On one thing, politicians, economists and commentators on the left and right can agree: Britain is broken. Not as in the silly, smirking slogan used by David Cameron in opposition, but in the most basic sense. This winter, sick people have died in the hours that it took for ambulances to arrive. This week’s cold snap has again forced many families across the UK to debate whether to heat their homes or feed themselves. On Wednesday, as Jeremy Hunt delivers his budget in parliament, teachers in England and Wales, junior doctors, civil servants, university staff and tube drivers will all be on strike.
The newish chancellor is not even pretending next week’s measures will fix these problems. Perhaps such candour is to his credit. What is shaming is that he doesn’t even try. Getting to the root causes of big issues and turfing out dogma has never been Mr Hunt’s style. To take one example: the Treasury will almost certainly keep down fuel bills by maintaining the energy price guarantee. A U-turn on the policy announced in the autumn by No 11, ministers will hail this as compassionate conservatism – the state mitigating the pain of ordinary people. Yet bills will still be twice what they were in 2021, and the government will once again hand over taxpayer money to energy suppliers in a privatised market that has comprehensively failed.
Emergency measures on energy prices makes sense, but that policy should be combined with a new social tariff system as well as serious action to retrofit houses and expand renewable sources. Fat chance: Mr Hunt’s boss, Rishi Sunak, is the chancellor who blew £1.5bn on a green homes scheme described by the National Audit Office as “botched”. Designed in a rush to a timetable that was a blur, it was the kind of trivial response to a serious problem in which this government specialises (see also levelling up).
The big picture likely to emerge next week is that the short-term outlook for both the economy and public finances has brightened a little. Gas prices in wholesale markets have dropped 80% since last August (although they are still three times what they were in 2020), and tax receipts from national insurance and the self-employed are above previous forecasts. Mr Hunt has wriggle room, should he wish to use it. Much more probable is that he won’t – not yet, when there is still a year or so before a general election.
Politics means that this autumn’s budget is far more likely to be the tax-cutting blockbuster. Next week, in contrast, will perhaps be sold as the budget that was neither shaped by Covid nor drawn up by Kwasi Kwarteng and Liz Truss, that did a little to mitigate the costs of childcare and to encourage businesses to invest. Political stability and financial affordability will be the watchwords; continued stagnation and a decline in relative living standards will be the result. This is not a recipe for election victory, as even the most faithful Tory backbenchers will surely realise. Nor does it offer much to a country battered by 13 years of austerity economics and venal politics.
For all their clownishness, Mr Kwarteng and Ms Truss raised an urgent issue: the British economic and social model is now bust, so what replaces it? Their answers, of tax cuts and deregulation, came out of the Tory jokebook – and fell flat in an economy shocked by rate rises and financial turbulence. Other responses, underpinned by environmental sustainability and social justice, haven’t even been tried at Westminster. But the big question hangs over both this government and the opposition, even if neither side wants to square up to it.
