Sunak takes his tanks to Labour’s lawn

For a government buffeted from all directions – the pandemic, supply chain issues, a fuel and energy crisis – this was the Budget of a Chancellor and a Prime Minister attempting to reassert their narrative.

Perhaps most significantly, this was a Budget that firmly parked the Conservatives’ tanks on Labour’s lawn.

Reiterating that rising prices are “shared global problems, neither unique to the UK nor something we can solve on our own”, Rishi Sunak predictably made ‘levelling up’ a central plank of his Statement, providing long lists of towns and cities that will benefit from ‘levelling up fund’ investments.

It was notable that the majority of these locations are Labour seats – the announcement was as much about politics as economics. “We’re so committed to levelling up – we’re even levelling up the Opposition front bench,” crowed the Chancellor.

But the spending didn’t stop there. Government departments will see real term increases in budgets, to the tune of £150bn over this Parliament. Development spending, cut in 2020, will return to 0.7% of GDP by 2024/25. Local Government will receive a funding boost, and £11.5bn will be made available for new affordable homes.

“This Budget confirms that the Conservatives are the real party of public services,” said Sunak, to cheers from his own benches.

Sunak announced that school funding would be increased to 2010 levels in real terms – notable that this effectively sets the level at that established by the last Labour government. Indeed, many of the Chancellor’s announcements appeared to be designed to roll back the cuts driven by his predecessors in Number 11.

And perhaps that is the real quirk of this Budget; Johnson and Sunak are not so much drawing a distinction between themselves and the Labour Party of Keir Starmer, who was absent from proceedings after testing positive for COVID-19, but rather between themselves and the Conservative governments of their predecessors, Theresa May and David Cameron.

In doing so, their aim is to pull the rug out from under the feet of the current Opposition. The ballot box will measure whether they have succeeded in this.

Perhaps the most surprising announcement, with the COP26 climate summit just days away, was a cut to air passenger duty on domestic flights. “Bankers on short haul flights drinking champagne will be celebrating” said the Shadow Chancellor Rachel Reeves MP.

And then came the real politics. Sunak is a fiscally conservative chancellor whose instincts are to pursue low tax, low spending policies, minimising government involvement in the daily lives of citizens.

“Do we want to live in a country where the response to every question is: “what is the government going to do about it”?” the Chancellor began, “Or do we choose to recognise that Government has limits. That Government should have limits…”

“The moments that make life worth living aren’t created by government, aren’t announced by government, aren’t granted by government. They come from us as people… our choices… our sacrifices… our efforts… And we believe people should keep more of the rewards of those efforts….”

With that Sunak announced an 8% cut to the Universal Credit taper, which withdraws support as people work more hours.

While this measure will help far fewer people than the 5.5 million that benefited from the recently ended £20 per week Universal Credit uplift, in a stroke the Chancellor had handed a £2bn tax cut to the poorest working families.

This was a Chancellor walking the narrowest of tightropes between fiscal discipline and prudent public spending in an effort to drive recovery from the pandemic. Has he kept his balance? Only time and the economy will tell.

As for those tanks on Labour’s lawn?

Shots fired.

Written by Jamie Slavin, Associate Director, Public Affairs