And yet there is the outline of a winning Tory political strategy within the plans the Chancellor set out. Sunak has, insofar as it is possible to do so without declaring open warfare with No 10, disassociated himself from the catastrophic decision last year to raise National Insurance and pour the money into a completely unreformed NHS. Sure, the best thing he could have done would have been to have dumped the whole woeful project in the circular, gray filing cabinet underneath his desk.
And yet even a government already known for shameless levels of political chutzpah would have found that impossible, at least while maintaining any shred of credibility. Instead, it has just about been cancelled by the increase in thresholds, and the cut in the standard rate. It has been scrapped without actually being scrapped – which is the next best thing.
Nor should the cut in the standard rate be dismissed as simply symbolic. It is important for three reasons. First, the headline rate is the one that catches the most attention. We are sort of aware there are lots of other taxes we pay, but it is that line on a PAYE slip that we really notice. Next, it is the tax rate that makes the most difference to incentives. Put in an extra shift on overtime, or start up a side hustle to bring in some extra cash, and you can keep a bit more of the money you earn.
Finally, and most significantly, it is a broad tax cut for Middle England. It breaks with the Brown/Osborne orthodoxy of the last quarter century that tax cuts must always be targeted on the very poorest, and it recognises that families on average incomes are now paying far too much to the state. It is the first time we have seen that since Nigel Lawson and Margaret Thatcher were writing budgets together in the 1980s. There is a long way still to go – but that is potentially a huge change.
The Spring Statement has opened up some clear blue water between the Chancellor and the Prime Minister. We have heard Sunak talk about how he is a tax-cutting Tory. Now we have seen some glimmers of it.
In reality, when there is an election, probably in the spring of 2024, the Conservative message will be very simple. It has steered the economy through Brexit, the pandemic, and the war, and kept it just about afloat, and now the work has started on cutting taxes again and restoring incentives and competitiveness.
The Chancellor would like to be leading his party into that election. And for all its incoherence the Spring Statement has made it easier for him to do so – and improved his chances of winning it as well.
