Boris Johnson’s government has done the right thing, for all the wrong reasons

Editorial: Rishi Sunak now calls the introduction of a windfall tax ‘pragmatic’ – but voters can see that the Tories never wanted to do it, in stark contrast to the opposition

Thursday 26 May 2022 16:30 EDT
Comments
(Dave Brown)

Credit where credit is due: Rishi Sunak has “delivered”, in the current Conservative catchphrase. The chancellor’s package of help for people faced with fuel poverty is bold and will make a real difference, with those most in need getting £1,200, those on benefits receiving a median payment of £650, and a £400 grant going to every household. It is almost socialist in flavour.

The think tanks have confirmed its strongly redistributive effects, it is part-funded by a tax on business and by public borrowing. It also marks a point where the government abandoned all pretence of following Thatcherite fiscal principles, let alone austerity, and became wholeheartedly populist, or at least “one nation”. Mr Sunak himself called it “pragmatic”.

The spring statement, although derided and poorly designed, provided £22bn in cost of living support. This latest package adds another £15bn, with £5bn coming from the windfall tax and £10bn from good old fashioned borrowing. Apart from a few fundamentalist Tory backbenchers, no one seems to mind.

The hike in national insurance remains, aside from the change in thresholds, and fuel duty remains where it is. Apart from the partial exception of those on local authority-administered housing benefits (and not other benefits), where more help seems difficult to arrange, it is just the kind of initiative that hard-pressed families at the bottom of the pile urgently need. The triple lock for pensioners is to be restored, with a bumper inflation-matching rise scheduled for next year.

Without the government finding itself in such a political mess, these announcements might never have been made, at least so urgently. It is fair to conclude that the timing of the announcement was driven by the publication of the Sue Gray report. It is a successful distraction technique because the media and public can hardly ignore it.

Yet it is difficult to see the Conservatives yielding much of a political dividend, for the simple reason that voters can see that they never wanted to do it, in stark contrast to the opposition. Such is the shifty reputation of the government that voters view anything it does with suspicion and a healthy dose of cynicism.

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It is now seven months since the leader of the Liberal Democrats, Sir Ed Davey, suggested a windfall tax on the big energy companies to ease the burden of rising energy bills. That was around the time when the prime minister said fears about rising inflation were “unfounded”, a typical piece of Johnsonian complacency, and Sir Ed’s call was mocked. A few months later, the Labour Party joined in the chorus, and the shadow chancellor, Rachel Reeves, marked a new departure for Labour in starting to develop concrete policies that had widespread public appeal, including the windfall tax.

Yet even as gas and electricity prices soared, with inflation heading to 10 per cent plus, ministers still set their face against extending the badly targeted package of measures in March. The business secretary, Kwasi Kwarteng, was (and probably still is) opposed to the idea in principle, though lately grumpily admitting that it was “up to the chancellor”. The Brexit opportunities minister, Jacob Rees-Mogg, pronounced windfall taxes “unconservative”. The chancellor himself thought an emergency Budget “silly” and Mr Johnson ordered his MPs to vote against it three times, most recently only last week.

Yet now, when his leadership is in jeopardy once again, he has availed himself of HM Treasury and the weak political position of his chancellor by spending another £15bn of other people’s money to save his career. The government, in other words, has done the right thing, but for all the wrong reasons. It’s not gone unnoticed, and it won’t save Mr Johnson’s political career.

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