You have to hand it to him. Rishi Sunak has done the impossible and managed to deliver a “something for everyone” Budget against the odds.
The fates are once again smiling on Downing Street in the form of an upgrade to economic growth and some unexpected borrowing headroom. This has given the Chancellor some desperately needed options on spending and revived cakeism as the Government’s central political thesis.
Though there was little in the way of climate change spending or indeed any nod to their commitment to the green agenda, we managed some rapid temperature changes within the policies themselves, running the full gamut of the thermometer. This ranged from freezing fuel duty to thawing public sector pay freezes, as well as lowering air passenger duties for flights within the UK, huge reforms to alcohol duties for that all important photo op with a pint, and much more besides.
Much of the Budget had been trailed in advance and a lot of it was in fact old news brought together in a single neat package. But there were a few surprises. The reduction in the Universal Credit taper rate, from 63p in the pound to 55p, which means working people keep an extra 8p of every extra pound earned, was eye catching for its unexpected generosity. Even the progressive Tory contingent got a promise to return to the UK’s commitment to spending 0.7 per cent of GDP on foreign aid by the end of this Parliament. Not something many had believed possible.
This was far from the gloom expected in a budget by a self-proclaimed low tax, small state Tory. The extra headroom and reduced borrowing figures are down to better than expected growth and a huge new social care tax finds the Conservatives presiding over a permanently enlarged state. It’s not a problem for some, but the Chancellor was at pains to remind people that this was not his ideal state and that there would be blue flavoured jam tomorrow, a return to that fiscal hawkishness that made the Tories what they are. This perhaps marked an earlier election date in 2023 once the damage from the pandemic is behind us.
But the positivity may well be short lived. Support being offered to low-income families, whilst welcome, is a sign that things are going to get tough and further pressure on business to raise the National Living Wage suggests Britain is going to need a pay raise. Indeed, a projected four per cent inflation rate suggests it’s not just the low paid who are going to need some help.
This Budget has been described as reminiscent of the Gordon Brown years in tone, which is perfectly plausible, but it also harks back to 2010 and the concept of “the squeezed middle” who were forced to bear the financial brunt of austerity. Not employed by the public sector, and in an increasingly difficult business climate, where is the message of hope for these guys?
This cohort, theoretically, have no issue with putting more money into the system to help pupils affected by a pandemic or an NHS that needs extra resources, but if they’re going to put their money where the Government’s mouth is they’ll need some assurance that the Government is going to spend their money effectively.
And here is the classic problem for departments once the adrenaline from a budget announcement has worn off. They actually have to deliver on these promises if the electorate is going to be convinced that their concerns are being addressed.
Take for example the £5.9 billion earmarked for reducing waiting lists through improved digital infrastructure. This is no small undertaking, especially given the NHS’s history with IT projects. Do we have assurances that this money will be spent in accordance with the announcement? These headline figures on capital are often used instead to plug resource gaps in day to day spending. But waiting lists don’t lie, and if the delivery doesn’t work, this will be chalked up as a fail.
Similarly, it’s important that the £11.5bn set aside for building 180,000 affordable homes actually delivers affordable housing. It seems the Government has been trying to build the same 200,000 houses for the last 10 years. This time, the cost of living crunch will make the delivery of such funding far more critical to political success. Headline figures can only get you so far. The proof of this cakeist budget will really be in the eating.
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Salma Shah is a former Conservative special adviser for the home office, culture, business and housing departments.Internet Explorer Channel Network