Announce targets you think that you can achieve. Then hit them. Proclaim success. Next, cut taxes (even if you’ve previously raised them). Increase spending (that’s to say, put it up by even more than you previously planned). Attack the Opposition. Then go the polls arguing that you represent safety and your opponents risk. And win.
Such is the classic general election playbook for governments. And such is the one that Isaac Levido has written for Rishi Sunal – the relative buoyancy of whose ratings provide the Conservatives’ best ground for optimism. After this Budget, that hope will burn just a little brighter.
Turn for your primer to the playbooks’s five pledges. The Government cannot be sure that its new plan will stop the small boats, though it hopes that it will at least get credit for trying. It can feel more comfortable about falling NHS waiting lists – although, like those taxes, the lists will previously have risen, driven upwards by the impact of Covid..
That leaves three economic promises: falling national debt, halving inflation and growing the economy. On debt, the Institute for Fiscal Studies claims that the “buffer of just £6.5 billion on debt is close enough to zero to make no difference”. That commitment is in place to reassure the markets as much as to woo voters.
Indeed, this Budget marks the end of the first period of the Sunak Government, in which the Prime Minister and Jeremy Hunt have sought to reassure the markets of Britain’s stability after the turbulence of the Liz Truss mini-Budget. Next comes the best bit of economic news for the Government.
The Office for Budget Responsibility now expects inflation to fall to 2.9 per cent by the end of the year. All predictions are fallible but, if it drops to that level, our economic landscape won’t be shaped by rising prices – and Hunt will believe that he has opportunities to cut taxes and raise spending, certainly in next year’s Budget, perhaps in this one’s Autumn Statement.
The OBR also expects no recession this year. That leaves one pledge outstanding: “we will grow the economy, creating better-paid jobs and opportunity right across the country”. Inflation-wise, the gods are smiling on the Government, with the Bank holding up at home (not before time) and post-Covid and war-driven pressures easing abroad.
Growth-wise, they aren’t. Sunak has no room for manoeuvre on housing. Higher Corporation Tax is one of his and Hunt’s flagship means of reassuring the markets. A key means of keeping growth going is the one that governments have tended to reach for since the New Labour era: more immigration.
In these constricted circumstances, the Chancellor has reached for every lever he can pull and button he can press that may squeeze a bit more growth out of this stuttering machine. Full expensing is the Hunt’s compensation for the Corporation Tax rise. There will 12 new investment zones.
None will be in the greater South-East, which is both a levelling up win for Michael Gove and a symptom of a hard choice – namely, to what degree should we concentrate our resources on our strengths, or try insead to redress our weaknesses? What price the Oxford-Cambridge corridor?
There are new credits for the life science and creative industry sectors, more green reliefs and spending (plus the redesignation of nuclear as “environmentally sustainable”, evidence of the policy shift to energy security), new rules and breaks for digital technology and multi-year settlements for the two Andys – Street and Burnham.
All this is welcome, especially the last bit: more localism is key to delivering more regional prosperity – and the aspirations of the provinical voters who voted for Brexit. Hunt is getting into the pre-election groove. In the manner of George Osborne packing details of road schemes in marginal seats, he peppered his speech with praise of colleagues with slim majorities.
But at the heart of the Chancellor’s speech was work. Labour shortages hold growth back, and make the economy more migration-dependent. So Hunt has turned to three groups of people: older workers, the parents of young children (usually mothers), and others not in work, perhaps because of incapacity.
He wants more of them in the labour market. That raises questions for Conservatives which range wider than the next election; wider even than the economy’s future. These include: is there a trade-off between happier families and greater prosperity? Or might the second turn out to be dependent on the first? Why is any of it the Government’s business, anyway?
I can scarcely think of an odder couple than Gordon Brown and Iain Duncan Smith, but no two politicians have done more, during the past 25 years or so, to change the way we think about work. Both agree that idleness is a giant, just as Beveridge said it was, and that work cuts it down to size – providing a means of dignity, resources for leisure, the capacity for development.
Brown stressed targets and transfers; Duncan Smith, Universal Credit – his baby – and the role of civil society, exemplified by the small charities which partner with the Centre for Social Justice, which we founded. Most would agree that the state has an interest in getting people off benefits and into work.
So it is that Hunt is offering a new range of carrots, such as scrapping Work Capability Asssessments, and sticks, such as new Universal Credit sanctions, to get and keep those not in work into work. Next come older workers. As Henry Hill has pointed out, many aren’t in the labour market because they can afford not to be.
Their situation is different (though it can be argued that, as consumers of healthcare and pensions, many are also taxpayer-reliant). Hunt has been careful in their case to rely on carrots, since these voters are the Tory electoral base. Hence the increase in the pensions Annual Allowance and the abolition of the Lifetime Allowance.
That leaves young mothers. Here, though, two Conservative beliefs come into conflict – that work provides a means of self-realisation and lifts a burden from the taxpayer, and that bonding with children is indispensable for them, and integral to a more family-friendly country in which welfare bills are lower.
Might the best means of resolving the conflict be to let people make their own choices? More Tory MPs seem to think so. The Treasury doesn’t. So Hunt has doubled down on Brown’s policy legacy, the flagship of which was his free hours plan – i.e: subsidies for providers rather than purchasers.
We have yet to see the small print – and it may be that Hunt’s offer is less extensive than seems to be the case. But all it is likely to achieve is to boost demand with sufficiently boosting supply, leaving our broken childcare system no less wounded than it is now. In no policy area have the Conservatives failed more spectacularly since 2010 than in childcare.
It may well be that the Levido plan won’t work. Whatever may happen to inflation, prices are still rising rapidly, the squeeze on people’s incomes still intense, the history of the Conservatives’ last year as it is, memories of the Truss disaster still raw, and the great Barham and Bailey and Boris circus, as I can’t help thinking of it, still selling tickets. Roll up for the greatest show on earth!
In The Once and Future King, T.H White’s King Arthur compares the way in which he tried to nurture Camelot to a man who tries to shield a candle from the wind. This evening, Sunak treads on as the gale blows just a bit less vigorously, with a hand curved round a vulnerable flame.
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