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Lodestone Communications

In our pre-budget note, we said that Rishi Sunak’s ideological and political interests were pulling in different directions and that – therefore – relative stasis was the likely result. And to a certain extent, the Chancellor proved us right this week. His budget was clothed in the rhetoric of pain and ‘tough choices’ but was, in the end, more a holding pattern than a programme.


Neither of the big ticket tax rises in this budget are immediate. Companies won’t have to pay higher Corporation Tax until 2023 and the freeze on income tax thresholds will only come in after they rise as planned in April. No-one is being hammered to pay back the money we have borrowed to help us make it through the pandemic – or not yet, anyway.


Sunak played it safe and kept his options open. Which is smart. Because if 2023 comes along and we still need to raise those taxes then we can’t complain that we weren’t warned. And if by 2023 the economy is in a better shape than expected then he can frame less steep rises as a tribute to his expert management of the economy and expect considerable gratitude from workers and businesses alike. He has done – successfully – what some of his predecessors have failed to. He has rolled the pitch, to borrow a phrase from Tory strategist Lynton Crosby, for whatever comes next.


But what he has not successfully done – perhaps because it is not actually possible to do so – is resolve the central economic tension at the heart of the government. There are pragmatic arguments for austerity. There are pragmatic arguments against it. But what does the Conservative Party want the economy to be like? How much state do they want and likewise on tax and on regulation and on spending and on infrastructure. We don’t know. We know – or think we know – what Boris wants. And we know that there are divergent preferences between the two main camps of the Tory coalition – the golf club Brexiteers of Buckinghamshire and the working men’s club Brexiteers of Bolsover. But the plan for resolving those tensions, for feeding Boris’ insatiable appetite for boosterish spending whilst also accommodating the prudent instincts of the shires? Well – that is not there yet.


People talk a lot about how unlucky the Government is to face a black swan event like COVID. But there are upsides for this government in particular. Because the crisis has provided a fig leaf that serves to disguise and obfuscate the deep confusion and disagreement over economic policy at the heart of Boris’ Conservative Party. One day, the COVID crisis will be over. And at that point it will be much harder to delay squaring the circle. We can’t wait forever for the Conservative Party to decide what it actually believes when it comes to the economy.