It’s safe to say Rishi Sunak’s Spring Statement has not been a political triumph. When, as a Tory chancellor, even the Express and Telegraph are running highly critical headlines, you’re in trouble. Yet Sunak may feel he can absorb some short term political pain in return for the payoff of an electoral strategy as brazenly unsubtle as an oligarch’s yacht.
His aim is to go into the next election, most likely in summer 2024, having cut income tax, which he will claim is the reward for his fiscal prudence. He’s already told us a 1p cut is coming in 2024. This will no doubt become 2p or even more by the time we get there. In the election this tax cut will be contrasted with Labour spending plans, and the Tories will, yet again, rely on their favourite “dividing line” for victory.
It’s not surprising Sunak is trying this. After all, it’s worked plenty of times before, and it’s not as if the Prime Minister has any kind of an alternative plan. But it has much less chance of working this time.
For a start the amount of pain between now and 2024 will be so great as to make any tax cut look puny by comparison. Next year will see the biggest fall in living standards since the second world war. And it will hit everyone, including the key demographics for Tories: pensioners and mortgage-paying homeowners. The “help” announced by the Chancellor won’t even touch the sides. Almost one in five people are already telling pollsters they’re struggling financially – twice as many as last year – and that’s before the full effects of inflation are felt.
That inflation is also eroding the budgets for public services. The economist Jonathan Portes calculated it represents an effective £4 billion cut to education and £6 billion to health. These are universal services which Tory voters rely on as much as the rest of us, and more so in the case of the NHS, given their average age. With waiting lists already heading towards 15 per cent of the population, the government will increasingly get the blame for underfunding.
While everyone will take a hit it will be the poorest who suffer most. Benefits will effectively be cut next year as inflation will be far higher than the 3.1 per cent increase. This comes on top of a decade of freezes; which have already pushed hundreds of thousands more people into poverty. You might think, however callous this may seem, that there is a brutal political logic here. Benefits claimants rarely vote Tory anyway, so giving money to this group would empty the coffers without much electoral gain.
This probably was true a decade, or even five years ago, but is less so now. We have seen a big shift in attitudes towards benefits that has yet to be picked up by politicians, who still seem to believe the unemployed and low paid are seen as scroungers and layabouts. In 2010 56 per cent of respondents to the British Social Attitudes survey agreed with the statement “if welfare benefits weren’t so generous, people would learn to stand on their own two feet”. Only 20 per cent disagreed. By 2020 this had flipped. Now just 34 per cent agreed and 40 per cent disagreed.
This trend has become even more pronounced in the last few years. Last month YouGov found 40 per cent of people saying benefits were too low, the highest level ever on their tracker, and just 15 per cent saying too high. We can see this change in attitude translate to the media, with more focus on poverty than there’s been for a long time, and heart-breaking stories of destitution commonplace. This will only increase as the most vulnerable bear the brunt of the economic hit to come. It is a political miscalculation on Sunak’s part to think “his voters” don’t care about poverty, as well as a profound moral failing.
The final reason the Chancellor’s political gamble won’t work is that Labour can see exactly what he’s trying to do. There is no chance the opposition is going to walk into the big elephant trap with a large neon sign saying “this is a trap” above it. They will commit to any level of cut to the basic rate of income tax while relying on extra taxes for the richest 10 per cent to fund any spending pledges. Even Jeremy Corbyn and John McDonnell had the political nous to figure that much out.
There is little doubt that the government’s approval ratings will continue to fall over the next year, unless Sunak and Johnson change strategy. If they persist on their current course in the hope that a pre-election giveaway revitalises support, they will have done too much damage to their brand to recover. And they will have gambled away not just their own futures but those of the people most in need of their help.
Sam is a senior fellow at the Institute for Government. He is also a senior adviser to the education charity Ark.