How – and when – will austerity end? Thanks to Theresa May, that is the question Philip Hammond will have to answer with his Budget this Monday. But as far as Labour is concerned, there is no way that the Chancellor can.
Since the Prime Minister used her Tory conference address to declare that the days of cuts are over, the opposition’s attacks have written themselves, as grateful Labour aides happily admit. It doesn’t take much to expose the yawning gap between May’s sunny rhetoric and the altogether gloomier reality of government policy, and, in a pre-Budget speech this morning, John McDonnell demonstrated that Jeremy Corbyn will be pushing against an open door when he responds to Hammond next week.
Citing May’s promise to end austerity, the shadow chancellor described the Budget as a test of whether “she is true to her word or not”. The scale of the cuts that have been implemented since 2010 means the Prime Minister simply cannot pass it.
New research by Labour reveals that it will take more than £110bn in new public spending to reverse the cuts since 2010 and prevent further reductions to budgets across Whitehall departments, in social security, social care, schools, Sure Start, local government and affordable housing.
This, McDonnell rightly said, is ideological choice rather than political necessity on the part of the Conservatives, who, according to the research, have given large firms a £110bn corporation tax break and reduced public sector investment by £18bn since 2010. All of this has come at a steep human cost, as the New Statesman’s Crumbling Britain series has illustrated. The literal and political cost of ending austerity will prove even steeper for a divided Conservative Party with no parliamentary majority.
The chancellor cannot meet either cost, and as a fiscal hawk conscious of the economic consequences of Brexit does not want to anyway. McDonnell put it well this morning: “With a bit of chutzpah, which I quite admire, Mrs May threw the architect of austerity, the man who back in the days when the Tories were in opposition designed the austerity programme, she threw him under the proverbial bus with her unilateral announcement of the end of austerity.”
Hammond has neither the ability nor interest in bridging this gap between his leader’s rhetoric on austerity and the inevitably disappointing realities of his budget, which will be delivered on the eve of Halloween. McDonnell quipped that it would be “neither trick nor treat”. Brexit severely limits the chancellor’s scope for economic trickery, while the empty promise of an end to austerity – and a decade of wage stagnation – means no fiscal treat can meet the high expectations May has inflicted on him.
This political context is a gift to Labour. Team Corbyn believes that offering a clear economic alternative will win it the towns that voted for Brexit and with them the next election. As in 2015, they believe the predominant narrative of that contest will be about public spending. Where Ed Miliband failed by fighting the election on David Cameron’s terms and offering austerity-lite, their belief – and that of many Tory MPs – is that May will too, by aping the language but not the substance of Corbynomics.
For all its forensic exposition of the extent of Tory austerity, McDonnell’s speech was comparatively light on detailed proposals for rectifying it, beyond spending and investing more. But when the failure of the government’s economic policy is so manifestly obvious, it did not need it. Such is the inherent political danger in the course May has charted. Her MPs are right to worry: in fighting on Labour turf, she exposes the reality of her government’s record and highlights Corbyn’s ability to outflank her, whatever the promise.