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25 October 2021

Will selective austerity continue to work for the Conservatives?

The political approach that has proved lucrative for the Tories over the past decade may not be suited to the next one.

By Stephen Bush

Rishi Sunak is spending money like it’s water! The Chancellor is set to splash the cash across a range of policy areas, at least if the Treasury’s pre-Budget announcements are to be believed. The biggest single expenditure commitment is £5.9bn of extra money for the NHS to tackle the backlog of waiting lists, but there have been announcements, large and small, on any number of subjects. 

However, for the most part, these have something very important in common: they relate to capital expenditure. Why? Because Sunak’s fiscal rules give him greater freedom to spend on new infrastructure (such as new roads, new railways and new hospitals) than they do on “day-to-day” spending (such as new members of the British Transport Police, new train drivers and new doctors). 

The great success of the Conservative Party over the past decade, electorally speaking, has been that it has managed to preside over real-terms cuts to most public spending while keeping money flowing to the big and vote-moving parts of the state. 

Does that approach still have much road left to run? Who knows, frankly. But part of the NHS’s problem is that, since 2017, it has had permission to raid its capital expenditure budgets to fund day-to-day spending, money sorely needed to keep up with the rising cost of healthcare across all advanced economies. That freedom has come with a price: an NHS with outdated infrastructure that will struggle more than most health services to recover from the pandemic and lockdown. 

The pressures on the NHS are in part a product of the cuts elsewhere, and the big political question of the next decade is ultimately a policy one: is the spending approach that has been politically lucrative for the past decade going to last for another one, or will the consequences of a very tight spending round outside the NHS, the police and a handful of other favoured services start to bite politically?

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