JEremy Hunt’s budget speech was illuminating not for what he said but for what he didn’t say. His statement failed to mention that household income will fall by the largest amount over the next two years since records began. Or that house prices will fall by a tenth. The Chancellor swept over those numbers to paint a rosy picture of a nation that has been the envy of the developed world since 2010. As the economy shrinks this year, voters have every right to ask which planet Mr. Hunt lives on. If such a celestial body existed, one would certainly call it austerity.
Mr Hunt believes that by cutting the government budget, debt and deficits, he will restore the economy’s competitiveness by cutting wages, prices and public spending. The policy is so unpopular that it has not dared speak its name for the past five years. But the Chancellor believes the public will back the Tories because the books could be balanced by 2026. Voters are being urged to prioritize an abstract idea over their wage packages and weekly purchases when both are under pressure. Good luck with that, as the pollsters might say.
However, the chancellor never misses an opportunity to make headlines. Mr Hunt has observed tax revenues, particularly those paid by households, exceeding expectations. Interest rates on government debt were also below the bean counters’ calculations. Energy subsidies were lower than forecast. Even within the government’s budgetary rules, this meant there was extra money available to spend. The Chancellor has decided to hand out cash to motorists, the armed forces and large companies. By a happy coincidence, these are the very constituencies that need mollifying to keep stubborn Tory backbenchers happy.
On a day of industrial action, Mr Hunt decided there was no money to be found to improve the wage offer to striking public sector workers. The sums he has made available to motorists this year are just short of the £6billion which experts believe would have been enough to fund an inflation-matched salary offer next year. Instead, Mr. Hunt chose drivers over nurses, doctors and teachers.
The chancellor is extending some help in the next financial year. However, the scale of the freebies tells a story about who the Conservatives value most. Before the next election, the defense budget will get almost as much money as Mr. Hunt suggests Total spending on its childcare offering, climate investments in domestic energy sources, and subsidies to keep household gas and electricity bills down.
The chancellor obviously thinks that some voters are worth more than others. The abolition of the lifetime supplement for pensions is a huge subsidy to wealthy Britons and theirs Children. A stricter sanctions regime for beneficiaries would be harmful and counterproductive. Indeed, sanctions for disabled people are likely increase economic inactivity, the very “problem” Mr. Hunt wants to solve. The temporary “100% capital grant” is similarly self-destructive: the Treasury will pay £28bn over three years while the investment generated is only £18 billion.
Post-Brexit Britain is proving to be a less productive place, requiring more net migration, contrary to what its proponents might think. The New Economics Foundation estimates £22bn in damage to public services. Mr Hunt cited in his defense the International Monetary Fund, which had said Britain was now “on the right track” after Liz Truss’ disastrous tenure. What Mr Hunt didn’t say was that the IMF’s figures showed that the shrinking UK economy was making it not only the ‘sick man of Europe’, but also of the G7 and the world’s 30 largest economies. If this happens, if the plan works, then heaven help the country if it fails.