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27 October 2021

Rishi Sunak’s 2021 Budget is one giant U-turn

The Chancellor’s dramatic public spending increases have left some Tory MPs demoralised – and sent Labour scrambling.

By Stephen Bush

The run-up to Rishi Sunak’s Budget was dominated by speculation that it would contain at least one U-turn: something to address the growing concern about untreated sewage being pumped into the United Kingdom’s rivers and oceans, or a measure to alleviate the pain from the £1,040-a-year cut in Universal Credit

In the end, Sunak delivered a speech that was essentially one long U-turn: across the public realm, he unveiled real-terms spending increases, in many cases to parts of the state that haven’t received a real-terms increase since the Conservatives entered office in 2010. The headline he was seeking was “the biggest increase in more than a decade”: Labour will want to it to be that this Budget is also the first real spending increase in more than a decade. 

Although much in the Budget was at one with the Conservative approach over the past 11 years – the planned cut to Universal Credit remains in place, while fuel duty remains frozen – this Budget repudiated the post-2010 approach to spending much more than anticipated, and much more than Sunak’s stirring conference speech defence of his predecessors – George Osborne, Philip Hammond and Sajid Javid – led many to expect. 

The British state will still be smaller in 2024 than implied by Gordon Brown and Alistair Darling’s plans in 2010, but it will be much larger than implied by Osborne, Hammond or even Sunak in his March Budget

The scale of the U-turn was one reason why the reaction of Conservative MPs was more muted than usual for a Budget: these aren’t the applause lines that Tory MPs expect or in many cases want. But it also confused Labour. The Budget response is one of the hardest jobs for the opposition because of the absurd theatre of the event (the first time that the leader of the opposition hears the Budget speech is the same as everyone else, and Rachel Reeves, filling in for the self-isolating Keir Starmer, couldn’t even pick the brains of the shadow chancellor because she is the shadow chancellor). But it was made even harder today simply because a lot of Sunak’s measures were policies Labour has been calling on the government to adopt for some time. 

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Reeves tried to move the debate to where Labour wants the political battle to be: that the Conservatives are now the party of high tax, low economic growth and poorly-run public services, and that Labour will be the party of lower tax, high economic growth and well-run public services. 

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The Conservative fear – including among Sunak’s closest allies – is that an argument over who is best at running public services naturally favours Labour, because it is generally seen as being better at that than the Tories. But Labour’s vulnerability is that an argument about who is best at delivering economic growth goes the other way. Whichever party emerges stronger from the new debate, it is certain that Sunak’s Budget has changed the nature of the political battle between the two parties.

[see also: The gulf between Boris Johnson and Rishi Sunak should worry the Tories]