There is nothing, says the former chancellor Ken Clarke in his memoir, “so dead and forgotten as old budgets”. A chancellor’s budget is the product of months of Treasury work. It provides a spectacular pantomime on the day it is delivered. It appears to matter hugely at the time. But, as Clarke himself admits, most budgets are effectively forgotten within months.
Jeremy Hunt’s 2024 budget, delivered on Wednesday, is unlikely to be an exception. Many of its figures can be taken with a pinch of salt. They will need to be adjusted, sometimes radically, in the months ahead. Hunt’s budget will be rapidly absorbed into the existing party battle, too. It has not changed the conversation much. Nevertheless, in one very particular and politically significant way it was genuinely memorable.
What Hunt produced on Wednesday was both a distinctively Conservative budget, and a recognisably pre-election budget. But it was absolutely not a credible account of the economic and fiscal problems facing Britain or of the conditions that will shape the next financial year. Instead it felt more like the work of a party that, having once believed that it was born to rule, is now reduced to being born to wreck.
Hunt’s repeated attacks on Labour – I counted at least a dozen – showed where this budget was really focused. The speech was shot through with the recognition that a Labour chancellor, Rachel Reeves, will probably be taking Hunt’s place within a few months. Hunt knows this, and so do the MPs alongside and behind him on the green benches. If and when that happens, much of what Hunt said on Wednesday will then be consigned to history. This made it the first budget speech of my lifetime whose central idea was simply to rough up the pitch as much as possible for the likely next administration.
The central example of this was the tax cut in employees’ national insurance contributions. This did not go far enough for the Liz Truss wing of the Conservative party, which wants income tax cuts as well. But it was designed to wrongfoot Labour, who clearly saw it coming and quickly accepted the new cuts. Even so, although Hunt unveiled some new taxes too, on vaping for example, it still takes net income out of the Treasury’s coffers that will not now be spent on public services.
Hunt went to great pains to claim he was not cutting the planned increase for next year in departmental spending. But this is a deceit. The overall tax burden, unmentioned by the chancellor at any point, will continue to rise, but the planned increase in spending for government departments is still below inflation and thus a real-terms cut. It does nothing to compensate for long years of even larger real-terms cuts. It will mean further cuts for the many departments – such as environment (climate did not rate a single mention), justice and work and pensions – whose budgets are not protected, as health and defence will be. Some of the new taxes will not come on stream next year either, let alone this year. All this is in reality being deliberately dumped on Reeves’s desk.
There have been pre-election budgets in British history before in which everyone knows that the chancellor’s speech was crafted with the election in mind. Several of these have been classic election giveaways and some have been rewarded with victory at the polls. But there have also been a smaller number of budgets in which neither the chancellor, nor anyone else, has any great expectation that the political tide will be turned in the election to come.
Hunt’s budget fell into this category. Yet there was one standout difference in it from the similarly fatalistic budgets of Reginald Maudling in 1964, of Denis Healey in 1979 and of Clarke in 1996, all of which were also delivered amid the expectation of an imminent change of government. Maudling and Clarke actually had decent economic stories to tell, though each could see the writing on the wall for other reasons. Healey, amid more straitened economic times and with the Callaghan government having already been defeated in a confidence vote, saw the writing too. As a result Healey explicitly avoided any tinkering or headline-grabbing measures, delivering instead what he called a “caretaker budget”.
Hunt’s budget was therefore unique among cornered chancellors. Although he claimed that the economy had turned a corner, he still had a low growth, recessionary, high-tax story to tell, not a more optimistic one. He too could see the writing on the wall (support for the Conservatives was down to 20% last month in one leading poll). But, unlike the chastened Healey who, 45 years ago, apologised to the “next chancellor” for handing over a “poisoned chalice”, Hunt showed no shame. There was no avoidance of radical changes, as there had been with Healey. Instead, Hunt delivered a hit-and-run budget.
This was embodied by the decision to replace non-dom tax status. When Labour proposed this very same measure two years ago, the Conservatives scoffed that it was an anti-competitive gimmick. Now the Tories have stolen their rivals’ clothes while they were bathing, as Disraeli said of his 1867 electoral reform bill. Hunt’s purpose was to make life difficult for Labour, without actually proposing a new system for non-domiciled taxpayers to put in its place.
Although it is sometimes easy to take a lofty approach to budgets and to dismiss them as so much sound and fury, they do matter. They certainly matter for the Treasury, the dominant department in Whitehall and in any government, for whom budget day is not merely the supreme annual moment of its existence but also its day of maximum exposure.
That makes it, as Hugo Young once pointed out, into a moment for which the Treasury does not have an alibi. Wednesday’s speech should be viewed in that light, both for the Tory party and for the Treasury itself. It felt like a moment in which neither of them showed they had learned much, repeating too many of yesterday’s failed solutions to address the problems of today. The great question hanging over Britain is whether Labour has the strategic answers that the Treasury has lacked under the Tories.
Although Hunt is a different kind of Conservative from Liz Truss, his tax cuts are ultimately an attempt to apply the same non-solution to today’s macroeconomic problems. They will go down well with some MPs, some Tory activists and the Tory party’s rightwing media echo chamber. But they will not necessarily cut it with the public. And they will not re-equip Britain’s broken state institutions – or make them more productive, as Hunt put it – to carry out the tasks of which only the state is capable. To carry on this way is like relying on a cavalry charge in the nuclear age.
Martin Kettle is a Guardian columnist
