Yahoo Finance This budget will prolong the Tories' vaccine bounce: for now, Labour must sit tight
Rishi Sunak will have a glorious day on Wednesday. Nothing will ever be as perfect as this budget – bounty will flow and yet he will proclaim himself a traditional, tight-fisted, low-tax Conservative chancellor.
Related: Keir Starmer is right to oppose the corporation tax increase | Alan Johnson
In this golden moment he will renew temporary cash-splashing. Expect pork barrel munificence for “red wall” seats perched on thin majorities: the pork will look deceptively lavish, with most voters too distracted to count noughts or to examine who it really benefits. He’ll no doubt reprise those northern rail schemes re-announced 60 times in seven years, with not a spade in the ground. And there are others more in need of housing security than those saving for their first home.
All budgets are pure politics, so he will sonorously “level with people” that debt means future tax rises, to sound sternly prudent with the purse-strings. He reassured the Sunday Telegraph leader-writing diehards calling for tax and spending cuts with his true creed: “I am a Conservative and I believe in lower taxes.” So in this budget, and for this budget only, he will outdo his boss on cakeism.
This is odd. Objectively any chancellor would hold their head in their hands at spreadsheets on their desk showing sky-rocketing debt, a spectacular fall in growth and the Bank of England predicting unemployment at a shocking 7.75% soon. Yet he brims with self-confidence, his PR machine churning out flattering videos. He is king of the castle – for now.
Precisely as pollsters predicted, the Tories are benefiting from a vaccine bounce. The end is nigh (barring new Covid variant catastrophe), freedom dates are ringed on every calendar. No government in my lifetime has had a chance to gift every citizen such instant euphoria as this life-preserving injection.
This is the worst of times for an opposition, a bystander carping at the government’s monumental blunders and disgraces, too soon forgotten (though never forgiven by many families of the dead). In this Covid-transfixed time, few are interested in Labour policies. Except, of course, Labour-supporting political aficionados, writhing at painful polls with Opinium showing the Tories seven points ahead. Yet while the “vaccine bounce” is inevitable, the opposition and its supporters would do well to keep calm: it won’t last.
An absurd brouhaha blew up on Labour’s twitchy benches when Keir Starmer and Anneliese Dodds opposed tax rises now, including corporation tax. Were they outflanking the Tories from the right? No, this was pure Keynes: don’t tax and choke off a recovery. When the economy is in a trough, borrow and spend, don’t repeat George Osborne’s blunders. As you head into a recession, keep cash flowing and hold off on business taxes. Dodds is appalled by the 5% rise in council tax crippling already stricken households: instead, councils need the grants that were stripped from them in the austerity decade.
The Institute for Fiscal Studies (IFS) says £60bn in tax must be raised at some point, including radical reforms to lavish reliefs for the wealthy – but they too say not now. The Resolution Foundation wants a £100bn Biden-style stimulus package. However, a progressive thinktank’s wise policy for massive borrowing may not be so easy for Labour to promote.
Labour is up against this: on trust to run the economy, Johnson and Sunak score 39% while Starmer and Dodds trail at just 25%. Without at least level-pegging on economic trust, Labour can never win. The albatross around its neck is the unjust blame it still carries for the 2008 crash and the Corbyn manifesto seen as wildly spendthrift. The bitter lesson is those policies were affordable financially, but not politically. Credibility is all and it’s usually an artifice.
Voters believed Osborne’s maxed-out-the-credit-card lie. Imagining Treasury debt as a household overdraft, they accepted national belt-tightening. Keynes understood that borrowing more when in debt was a hard-to-sell “paradox”. Sunak will try Osborne’s trick: you can bet his “fiscal responsibility” hides austerity cuts alongside tax rises. The chancellor seeks clear blue water between his “fiscal rectitude” and Labour “prodigality”, but he already knows austerity is out of favour. Boris Johnson has promised spending, but filling the black holes in funds for schools, social care, council services, law courts and nurseries is nowhere in Treasury plans. As pay freezes bite, “levelling up” will soon emerge as the imposter it always was.
Economic trust is 10 times harder for Labour to win. Extreme caution saw Tony Blair and Gordon Brown sign up to eyewatering Tory plans in 1997, economically needless, but politically essential. Right now, Labour needs to keep calm, be patient. When vaccine joy is over, the charm of Sunak’s showbiz and Johnson’s rumpled roguery will wear thin, raising the unflashy appeal of a serious, decent and honest opposition frontbench.
Is that enough? Where are the lighthouse ideas? For now, Labour should continue to hammer this government’s serial outrages – and soon enough, its better answers will be heard. Catastrophic youth unemployment is worsening, the government’s “kickstart” scheme is already failing and Labour will always do social programmes better. Nonetheless, last week’s major King’s College London and IFS survey on attitudes to inequality is a dire warning to Labour not to leap too far ahead of voters, with half saying Covid unemployment is people’s own fault.
All those impatients, straining at the leash over this budget, stop and think: rallying existing Labour supporters with radical social justice policies feels good, but currently cuts little ice with a conservative electorate. I share the extreme frustration, but patience comes first. Like an army waiting for the enemy, don’t break ranks but sit tight until the time is ripe.
Polly Toynbee is a Guardian columnist
