Inside Sunak’s Little Red Box
Chancellor Rishi Sunak has announced an Autumn budget to “level up” Britain, but don’t be deceived: this seemingly generous spending wish-list is the least he can do.
Against a backdrop of surging energy prices and rising inflation, Rishi Sunak gleefully posed with the iconic red box before later announcing a budget that will usher in a “new age of optimism”. Promising more funding for schools, transport and the NHS, the budget seems – on first appearances – unusually generous and far from the traditional Conservative approach of stingy spending.
The national living wage will be raised from £8.91 to £9.50 an hour; the controversial pay freeze on nurses will be lifted; research and business are to receive heavy investments; there’s even £50 million pledged for breastfeeding support (whatever that means). But can any of the measures actually turn the economic tide?
Whilst the living wage may be getting a raise, it comes after the government cut universal credit by £20 a week in the Spring, and so many households won’t be any better off than they were this time last year. The benefits of Sunak’s heavy investment in public services progress could also easily be belittled by tax hikes, inflation and aforementioned rising energy prices. Far from seeming like a positive, new age, this is starting to seem like the “old age of skepticism” where politicians promise many good things in soundbites but the reality never quite lives up and the electorate is left dissatisfied.
Furthermore, many of the proposals also include previous pledges of funding: so the almost £7 billion investment in transport is actually the £4.2 billion promised in 2019, plus a little extra for good measure. These sorts of policies are designed to grab the headlines and gain some quick, positive press. But what’s needed here is a careful, well-thought-through economic plan that’s focused on long-term growth, not short-lived, trigger-happy spending which will create a burden of debt that will ultimately fall on the taxpayer.
This wasn’t a usual budget for the Conservative party, with Johnson and Sunak being much more liberal in their spending than their previous Tory counterparts. In fact, one of the plans outlined for education was a reversal in education funding: raising it back up to pre-Cameron and Osborne levels of 2010. Perhaps they know that the way to the electorate’s heart is not through meagre public spending, but they should also realise it’s not through grand gestures that will fall flat on their face when reality hits. This isn’t a Richard Curtis movie where we all ride off into the sunset after a charming, bumbling Englishman delivers a public speech of affection and (empty) promises. Such acts of generosity come with a bill… and it’s footed by the taxpayer.
The main repercussions on day-to-day life, for the moment, will be minimal: National Insurance will increase, and there’ll additionally be a duty rise on cigarettes and tobacco. It's also worth noting that alcohol duties are getting a large overhaul, with higher duties on stronger drinks and lower ones on weaker options.
In the long term, government spending and taxation are both at the highest they’ve been since the 70s and 50s respectively and inflation is expected to reach 5%. In short: you’re going to be paying the government more, and your money will be worth less.
So there we have it, budget number 2 of the year: whilst the soundbites are more upbeat than those of its Spring counterpart, the reality seems equally as bleak as it was in March. “A new age of optimism” was how the Chancellery described it. Optimism isn’t the word I’d use, but perhaps the budget will also stretch to buying Sunak a dictionary.
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