An unprincipled budget with no long term plan for nation or economy

Allister Heath, editor of the Sunday Telegraph and one of the guardians of the true flame of Thatcherism on the Tory right, has pronounced it extinguished. Much rejoicing in heaven perhaps, where Catholic Social Teaching is the only orthodoxy allowed, but what about here in earth? Labour, and even the Guardian, seem to have missed the wake, which they should have turned into a party. Rishi Sunak’s Wednesday Budget upset the left just as much as the right, and when that happens in BBC circles, Broadcasting House executives tell themselves they must have got things about right.

Meanwhile the public seemed to like it, and added to Sir Keith Starmer’s woes by giving Boris Johnson a budget bounce in the polls, on top of the vaccination bounce he was already basking in. Both back in the world where sanity reigns, ie The Tablet, it has to be said the Sunak budget fell short. That may be because the Chancellor of the Exchequer is still a Thatcherite-by-desire, so to speak, and Boris Johnson is not and never was. So the Conservative Party cannot work out whether it believes in One Nation Toryism, with a quasi-Keynesian economic philosophy, or a full-blooded Hayekian discard of social justice in the name of freedom and private enterprise.

The Johnson pitch before Covid intervened was the promise to address the inequalities which had traditionally driven politics in the Labour industrial and post-industrial heartlands. They had turned Tory in the 2019 election in support of Brexit and dislike of Jeremy Corbyn. Johnson knew his hold on power depended on keeping their support once those two helpful factors were no longer relevant. Indeed this made him a true Tory, as finding ways to hold on to power has always been the secret of its success, even if that meant joining the Chinese Communist Party. Tory politics are traditionally about power, not vision, which is what made Margaret Thatcher an aberration.

So both the Starmer critique and the Heath critique of the Sunak budget are correct, in that it contained no long-term plan, neither for the economy nor for the nation. Increasing Corporation tax to 25 per cent and limiting NHS pay rises to one per cent were both unprincipled, that is to say pragmatic. Even Johnsonian “levelling up” was relegated to a footnote, and instead Tory-voting market towns were promised regeneration funding they hardly needed. The Corporation tax rise, it has been noted, is almost exactly what Corbyn proposed in 2019, provoking waves of Tory scorn and derision at the time.

Meanwhile in a classic Budget stealth tax, local authorities have not been given enough to live on from central funds but told they can increase local property taxes by five per cent. This will increase poverty and inequality, no doubt. It is the current Conservative substitute for a policy on the social-care sector, the neglected but all-important part of the economy where the community chooses to house its old people when they can no longer care for themselves.

It is crying out for reform, and the Tories have repeatedly promised it. Local authorities pay for some of it, and the rest is financed by the sale of houses no longer occupied by the care-homed elderly. Both issues are hot Tory potatoes; they don’t much like expanding local government, and they don’t like interfering with middle class expectations of inheritance down the generations.

So they have no idea how to proceed. Nor do they regard poverty and inequality as priorities. These are both closely related to wage levels, and levels of welfare payments. One piece of Thatcherite ideology not yet discarded is belief in the rough justice of the labour market. Sunak has raised the minimum wage by a point or two, but frozen public sector earnings for the foreseeable future – apart from the NHS one per cent which the Government has proposed to the “independent” NHS pay review board – independent only in name, as it is for the Treasury alone to decide what is “affordable”. This one per cent offer is a major political mistake which will tarnish Sunak’s reputation if he doesn’t realise it fast. Considering what they have been through in the last 12 months, NHS workers deserve a lot more.

Sunak’s reputation is also at risk for continuing to refuse to commit to maintaining the enhanced rate of universal credit once the economy starts to recover from Covid. Any Government serious about tackling poverty would not hesitate to make that commitment, and more. Otherwise he is going to be blamed for making some of the poorest people in the community £1,000 a year worse off.

Meanwhile nobody really knows what the future holds, whether for instance a return of inflation is a serious threat or not. Monetarist theory under Thatcher would say it was inevitable, and economists of that ilk don’t really understand why it hasn’t happened already. Nor is there universal agreement on whether there really is a Money Tree growing in the Downing Street back garden – whether the Bank of England can simply bail the government out by printing more bank notes, or whether the alchemic magic called quantitive easing is good, bad or indifferent. It certainly isn’t in the Thatcherite playbook. Perhaps you have to be a Chinese Communist to understand it.