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Too Little, Too Late?

March 16th 2023

Margaret Thatcher famously used the parable of the prudent housewife to explain her approach to the nation’s finances. In 1998 she told a Conservative women’s conference that “I can’t help reflecting that it’s taken a government headed by a housewife with experience of running a family to balance the books for the first time in 20 years – with a little left over for a rainy day”. What would she have made of Jeremy ‘four E’s’ Hunt’s first budget?


She might have observed that her fabled housewife was probably the sort of person who saved for future expenditure, rather than simply signing a cheque and hoping that something might crop-up to make the spending good. She might have suggested that a mother understands that you get a more productive outcome from rewarding your children for doing their chores than you do for punishing them either way. And she might have questioned the wisdom of ostentatiously indulging an already spoilt child whilst telling the rest of the family that belts must be tightened.

The cornerstones of Hunt’s budget were extended childcare that won’t kick in (or be paid for) until 2025, a corporation tax hike that represents a 6% hit on British business, and a generous tax break for pension pots of a million pounds or more and for our highest earners. A housewife, Hunt is not.

The politics of a lot of this, though, is smart. Childcare in the UK is absurdly expensive and the Chancellor knows that the Conservative Party needs a line - he has blunted a Labour attack without having to pay the bills for the policy until after an election. No, people won’t feel the benefit today. But he has lessened his party’s exposure without spending money he doesn’t, currently, have.

The corporation tax rise was baked in - he had signalled it in the Autumn and was consistently committed to doing it. It won’t be popular with business - or with a section of his own back benches - but pairing the hike with a fairly general capital allowance for investment lessens the blow.

Hunt’s one significant blunder was in his handing of a huge bung to wealthy earners - allowing them to funnel money, tax free, into their pensions at a time when millions are wondering whether they can continue to make their small contributions work whilst dealing with rampant inflation. This has handed Labour an easy attack line and the attempted trick of hiding the move in a measure to bring senior doctors back to the NHS hasn’t succeeded. This also points to the improved sophistication of Labour’s policy and political operation - they identified the weakness swiftly and have moved to capitalise ruthlessly.

This was not an earth-shattering fiscal event but we’ve all probably had enough of those, anyway. This was careful, cautious and cunning budget - not ideological but deeply political, designed to protect his party and give it the space it needs to start rebuilding trust with the public. He will be pleased with how it went and pleased with the somewhat muted reaction - quiet and calm are small but important victories for this government.

Now it is up to Sunak to make use of that space. His team plan to build on the flurries of activity that we have seen of late - on Brexit, on small boats, on AUKUS - with further moments that paint Rishi as a ‘doer’ and the chap who works hard to break the impasse and delivers fait acompli. They believe that such moments are a profound relief to the public and that voters are beginning to disassociate this government from the last government (despite them being, on any fair reading, the same government).

Labour’s job? To keep tying every moment of pain that we feel as a country to that government’s thirteen-year reign. In the end, the question becomes, will voters remember, or will they choose to forget?