Sunak’s much trailed budget didn’t match the hype argues Chris Nineham

This was supposed to be a feelgood budget. It was trailed as an exercise in ‘levelling up’, a budget for ‘a new age of optimism.’ In parliament Sunak claimed to be looking after working people, “If anybody still doubts it,” he said, “today’s budget confirms it. The Conservatives are the real party of public services.”

Few will be taken in by this blather. The much hyped end to the public sector pay freeze is meaningless and cost free until actual pay rises are announced. In the TUC’s words, Sunak went ‘from pay freeze to pay squeeze’.

The taper to the Universal Credit will benefit some people in work, but even Sunak admits only 2 million out of the over 5 million who get UC will be better off. The poorest still face the £1,000 a year cut in earnings brought in last month

A 6.6% raise in the minimum wage is welcome, but don’t forget it is set against an expected 4% rate of inflation. Sunak is claiming he is increasing spending by a record £150 billion. This is over three years and comes out as a 3.8% overall annual spending increase, less than the projected rate of inflation.

It includes the costs of previous announcements, the increase in NHS funding, the increase in the minimum wage and public sector wage rises. 

The Institute for Fiscal Studies estimates average real-terms annual growth in departmental resource budgets was higher than this in previous years, above 4% in 2000 and 2002 under Labour, and 4.1% under the Conservatives in 2019. 

This level of spending will at best undo a little of of the damage of Tory austerity. By Sunak’s own admission for example, the extra money for schools, if it materialises, will only take per pupil spending back to the levels of 2010 when the Tories took office. Less than £5bn of this is earmarked for the Covid catch up budget which teaching experts estimated required £10-15bn.

Businesses however will cash in in what Sunak calls “the biggest single year tax cut to business rates in over 30 years.” For the Financial Times, cuts to business rates were the main story of the day. These include a new 12-month relief for companies to invest in their premises and other investment incentives worth £750m, cuts to business rates worth £4.6bn over the next five years and a 50% business rates discount for companies in retail, hospitality and leisure sectors worth £1.7bn.

There were other giveaways for consumers including scrapping an increase on fuel duties, some money off a pint of beer and cuts to duty on air travel. These are classic sops to the Tories’ middle class base. The cut to duty on air travel is astonishingly irresponsible in the context of the climate crisis. Taken together they may be signs that the Tories are seriously considering an election relatively soon. 

Labour have righty been critical of what is essentially a big business budget. But if the Labour leadership had been promoting a bolder economic vision over the last few months – pushing for a £15 minimum wage for example – it would have made Sunak’s posturing impossible.   

Given the combination of inflation, continued cuts, energy hikes and tax increases that face working people over the coming months, any Tory budget bounce is likely to be short lived.