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Rishi Sunak ended the day as he began it, to the sound of fellow Tory MPs banging their desks in approval.
The support given by the Cabinet in the morning was unsurprising, particularly as
Boris Johnson was by the chancellor’s side. But even when he flew solo at the early evening meeting of the backbench 1922 Committee, a body not normally in favour of borrowing-fuelled spending sprees, the reception was just as warm.
It’s likely too that Sunak’s summer “update” will go down well with many of the public who take advantage of its 50% midweek meal deal, are hired as apprentices or spared thousands in stamp duty. And even though this wasn’t a full-blown Budget, he managed to pull out the ‘rabbit’ of a six-month VAT cut that cheered many in the hospitality sector.
Yet with confirmation that the furlough scheme was definitely ending in October, this was in many ways a break-up speech with much of the
British workforce. Even though it was tempered by “Dishi Rishi”’s soothing voice and long eyelashes, the message on the end of the affair was unmistakable: “It’s not you, it’s me (and my politics).”
To the nine million people currently dependent on the state paying 80% of their wages, he said: “It cannot and should not go on forever. I know that when furlough ends it will be a difficult moment.” But he didn’t want to give “false hope” that it will be possible to return to the jobs they had before.
There was even a bit of tough love: “The longer people are on furlough, the more likely it is their skills could fade, and they will find it harder to get new opportunities.” That sounded like “it’s better for both of us that we end this”. Anyone who has been on the receiving end of that particular sentiment (in work or relationships) knows that it’s not wholly true.
Still, even as he was effectively saying goodbye, the chancellor wanted to cushion the blow for a few more months. His August “eat out to help out” plan may ensure that he’s a summer boyfriend to those restaurants and pubs that face a tough time from continued social distancing.
Applying the 50% discount to Mondays-to-Wednesdays only was shrewd, as it ensures eateries can spread more evenly through the week their footfall, allowing them to survive without the daily capacity that ekes out a profit margin. The average household spends £19 a week on restaurant and cafe meals, so the £10 maximum discount has also been crafted with that in mind.
Targeting a fiscal stimulus at the lower paid and the sectors that need help most makes sense. The stimulus impact of a stamp duty cut is more debatable, especially if the better off who sell a £500,000 home then decided to simply pocket rather than spend the £15,000 saving. The story of this downturn has been the wealthier actually paying off debts and increasing savings, as the poorest head more into the red.
Shadow chancellor Anneliese Dodds pointed out that consumer confidence is vital in regenerating demand in the
economy and that ultimately relies on the government sorting out a proper test and trace system. Just as the public were ahead of No.10 in going into lockdown before it was formally imposed, their fears over safety mean that it will take more than a £10 meal deal to venture out and spend. Sunak may have been keen to wait on tables in Wagamama’s today, but he was clearly not so keen on waiting to see if there was a second wave of
Coronavirus before axeing furlough altogether.
Are the public more worried about health than wealth? I’m told that some private polling done by the government suggests that the public aren’t scared enough about
Job losses yet, and they believe the state will step in to help them. A new survey today found a quarter of parents don’t intend to send their children back to school in September.
Maybe that’s why Sunak essentially said today that in fiscal terms there really is no such thing as a free lunch, even as he offered 50% off an actual lunch. “Over the medium-term, we must, and we will, put our public finances back on a sustainable footing,” he said. There was a gaping hole in his speech about how or when he would do that, and we will have to wait until the autumn to find out.
Another unknown is whether firms will be so hard hit by the downturn that no amount of job retention bonuses or training and apprenticeship help will shift them from the simpler strategy of just slashing jobs. The bottom line of business self-preservation, of stemming losses, may make Sunak’s own talk of a return to ‘sustainable’ finances look bitterly ironic.It’s worth noting that this is a Treasury that is now run in tandem with No.10, not independently from it. Minutes before the statement, Boris Johnson made plain his own impatience, saying the furlough scheme “keeps employees in suspended animation” and “we need to get our economy moving again!” When your boss talks like that, and your predecessor was ousted for not toeing the line, the pressure on the chancellor to follow suit is obvious.
Johnson asserted his authority this weekend too,
BREAKING convention to rule out any increases in VAT, income tax or national insurance. “I don’t normally talk about fiscal stuff because I leave that to Rishi. But what is in the manifesto is in the manifesto.” So, for all Sunak’s own flashy
Twitter graphics, complete with a rockstar signature, it’s the PM’s imprimatur written all over his plans.
If we are not totally sure what Johnsonism is yet, Sunakism is even harder to fathom. But it does involve a sharp political eye (he personally intervened last night to reverse the HMRC move to tax people taking up an employer’s covid test) and a focus on the future (Treasury insiders stressed repeatedly his plans would support young, female, Bame workers in the hospitality sector).
Most of all the chancellor knows he has an almost impossible task to balance competing interests and forces as the
UK moves into the next phase of the pandemic. His bluetoothed Ember travel mug sets an exact drinking temperature “so your coffee is never too hot, or too cold”. He clearly wants the public finances neither too hot nor too cold too.
Instinctively a small state Tory, Sunak starts off with backbench goodwill because he backed
Brexit (even putting it before a career in George Osborne’s Treasury). But he has proved he is willing to implement policies Gordon Brown would only dream of, and in some cases actually started (the Future Jobs Fund, a targeted VAT cut).
He told Sir Edward Leigh that he “wholeheartedly” agreed that there are no long-term “subsidised jobs”. Sir Des Swayne lavished praise but added a hint of menace too. “After that package and that performance, the only reasonable thing I can say to my right hon. friend is, ‘Remember, O Caesar, you are mortal’”. Sunak gulped and said: “Thank you, I think.”
When he addressed the 1922 committee at the end of the day, the chancellor flashed his libertarian credentials and his desire to get the state out of people’s lives. However, he then explained that he had been on a political journey forced on him by the pandemic. What he didn’t say was that his Damascene conversion to the merits of government intervention - and now his path out of it - was really him following the gospel according to Boris Johnson.
For all his soaring rhetoric about “turning our national recovery into millions of stories of personal renewal”, and for his belief in “the nobility of work”, he still faces the big charge that he is still not doing enough to help avoid the spectre of mass unemployment. Hard-nosed Tory MPs, some of whom see Sunak as the next Conservative PM, have been urging him to stop being Santa and to turn into Scrooge this winter.
It’s unclear whether swapping the public’s affections for those of the PM and his fellow MPs will turn out to be a good career move. But the careers of millions of others rest on him - and his boss - getting it right. The real reckoning, in fiscal and employment terms, will come in the autumn.Related... Everything You Need To Know About Rishi Sunak's £30bn Coronavirus Mini-Budget Fears For Older Workers As Rishi Sunak's Mini-Budget 'Ignores Plight' Employers To Get £1,000 Bonus For Every Furloughed Worker Kept On Staff