WHEN an opposition politician complains a shiny new Government policy should’ve happened sooner, you know they’re in trouble.
It means they agree with it, wish they’d done it, think it a thoroughly good thing – but would rather die, or be taken apart by Emily Maitlis, than admit it.
There’s been a lot of harrumphing like that following the Johnson Government’s first Budget.
There’s no denying that the new Chancellor’s turn as coronavirus crisis manager was impressive.
Would Labour have spent even more money in the budget overall? Probably, but the numbers are so gargantuan anyway that it hardly matters. When a Chancellor is pledging £600 billion over five years on infrastructure, a few more tens of billions start to look like loose change.
This is the biggest giveaway since the days of that purse-lipped Santa Claus Norman Lamont. The Tories are stealing Labour’s clothing and getting away with it, for now, because of their (questionable) reputation for prudently managing the economy.
But with so much risk and uncertainty swirling around both the global and UK economies, it could all too easily end up being the budget that comprehensively shreds that reputation.
“Dr Feelgood” he’s been called, but a huge national debt and adverse economic conditions in a year or two, when all the fiscal wiggle room has been used up, would make Rishi Sunak’s performance this week look rather different.
In Scotland, Jackson Carlaw’s Tories, who are ambitiously going all out to beat the SNP in next year’s Holyrood poll, are wreathed in smiles after years of taking pelters for austerity. They hope this bounty will allow them better to construct a narrative to repel the SNP’s case for independence (“why risk ‘indy austerity’ when you can bathe in pound coins?”)
But if that’s to work for them, then the Budget must deliver on two counts: it must ensure that those who have felt left behind in the last decade feel genuinely better off; and it must help the Scottish and UK economies cope with the challenges ahead, which means not just coronavirus but Brexit.
The danger for them is that it will not succeed on either count.
Both of these ventures, “levelling up” and Brexit, are wholly owned subsidiaries of the Tory Party. They ramped up public expectations on both and must now meet them.
The Government would like “levelling up” to be understood narrowly as improving economic opportunities in neglected areas, particularly the north of England and the Midlands, but this studiedly vague phrase has taken on a life of its own. Struggling people everywhere will expect to feel better off as a result of this colossal outpouring of cash, and quickly.
The trouble for the Tories is that rather a lot of them probably won’t. That’s because, while the Conservatives may be sincere in wanting to level up north and south, they seem less interested in levelling up poor and rich.
The cash on offer does not make up for a decade of austerity, but that’s only part of the story. The trouble is that this is not a redistributive budget.
“This Budget was an opportunity to begin to slow the rise in child poverty but there was no evidence that low incomes are the priority that they should be in any effective strategy to level up the country and boost the economy,” declared John Dickie of the Child Poverty Action Group.
He added that 700,000 children could be lifted out of poverty by 2023 if Universal Credit were restored to its 2013 value, £5 was added to child benefit and the two-child limit and benefit cap were removed, none of which Mr Sunak went anywhere near.
Unless funding is restored for universal credit and children’s benefits, warned Mr Dickie, “investment in infrastructure will have limited effects”.
That is of course a pertinent point. New railway lines don’t make people feel better off. Faster broadband doesn’t make people feel better off, not directly at least and not in the short term. HS2, a vastly expensive symbol of the Government’s commitment to the Midlands and North, is not going to benefit struggling families for quite some time, if at all. That’s without even considering the notorious tendency of government-run infrastructure projects to go wildly over budget.
The danger for the Conservatives is that, as the next election approaches, people will come to feel they have been fobbed off with bread and circuses.
This Budget also body-swerved difficult decisions on critically important issues like funding home insulation, dissuading car use and investing in social care south of the border. Those matters are devolved, but their treatment hints at something important all the same: it indicates that even during its honeymoon, this Government would rather avoid tough decisions where possible.
And that is not reassuring, given the turbulence ahead.
The time was right for Mr Sunak to ease the spending constraints and his decision to do so shows that Labour won that economic argument after all, but he still needs ballast to be able to cope with what’s to come. Britain is facing not only the economic shock of coronavirus, which could tip the economy into recession; not only growth forecasts which were weak even before the virus emerged; not only weakening pay growth due to hit household earnings by £600 a year; but the small matter of Brexit.
And it isn’t just Brexit any more, but a defiant, uncompromising hard Brexit, the Brexit of Ann Widdicombe’s ecstatic visions. By the end of the year, we may have to trade with the world on WTO terms or something very close to it. How will Mr Sunak mitigate the impact of that when Phillip Hammond’s “fiscal headroom” is a distant memory?
“Get Brexit postponed” – will that be the Prime Minister’s response? Speculation is rife that he’ll seek a year-long extension, using coronavirus as cover, and it has to be a possibility, given that the alternative is economic hardship.
Theresa May warned yesterday that the Tories have a reputation for fiscal probity that is their unique selling point. Perhaps not any more. The loss of that reputation isn’t fatal – after all, that probity has all too often meant meanness – but this budget, for all its munificence, may fail to make people feel better off. And then they will wonder why they bothered voting Tory.
Read more: Chancellor finds forest of magic money trees. Watch out, Boris!
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March 13, 2020 at 12:03PM
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Rebecca McQuillan: The dazzling Budget that is setting up the Tories to fail - HeraldScotland
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