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12 March 2020

George Osborne was a bigger welfare nationalist than Rishi Sunak

The Chancellor is doing something new and radical – but he is also striking a note of continuity. 

By Stephen Bush

The government has a new approach: “welfare nationalism”. That’s Martin Wolf’s diagnosis in today’s FT, and one fairly widely shared.

I’m not convinced by this for a number of reasons. Firstly, as I wrote yesterday, I think it misidentifies both where the government is genuinely providing a radical breach with its Conservative predecessors and where it is offering more of the same.

The big breach point is infrastructure or capital spending, not social programmes. Rishi Sunak did increase welfare spending in his budget, but as a temporary, entirely orthodox and economically non-controversial way of dealing with the demand shock caused by Covid-19.

The reality is that, facing a demand shock of this type, there are really only two levers available to a British chancellor: tax relief and welfare payments. Sunak has sensibly pulled both of the available levers. There’s an open debate about whether he has gone far enough – I think the most important thing is that he has said and signalled he will do “whatever it takes” and that he has, correctly in my view, decided to intervene through the existing tax and benefit system rather than trying to create a bespoke “Covid-19 relief programme”, which would generate headlines but also create yet more logistical challenges. 

These are levers George Osborne would have pulled, and indeed Osborne was not amiss to the odd measure to stoke demand here and there, particularly in the 2013 budget when the government was worried about low growth and a potential downturn, when he introduced Help to Buy and expanded government road-building. Sunak is benefiting from the propaganda efforts of two groups: Osborne’s cheerleaders in the media, who believe that is in their interests to paint him as an unyielding free-market austerian who never fudged or muddled his targets, and his bitterest opponents, who think it is in their interests to claim something similar.

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In terms of “welfare nationalism”, the actually existing Osborne was a lot closer to than Sunak. Yes, he made large and painful cuts to in-work benefits, which Sunak has, importantly, not reversed, and which are one reason why child poverty is forecast to continue climbing over this parliament.

But Osborne also maintained generous and expansive welfare policies for the old. To the extent that these new model Conservatives are pursuing a model of “welfare nationalism”, this is actually the biggest continuity with what has gone before. What has changed is that Theresa May and Boris Johnson both added yet more elderly voters to the Conservative coalition – but the generosity of the welfare offer to that group remains unchanged.

At the risk of sounding like a stuck record, this is not “the end of austerity” or anything like it. This is a continuation of the austerity of the 2010s accompanied by a radical expansion of infrastructure spending. And as far as this government’s “welfare nationalist” approach: well, that, so far, is the biggest continuity of the lot.