Rishi Sunak may have called off austerity, but the Tories will never reverse it

Two very different budgets were unveiled yesterday afternoon. They concerned the same country and the same economy, and were delivered by the same chancellor. They were the same coin, but each face was implacably opposed to the other.

You might call the first “heads we win” – and boy, was it a triumph. Chancellor Rishi Sunak stood up in the Commons and laid out boast after joke after strapline. His was a budget for “the age of optimism”, he declared, creating an economy of “higher wages, higher skills … vibrant communities and safer streets”. He listed spending pledges and ran off an itinerary of northern towns about to get building projects. To a house used to grim economic news and tax hikes, it felt like golden sun peeping out from behind black clouds.

Detailing at inordinate length a tiny measure to encourage ships to fly the red ensign – the UK merchant vessel flag – Sunak glanced at the Labour MPs opposite. Ver, él dijo, “red flags are still flying somewhere in this country … even if they are all at sea”. It was a very George Osborne trick, retrofitting a policy to a joke at the opposition’s expense, and how his side loved him for it.

The other budget, the budget of “tails you lose”, got no such mention but it was there all right, buried deep inside the documents released after the chancellor had sat down. Read down the tables published by the Office for Budget Responsibility – the body whose economic forecasts set the limits for any chancellor’s plans – and the picture is much grimmer. Take away surging inflation and record high taxes, and household incomes barely rise at all over the next half decade. Living standards are set to stagnate. So bad is the picture that the head of the Institute for Fiscal Studies, Paul Johnson, exclaimed in some very non-IFS language: “actually awful”.

In that contrast lies the harsh truth of politics in this very punishing winter. A government, with both the majority and confidence to tell whatever story it likes to the media and voters, looks out on a country where motorists punch each other for petrol, major supermarkets put out pictures of veg to fill their empty shelves, and everything from your fuel bill to your grocery bill just keeps on rising, and declares it a triumph.

Boris Johnson believes his own boosterism, the chancellor gets high on his own spending pledges – and anyone who doesn’t share the jubilation was never invited to the party anyway. In the nineties and noughties, budgets would be assessed on their “feelgood factor”. This financial package is the very opposite: it looks great but is feel-bad.

The Treasury is now a government department that looks and behaves like Virgin Rail, complete with friendly fonts and carefully curated social media profile. We had the Seven Days of Sunak leading up to yesterday afternoon, with umpteen press releases announcing carefully uncosted policies. And the surprise and welcome promises of spending for schools and councils, and even a half U-turn on universal credit, all read as if No 11 had got a very sharp talking-to from the boss next door.

The feel-bad factor is the realisation that none of this matches up to what teachers and town halls and organisations who work to alleviate poverty actually asked for. Sunak brags of spending as much on school pupils as in 2010 – which is not much of a boast, seeing as it is nearly 2022 and pupil numbers have risen sharply. Preliminary estimates indicate that school funding is still £1,000 less per pupil than it was in 2010.

Though £6bn was taken away from some of Britain’s poorest people, in reduced universal credit, only half of that was given back yesterday. Sunak may have shown a little more flexibility than had been expected, but those on universal credit who are unemployed will get nothing from his largesse.

The basic message of today – the most significant in British policymaking this parliament, setting out the shape of the state and budgets for Whitehall departments for years to come – is that the Tories have now called off their decade-long austerity programme, but they will never reverse it. Beyond the NHS, huge swaths of the public realm are now permanently shrunken.

You see it even in the ways groups now lobby the Treasury. The Local Government Association welcomes the fact that councils have just been granted £5bn, even while gently observing they need nearly twice that to stand still. Yet our town halls have been stripped of their budgets and their services by former chancellor Osborne’s austerity – and they have given up asking for that money to be restored.

es más, Labour has let Johnson off the hook for the way his predecessors smashed up public services. Through diffidence and sheer lack of political skill, Keir Starmer has allowed Johnson to pose as an anti-austerity prime minister, to swear loyalty to net zero carbon, and to fake seriousness about reducing the regional inequality his party did so much to create.

Sunak cut the ribbon on Cop26 by freezing petrol taxes yet again, announcing ever more road-building and halving passenger duty on short-haul flights. Is that what he thinks will help the planet? At a time when Joe Biden and progressive leaders across the west herald a new green politics and a commitment to reforming capitalism, this government is still doing so much damage.

This mob of Brexiteers knows the magic of small numbers. That’s why their bus read £350m a week rather than £18bn a year. And that’s how they go about levelling up, a project that would take decades and hundreds of billions by any administration serious about it. This lot hope to get there by throwing around some spare change – look, Mamá, £20m for Sunderland – and posing for photos in hard hats and hi-vis jackets.

But the electorate works with small numbers too. That’s how we manage our bills and measure how much we have at the end of the month. And when we finally work out that we’re not getting better, that’s when there’ll be hell to pay. Now is not the moment, not with a country still blinking its way out of the worst of the pandemic and a media keener on reporting what Johnson says rather than auditing what he does. But voters can turn into hecklers very easily – witness the Brexit referendum. And when it finally happens, it will look ugly and feel much, much worse.

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