The last time Jeremy Hunt rose to the despatch box to deliver an Autumn Statement he dismantled Liz Truss’s cavalier plans to cut tax to grow the economy. She sat on the front bench placid as her political eulogy was read. Hunt’s speech triggered the party’s descent from panic to mania to despair. It indicated the return to where it all began back in 2010: fiscal conservatism, austerity, light-touch regulation and a reverence for the private sector.
This was the Conservative Party in action: driving in circles, searching for what it believes. And now, this autumn of incoherence is the latest act of indecision. I’m convinced one of the reasons that the Conservatives’ support has withered away is their flip-flopping over the past 13 years.
David Cameron’s return to front-line politics exemplifies this circularity. But there are other instances too. Boris Johnson was partly elected to rehire 20,000 police officers that were scrapped under Cameron. The current prime minister wants to cut the tax burden that he himself raised. The China sceptics want to reverse a policy towards the Chinese Communist Party that was instituted by the coalition. Rishi Sunak sought to rebuild relations with the EU trashed by his predecessors, and he cancelled HS2 despite it being championed and funded by successive Conservative governments.
Sunak is left trying to construct a story out of a pick ’n’ mix of political projects, none of which achieved their stated plans. The deficit didn’t disappear (although it did fall); the country wasn’t levelled up; tax cuts didn’t fuel growth.
The question, then, for today is whether this will really be a tax-cutting, or even a fiscally conservative, Autumn Statement. Will the tax burden overall actually come down? Or will tax cuts be paid through extending tax allowance freezes (which due to inflation constitute a tax rise)? Or will they be paid for by pencilling-in more spending cuts for after the election?
This last point is key. The polls are so bad for the Conservatives that a penny here or a tax break there is unlikely to win over a fresh crop of voters. But they are significant for Labour. Those spending cuts will enter Rachel Reeves’s in-tray on her first day as chancellor (if Labour wins). Whether she has to implement them (or raise taxes or borrowing) will, to bang on yet again about this, depend on the nature of Labour’s fiscal rules.
Yes, governments can change their fiscal rules at will. But, as today demonstrates painfully well, once they are set in place, they dictate the amount of money a chancellor has to spend. That Hunt has “head room” to spend on tax cuts is an artificial consequence of the fiscal rules he himself chose. It does not reflect a fundamental improvement in the state of the public finances, nor does it reflect the likelihood that tax rises are probably going to be necessary to fund an ageing population.
Instead the mooted changes suggest there is an election next year the government will likely lose. In such a scenario, the most important thing could be how Labour responds.
This piece first appeared in the Morning Call newsletter; receive it every morning by subscribing on Substack here.
[See also: Keir Starmer needs a coherent plan for immigration]
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