Opening his Budget statement, the Chancellor of the Exchequer, Jeremy Hunt, adopted an upbeat and optimistic tone, telling detractors the UK economy was “proving the doubters wrong” and proving more resilient than expected. After the turmoil and inflationary pressures of the last three years caused by Covid and the war in Ukraine – not to mention the infamous ‘mini-Budget’ of his predecessor which wreaked havoc on the economy – Hunt will hope his calm and somber manner will be interpreted as a return to “sensible politics”.
Seeing Hunt – a political figure who came of age in the 2010-2015 coalition – at the dispatch box, you could be forgiven for thinking this Budget marked the end of an era of turbulence brought by the Johnson and Truss premierships and heralded a return to the managerialism of the Cameron and Osbourne years. The inclusion of forecasts from the Office of Budget Responsibility, a body established by George Osbourne, helped to project this image. Indeed, the forecasts will have made pleasant reading for the Treasury, having concluded the UK will no longer enter a technical recession this year and will return to growth in 2024; in addition, it forecast the UK Government will exceed its target to halve inflation this year, predicting a fall to 2.9% in December, down from 10.4% at the time of writing. But the Chancellor’s critics on the left might have reason to warn of one other spectre from the early 2010s lurking in the House of Commons – austerity.
Hunt’s message to the electorate is simple: trust me to turn this ship around and the good times are just around the corner. It might be a stretch to say the feel-good factor is back but there are some measures in this Budget which will raise a smile in some quarters. Abolishing the lifetime allowance on pensions is a huge win for those fortunate enough to have very large pension pots.
The other flagship announcement, the extension of 30 hours of free childcare to cover children below the age of three during term time, might help to ease some of the pressure on working families and begin to address the more than 1,000,000 unfilled vacancies in the UK job market. The possible election of Humza Yousaf as the next First Minister could well see a similar policy enacted in Scotland. The extension of the energy price guarantee until June will be a relief to millions of households while the freeze on fuel duty will keep motorists happy. Corporation tax will rise as planned but there are breaks in the form of “capital expensing” for businesses who plan to invest in IT equipment, plant or machinery. Elsewhere, the Government renewed its commitment to nuclear energy, pledged £20bn to support the development of carbon, capture and storage, and announced the creation of 12 new “investment zones” modelled on London’s Canary Wharf – with one of these new zones to be based in Scotland.
Jeremy Hunt and Rishi Sunak will hope these modest announcements are interpreted as the reflections of a serious government, taking its first few careful steps on the road to economic recovery, rebuilding business confidence and reassuring the markets in the process. The broad welcome the Budget received in business circles seems to justify that approach. But as The Guardian argued in its editorial, what is most striking about this Budget is what it left out. There was very little detail on spending for health and social care or pay offers for striking public sector workers. Nor did the Chancellor address the expected fall in disposable income resulting in the worst sustained drop in living standards since records began. Analysis from the New Economics Foundation claimed the statement would lead to a further £21.6bn in unannounced cuts to public services, giving Labour ammunition to frame this as an austerity Budget and a giveaway to the wealthiest.
Hunt is banking on voters’ responding well to a Government which shows it can balance the books. The combined efforts of the Chancellor and Prime Minister to project an image of calm competence has so far failed to shift public opinion, according to the latest polls which still give Labour a healthy lead. If the Chancellor’s growth plan can reverse falling living standards and increase disposable income the electorate might just be willing to give the Conservatives another go. The challenge he faces is doing so before the next election in 2024 and when scandal still courts prominent members of the party – for that see Boris Johnson, Nadhim Zahawi and others. Time is running out.