The Budget this week promised a different approach to public finances than we have seen from the past decade of Conservatives fiscal policy.
The message and the messenger (in Rishi Sunak) certainly mark a change of course from the ‘Osbornomics’ that dominated the 2010s, but now the dust has settled and the documents have been analysed, the reality might end up looking somewhat more familiar.
Hidden away deep in the Budget documents is a further £4bn cut for public sector spending, on top of £12bn announced back in the Autumn. The Chancellor was quick to suggest that this was merely a technically adjustment due to inflation, but that notion was quickly busted by the Institute for Fiscal Studies’ analysis which stated the cut will cause “additional pain” and presenting it as merely inflationary “means the Chancellor isn’t really levelling with people about the choices the government is making to repair the public finances”.
These cuts will also hit hard in specific areas – health, education and defence all have protected spending, so already cash-strapped areas like local government and justice will presumably bear the brunt once again.
The sense of unease with the Government’s messaging versus reality was then hit home by their recommendation for just a 1% increase in NHS pay, a real terms pay cut once inflation (forecast to be up to 1.5% this year) is taken into account.
The timing of the submission, just a day after a Budget with no mention of public sector pay, also strikes a slightly sour note, particularly when the public sector unions and other interested parties had to make their submissions in mid-January.
Whilst the Covid-19 pandemic has put unprecedented strain on public finances, a Budget that raises the tax burden to the highest level since 1969 whilst simultaneously cutting public services could be challenging to defend in years to come, particularly as we look to the 2024 General Election.
Which begs the question: what exactly is the Government’s vision for public services?
Much of the measures in the Budget do look to have been set with one eye on 2024 – take the pain now, with the hope that the economy will rebound and tax cuts are possible in the run up to campaigning. All of which is a very sensible strategy if the election is to be fought on economic competence, as arguably 3 of the last 4 have been.
But what if the next General Election was fought on public services?
We haven’t seen a true public services election since 1997, when Tony Blair swept to a 179-seat majority and ended 18 years of Conservative rule.
By 2024 the Conservatives will have been in power for 14 years, if the public are not happy with the state of public services it will be hard to pin the blame elsewhere.
And it’s not just NHS pay that will define the public mood – 1997 was in part driven by people’s everyday experience of the world around them – education, health and crime dominated the issues that mattered to voters.
And public sector issues are rising in importance to the voters today.
According to YouGov’s tracker the importance of education to the British public has doubled since the last election in 2019, beaten only by the NHS, the economy and the environment.
Whilst Labour has a mountain to climb according to recent opinion polls (including instant Budget reaction giving the Tories a 13 point lead) there is a long way to go until the next election and overcoming such a deficit is not impossible – Gordon Brown had just moved to a record 10 point lead over David Cameron at a similar point ahead of the 2010 election.
Which comes back to the question, just what is the Government’s vision for public services?
The truth is, at the moment at least, there doesn’t appear to be one.
Boris Johnson’s penchant for big infrastructure projects may help drive a Keynesian recovery from the pandemic – and in that sense the promise that this is a different Conservative party certainly rings true – but if social care remains in crisis, schools are in disrepair, and potholes litter our roads, then he may just have a problem.
And shaving 30 mins off a train ride to Birmingham will not be enough to solve it.
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Harry Shackleton
Harry is an experienced communications and operations professional with 15 years’ experience working across public affairs and communications, in the UK, Brussels and with clients across Europe. He has worked with some of the UK’s best known communications agencies to help them develop their business and become more effective.
