Another week, another front opens in the Conservative party’s multipronged campaign against facts. In Wednesday’s autumn statement, Jeremy Hunt will chart the hard economic road ahead and claim it is the path to prosperity. He will celebrate stagnation by branding it stability. He will claim credit for falling inflation, which is largely beyond the government’s control (as ministers were eager to explain when the rate was rising).
The chancellor will cut taxes in the hope of synthesising a taste of good times before the next election, making it harder to balance the books after polling day. He will boast that this is responsible fiscal management. Policies drafted with an eye on the following morning’s headlines will be advertised as a long-term plan.
In tests of sobriety, Hunt and Rishi Sunak still enjoy the benefit of not being Kwasi Kwarteng and Liz Truss, although hope of electoral gain from that distinction relies on voters not minding that the incumbents and their discredited predecessors are all from one party. It is hard to sell an antidote when the brand is better known for poison.
In policy terms, the main departure from Trussonomics is a recognition that governments should have a credible explanation for where their money is coming from before giving it away again in tax cuts.
The meagre reliefs Hunt doles out on Wednesday will be justified by “fiscal headroom” – essentially a windfall from tax revenues coming in higher than forecast (partly as a function of inflation). The chancellor will also emphasise his obedience to fiscal rules that demand debt falling as a share of GDP by 2028.
This approach is more rigorous than the Kwarteng-Truss model of harvesting future revenue from magic money trees but it is still unrealistic. The fictional element consists in assumptions about future spending constraints that look unfeasible to anyone who uses public services.
To buy himself some flex this side of an election, the chancellor has pushed the hard work of budget consolidation into the next parliament. Once commitments to the NHS, schools and defence are factored into the equation, there won’t be much left for unprotected departments. In a word: austerity.
What Sunak and Hunt describe as fiscal responsibility contains a denial and a delusion. They are pretending that public services are not already in crisis, which makes it safe to prioritise tax cuts. And they are operating from the sacred Conservative dogma that diagnoses every British malaise as an excess of government and always prescribes state shrinkage as the remedy. (This habit of projecting 2020s problems through vintage 1980s lenses leads to bad policy but also misjudges voters, who remain stubbornly attached to the idea that services should work.)
George Osborne secured political permission for austerity in the 2010s with effective but dishonest claims about budget flab that could be cut without pain. That device isn’t available now that the emaciation of the public sector is too visible.
The Office for Budget Responsibility sounded as sceptical as its non-political idiom would allow when modelling Hunt’s route to debt consolidation last year. The strain already showing on public services “presents challenges and risks to the forecast”, the OBR observed drily. In other words, you might say you’re going to make these cuts, Mr Hunt, but it isn’t going to happen.
The chancellor has no intention of making it happen. In the unlikely event that the Tories find themselves saddled with their own post-election fiscal plans, they will bin them.
But the real function of the projected spending squeeze is as a trap for Labour. If the opposition rejects the Tory trajectory, it will be accused of planning a profligate spree with public money. And if it pledges adherence to impossible targets, it will enter government with its hands bound too tight to deliver prompt satisfaction to the people who voted for it.
Keir Starmer and Rachel Reeves have so far operated a sensible policy of not walking into traps of this kind. That approach restored swing voters’ trust in Labour as stewards of the economy. But it tests the patience of an activist base that sees reversal of austerity as a moral imperative and can smell the incipient disappointment in promises of fiscal discipline.
The immediate challenge for Labour after the autumn statement is to avoid getting ensnared in a game of saying whether it would accept or reverse various specific measures. This is a balancing act that involves rejecting the premise of the question without sounding too evasive; refusing to dance to a Tory tune when the whole event is choreographed by the government.
Reeves argues that Sunak and Hunt are fiddling in the margins of fiscal policy because they have no credible strategy to restore growth. They are cycling through a back catalogue of policies that failed before and will fail again. The route to a healthy balanced budget goes by way of productivity gains from private investment facilitated by proactive industrial policy; smarter government, not a shrivelled state.
A sturdy cohort of independent economists endorse that view although it doesn’t immediately lend itself to pithy campaign slogans. It is also genuinely geared to the long term, which is a liability in an age of attention-deficit politics. Labour will inherit a colossal mess and face vast pent-up demand for palpable improvement in the state of everything.
And while it is surely too late for Sunak and Hunt to restore the Tories’ reputation for sound economic management they can still salt the earth where Labour wants to sow seeds of a sustainable recovery. They have lost the argument over budget responsibility, which leaves them only a campaign in defiance of budget reality.
Rafael Behr is a Guardian columnist
Hunt’s budget may be economic fantasy, but he’s set a political trap for Labour
7
1
22.11.2023
Another week, another front opens in the Conservative party’s multipronged campaign against facts. In Wednesday’s autumn statement, Jeremy Hunt will chart the hard economic road ahead and claim it is the path to prosperity. He will celebrate stagnation by branding it stability. He will claim credit for falling inflation, which is largely beyond the government’s control (as ministers were eager to explain when the rate was rising).
The chancellor will cut taxes in the hope of synthesising a taste of good times before the next election, making it harder to balance the books after polling day. He will boast that this is responsible fiscal management. Policies drafted with an eye on the following morning’s headlines will be advertised as a long-term plan.
In tests of sobriety, Hunt and Rishi Sunak still enjoy the benefit of not being Kwasi Kwarteng and Liz Truss, although hope of electoral gain from that distinction relies on voters not minding that the incumbents and their discredited predecessors are all from one party. It is hard to sell an antidote when the brand is better known for poison.
In policy terms, the main departure from Trussonomics is a recognition that governments should have a credible explanation for where their money is coming from before giving it away again in tax cuts.
The meagre reliefs Hunt doles out on Wednesday will be justified by “fiscal headroom” – essentially a windfall from tax........
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