The Conservatives’ reputation for fiscal rectitude has been handed to Labour

Nothing sums up the role reversal in British politics since the last general election than the present Labour leader, Sir Keir Starmer, condemning the Conservative programme for its profligacy – invoking the name of the last leader in the process, "a Jeremy Corbyn-style manifesto”. This is bewildering stuff.

It takes a moment to recall how easily the Tories used to be able to present themselves as the party of fiscal rectitude and perversely proud of their policy of austerity, and how wantonly Mr Corbyn and – albeit to a lesser degree – his predecessor Ed Miliband were (or allowed themselves to be) presented as reckless towards the public finances.

And so it is that the Conservatives seem not only to have ignored the lessons of the Labour defeat in 2019 but, rather more unexpectedly, also the grim experience of the brief premiership of Liz Truss.

It was, after all, Ms Truss’s 2022 mini-Budget, delivered under some duress by her chancellor Kwasi Kwarteng, that did more than anything else to shred the Conservatives’ reputation for sensible economic management. It was Mr Sunak, in the immediately preceding Tory leadership campaign, who wisely warned about what would happen if she actually embarked on her experiment of lavish, unfunded tax cuts; and it was Jeremy Hunt – whom Ms Truss had to appoint as chancellor – who had to begin to undo the damage.

In the hard months that followed, the now premier Mr Sunak and Mr Hunt made considerable progress in calming the markets, rebuilding trust and getting the public finances into shape. They supported the Bank of England – in getting inflation down, rather than ignoring it – and the Office for Budget Responsibility.

Now? It is as if Mr Sunak and Mr Hunt have suffered a sudden and acute attack of fiscal amnesia.

So far as the management of the economy is concerned, the Conservatives are, to borrow one of Mr Sunak’s favourite soundbites, back to square one. Or, more colourfully, they have “Trussed” themselves up with a manifesto akin to a sort of tribute act to her mini-Budget.

Whatever merits the policies in the manifesto may have, few of them can be implemented by a re-elected government that promises to spend more than the nation earns, and to risk inflation and inflict higher interest rates on homebuyers once again, just as Ms Truss did so disastrously less than two years ago.

At the fiscal core of the Tories’ “clear plan” for their dreamy fifth term in office is some £30bn in unfunded tax cuts. These, ironically, are near enough to the £38bn “black hole” that they accuse Labour’s plan will blow in the public finances. The Sunak plan is only “funded” in the sense that the Tories suggest unspecified and uncorroborated cuts in the social security budget, efficiencies and clamping down on tax avoidance will yield the necessary entries on the credit side of the Treasury ledger. On the basis of past experience, those are highly optimistic assumptions.

Like the dodgy calculations they produced about Labour’s supposed policies, with the discredited claim that it will cost every household £2,094, there is very little in the Conservative manifesto, or their recent record, to reassure voters that their plans are sustainable and that the tax cuts will indeed ever end up in people’s pockets.

Besides, the voters are now all too well aware that the medium-term freeze in tax thresholds – which remains in place – will mean rising taxes for most of the rest of the decade. The (third) 2p cut in national insurance contributions (NICs), the abolition of employee NICs and the Help to Buy package must be assessed in that context. Besides that, many people would rather an improvement in vital public services than a tax cut.

Away from economics, Mr Sunak and his team seem rather timid, too much so to avoid further criticism from the discontented right of the party and to defend themselves from the electoral predations of Nigel Farage. In purely tactical terms – they are inherently immoral policies – Mr Sunak could have taken the opportunity to promise to leave the European Convention on Human Rights and to abolish inheritance tax, radical moves symbolic of what the Tories mean by “change”.

But he did not – even though it is extremely unlikely Mr Sunak will ever get the chance to implement these ideas. His fate as the man who will carry the can for a historic defeat seems sealed. It might have been better if he’d laid some more of the blame on the Tory right.

We shall see what Labour has to offer in the coming days, but the signs are that Sir Keir and his shadow chancellor will not be matching the Tories’ proposed tax cuts, chimerical as they may be.

Indeed, because Labour seems inclined to follow much of the Tories’ public spending plans and the narrow and slow trajectory for reducing the national debt, it will do well to avoid having to put taxation up during the next parliament and stick to its promise to leave income tax, national insurance, VAT and, it appears, even capital gains tax alone, behind some specific targeted measures already announced, such as adding VAT to private school fees and changing non-dom rules.

So far as the macro-picture of the public finances is concerned, then, there is not much to choose between the parties, and it is as well to recognise that reality. There are lobby groups who push for lower taxes, just as there are for more spending on everything from defence to first-time buyers. But few suggest that, still bearing the huge debts incurred by wars, the global financial crisis, Brexit, the pandemic and the energy crisis, the UK should as a priority be paying its debts down. Even the prudent Sir Keir and his iron-clad shadow chancellor don’t talk much about that.