Many a chancellor’s hour in the spotlight wins immediate cheers, which only gradually lapse into sullen jeers as the number-crunchers go through the books and expose how the crowd-pleasing conjuring was done. In one sense, Rishi Sunak suffered the opposite fate this week. He announced two significant tax cuts, to petrol and National Insurance, and promised to come back with a third, and yet immediately ran into a wounding “is that it?” heckle in the House and a truly awful set of front pages. A day later, the Institute for Fiscal Studies—the foil of many chancellors over the decades—was suggesting that, considered in the round, the Sunak “package” was “more progressive than [he was] being given credit for.”
That is a technical judgment that the chancellor’s actions had been relatively more generous to poorer than richer families. The IFS reliably gets its sums right, although such conclusions are always affected by exactly what changes you include and where you draw the baseline. (Most of the think tank’s charts included Sunak’s pre-announced tax rises and energy bill relief schemes.) More to the point, this verdict felt entirely out of kilter with the political mood in which alarm about penury is rocketing up the agenda.
Indeed, as someone who spent much of the long austerity years deconstructing unambiguously regressive fiscal moves—the four-year freeze on benefits, the “two-child policy,” George Osborne’s arbitrary household welfare cap—only to watch the government get away with them, I find it both fascinating and startling to watch Sunak getting hammered this week for actually announcing very little that directly affected the poor.
And yet there the chancellor was on the Today programme, being asked the kind of awkward questions about how single mother “Sarah” was expected to budget for her bills that were rarely pressed on his predecessors. He squirmed to the point where he resorted to asking the show to pass on his email address. Meanwhile, the Daily Express—a title with such lunatic loyalty to the government that it at the height of the partygate row it ran with the headline “Down but not out! Why we must put faith in Boris!”—is suddenly running front-page campaigns for the “forgotten millions” with their “everyday stories of despair.”
So how do we unravel the Sunak paradox: a Spring Statement that didn’t do all that much and yet has unravelled in terms of public morality? There are, I think, five answers, all instructive for the way the politics of the economy is likely to play out over the next few years, and also all-important insights to absorb for those of us who are concerned to banish the twin spectres of destitution and unchecked insecurity from our country.
- Amid war and plague, there are bigger things than Budgets going on, creating a context where what a chancellor doesn’t do can be more important than what they do. The politically pertinent comparison is not the IFS test of how the next year will play out compared to how it might have been if Sunak had simply kept schtum and sat on his hands this week, but how 2022 is actually going to unfold compared to the years that went before. The big picture, highlighted by JRF calculations pointing to 600,000 sinking into poverty in the coming months, is dominated by the lag between accelerating price rises and benefits that only adjust later.
- In a sense, we really are “all in it together” now—and, thanks to the rising prices that confront us every time we open a bill or walk into a supermarket, we can all see it too. Of course, the thud of an electricity statement dropping onto the doormat is not going to chill the heart of a senior accountant in the same way as it does a struggling single mum. But when all but the richest are today looking at prices and thinking they will have to cut back on something or other, it makes all of us reflect on what it must be like when there’s nothing inessential left to cut back on.
- The backstory to a government announcement can be more important than the announcement itself. Middle England has been cumulatively exhausted by long years of squeezed pay going right back to the financial crisis of 2008. Year by year, the absence of an incremental rise may barely register, but a Resolution Foundation calculation this week that the cumulative toll of the swerve from the pre-crisis trend of rising living standards will tot up to an average wage hit of £11,500 by 2027 might well suggest that we are ripe for a reckoning.
- There’s also a new awareness that the cumulative drip-drip of retrenchment affecting poor families in particular is leading to destitution. This is true both in a general sense tracing back to 2010 and the dawn of austerity, and more acutely about the last few months which saw, first, the emergency £20 universal credit uplift for the pandemic withdrawn, and then energy bills beginning to rocket. For some groups on long-frozen benefits, keeping warm could soon eat up half of total income. Putting the two things together, the IFS calculates that real disposable income for a jobless lone parent with two kids will have sunk by a staggering 17 per cent between last autumn and next spring, when benefits will finally adjust. Even well-to-do families would struggle to adjust to such a sharp squeeze, and it seems sure to sink people who start out with little.
- More speculatively—and hopefully—I just wonder whether the combination of first the pandemic and now war on our continent is engendering a new dispensation in which it is less acceptable to throw parts of our population to the wolves. War has historically been enormously important in fostering a new awareness of what Peter Hennessy calls the “duty of care” we owe each other. Amid mushrooming “mutual aid groups” during the Covid crisis, a citizen’s army of volunteers emerged to ensure that vulnerable people had access to the essentials. In the wake of that, it is perhaps less acceptable than before for large parts of our citizenry to miss out on the basics not because of some passing emergency, but because of the Scrooge-like way in which we have come to run our welfare state.
