We live in a world of reduced expectations. A government which does not provoke a currency crisis, break its own laws or intentionally alienate its allies is today a cause for celebration.
Rishi Sunak has by these measures had a good start. The prime minister has stabilised the UK economy, shown political courage in resolving the festering row with the EU over Northern Ireland, improved relations with France and effectively managed a bank rescue. Both voters and MPs can see a premier who looks like he knows what he is doing. Judged against recent administrations, he has performed admirably. On a longer perspective, he has simply hit the top end of low expectations.
Yet in the outside world — those not watching Jeremy Hunt deliver Wednesday’s budget — Britons are experiencing deteriorating public services, inflation and falling household incomes. This week alone sees strikes by junior doctors, teachers, rail workers, civil servants and university lecturers.
The UK may avoid a technical recession this year and inflation will fall sharply but growth is forecast to remain limp. The Office for Budget Responsibility expects real household income to fall by 5.7 per cent over the next two years — better than predicted last year but still hardly a firm foundation for re-election.
Nor is there any great reason for Conservatives to believe that the, “Oh look, we’ve found our marbles” strategy will deliver electoral success against an inoffensive opposition.
The party has only one product left to sell and it is “stable, sensible Sunak”. It has around 18 months to convince voters that he represents a safer bet than a Labour leader about whom they remain unconvinced. On that basis, Wednesday’s Budget must count as a success.
It had the hallmarks of a government that knows what it is trying to do. There was clear political discipline in its targets for action and the readiness of Sunak and his chancellor to defy bellowing from their own backbenches for financial indiscipline and tax cuts now. The prime minister is quieting dissenters and winning the battle for control of his party. There remains an irreconcilable rump of foes but most MPs can see that Sunak is their best and indeed only bet.
And while Hunt did not offer the desired tax cuts, though they will surely come before the election, he did give his party some songs to sing. He defied demands to pare back the planned rise in corporation tax but, in offering the full expensing of capital allowances, he both bet industry’s demands and offered incentives for early investment.
A substantial increase in state support for childcare costs is not only welcome in helping parents back into the labour market, it is shrewd politics. More generous childcare support was likely to be one of Labour’s major retail offers at the election. Hunt has now joyfully appropriated that plan and targeted resources on young families, a key demographic the government has been losing.
Other measures to expand the workforce, notably the removal of disincentives for the disabled, were sensible and fair, though pension reforms designed to dissuade experienced doctors from early retirement are also a spectacular bung to the wealthiest employees.
And yet for all this, as a Budget for growth there were some notable omissions. There was no effort to find funds to ease the public sector pay disputes. Ministers are still bowing to Nimby MPs blocking planning reform to generate more homes. Nuclear expansion is heralded again but with no firm timetable. There are no new investment zones below the Midlands and nothing, beyond the promise of “further details” in due course, to suggest that a nation with an aspiration to be a “science superpower” is ready to address the crying need for lab space in the Oxford Cambridge arc. The south, it seems, is not an economic priority.
But this was the disciplined Budget of a tailor cutting his coat according to his economic and political cloth. What there was, was largely welcome, but the government must rely on forces largely beyond its control to improve the economic picture before the election. Five-year debt targets are met by a whisker in the final year, the tax burden remains historically high and the continued freeze in income tax thresholds will erode household budgets.
The government is building the only case it can: that the UK’s problems were down to global shocks and, after an ill-judged comic interlude, the nation is back on track with reliable grown-ups in charge. This is the narrow path to victory, or only mild defeat, which Tory strategists have long identified.
It remains very steep but Sunak and Hunt have offered their party a reason to stay on it. Conservatives will look at this Budget and conclude the strategy is back in the hands of professionals. It throws up a challenge to those advising Labour leader Keir Starmer to avoid offering too concrete a vision of how his party would make things better. For if the next election comes down to a contest of managerialism, it is Sunak who is the known quantity.
The concern for the country is that while there was much to applaud, there was little which materially alters the UK’s lacklustre economic trajectory.
Hunt has given Tories a reason to trust the plan. An amateur hour administration looks once again like a professional outfit. But the real economy offers voters, and by extension the Tories, limited reason for optimism.
After 13 years and umpteen upheavals, their only strategy is akin to a plea for “one more season” from a football manager who has lifted his team out of the relegation zone. Fans are left to ponder whether more of the same is worse than an uncertain alternative. But sometimes there are advantages in low expectations.