The Budget is far too little, too late to save the Conservative Party from defeat

Well within living memory, a pre-Budget leak would be a resignation matter for a chancellor of the Exchequer – and Treasury ministers were placed in a state of strict pre-Budget “purdah”, during which media appearances were strictly forbidden. Times change, and now they’ve altered to the extent that Jeremy Hunt’s latest package of measures has been so widely and comprehensively floated, briefed and analysed that when he got to his feet he had nothing to add of any substance.

The cuts in national insurance, adjustments to child benefit thresholds, the freeze in fuel duty, and the “full expensing” on leased assets were so well-trailed that the announcements, all significant, were met only with a collective national shrug. Another tradition was broken because the Commons chamber was continuously noisy, and the deputy speaker made only token attempts to impose the sepulchral silence in which Budgets used to be heard, aside from rare moments of gross disorder.

The overall effect was to make the Budget less of an event than the government surely wished for. Indeed the lack of a final rabbit out of the hat – which in reality the press were fully expecting – left Mr Hunt presiding over something of an anti-climax. Rather than the crack of a starting pistol on a frantic period of electioneering, it was a bit boring. It may therefore be just as well that the supposed “early” election (in reality very close to the end of the parliament in any case) seems to have been abandoned. It certainly did not feel like a Budget that might be the game-changer the Tories so desperately need. On balance, Mr Hunt would have been better off keeping schtum.

Not that it was exactly cautious. Understated though he is, Mr Hunt did the most he could within very tight fiscal constraints, and he has taken some risks to engineer the tax cuts he has worked so hard to present to the electorate. He managed, just, to remain within his fiscal rules, with the level of national debt in relation to national income falling at the end of his five-year forecasting horizon, but as usual it is a damned close thing, and the burden of debt will still climb over the next four years, before an almost imperceptible dip in 2029 (far enough away to be near irrelevant in any case).

Public spending will still increase overall, albeit at a miserable real rate of 1 per cent a year, and, worryingly, with more real terms cuts in “unprotected” areas, such as prisons.

The priority, though, is obviously tax cuts. Mr Hunt repeated the reductions in national insurance he implemented in January, and he removed the anomalies in taxation of child benefit for people earning about £50,000. There was no sign of a reduction in corporation tax, but business investment will be encouraged by a range of tax breaks, and incentives for pension funds to put money into British growth industries.

Welcome as that is in principle, it would be a disaster if Mr Hunt, or his successors, actually ended up raiding pension pots to pick winners that turn out to be losers. Such a move might artificially boost growth rates in the short term, but would rob pensioners of their incomes in old age; a scandal waiting to happen, in fact.

It was smart, and cheeky, for Mr Hunt to attack the non-doms and steal one of Labour’s most distinctive priorities, but the super-rich seem to have few defenders apart from Sir Jacob Rees-Mogg these days. As usual with one of Mr Hunt’s statements, he managed to mention as many different beneficiaries of another modest round of “levelling up” as possible. There was something for the citizens of Cambridge (especially), Rhyl, Darlington, Redditch, High Peak, Coleraine, and Peterhead, among other locales.

The biggest economic problem with Mr Hunt’s plans is that he has made the books “balance” on the basis of some extra borrowing and some heroic assumptions about the effect of Artificial Intelligence and digitisation on public services. Mr Hunt, presumably without objections from the Office for Budget Responsibility, is assuming that the NHS and other public services will save tens of billions of pounds in the coming years from such innovations, which will apparently also have the added benefit of adding the equivalent of tens of thousands of people into the workforce by revolutionising productivity.

This is how the chancellor thinks his meagre increases in funding for public services will translate into better provision. It is unproven, and Rachel Reeves, if she succeeds him, will have an even more difficult task ahead of her if it turns out to be wishful thinking on the chancellor’s part. She will certainly need to find fresh sources of funding to pay for the Labour schemes, such as expanding NHS dentistry, that were going to be paid for by the non-dom money, given she won’t reverse the national insurance cuts.

The Hunt strategy might work. The case for modernisation and, for example, for the creation of electronic patient records is well overdue and should be transformative. But such progress has not yet been achieved, and by the time anyone finds out if the NHS productivity plan and the rest of Mr Hunt’s schemes are working or not, the money will have already been spent on tax cuts. It is a “jam today” Budget built on some very rosy and optimistic assumptions – and that is not prudent.

Politically, it is far too little, too late too late to save the Conservative Party from ignominious defeat. The party long ago forfeited the confidence of the public, and whatever the Sunak administration does now is framed in the context of 14 years that has inflicted austerity, crisis, Brexit, Partygate, the cost of living crisis, sleaze, failing public services, crumbling schools and record high taxation.

The recent “cuts” in tax will make some better off than otherwise – but they only amount to about a 50 per cent rebate of the tax grab already made from freezing income tax thresholds. People feel worse off and they are worse off because 2022-23 remains the largest year-on-year drop in living standards since ONS records began in the 1950s.

It is a deafening fact: sometimes the chancellor struggled to be heard in a raucous session in the Commons, but the voters have stopped listening to him and his party anyway.