement that No 10 was preparing to break international law to kick-start the Brexit negotiations. 

‘I don’t mind dying in the ditch over Brexit,’ one exasperated MP tells me, ‘but I do expect No 10 to at least dig me the ditch before the bullets start flying.’

Rishi Sunak is going to spend the next few weeks rolling up his sleeves, and digging in with his colleagues.

He knows that hard times are coming. That the crushing burden of Covid-19 on the UK economy can no longer be resisted by one-off loans and eye-catching restaurant discounts. And that when economic gravity finally reasserts itself, there will be a political backlash.

Some of his opponents think there is no place for him to hide.

‘We don’t think we’ll be fighting Boris at the next Election,’ one of Keir Starmer’s aides told me a few weeks ago, ‘but I’m not sure we’re going to be facing Rishi either. He’s very popular now, but let’s see how popular he is when the furlough scheme is taken away.’

But it isn’t popularity the Chancellor craves at the moment. He believes what is needed is an end to Covid-inspired fiscal complacency.

Dishy Rishi has been sent home. It’s now Ruthless Rishi who’s sitting behind the Chancellor’s desk.