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13 March 2020updated 26 Jul 2021 4:04am

For Labour, Rishi Sunak’s Budget is an opportunity – but also a danger

This isn't a budget any Labour chancellor should want to give, but it does present a new challenge for the party.

By Bridget Phillipson

Some of the commentary on the Budget suggests that had Labour won the general election, a new chancellor would have presented a similar financial and economic package: focusing infrastructure spending on roads, neglecting to fix Universal Credit, failing to lift working people out of poverty and deprioritising investment in green technologies. Counterfactuals are never very productive, and while I hope no Labour chancellor of the exchequer would have presented a budget quite like that, it is important not to lose sight of three things.

The first is that with growth this year projected at just 1.1 per cent, a decade of Tory economic policy has been a disaster for this country. Cuts to services, pay freezes for frontline public sector workers, a shift of wealth and spending power from those who have less to those who already have more, and years of uncertainty about our relationship with our major trading partner. It has added up to a predictable – and widely predicted – wasted decade for our country. 

The second is that the Tories, if they ever truly believed that austerity was in any sense the right answer for our economic problems, have now backed away from making the case for it, even though they have not yet brought it to an end. For as the Institute for Fiscal Studies observes, austerity is set to continue in many key areas “for a long time to come”. What the shift in tone does illustrate is how concerned Downing Street and the Treasury must be at what might follow Brexit, with the economic outlook among the worst on record. It seems implausible that the government would engage in a such a significant expansion of public spending, however cheap money currently is, unless they were looking at fairly grim projections of what will happen to the economy in the years ahead. They will, by virtue of their position, have a clearer understanding of the likely end result of the UK’s negotiations with the European Union than the rest of us, and therefore the extent to which stimulating domestic demand may become more important for our economy than in recent decades.

The third point is perhaps the most important politically for Labour in the next few years. Can the government actually deliver all this? A decade of stripping the civil service to the bone, freezing pay, and more recently, insulting their values and competence through high-level briefing, has seen an exodus of people. That has left the government far less capable than even ten years ago of turning promised spending into delivered projects – buildings, staff, roads, rail services as well as railways, and above all, citizens experiencing tangible improvements they ascribe to political decisions. The completion of the road past Stonehenge was announced again in the Budget: it has been in the works for twenty years. Again and again, I and my colleagues on the Public Accounts Committee see government spending programmes bedevilled by huge time and budget overruns, look over projects promised with wildly unrealistic timelines, and despair at the extent to which the delivery capacity of the British state – the ability to turn an announcement in parliament into reality on the ground – has been shredded in the last decade. 

Universal Credit, High Speed 2 and Crossrail are the most obvious examples but by no means the only ones: major projects by the government are simply not being delivered in anything like the time promised. Had Labour won the election, this degradation of the capacity of the state to achieve change would have been a major problem for us, given the immense ambition of our 2019 manifesto. As it is, it looks like it will be the Tories who soon discover that you can’t run down the civil service for a decade and still be able to turn galloping ministerial ambition into accepted political reality within a single parliamentary term.

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That creates an opportunity for Labour, and at the same time a serious challenge. We can expect both the frontbench and select committees to give Conservative ministers a hard time in parliament over botched projects. But that isn’t remotely enough, as the last general election illustrated very powerfully. We will also need to raise our game as a party, lifting our eyes from the Westminster village to the wider electorate. After almost a decade in power, the Tories managed to escape scrutiny on their record in the last election. They ran as an insurgent party offering change, and somehow managed to ascribe to us all that has gone wrong since 2010 in the communities we represent. We can’t ever allow them to do that again. Unless we can pin them to their promises, their record, and their failures, we will be unable to position ourselves as the party of change and hope.

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