“A budget for growth” was how Hunt’s speech was briefed and that phrase was used by the Chancellor in the first minute of Wednesday’s UK budget announcement.
Of course, all budgets are supposed to be about growth and that is particularly true in the current political climate with Sunak, Starmer and Truss all staking their leaderships on growing the economy. The question, as ever, is how to grow the UK economy?
This was a more political budget than expected with Hunt sating the appetites of the free market Trussites that never got to see the supply-side economic reforms they were promised under the former PM, whilst also spiking the guns of the Labour Party that is not only leading the polls but also leading on economic competence.
The politics is best seen in today’s childcare reforms that will see an extra 30 hours a week for parents of one and two-year olds. A broad political coalition spanning from Mumsnet to Kwasi Kwarteng have been calling for additional childcare support because it is seen as crucial for making the economy more productive, for helping more parents back into work and for easing the cost-of-living crisis. This is a bold announcement (when it comes in, staggered as it is) that makes clear that the Sunak government will make the necessary changes to help working people. It also puts Labour in a political arms race to out-do the Tories in an area that the former has prioritised but which the latter is now trying to own.
Elsewhere, there is some big pensions tax relief for high-earners to encourage older people to return to work, the now-traditional fuel duty freeze and some inevitable energy bill support. We might be technically avoiding a recession but with the economy due to shrink by 0.2%, Hunt has resisted the siren calls of the Tory right for big tax cuts (but will probably be saving these for closer to the general election next year).
For Sunak and Hunt to stay in their jobs beyond 2024, they both need to deliver tangible results and demonstrate that they are competent drivers behind the wheels of government. The Windsor Framework, the small boats policy and today’s budget have all set out this government’s proposed solutions to significant political and policy challenges. But what is important is if these solutions actually work, and that the voters feel that they work.
Taking today’s announcement as an example, will these childcare changes actually help parents or will providers find that they don’t have the staff available to meet demand for new places? Will the staffing ratio changes and signing-on bonuses be enough to increase the childcare workforce? Will the additional government support help parents deal with the cost-of-living crisis or will a lack of places drive up childcare costs?
This week’s budget contained announcements that could make a tangible difference to people’s lives. They just have to work, work soon, and for voters to feel that they work.
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