This is not a “grown-up” government. The autumn statement proved it

The whole purpose of Rishi Sunak’s administration was to restore steady leadership, but it is not equal to the times 

November 23, 2023
Rishi Sunak and Jeremy Hunt—hard-hearted towards the hard-up? Image: Associated Press / Alamy
Rishi Sunak and Jeremy Hunt: hard-hearted towards the hard-up? Image: Associated Press / Alamy

Nothing is certain in life, except death and politicians playing games with taxes. 

As chancellor, just 18 months ago, Rishi Sunak was steering through a big hike in National Insurance. When this was attacked, he—together with Boris Johnson—doubled down, the pair penning an article stating: “Now is the time to stick to that plan… It is the right plan.”

Then, after Liz Truss’s ruinous month in the sun, he decided to junk almost all her tax cuts, but stuck with her reversal of this one rise. Now he is going beyond her policy, and actually reducing the very tax rate that he was so recently trying to raise.

Does anyone think the original rationale for the rise—to get a grip on rising NHS waiting lists and fix social care—has become less urgent? Of course not. 

Sunak’s see-sawing attitude towards the appropriate National Insurance rate betrays an abject lack of seriousness. To be fair, he is anything but unique in this: the maddening complexity of Britain’s tax system is the direct result of an absence of real tax strategy that goes back at least a generation. 

Chancellor Jeremy Hunt previously ran not one but two leadership campaigns centred on cutting corporation tax rates, based on the Reaganite fantasy that this would boost growth so much that it would more than pay for itself. The moment that he got into No 11, one of his first acts was, instead, to restore a steep increase in the same levy

There is no party monopoly on fiscal body-swerves. Early in his time at the Treasury, Gordon Brown loudly trumpeted his new “10p starting rate” to ease the burden on low earners; towards the end, he decided it would play better to ditch it, and use the savings to cut the basic rate. 

Tony Blair’s greatest achievement as prime minister was finding the funds for decent pensions and healthcare, in the latter case by explicitly raising tax for the purpose. But in his strange corporate afterlife, surely knowing full well that cost pressures on pensions and health continue to dominate the outlook for the public finances, he trolls today’s politicians by pretending there is some easy way to tax less and spend less.

If all politicians dissemble on tax, you might think Sunak would get away with doing the same. But there are a couple of reasons why, I suspect, he may pay a heavy price for playing the ordinary games. 

First, the character thing. 

After the Truss interlude, the whole purpose of Sunak was meant to be—as numerous newspaper headlines put it—having a “grown-up” back in charge. Under pressure of events, this flattering image is rapidly unravelling: he is being steadily exposed as a man without a plan. 

In the last few months alone, he has veered from ship-steadying centrist to the feisty insurgent on the party conference stage who vowed to break with 30 years of failed consensus, and on to the re-shuffler who brings a former prime minister from the height of that supposed consensus back to his top table. 

His Machiavellian move to secure the backing of Suella Braverman for his run at the top job—apparently by promising to reinstate her as home secretary a matter of days after she was sacked for misconduct—has backfired in spectacular fashion, after he ended up with no alternative but to sack her a second time. 

While it might be only lawyers and anguished liberals like me who despair at the lack of cogent purpose in the Rwanda policy, after the Supreme Court ruled it unlawful, the wider public must be starting to suspect that all the noise about it is a distraction from nothing getting done. 

Sunak’s star first rose because of the energetic pragmatism he showed in responding to the first Covid wave at the Treasury. But within months, he was peddling his signature Eat Out to Help Out scheme, which always risked becoming Eat Out to Wipe Out. Even from the narrow point of view of the public finances, the “grown-up” option would have been paying pubs and restaurants to stay shut, rather than inflaming the need for the hugely costly furlough extension. Two years on, the inquiry is providing a public reckoning.

The PM also seems incapable of pulling off a smooth announcement, instead getting excited and pulling away at the wrapping before the big day, like a child wanting to open presents on Christmas Eve. Before the cancellation of HS2 in October there was endless speculation, not only about the substance of the decision but whether Sunak would have the brass neck to announce it in Manchester. Before this autumn statement, all manner of kites were flown about under-indexing benefits and cutting inheritance tax, needlessly worrying some, creating false hope for others, and eventually creating a sense of drift on all sides. 

And Sunak’s second big problem is an economic context in which clear direction is especially important. 

Large, specific and early tax cuts are being funded by large, hazy and delayed cuts to public services

Some of the dark clouds were dispelled by Chancellor Hunt, who has a good feel for both business and Middle England. He set out a few useful measures to boost private investment while closing down some of the wilder ideas in the air. He also proved an extremely deft editor of the bundle of forecasts. In the House, he highlighted a run of positive headlines: inflation down, recession avoided, and, in another few years, debt to start edging down.

But even before Hunt had sat down, the experts were exposing how none of the news was as reassuring as he’d made it sound. And the official bean counters at the Office for Budget Responsibility revealed that his plans relied on deep-to-the-point-of-implausible cuts to many public services after the election. Large, specific and early tax cuts are being funded by large, hazy and delayed cuts to public services. To grab and twist Sunak’s conference slogan: short-term decisions for a squalid future. 

Now, in the right circumstances, this might nonetheless be a clever trap to set for a nervous Labour party which vows to match Tory spending plans. But manoeuvring the other side into pledging the impossible won’t do much for Sunak. The country is less interested in the opposition than in the day-to-day reality bluntly highlighted by the OBR: namely, “the largest reduction in living standards since records began in the 1950s.” 

Inflation is still more than double the Bank of England target, and—even as the PM pats himself on the back for fixing that problem and making tax cuts affordable—the governor warns further interest rate rises may be required. Millions are already set to see mortgage repayments shoot up as deals are renewed, and will weigh that cost, plus continuing price rises, against the bump in pay packets now in train for January. 

All this creates, to an unusual degree, a real hankering for steadiness of purpose. Any sense of being governed by gimmickry is unusually dangerous. One last example of why that suspicion is rising concerns the heavily trailed crackdown on supposed unemployed layabouts, by cutting their benefits off. Tony Wilson of the Institute for Employment Studies immediately spotted that, on the government’s own numbers, enforcing the new sanctions will actually cost the Exchequer money. 

In other words, “hardworking taxpayers” will have to work harder for a show of hard-heartedness towards the hard-up. Whatever else that may be, it isn’t hard-headed. And it feels like we’re slipping beyond the point where such stunts can be mistaken for “grown-up” policy.