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9 March 2024

Jeremy Hunt’s disgraceful scorched earth budget

The Tories fiscal chicanery this week embarasses them and endangers us.

By Jonn Elledge

Back in January, a reporter asked Keir Starmer about a YouGov poll showing that a majority (62%) of the public would rather the government prioritise public services than offer them tax cuts. “We’ll see what the Budget brings in early March,” he replied. “[But] I think it’s very obvious that they are trying to salt the ground… They have totally neglected the national interest.”

Far be it from me to question the great leader, but I’m not entirely sold on his choice of metaphor here. Probably the single best known example of a military force salting the earth to undermine an enemy was Rome’s conquest of Carthage in 146BC – but this was the action not of a retreating army but a victorious conqueror, which hardly seems to fit. (It also, by the by, seems to have been a Victorian invention, based on a passage from the Bible.) The technique actually used by retreating armies to wreck things for their attackers – burning crops, ripping out infrastructure and so on – is a scorched Earth policy.

If Starmer was confused about his military metaphors, though, he was bang on in his political predictions: Jeremy Hunt really did use what we all hope to God will be his last fiscal event to make life harder for Labour.

First up, that 2 pence cut in National Insurance rates, the second in just four months: put together, these make up a not insignificant cut in the average worker’s headline tax rate, a transparent attempt to look like a generous and tax cutting government in the run up to an election, in the hope the electorate won’t notice that overall tax take is still at its highest level in decades. It’s not clear it’ll work: November’s NI cut failed to move the dial, early polling suggests this one is little different, and the only people who seem to have noticed it thus far are pensioners, who are apparently furious at the chancellor’s decision to cut a tax they don’t even pay.

What the move will do though is reduce Labour’s room for manoeuvre: the party can’t very well go into the next election promising to reverse a tax cut, but that will leave it with less money to fix the mess it inherits. People say they’d rather public services than tax cuts. That does not mean they’d welcome tax rises.

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Tories gonna Tory, of course, and it’s not as if a Conservative chancellor cutting taxes and to hell with the consequences is exactly unknown: the clue that this all might be a trap instead lie elsewhere. Consider Labour’s promise to fund more spending by taxing the rich. Here, too, Hunt has made life difficult for the opposition, this time through the clever trick of implementing its own proposals and scrapping tax breaks for “non-doms”, rich foreign residents.

As delightful as it must be to see one’s ideas become policy, it may also be slightly irritating after over a decade in which you’ve been told it’d be economically ruinous: it happening at the exact point when it serves mainly to send a flock of lobby reporters after you with annoying questions about how you now plan to arrest the collapse in public services is just the cherry on the cake. All in all, it’s enough to make you wonder whether judging the opposition’s fiscal plans against spending envelopes determined by a governing chancellor and adjusted on a whim might possibly have its downsides.

Jeremy Hunt, I fear, has shown little interest in arresting such decline himself. His budget implied a 13% cut for “unprotected” departments – essentially everywhere except schools (little change) and the NHS (some more money, but not enough to keep with demand). Tellingly, these cuts – a round of austerity as great as anything imposed by George Osborne, from a much less generous starting point – are scheduled for between 2025-6 and 2028-9, after the election must take place.

How, at a time when services are already visibly struggling and councils keep going bankrupt, is such a settlement to be handled? Through warm words about “productivity plans” and “efficiency savings” made by departments already cut to the bone. (In reality, productivity increases almost certainly require up front investment and staff good will for which it is not clear this settlement allows.) Few expect these plans to be delivered, but that doesn’t matter to the Tories. They got their tax cut. What comes next is Labour’s problem.

It is an infuriating feature of the British constitution that a Prime Minister who’s 20 points behind in the polls, who couldn’t win an internal party leadership race against Liz Truss and who is visibly terrified to face the electorate today should get to preside over such ruinous fiscal decisions in the doomed hope that he might see off an epochal electoral annihilation. There are just two small sources of comfort. One is that the polls continue to suggest the Labour Party is on course not just to win, but win big. That will give it more room, early in a five year term, to make the sort of difficult and unpopular decisions required to begin to address this mess.

The other comfort is that there is just a chance, however faint, that the Tory strategy works. Terrible as this would be in very many ways, it would at least make all this their problem.

[See also: Jeremy Hunt’s Budget was a work of fiction]

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