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Rishi Sunak’s expectation management

Ahead of the spring statement, a Chancellor desperate to return to small-state conservatism is playing down his ability to address the cost of living crisis.

By Ailbhe Rea

While the situation in Ukraine remains dire, with all eyes on the besieged city of Mariupol, the focus in Westminster this week will be on the Chancellor’s spring statement. Rishi Sunak is under pressure to address the cost of living crisis that is squeezing people of all incomes and forcing the poorest to choose between feeding themselves and heating their homes. 

Team Rishi has been rolling the pitch for Wednesday’s statement by playing down both in public and in private how much the Chancellor is able to help. They argue the sanctions on Russia have left the British economy more exposed than the public has yet realised, and that there is a limited amount the Treasury can do to mitigate the pain. The Chancellor’s big worry is that the economic support he provided during the pandemic has given people unrealistic expectations of what measures he can and can’t take to shield people from an economic crisis caused by global inflationary pressures and international challenges. 

[see also: How phasing out Russian oil could deepen the cost-of-living crisis]

The measures Sunak will announce on Wednesday (23 March) – an expected cut to fuel duty and an increase of the threshold at which people pay National Insurance – are further than he wanted to go, and not far enough for Labour. The opposition believes it is Sunak’s choice not to do a lot more, as a Chancellor desperate to return to low-tax, small-state Conservatism after being forced to do things opposite to his political instincts during the pandemic. Labour support the measures that have been trailed, but wants the National Insurance hike scrapped altogether, and a windfall tax on oil and gas producers to be used to scrap VAT on energy bills and extend energy bill discounts for those on low incomes. (The government’s view is that a windfall tax would simply hamper the ability of oil and gas producers to invest in their transition to sustainable energy.) And it isn’t only Labour wondering if the support is sufficient; Conservative MPs are also worried about the impact of spiralling costs on their constituents.

But the disagreement between the Conservatives and Labour is not just about how government should respond to the cost of living crisis, but how we got here in the first place. The next big political debate will be about the extent to which the Conservative’s stewardship of the economy has caused a worse crisis in the UK than other countries.   

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