IT had an end of term feel to it. Labour were waving bye-bye to the Tories as if they were off on their holidays and their cheekiest schoolboys were shouting impertinent questions, like “where’s Liz?”.
The Deputy Speaker tried to keep order but only in a good natured, half-hearted way because she knew that, any day now, it would all be over.
Chancellor Jeremy Hunt stood for more than an hour making his Budget speech which seemed to be a presentation at a last-day assembly. He went out of his way to shoehorn in some gags that had everyone rolling their eyes – there was one about Peter Mandelson urging Keir Starmer to lose a few pounds and another about Angela Rayner apparently having two homes – but, other than a £20m boost for Darlington, he had very little new to announce.
READ MORE: WHO ARE THE WINNERS AND LOSES IN THE BUDGET?
Instead of talking for 66 minutes, he could have saved everyone’s time plonking a pile of yesterday morning’s papers on the Despatch Box and saying: “It’s all in there.”
So we knew that he’s going to raise some taxes – on vapes, on holiday lets, on posh plane tickets – and he’s going to scrap the non-dom status that helps wealthy individuals avoid paying tax in this country. This is going to raise him some money that we knew he was going to spend that money by cutting another 2p off National Insurance.
He tried that approach in his Autumn Statement, but although each 2p cut gives average workers £450-a-year back, it didn’t shifted the polls. The Tories are still 20 points behind Labour and now they are haemorrhaging votes to the right to Reform UK.
Will another £450 work?
The tax cut is a desperately hard sell for the Tories because taxes are not really being cut. The point at which people start paying taxes has been frozen since April 2022 at £12,570, so as wages rise, more working people are paying more tax.
In 2010-11, when the Tories came to power, taxes accounted for 33.2 per cent of Gross Domestic Product (GDP). Today, because of the pandemic, they’ve risen to 36.2 per cent, and, even with the NI cut, they are scheduled to keep rising to 37.1 per cent in 2028-29.
Oh, and perhaps why an NI cut does not shift the polls is because it does not benefit pensioners, who are the most likely of all to vote.
Another substantial part of the Budget was Mr Hunt’s “landmark Public Sector Productivity Plan”. It makes sound sense, but it’ll be interesting to see whether it is a vote winner on the doorstep. The Treasury is to fund the NHS’ £3.4bn computer system in the belief that it will result in £35bn of savings.
“We will slash the 13 million hours lost by doctors and nurses every year to outdated IT systems,” said Mr Hunt. “We will use AI to cut down and potentially cut in half form filling by doctors. We will digitise operating theatre processes allowing the same number of consultants to do an extra 200,000 operations a year.”
Given the public sector’s appalling record of computer systems – the Post Office’s Horizon immediately springs to mind – this is a brave boast, and will the public be looking forward to Artificial Intelligence filling in their medical records when what they really want is a physical dentist to extract their teeth?
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This is the Tories’ presentational problem in a nutshell: Mr Hunt, putting his faith in AI, looks like a techno-nerd, just like his boss, Rishi Sunak. In fact, Mr Hunt sounded like a pretty competent techno-nerd, but do techno-nerds win elections? Do techno-nerds convince real world voters they have real answers to the cost of living crisis, or the immigration crisis, or the NHS crisis?
But if this were an end of term occasion, it would mean Labour had a lot of homework to do over the long holiday ahead because in performing a breath-taking U-turn, Mr Hunt stole one of their most potent ideas.
Less than 18 months ago, Mr Hunt said scrapping the non-dom status was the “wrong thing” to do because it did not “make sense”. Now he’s flip-flopped and done it, presumably because the public see it as the right thing to do to stop super-wealthy people, like the Prime Minister’s wife who so clearly lives in the country she has a Downing Street address, avoiding tax.
It will raise about £2bn, which Labour was going to spend financing its plans, from school breakfast clubs to the green industrial revolution. Now Mr Hunt has taken that £2bn, handed it back to workers in the form of an NI cut, and blown a big hole in Rachel Reeves’ accounts.
There was probably lots of sniggering in the boys’ toilets when he came up with this wizard wheeze.
How can Labour make their books balance?
The end-of-term atmosphere as Mr Hunt spoke was partly because there has this week been feverish speculation that Mr Sunak was planning on calling a May election immediately after the tax-cutting Budget, but as there was no rabbit from the hat, no grand reforming vision, no big electoral promise, it suggests the Tories’ tactics are to play it long, wait for an autumn budget when they offer more tax cuts and a genuinely big reform, like scrapping NI altogether. This term looks likely to drag on and on and on…
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