Rishi Sunak, having made his Spring Statement, wanted an autumn follow-up – saying last month that it would be “silly” before to take further major action before then, when the energy price cap is due to rise again.
With poverty for working families hitting a record high, almost a fifth of adults having less than £100 in savings, one in five families facing fuel poverty and Britain facing the biggest drop in living standards since the 1950s, it is scarcely surprising, welcome and almost inevitable that he has been forced off course.
But while there may be some good news today for voters, I am not so sure that it will mean good news for the Conservatives – or the Chancellor. The downsides of spending money or cutting tax or both now means that those same tax cuts and spending rises can’t be made later – during the run-up to the next election.
Nor are voters, having become used to Sunak deploying his big bazooka during the pandemic, likely to thank him for firing it once again now: familiarity with spending sums so vast as to elude most people’s comprehension may not breed contempt, but it seldom brings gratitude.
And while it is right to give more help to desperate people, the timing of the statement is suspect: clearly, the Government is attempting to “move the story” on from yesterday’s report by Sue Gray. Which provokes the question: are these measures coherent – or opportunistic?
Confidence that they will be the first is undermined by the weak position of the Chancellor in the wake of the non-dom controversy – and by him having to return to the Commons within only a few months of his last major statement. And he is worse placed to resist the demands of a Prime Minister whose economic instincts are different from his.
Jack Sunak would eat no fat, and his boss would eat no lean. It would be unfair to claim that the Chancellor has no interest in growth: his recent Mais lecture was preoccupied by it. But there is a clash within the Government and elsewhere about the main economic problem facing Britain.
To the Treasury, rising prices are enemy number one. And so it leans towards lower borrowing and tax rises: it is preoccupied by further interest rises that could intensify an economic downturn. To its critics, low growth is our main foe and, with the deficit lower than was forecast, the Treasury is choking off growth through unnecessarily high taxes.
Johnson’s instincts are to cut tax, spend, borrow if necessary, whack up infrastucture, and “eat, drink and be merry, for tomorrow we die”. It has been briefed that Sunak will splash out another £10 billion today. That would be a relatively small proportion of the £90 billion or so by which the deficit undershot the Treasury forecast.
So, then – five sets of questions for today.
- To what degree will the Chancellor target his measures on those most in need? Crudely speaking, what will be the trade off between Universal Credit rises and tax cuts (if any)? If the latter happen, will they be concentrated on workers and business or the retired?
- How much of this new spending will he seek to find from new windfall taxes and how much by relaxing his plans for deficit reduction and debt repayment…?
- …And so where will he settle on the relative threats that rising prices and low growth pose to the economy and our future? Will the Treasury shift its position?
- Will the statement be relatively narrow or broad? The broader it is, the more of a Spring Statement or Budget-type event it will be. And the more problematic for Sunak it will become if he is forced to make further such statements before the Budget.
- If the statement is relatively broad, what will he have to say about supply side reform, faster growth and borrowing to invest in infrastructure, science and skills?
In sum, to what extent will he present a clear plan projected by a clear message? My starter for ten is “help hard-working people and go for more growth”.
I’m sure that the Chancellor, David Canzini, Isaac Levido and so on can do better than that. But in order to do better, they need to say something.