The political implications of the Budget

On Wednesday Rishi Sunak unveiled his second Budget since he was appointed Chancellor of the Exchequer, setting out the British government’s tax and spending plans for the year ahead. Sunak’s tenure as chancellor has been characterised by high levels of public spending and government borrowing, in large part due to the COVID-19 crisis, putting him at odds with the austerity consensus of the David Cameron and Theresa May-led Conservative governments, which governed Britain  from 2010-2019. The chancellor attempted to use the Budget to put clear water between himself and his predecessors, signalling that this government would play a more active role in the British economy and ‘level up’ deprived areas of the country. Substantively, this included a pledge to increase corporation tax, a tax on company profits, from 19% to 25% in April 2023, a new UK Infrastructure Bank to fund public and private projects and a one billion pound ‘Towns Fund’, to be invested in 45 areas of England, primarily in the North and Midlands. In my opinion this Budget, which only offers small increases in spending in some areas, primarily functions to further two of Sunak’s and the government’s political aims. 

Firstly, it is clear that the government is keen to retain its parliamentary seats in the so called ‘Red Wall’ — areas in the North of England and the Midlands which have traditionally voted Labour — many of which voted Conservative for the first time in 2019, as well as crystallise support among its voter coalition more generally, made up of pensioners, homeowners and people living in more rural areas. The Towns Fund is perhaps the most obvious signifier of this. Of the 56 constituencies which will benefit from the fund, 47 are currently held by the Conservatives, and 53 voted to Leave in the EU referendum. Although this is partially to be expected — Labour and remain voting areas tend to be in big cities — by singling out ‘towns’ as areas which require investment, despite there being deprived areas in cities such as Greater Manchester, the government is undoubtedly trying to hold on to its own seats, as well as appeal to voters in other seats which might be persuaded to vote Conservative at the next election. The Towns Fund contributes to a wider narrative about cultural and economic divides between the North and the South of England and between cities and towns, which has been a feature of conservative political discourse since the EU referendum. This narrative is designed to make the Conservatives the party of deindustrialised parts of England at the expense of Labour. 

As well as being fuelled by narrow electoral considerations, this Budget also served to elevate the profile of Sunak himself. It seems inevitable that he is the government’s preferred successor to Boris Johnson as prime minister, and this Budget was an opportunity to boost Sunak’s personal popularity (which has been consistently high during the pandemic and is currently significantly higher, according to YouGov, than that of either of the two main party leaders). On Monday, two days before Sunak’s Budget announcement, the Treasury’s official Twitter account released a video in which the chancellor “reflects on the challenges of the last 12 months” (a questionable use of public money). The video depicts Sunak as an effective chancellor who has performed well within a national crisis and who cares about people’s livelihoods. Listed are many of the beneficial actions which Sunak has undertaken as chancellor, most notably the furlough scheme which “for the first time in our history” has seen the government pay people a proportion of their wages in order to protect their jobs during the pandemic. Sunak himself says of protecting people’s jobs that it is “the overriding thing that’s driving me every day.” Although the video itself is unlikely to have much of an effect on popular perceptions of the chancellor, it is symptomatic of a wider drive by the government to promote Sunak. This was also seen during the government’s popular ‘Eat Out to Help Out’ scheme in August, which Sunak became synonymous with. 

A cynical view of the Budget would be that it is purely designed to increase the government’s and Sunak’s personal popularity, and therefore that the economic recovery is subordinate to the Conservative Party’s political aims. While this is difficult to prove, it certainly seems likely that political considerations motivated at least some of the content and framing of Sunak’s budget. The Budget demonstrates that the government, unlike its predecessors, is not strictly wedded to austerity (although it is debatable the extent to which Sunak represents a break with Osborne and Hammond). While this will be a welcome, albeit meagre, change for the communities who have lacked investment in recent years, this budget does not mean that the government is on their side.

Leave a Reply

Your email address will not be published.