STEPHEN GLOVER: Rishi Sunak's Budget wasn't just a vast splurge

STEPHEN GLOVER: Rishi Sunak’s Budget wasn’t just a vast splurge, it was a historic shift for Toryism (and yes I have a few qualms)

Rishi Sunak’s first Budget confirmed what we had suspected. Boris Johnson’s Tories are not the party of Margaret Thatcher, or even David Cameron. That is why it is no exaggeration to describe yesterday as historic.

The spectacle of this passionate, articulate, confident young Chancellor of Indian descent showed on one level how much the old Tory party has changed. But it was what he said that was truly revolutionary.

In fact, I can’t imagine any Tory chancellor of the past 50 years delivering such a speech. The truth is that many of his measures would have sat very happily in a Labour Budget.

Rishi Sunak’s first Budget confirmed what we had suspected. Boris Johnson’s Tories are not the party of Margaret Thatcher, or even David Cameron. That is why it is no exaggeration to describe yesterday as historic

Largesse

Indeed, although Mr Sunak’s intonation sometimes oddly recalled that of Tony Blair, his evangelical fervour, and his appetite for spraying money around in parts of the economy often neglected by his Tory predecessors brought back memories of former Labour Chancellor Gordon Brown.

What Mr Sunak unveiled in his speech — unquestionably a tour de force — was, according to the independent Office for Budget Responsibility, the largest sustained fiscal loosening since the Tory pre-election budget of 1992. The then Chancellor, Norman Lamont, had to claw back much of his largesse after the UK was humiliatingly driven out of the European Exchange Rate Mechanism in September of that year.

Not only is austerity (whose demise was intimated by Philip Hammond, the then Chancellor in October 2018) now dead and buried. The spending taps have been turned on so that government debt, already heading towards £2,000 billion, is expected to increase by £125 billion over the next five years.

The principles of Thatcherism — a tendency towards frugality, and a cautious attitude towards expenditure on infrastructure projects — have been replaced by Boris Johnson’s spirit of ‘Boosterism’, calculated to appeal to ex-Labour voters in the North of England who backed the Tories last December.

A massive £640 billion is planned to be spent on roads, rail and broadband by the end of this Parliament. And £30 billion has been conjured up in the coming tax year which will include all sorts of imaginative measures to mitigate the worst effects of the nightmare of coronavirus.

That sum easily exceeds the £21.1 billion that Italy — which has so far been much worse affected than the UK — has just set aside to deal with the disruption caused by the alarming spread of the contagion.

Of course, no one can say whether all of Mr Sunak’s fighting fund will be needed, or whether it will have to be augmented. But it is clear that the Government will spend whatever it takes to get this country through what Mr Sunak conceded is a ‘significant’ disruption.

How should traditional Tories, brought up to respect the disciplines and restraints of Thatcherism, respond to what can only be described as a spending splurge? Favourably, I believe, though not without a degree of caution.

Almost no one will cavil at extra spending during the coronavirus crisis on the NHS, the temporary abolition of business rates for firms with a rateable value below £51,000, and more generous provisions for sick pay, including for those on benefits.

What Mr Sunak unveiled in his speech — unquestionably a tour de force — was, according to the independent Office for Budget Responsibility, the largest sustained fiscal loosening since the Tory pre-election budget of 1992

And although a lot of detail still has to be published about how £640 billion will be spent on infrastructure projects, there is surely little doubt that rail connections in the North of England must be improved, and that new roads and bypasses in many parts of the country should be constructed.

Nor will most drivers complain about the £2.5 billion being set aside to mend the 50 million potholes (Mr Sunak’s figure) that are becoming such a menace. The £5 billion earmarked to upgrade our sluggish broadband will be widely welcomed.

Moreover, it is undoubtedly the case that Mr Sunak is in the happy position of being able to borrow money at rock-bottom rates which would have seemed incredible to most previous chancellors, whether Tory or Labour.

He also has room to manoeuvre simply because the Conservative-led coalition, followed by the Tory government of 2015, were so successful in bringing down a deficit that at one stage threatened to sink the country, though it is true that the reduction has been achieved at some social cost.

All this said, I confess to having a few qualms about the sheer scope of the extra spending — and I am sure I’m not alone. No one can feel comfortable about adding substantially to the national debt, which has almost doubled in cash terms since 2010 even while the deficit has steadily been brought down.

Euphoria

It wouldn’t take much — a prolonging of the coronavirus scourge, for example, or a disadvantageous trade deal with the European Union — for Mr Sunak’s sums to go awry. In his defence, it should be said that his assumptions about future economic growth are relatively modest.

Some Tories, when they have recovered from their post-Budget euphoria, may also reflect that, apart from a raising of the national insurance threshold which will be especially welcome to the low paid, this wasn’t a tax-cutting Budget.

With coronavirus rampant, it probably wasn’t the moment for such measures. But Britain remains a relatively heavily-taxed country. I hope Mr Johnson’s boosterish Tories won’t forget that reducing taxes is a key, and perennially popular, Conservative policy.

For the moment, though, such reservations can be held at bay. Mr Sunak’s Budget was pitched about right — and all the more impressive given that he was appointed Chancellor only a month ago after Sajid Javid (cruel to say, already almost a forgotten figure) could not accept the Prime Minister’s exiguous terms.

It was a politically clever Budget, too, inasmuch as Mr Sunak — and Mr Johnson, sitting benignly by his side — have stolen some of Labour’s clothes 

Brio

It was a politically clever Budget, too, inasmuch as Mr Sunak — and Mr Johnson, sitting benignly by his side — have stolen some of Labour’s clothes. In his response in the Commons, Jeremy Corbyn was reduced to blathering about a ‘smoke and mirrors’ Budget. In truth, a sensible Labour chancellor would have been proud to have delivered much of Mr Sunak’s speech.

The challenge for a post-Corbyn Labour Party is how to stake out a territory of its own that is distinct from the new-fashioned Tories with their eye on the North. Clinging to far-Left policies is obviously not the answer since that would make the party unelectable. Time will tell whether Boris and Rishi have shot Labour’s fox.

One of the immutable laws of Budgets is that they can look different 48 hours after the event than they do on the day. Budgets that are received with rapture sometimes appear disappointing after a few days, while seemingly dismal ones can turn out to have concealed one or two initially unnoticed treasures.

But it is hard to believe that the general impression of Mr Sunak’s first outing as Chancellor will change much as experts chew over the implications. It was the ‘People’s Budget’ Boris Johnson wanted, but Mr Sunak delivered it with brio and élan that made it his own.

Over the longer term, none of us can say how successful his Budget will turn out to be. But I suspect it will be seen as a historic shift in the modern Tory party — and Rishi Sunak will not at all have damaged his chances of one day leading it.

 

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