Johnsonism Prevails as Sunak Announces Budget Spending Spree

The 2021 Autumn Budget was officially announced by Rishi Sunak yesterday, and although you could be mistaken for thinking that it had been announced almost daily since the weekend, anticipation of what his ‘rabbit’ might be was nonetheless high. A successful vaccination programme and better than anticipated economic growth have seen forecasts revised in such a way that allowed Sunak to deliver a Budget for an economy, that in his own words, “is fit for a new age of optimism”. It was a somewhat mix-and-match statement between further evidence of this Government’s departure away from traditional fiscal conservatism, but also a desire to pull back much of the state interventionism seen over the last two years.

Included in the Budget and Spending Review were departmental allocations up until 2024/25, details of the Government’s ‘levelling up’ policies, and changes to the minimum wage and various taxes. One of the most striking takeaways was a substantial, almost Brown-like, increase in public funds. He announced that total department spending would increase by £150 billion by 2024/25, which Sunak claimed was the largest increase this century. There was money for much-needed affordable housing and cladding removal, an extra £4.7 billion for schools by 2024/25, and £46 billion for railways. At the same time, he outlined (loose) new fiscal rules like everyday spending to be funded solely by taxation and borrowing only to invest.

Clearly the Conservative Party has a long way to go before overcoming the reputation earned from austerity, and many of the Chancellor’s public spending announcements simply illustrated how much more is needed to be effective. For one, the increase in per pupil funding will only see it return to 2010 levels, 11 years later, and education catch-up funding, now totaling £5 billion with the money  announced yesterday, is far below the £15 billion that the Government’s education recovery tsar, Sir Kevan Collins, said was necessary. Likewise, the funding for cladding removal is not new money, and comprehensive climate policies were scarcely mentioned.

Sunak was also keen to address the UK’s “uneven economic geography”, announcing how the Government would ‘level up’ within England and across the Union. There was a guarantee to spend £5.7 billion to build London-style transport systems across cities, more money for community football pitches, regional theatres and museums, and Scotland’s funding will rise by £4.6 billion. But these are meager policies that fail to address the long-lasting socioeconomic disparities between the South and the rest of the UK. There was little evidence of large relative educational funding increases for regions, nor policies like tax cuts for large firms that set up outside of London. Nevertheless, these commitments complimented other manifesto pledges like a continued focus on making the UK a science superpower with R&D spending and the Scale-Up Visa system to attract science and tech minds.

Headlines in recent weeks have been dominated by the financial squeeze working households are experiencing, but the Budget did little suggest this would end anytime soon. Sunak announced the national living wage would rise to £9.50 an hour and that the Universal Credit taper, how much out of every pound earned is removed, would fall by 8 percentage points to 55%. The taper cut does not equate to the removal of the £20 UC uplift though, and it only applies to the poorest who are in work. Rachel Reeves’ assertion that the Government’s optimism is a far cry from the struggle facing working families is hard to argue against.

Whilst it is undoubtedly a positive that the economy is not in as bad a shape as previously predicted, the Government will know that there remain problems aplenty for them. The educational gap exposed by Covid is only widening, millions of families face soaring energy bills with no help, and higher inflation is here to stay, at least in the short term. Turning its back on years of spending cuts has allowed the Government to plant its flag squarely in Starmer’s garden, but accusations that the Conservatives are now the party of high taxation won’t sit easy with many backbenchers and voters.