“It’s not a windfall tax, it’s a special economic operation,” said one wag. Whatever you call it, Rishi Sunak’s newfound largesse will be especially welcome to the lowest income groups who will receive an extra £650 in cash to offset against surging gas and electricity prices.
Economically and socially, it was the right thing to do, and it won’t be the last measure of its kind if inflation remains high. However, it is also a special political operation to save both Sunak and his fellow Partygate convict, the prime minister. As such, its success is more doubtful.
It certainly does not lack boldness. Tory MP Richard Drax’s complaint that this is “throwing red meat to socialists by raising taxes on businesses” is precisely why Sunak is doing it. He wisely decided that stealing only part of Labour’s windfall tax suggestion was going to be counterproductive, so he went even further than Labour had proposed.
The effect may be particularly significant in the red wall, where the beneficiaries are concentrated. Polling shows that economic issues are rapidly overtaking cultural issues—and Brexit—among the lower paid, as the cost of living bites.
As with Brexit, Johnson argued in public both for and against a windfall tax before finally adopting it. He doesn’t give a fig for the ideology: it is all politics, and the political imperative to seize the agenda from Partygate was no doubt for him the overriding consideration.
The very fact that the tax is paid by businesses makes it a far easier political operation than last year’s increase in national insurance for the NHS and social care. Gas, oil and electricity companies don’t vote, and they certainly aren’t popular, even among Tories.
Whether the political operation succeeds depends partly on what now happens to inflation. If we really are back to the inflationary 1970s, then this is the beginning of a new era of “prices and wages” politics, of which this is just the first instalment.
But it also depends on whether the public has already made up its mind that Johnson and Sunak are beyond repair and can no longer be trusted—or given another term—whatever they do.
It is too soon to know whether this stage has yet been reached. The fact that Johnson and Sunak are prepared to act so quickly and boldly demonstrates a will to power which is far from exhausted. Labour has a lot more work to do—and good policies to be stolen—before the next election is lost for the Tories, even under this damaged leadership.
