Hunt offers Tories hope in a world of low expectations -Dlight News

Hunt offers Tories hope in a world of low expectations

We live in a world of low expectations. A government that does not provoke a currency crisis, break its own laws or deliberately alienate its allies is a cause for celebration today.

Rishi Sunak has made a good start with these remedies. The Prime Minister has stabilized the UK economy, shown political courage in resolving tensions with the EU over Northern Ireland, improved relations with France and effectively managed bank rescues. Both voters and MPs can see a Premier who knows what he is doing. Judging against recent administrations, he has performed admirably. In the long run, it has easily hit the top end of low expectations.

Yet to the outside world – not watching Jeremy Hunt deliver Wednesday’s budget – Britons are experiencing deteriorating public services, inflation and falling household incomes. This week itself has seen strikes by junior doctors, teachers, railway employees, civil servants and university lecturers.

The UK may avoid a technical recession this year and inflation will fall sharply but growth is forecast to remain subdued. The Office for Budget Responsibility expects real household income to fall 5.7 percent over the next two years — better than last year’s forecast but still hardly a solid foundation for re-election.

Nor is there much reason for the Conservatives to believe that an “oh look, we’ve got our marbles” strategy will deliver electoral success against an unaggressive opposition.

The party has only one product left to sell and that is “steady, sensible Sunak”. He has about 18 months to convince voters that he represents a safer bet than a Labor leader about whom they remain incredulous. Based on that, Wednesday’s budget should be considered a success.

It had the hallmarks of a government that knows what it is trying to do. Among his targets for action was clear political discipline and the willingness of Sunak and his chancellor now to come down from their own backbenches for fiscal discipline and tax cuts. The prime minister is pacifying dissidents and winning the battle for control of his party. There remains an incredible mess of enemies but most MPs can see that Sunak is their best and indeed only bet.

And while Hunt didn’t offer the desired tax cuts, though they will surely come before the election, he did give his party some songs to sing. He rejected demands to roll back planned increases in corporation tax but, to offer full cost of capital allowances, he lent credence to both industry demands and offered incentives for early investment.

A significant increase in state support for childcare costs is not only welcome in helping parents back into the labor market, it is shrewd politics. More generous childcare support was likely to be one of Labour’s main selling points in the election. Hunt has now happily appropriated that plan and targeted resources at young families, a key demographic the government is losing.

Other measures to expand the workforce, especially removing barriers to the disabled, were sensible and fair, although pension reforms designed to keep veteran doctors out of early retirement are also spectacular bang for the buck for the wealthiest employees.

And yet for all this, there were some notable mistakes as a budget for growth. No effort was made to find funds to ease public sector pay disputes. Ministers are still bowing out to Nimby MPs and blocking reform planning to build more homes. Nuclear expansion has again been announced but with no firm timetable. There are no new investment areas under Midland and nothing more than a promise of “further details” in due course, suggesting the nation with aspirations of becoming a “science superpower” is ready to meet its crying need for lab space. Oxford Cambridge Chap. The South, it seems, is not an economic priority.

But this was the disciplined budget of the tailor who cut the coat according to his economic and political cloth. What was there was largely welcome, but the government must rely largely on forces beyond its control to improve the economic picture ahead of the elections. Five-year debt targets are met with a bang in the final year, the tax burden remains historically high and a continued freeze in the income tax threshold will strain household budgets.

The government is making the only case it can: that the UK’s problems were a global shock and, after an ill-judged comic interlude, the nation is back on track with credible adults in charge. This is the narrow path to victory, or just a soft defeat, that Tory strategists have long recognised.

It remains very steep but Sunak and Hunt have given their party a reason to stay on it. Conservatives will look at this budget and conclude that strategy is back in the hands of professionals. It poses a challenge to those advising Labor leader Keir Starr to avoid offering too concrete a vision of how his party will make things better. Because if the next election comes down to a contest of managerialism, it’s the trend that’s a known quantity.

Worryingly for the country, while there was much to applaud, there was little that could materially change the UK’s poor economic trajectory.

Hunt has given the Tories reason to believe in the plan. An amateur hour administration again looks like a professional outfit. But the real economy gives voters, and by extension the Tories, limited reason for optimism.

After 13 years and countless ups and downs, their only strategy is akin to a football manager’s plea for “one more season” that has lifted his team out of the relegation zone. Fans are left to wonder if the same is worse than the more uncertain option. But sometimes low expectations have advantages.

robert.shrimsley@ft.com

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