‘Even the fiscal rules sounded a bit Brownite’
Climate activists had hoped Rishi Sunak would go green in his budget and spending review. Instead he saw red. He’s morphed from a Thatcherite darling into a big spender, presiding over the highest tax burden since Labour’s post-war Attlee government.
The chancellor has joked about cutting up the prime minister’s credit card. Now the pair of them seem to have trotted off to a cashpoint together – splurging billions on health, schools, justice and a watering down of the universal credit cut.
Close your eyes and you could half-imagine Gordon Brown boasting as Sunak did of “higher wages, higher skills… of strong public services, vibrant communities and safer streets”. Even the fiscal rules sounded a bit Brownite.
All of which leaves Brown’s current Labour colleagues in a bit of a pickle.
Of course the chancellor may well revert to Thatcherite type with tempting tax cuts closer to the election. Former treasury permanent secretary Nick Macpherson tweeted he could “confidently predict” the tax take won’t reach the forecast 36.2 per cent of the economy by 2026. “Either HMRC will fail to secure this tax yield, as it has failed in the past. Or, if it succeeds, the chancellor will feel obliged to cut taxes, consistent with the election timetable,” he said.
But for now, although the shadow chancellor Rachel Reeves quibbled about tax cuts for the banks, it’s hard to see Labour opposing many of the tax and spend decisions set out yesterday.
Instead, the clear blue water between the two main parties had a rather greenish hue.
Many had expected some climate spending announcements to tee up next week’s Cop26 UN conference in Glasgow. But there was barely a mention yesterday. Labour, however, has had plenty to say on the subject, pledging £280bn of green capital investment by 2030, the party’s biggest spending pledge by a long way.
Last month, Reeves painted a picture of an economy built on green growth: “Gigafactories to build batteries for electric vehicles, a thriving hydrogen industry, offshore wind with turbines made in Britain, planting trees and building flood defences.” Sunak clearly doesn’t share her vision.
What’s more, by cutting taxes on domestic flights and freezing fuel duty for the 12th year in a row the Treasury has stuck two fingers up at the prime minister’s efforts – aided and abetted by his father Stanley and his wife Carrie – to save the planet. That’s because while Johnson junior can blithely vow to meet his net zero commitments “without so much as a hair shirt in sight”, his chancellor doesn’t go in for the prime minister’s “cake-ism” – having his cake and eating it.
Earlier this month the treasury warned of hair shirts aplenty as it said that the government’s net zero targets may require higher taxes or public spending cuts.
Sunak’s reticence on climate change suggests perhaps a belief that while voters pay lip service to environmentalism now, once the bills for new boilers and home insulation come in, the mood could swiftly turn sour.
It clearly makes sense for Labour to keep some of its avocado-munching university-educated voters on side by talking big on the environment, and we can expect much more from them on this in the months to come. But for the Conservatives – whose coalition of Brexit-backing and red wall MPs include prominent net zero sceptics – the electoral benefits are altogether more dubious.
At any rate, Sunak is clearly hoping that on the environment, the market will provide. Why else has the government part-subsidised just 30,000 heat pumps a year for three years?
So, if the prime minister was counting on the chancellor to put ethanol-fuelled rocket boosters under Cop26, he will have been disappointed.
The gathering is already missing the Queen, not to mention the Chinese or Russian presidents. Now it will have to do without a green bazooka from the treasury too.
Cathy Newman presents Channel 4 News, weekdays, at 7pm
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