Rishi Sunak has delivered austerity by stealth –
and the poorest will feel the pain
Rafael Behr
The chancellor emerged from the pandemic as the
candidate of sincerity. Today we saw he is as shallow and cynical as Johnson
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Wed 23 Mar
2022 17.44 GMT
There is a
pattern according to which the Conservative party chooses its leaders as the
antidote to their predecessor. Theresa May was the stolid answer to David
Cameron’s flimsiness; Boris Johnson promised to be a daredevil where May had
been dour.
On that
principle, Rishi Sunak had positioned himself as the candidate of sincerity and
competence, Boris Johnson being the opposite of those qualities incarnate. When
the prime minister looked close to being toppled during the “partygate”
scandal, the chancellor’s support was tepid.
Then came
war in Ukraine, a geopolitical crisis to make any domestic scandal look
parochial by comparison. The change in perspective was a reprieve for Johnson.
Tory MPs are no longer agitating for a replacement. Sunak’s loyalty can no
longer waver so conspicuously.
The ambition
is undiluted. Its expression was clear from a spring statement fashioned
entirely around the Conservative party fetish for cutting taxes. Sunak was
under pressure to abort a national insurance hike due next month, branded as a
levy for health and social care.
Although
the original impetus for that move had come from No 10, the chancellor bought
into the political gamble – taking flak for breaking a manifesto pledge in
order to avert the greater electoral hazard of an NHS funding meltdown. A
U-turn would blow a hole in the budget, with the added sting of making him look
weak in yielding to demands from backbenchers and the opposition.
Also, the
received wisdom in Downing Street is that the optimal time for cutting taxes is
just before an election. Voters might then carry the happy vibe straight into
the polling booth.
Sunak’s
ideological preference for a smaller state is not in doubt. He is a devout
Thatcherite but of a particular denomination – the fiscally flagellant cult
that insists on discipline in borrowing, reduced deficits and tighter spending
before indulging in the pleasure of the tax cut. He was keen in his speech on
Wednesday to emphasise how borrowing costs have risen and how global
uncertainty demands the observance of “fiscal rules with a margin of safety”.
But for
many Tory MPs, the optimal time for cutting taxes is always now. The chancellor
didn’t want to disappoint them – and he found a solution that is more
politically elegant than economically rational. The impact of the national
insurance rise will be blunted by raising the threshold at which the tax is
paid. Most thrillingly for Conservatives, Sunak has also booked in a 1p
reduction in the basic rate of income tax for 2024. A VAT reduction on solar
panels and insulation will help homeowners with enough of a disposable income
to be in the market for greener energy hardware, which is not the demographic
most in need of immediate help.
That isn’t
any consolation for people struggling with their bills right now, but not much
of the spring statement was aimed further than the Tory benches. In terms of
the immediate cost of living crisis, there was a 5% cut in fuel duty and an
increase in the household support fund – a meagre pool of local authority
grants.
Meanwhile,
inflation will shrivel the real value of state benefits and departmental
budgets. For all the chancellor’s declared intention to throw a warm economic
security blanket around the nation’s shoulders, people on the lowest incomes
will be left out in the cold.
The whole
package expressed a rhetorical contortion. Sunak wants to satisfy the
Conservative self-image as a party of low taxation. At the same time, he can’t
ignore economic reality shaped by the pandemic, war in Europe and public demand
for services that are not completely derelict. The overall tax burden will
still be at its highest level since the late 1940s. The Office for Budget
Responsibility expects real household disposable income to fall this year at
the fastest rate since records began.
What the
chancellor advertised as an exercise in building economic resilience is really
austerity by stealth, with the pain felt most by people who can least afford
it. That promises a bumpy ride to the next election, albeit with comfort breaks
for some Conservative target voters.
The
political consequences are impossible to predict. Governments do not generally
get more popular by making millions of people poorer. Then again, Britain has a
record of swallowing bitter economic pills dispensed by Tory governments and
returning the party to power, while Labour waits in vain for the pendulum to
swing.
In the
current crisis, Johnson and Sunak have a genuine alibi. It was Vladimir Putin
who invaded Ukraine. That aggression, and the western sanctions to punish it,
threaten a long war of economic attrition with a totalitarian state that
doesn’t hesitate to impoverish its own citizens. Fuel is the first commodity to
be affected. Grain is next. Ukraine and Russia account for around a quarter of
the world’s wheat exports. A protracted war will make food scarce in some
countries and more expensive everywhere.
These are
perils unseen by western European electorates for generations. They require a
level of candour from politicians about the scale and duration of the necessary
sacrifices; also, economic policies that distribute the cost fairly.
Nothing in
Johnson’s career suggests he can rise to that challenge. Any vestigial hope
that he might do so was dashed when he compared Ukraine’s battle for survival
to Britain’s decision to leave the EU. History invited the prime minister to
reach for a Churchillian mode of national reconciliation, the role for which he
has always imagined himself destined. Instead he chose the only way he knows:
crass insensitivity and cynical division.
Sunak had
the chance to be different. He emerged from the pandemic poised to be the
anti-Johnson; the serious alternative. But he missed the turning in the road.
There is no room now for repudiation. Whether they trust each other or not,
from here onwards, Boris and Rishi are a duplicitous double act; the same
record, the same fate.
Rafael Behr
is a Guardian columnist
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