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  1. Politics
30 January 2020

Budget cuts and Brexit realities: the Tories are setting themselves up for electoral trouble

The expectations of the party's new voters are high.

By Stephen Bush

Sajid Javid has written to ministers asking them to find cuts of up to 5 per cent within their budgets, in a letter obtained by Sky News and the Sun.

The reality is that the letter merely spells out what the Conservatives’ 2019 election promises were always going to mean. Yes, they have changed their approach on infrastructure to reflect the economic consensus that interest rates are set to remain ultra-low for the foreseeable future. Yes, they have more wriggle room in terms of spending than the very tight fiscal rules set by George Osborne. But their big commitments to spend more on the police, on schools and the NHS plus their promises to keep national insurance, income tax and value-added tax flat or falling mean that the rest of the public realm is looking at a spending round that is almost as tight as that proposed by Osborne back in 2010 – and after more than a decade of cuts.

That also assumes that the British economy continues to grow. A global downturn makes those promises even more punishing for the rest of the state. A lot of faith is being put in the idea that reforming Whitehall can unlock major savings and improvements to offset that. 

And then there’s Brexit:  Boris Johnson will tell the European Union that he is willing to accept border checks on British goods after Brexit next week, the Telegraph’s Gordon Rayner reveals. Which is a lot like saying that I will “tell” my local restaurant that I am willing to pay them money to bring me food: yes, that’s the point of the enterprise.

In practice, what that means is that Johnson will begin one of the government’s big tasks as far as Brexit is concerned: levelling with the British public about the trade-offs involved in their preferred version of the EU-UK relationship. The price of Johnson’s Brexit is that the United Kingdom will prioritise regulatory freedom over trade with the EU. More regulatory freedom, but likely at the cost of slower growth. And slower growth means a yet tighter fiscal settlement for much of government.

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The good news for the government is that the expectations among most Conservative voters are pretty low – they just want Brexit to vanish from the news. The bad news is that the voters they have gained in 2019’s expectations are high – and the painful fiscal reality of the tax-and-spend straitjacket Boris Johnson has submitted himself to may be painful for his party electorally, too.

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