Budget 2024: No magic bullet for the Conservatives, but has the trap been set for Labour?

07/03/2024

Jeremy Hunt’s Budget yesterday was a bit like him – solid, not particularly dramatic, perhaps even a little boring.  The cut in National Insurance had been broken as a story by The Times’s Steven Swinford earlier in the week, so there was no rabbit from the hat for Hunt to produce.  When he stood up in Parliament, everyone knew pretty much exactly what he was going to say.  Further to what he said in the House of Commons, even the confected story that the Conservatives sought to completely eradicate National Insurance died a death by the morning news interviews, specifically on Times Radio at 7am, not even lasting a full 24 hours.

Hunt is an adult, someone who understands economics and is not nearly as ideologically driven as his predecessor, Kwasi Kwarteng, whose mini-Budget crashed the markets, his own career and that of his close ideologically ally, Liz Truss.  Fiscal responsibility was the responsible path, Hunt told us.

But what he has created is a cliff-edge, a point beyond which debt, higher taxes and our very stretched public services lie.  The Institute for Fiscal Studies analysis of the Budget today bears that out, with warnings of what awaits the Labour government almost certain to be elected later this year.

With an election imminent, what Jeremy Hunt has set up with this Budget is something of a hostage to fortune.  But given how little has changed since the Autumn Statement, there is not much more he could have, perhaps, done.  Labour’s barnstorming reaction doesn’t outline what they would do; they are understandably reluctant, with manifestos being written, to be too forthcoming with their own plans.  With Hunt’s brazen theft of Labour’s non-dom plan yesterday, this is hardly surprising.

Historically bad poll ratings for the Conservatives, with one poll even suggesting the Liberal Democrats may end up as the Opposition with the Conservatives down to 25 MPs, is the context to this Budget.  Those in Westminster from the Conservatives I’ve been speaking to in the past 24 hours are not as grumpy as they could be, but neither are they enthusiastic.  Labour and other opposition parties seem very little being changed, rather just more to oppose and pick holes in – I interviewed a supremely relaxed Shadow Business Secretary Jonathan Reynolds yesterday afternoon. 

The National Insurance cut, like its earlier incarnation in the Autumn Statement, will probably similarly not be noticed.  Yes, the average worker on the average annual UK salary of £34,963 will be around £900 better off as a result of both changes, but with inflation at 4% and many other bills, such as council tax demands from many cash-strapped or even basically bankrupt council areas rising, this will feel like cold comfort.  And the Conservatives won’t be thanked even for this £900 cash boost, not least because of the more than two dozen times they have raised taxes over the past 14 years.

It is probably just too late for this Budget to be a game-changer for Jeremy Hunt, Rishi Sunak and the Conservatives, with Labour ahead in the polls consistently for two years.  By the end of this year, the likelihood is a new Labour administration under Prime Minister Keir Starmer will have to raise taxes.  The elephant trap has been set by Hunt, who, like many in his party, is attempting to play a long fiscal game.