Rishi Sunak, Chancellor of the Exchequer, Budget speech, 27 October 2021:
Madam Deputy Speaker, Employment is up. Investment is growing. Public services are improving. The public finances are stabilising. And wages are rising. Today’s Budget delivers a stronger economy for the British people: Stronger growth, with the UK recovering faster than our major competitors. Stronger public finances, with our debt under control. Stronger employment, with fewer people out of work and more people in work. Growth up, jobs up, and debt down: Let there be no doubt. Our plan is working. Madam Deputy Speaker, this Budget is about what this government is about. Investment in a more innovative, high-skill economy. Because that is the only sustainable path to individual prosperity. World class public services. Because these are the common goods from which we all benefit. Backing business. Because our future cannot be built by government alone but must come from the imagination and drive of our entrepreneurs. Help for working families with the cost of living. Because we will always give people the support they need and the tools to build a better life for themselves. And levelling up. Because for too long, far too long, the location of your birth has determined too much of your future. Because the awesome power of opportunity shouldn’t be available only to a wealthy few but be the birth right of every child in an independent and prosperous United Kingdom… today’s Budget does begin the work of preparing for a new economy post Covid. The prime minister’s economy of higher wages, higher skills, and rising productivity. Of strong public services, vibrant communities and safer streets. An economy fit for a new age of optimism. Where the only limit to our potential is the effort we are prepared to put in and the sacrifices we are prepared to make. That is the stronger economy of the future. And this Budget is the foundation.
Close your eyes and imagine who might have said this. It is the standard political promissory note of the social democratic left. Look back at the introductions to Gordon Brown budget speeches; they are all but indistinguishable from this. There is nothing wrong with arranging the facts in the best light; every chancellor does that. But the rest of this is like one of the off-cuts of the Blair & Brown documentary which is just winding up on the BBC. Lots of talk of investment and innovation, allied to a concern for opportunity and social justice. This is Rishi Sunak’s very own Third Way pamphlet. That is, of course, a testament to his political versatility. Can anyone doubt that, had Mr Sunak been David Cameron’s chancellor, he would have been an enthusiastic champion of austerity? Of course he would, and with a good deal more conviction than he musters here, because he would have been saying what he really thinks, rather than reading a script written by the prime minister. Mr Sunak has proved himself a credible chancellor and his good performance, and adept line in photography have obscured the central strategic fact about his time in office which is that he is a creature of his prime minister. This was a budget crafted by the boy next door.
The House will recognise the challenging backdrop of rising inflation… It would be irresponsible for anyone to pretend that we can solve this overnight… Growth this year is revised up from 4 per cent to 6 per cent. The OBR then expect the economy to grow by 6 per cent in 2022, and 2.1 per cent, 1.3 per cent and 1.6 per cent over the next three years…. Disruption in the global economy highlights the importance of strong public finances. Coronavirus left us with borrowing higher than at any time since the Second World War. As the prime minister reminded us in his conference speech: Higher borrowing today is just higher interest rates and even higher taxes tomorrow. So we need to strengthen our public finances so that when the next crisis comes, we have the fiscal space to act. Today I am publishing a new Charter for Budget Responsibility. The Charter sets out two fiscal rules which will keep this government on the path of discipline and responsibility. First, underlying public sector net debt excluding the impact of the Bank of England must, as a percentage of GDP, be falling. Second, in normal times the state should only borrow to invest in our future growth and prosperity. Everyday spending must be paid for through taxation…. Borrowing as a percentage of GDP is forecast to fall in every single year. From 7.9 per cent this year to 3.3 per cent next year, then 2.4 per cent, 1.7 per cent, 1.7 per cent and 1.5 per cent in the following years. Borrowing down, debt down; proving once again it is the Conservatives and only the Conservatives – who can be trusted with taxpayers’ money… As a result of this Spending Review, and contrary to speculation, there will be a real terms rise in overall spending for every single department.
Hence the square circle, the round square. Mr Sunak wants his backbenchers to regard him as a fiscal conservative, in defiance of what he is actually doing. Again, the relevant comparison is with Gordon Brown who, while keeping a tight rein on actual spending, wanted Labour MPs (his real audience) to believe that he was a genuine social democrat at heart. Mr Sunak is doing the precise opposite. While spending a lot of money at the behest of his boss, he wants his audience (the ones with votes in the next leadership contest) to regard him as the fiscal conservative he is. There will therefore be a number of occasions in this speech on which Mr Sunak seems to be adding rhetorical flourishes that have been imported from another speech. That’s how he can go, hardly pausing to draw breath, from the claim that he will get on top of borrowing to the humble-brag that every department will have more money to spend. It doesn’t really make intellectual sense and Mr Sunak hasn’t earned the more-than-slightly pleased with himself smirk with which he delivers the contradiction.
We are backing projects in: Aberdeen. Bury. Burnley. Lewes. Clwyd South. And not one, not two, but three successful projects for the great city of Stoke-on-Trent. And that’s not all. We’re also going to fund projects in Ashton under Lyne, Doncaster, South Leicester, Sunderland and West Leeds. Madam Deputy Speaker, Whilst today’s Budget delivers historically high levels of public spending. Its success will be measured not by the billions we spend but by the outcomes we achieve and the difference we make to people’s lives. The budgets are set; the plans are in place; the task is clear. Now we must deliver because this isn’t the government’s money, this is taxpayers’ money. Madam Deputy Speaker, Our stronger economy allows us to fund world class public services – the people’s priority. But over the long-term the only way to pay for higher spending is economic growth. And if we want to see higher growth, we’ve got to tackle the problem that’s been holding this country back for far too long: Our uneven economic geography. As we come out of the worst economic shock we’ve ever seen, we’ve got a choice. To retrench – or to invest. This government chooses to invest: To invest in our economic infrastructure. To invest in innovation. To invest in skills. To invest in a Plan for Growth that builds a stronger economy for the future. That’s what this Budget is about and that’s what this government is about…. And now that we’ve left the EU, we have the freedom to do things differently and deliver a simpler, fairer tax system.
A riot of different philosophies in a few short paragraphs. An unresolved tension between the demand for better public services and the requirement to pay for them while, at the same time, dampening down the debt. The desire to spread economic output evenly around the country. The choice to invest rather than retrench which is very much not what the Conservative government of 2010 chose to do. But the hostage to fortune here is the candid statement that the success of the Budget “will be measured not by the billions we spend but by the outcomes we achieve and the difference we make to people’s lives”. This is a high bar to set because changing the uneven geography of Britain is about a lot more than a scheme to refit Bury market. There is a missing word in this section which is “productivity”. The key to greater prosperity in Britain is solving the riddle of low productivity, about which the Chancellor had nothing to say. He also gestures, at the end of this section, towards another topic on which he was silent throughout: Brexit. The OBR has said that Brexit will have a larger long-term effect on the economy than Covid yet it barely featured in the speech. This attempt to make a boon of Brexit is, sadly, rather pathetic. It should have been left out because it is one of those phrases which inadvertently gives off the opposite meaning to the one intended.
Covid wasn’t just a public health challenge. It wasn’t just an economic challenge. It was a moral challenge too. We had to show we could pull together as a country, and we did. We had to put aside questions of ideology and orthodoxy to do whatever it took to care for our people and each other, and we did. There is a different kind of moral dimension to the economic challenge we face now. Last year, the state grew to be over half the size of the total economy. Taxes are rising to their highest level as a percentage of GDP since the early 1950s. I don’t like it, but I cannot apologise for it. It’s the result of the unprecedented crisis we faced and the extraordinary action we took in response. But now, we have a choice. Do we want to live in a country where the response to every question is: what is the government going to do about it? Where every time prices rise, every time a company gets in trouble, every time some new challenge emerges, the answer is always: the taxpayer must pay? Or do we choose to recognise that government has limits. That government should have limits. If this seems a controversial statement to make then I’m all the more glad for saying it because that means it needed saying and it is what we believe. There’s a reason we talk about the importance of family, community, and personal responsibility. Not because these are an alternative to the market or the state it’s because they are more important than the market or the state. The moments that make life worth living aren’t created by government, aren’t announced by government, aren’t granted by government. They come from us as people, our choices, our sacrifices, our efforts. And, we believe people should keep more of the rewards of those efforts. Yes, we’ve taken some corrective action to fund the NHS and get our debt under control. But as we look towards the future, I want to say this simple thing to the House and the British people: My goal is to reduce taxes. By the end of this Parliament, I want taxes to be going down not up. I want this to be a society that rewards energy, ingenuity and inventiveness. A society that rewards work. That is what we believe on this side of the House.
Expect to see this, or some version of it, as the Sunak pitch to the Tory party one day. Even though taxes are as high as they have been for half a century his philosophical credo remains unattached to his actions. This is a peculiar passage to have in any Budget speech – an unmoored paragraph of political philosophy. It is even more odd because it bears no scrutiny at all as a description of what the government is actually doing. If the Tory MPs swallow this Mr Sunak should say he has a bridge to sell them. His prime minister no doubt has plans to build one somewhere. There is nothing wrong, in itself, with what Mr Sunak says here. It is a routine piece of smaller state Tory philosophy. Yet if the rest of his budget is to be believed this part cannot make any sense. It’s a bit of an insult to our intelligence, really, for the chancellor who presides over public spending much higher than at any point during the Labour years to insist that he is a Tory of an older vintage. If he is, he ought not to be presenting this budget.
Let me tell the House what these changes mean: A single mother of two, renting, and working full-time on the National Living Wage will be better off by around £1,200. And a couple, renting a home with their two children, one working full-time, the other working part-time, will be better off, every single year, by £1,800. This is a £2bn tax cut for the lowest-paid workers in the country. It supports working families. It helps with the cost of living. And it rewards work. So, Madam Deputy Speaker, Fuel duty cut. Air passenger duty cut. Alcohol duty cut. The biggest cut to business rates in 30 years. Growth up. Jobs up. Wages up. Sound public finances. More investment in infrastructure, innovation and skills. A pay rise for over 2 million people. And a £2bn tax cut for the lowest paid. This Budget helps with the cost of living. This Budget levels up to a higher-wage, higher-skill, higher-productivity economy. This Budget builds a stronger economy for the British people. And I commend it to the House.
After spending more money fixing the problem with Universal Credit, Mr Sunak tried to tie up his speech’s many flaws in a bow. This was a speech that sounded a great deal better than it reads now. In the moment of performance this felt like a political coup de theatre. But on reflection it reads like a man wishing the world away and a man, to coin a phrase, trying to have his cake and eat it. The morning after delivering his Budget, Mr Sunak went to Bury, one of the towns that was a beneficiary of his largesse. Coincidentally, Bury is also a weather vane seat, a place that routinely picks the winner in a general election. The town might yet have a further portent for Mr Sunak. Perhaps he was tempted to have his picture taken next to the statue of the great Tory prime minister Robert Peel, Bury’s most famous son. A chancellor who is, for the moment, straddling the fault line in the Tory party next to the man who split the party in pursuit of free trade. Peel had agonised over his decision to repeal the Corn Laws in 1846. He understood the political consequences but he reasoned that he could no longer pretend to hold two positions at once. Left to his own devices Mr Sunak would like to follow Peel into the free trade lobby but he has not been left to his own devices. This is, as he said at the start, the prime minister’s budget. This was also a speech in a political world that is still upside down. It was a bit of a Red Wall budget which wasn’t either very blue or very green. We did, though, see the colour of Mr Sunak’s money and that colour was Brown.
Photograph Andrew Parsons / No 10 Downing Street
Philip Collins is a former Number 10 speechwriter.