Last week Jeremy Hunt took to Parliament to unveil his budget statement. In an upbeat hour-long speech, the Chancellor claimed Britain’s economy was “on the right track” and “proving the doubters wrong”.
He went on to unveil a pension giveaway aimed at the richest workers, measures designed to get people back into work, including a £5billion extension of childcare, more support with the cost of energy and “full expensing” scheme which allows businesses investing in plant and machinery to offset this against tax.
Gone were the dramatic and aggressive tax cuts announced by his predecessor, in their place more worthy policy announcements aimed at gradually boosting Britain’s low productivity rate – but the benefits of these will not be felt for some time. Alongside these were a number of relatively modest handouts. However, these were more than made up by the huge tax increases, both to businesses through the previously announced increase to Corporation Tax and thenthe refusal to up-lift income tax thresholds in line with inflation.
The refusal to uplift he tax thresholds, so-called fiscal drag,will see the average basic rate taxpayer coughing up an extra £800 a year, while a higher rate taxpayer will be paying an extra £1,700.
This confirmed by the respected Institute for Fiscal Studies, which in their post-budget analysis confirmed that families would pay more in tax.
No doubt the Chancellor was pleased that Labour’s main attack was the pension giveaway – a giveaway that the opposition leader, Sir Keir Starmer described as “a huge giveaway to some of the very wealthiest”.
There were two reasons, why this this might be the case. Firstly, the changes were sold as a measure to help senior doctors, headteachers, police officers and the like. The reason, according to Mr Hunt, was the pensions cap, acted as a deterrent to this group of senior and experienced public sector workers staying in work after their pension pot was full.
And secondly, we now know thanks to the Telegraph newspaper, that Sir Keir was himself exempt from tax rules that applied to other workers who save more than £1 million, under a special arrangement with the Government from his time as Director of Public Prosecutions for England and Wales between 2008 and 2013. Queue snorts of derision from the Conservative backbenches and calls of hypocrite – never a good look.
Then there was the criticism from the Conservative right that the budget lacked ambition and failed to reverse the corporation tax increases previously announced. But even these attacks were blunted, as the Chancellor revealed that the UK was no longer predicted to slip into recession, inflation was due to fall rapidly, and the nation’s finances were in better shape than previous OBR estimates.
The Government’s message was clear, the Ship of State had been stabilised after the turbulence under Liz Truss and was on the right course and now was not the time to deviate from it.
Expect to hear this message a lot from the Prime Minister and Chancellor as pollsters and party apparatchiks believe that the only chance of Conservative Party winning the next election is try and restore a sense that the Government is competent,delivering on its pledges and changing Government at the General Election would put this all at risk.
It is a message that worked in 1992, when Labour wasconsistently ahead in the polls, but in a shock result, John Major’s Conservative Government was re-elected, although with a reduced majority.
And there are some very early indications that this strategy might be working. Two polls, the latest a Savanta survey, has cut the Labour lead to 14–points, which is a significant improvement on Labour’s “baked-in lead” of plus 20–points in recent weeks.
No 10 and CCHQ will be hoping that the needle on the polls will continue to move and that the handling of Windsor Framework, now approved by Parliament and the “successful” publication of the PM’s tax returns, burying them in a week when all eyes were on the Boris Johnson and his appearance before the Common Privileges Committee, will further strengthen the view that the Government has got a grip and the PM is delivering on his 5 pledges.
Of course, only time will tell, but as one Conservative backbencher told parliamentnews.co.uk “There is a hope that the tide might be turning. As 92 showed us, when the economy is struggling you don’t have to have charisma to win, voters just want someone who is competent and who won’t make matters worse.”
They added: “This might not be the most exiting political strategy, but after Brexit, COVID and the invasion of the Ukraine it’s all we have.”