In a rousing peroration to his Budget speech, Rishi Sunak offered a tribute to the traditional values of the post-Thatcher Conservative Party: “”My goal is to reduce taxes, by the end of this parliament I want taxes to be going down, not up”. This, he said, “is my mission over the remainder of this Parliament”.
Like him, I too have dreams. One day, I will be on the cover of Men’s Health. I am solemnly committed to beginning the arduous work of bringing that about at some point over the next few years.
But not today. For I share with the Chancellor the understanding that the present is a time for nice things. Deliveroo it is.
This was a strange Budget. We have previously noted, based on other political calculations, that the Government might well be aiming for an election in 2023. It is also traditional for a Chancellor only two years out from a landslide win to front-load some of the pain, in order to create room for goodies and giveaways before the next vote.
Not Sunak. His speech today was packed with retail offers.
To be fair, some of these were indeed tax cuts. Taxes cut on your favourite booze. Fuel duty increases scrapped. A rapid cut in the taper for Universal Credit.
In similar vein there was a holiday on business rates for companies that improved their premises. A 50 per cent discount on rates for those in the retail, hospitality, and leisure sectors. Various tax reliefs for the cultural sector. The curious thing about this latter selection, however, is the timing. Time and again, the House was told that these windows were closing in 2023 or 2024. That is, at around the time the Government will be preparing to fight an election.
Then there was the announcement that Sunak will, as promised, restore the 0.7 per cent aid floor. Again, the timing is a puzzle. He burned a lot of capital with the bubble to cut it in the first place. Now he intends to restore it – a move which is not popular with the wider electorate – just at the time when voters will have an opportunity to make their feelings known on the subject.
But the puzzle goes deeper. These giveaways were more than matched by the traditional, spendy sort. Billions for research and development. Billions for Net Zero. Billions for the devolved administrations – the largest block grant increases since 1998, indeed. Some £4.8 billion for local government, too.
It goes on. A hike in per-pupil school spending of more than £1,500. An end to public sector wage restraint, and funding for “the Prime Minister’s historic reforms to social care”. £170m to pay childcare providers more (although not explicitly to increase the level of childcare they provide). At one point, the Rt Honourable Member for Richmond (Yorks) simply started firing off constituencies in receipt of government largesse.
Does all this mean that the Government is moving away from Conservative orthodoxy on fiscal responsibility? Heavens no! There will be a new Charter for Fiscal Responsibility, and new rules. By the end of the Parliament, public sector net debt must be falling (excluding some doubtless important caveats), and the Government must only be borrowing to actually invest, with everyday spending covered by taxation.
There’s no reason that can’t work, in theory. ‘Fiscal responsibility’ is not a synonym for ‘low taxes’. But this “Brexit Blairism”, as Bright Blue have dubbed it, is easier to reconcile with the TaxPayers’ Alliance’s claim that the UK tax burden will rise to its highest levels since Clement Attlee than with Sunak’s ritual tribute to Conservative shibboleths about low taxes.
If the Chancellor wants to square that circle, it seems very likely that the next few years will see more than just the lapsing of various tax holidays. It will also see pressure on departmental budgets (that’s ‘cuts’) in areas beyond the scope of his munificence. Especially if he sticks to his rule about not funding current spending through borrowing. Even more so if economic performance doesn’t match the rosier forecasts.
But that is a problem for tomorrow. Today, let us raise a cut-price glass of English bubbly to grand ambitions. Sunak is a future low-tax Conservative. And I, a future model.