Hunt offers Tories hope in a world of low expectations

We live in a world of reduced expectations. A government that does not provoke a currency crisis, break its own laws, or willfully alienate its allies is cause for celebration today.

Rishi Sunak has made a good start with these measures. The Prime Minister has stabilized the UK economy, shown political courage in resolving the simmering dispute with the EU over Northern Ireland, improved relations with France and effectively implemented a bank bailout. Both voters and MPs can see a prime minister who looks like he knows what he’s doing. Compared to recent governments, he has shown an admirable performance. In the longer term, it has simply hit the high end of the low expectations.

But on the outside world – those not watching Jeremy Hunt deliver Wednesday’s budget – Britons are seeing deteriorating public services, inflation and falling household incomes. Young doctors, teachers, railway workers, civil servants and university teachers are on strike this week alone.

The UK may avoid a technical recession this year and inflation will fall sharply, but growth is forecast to remain weak. The Office of Household Responsibility expects real household income to fall by 5.7 percent over the next two years — better than last year’s forecast, but still hardly a solid basis for re-election.

Nor is there any good reason for Conservatives to believe that the ‘oh look, we’ve found our marbles’ strategy will bring electoral victory against a benign opposition.

The party has only one product left to sell and it’s “sturdy, sensible Sunak”. He has about 18 months to convince voters he is a safer bet than a Labor leader they are not convinced of. On this basis, Wednesday’s budget must be considered a success.

It had the hallmarks of a government that knows what it is trying to do. There was a clear political discipline in his targets of action and the willingness of Sunak and his chancellor now to defy the roars of their own backbenchers about financial indiscipline and tax cuts. The Prime Minister silences dissenters and wins the battle for control of his party. An implacable bunch of enemies remains, but most MPs can see that Sunak is their best, and indeed only, bet.

And while Hunt hasn’t offered the tax cuts he wants, though they will certainly come before the election, he has given his party some songs to sing. He resisted calls for a cut in the proposed corporate tax hike, but responded to both industry demands and incentives for early investment by offering full use of capital allowances.

A significant increase in state subsidies for childcare costs is not only welcome in order to reintegrate parents into the labor market, but also smart policy. More generous childcare support was probably one of Labor’s key retail offers in the election. Hunt has now happily appropriated that plan, devoting targeted resources to young families, a key demographic that the government lost.

Other moves to expand the workforce, notably removing disincentives for the disabled, have been sensible and just, although pension reforms aimed at discouraging senior doctors from early retirement are a spectacular bung for even the wealthiest workers.

And yet there were some notable omissions in all of this as a budget for growth. No effort was made to find a means of settling the public sector pay disputes. Ministers are still bowing to Nimby’s MPs who are blocking planning reform to create more housing. The nuclear expansion is again announced, but without a fixed timetable. There are no new investment zones below the Midlands and nothing, apart from the promise of “more details” in due course, suggests that a nation with aspirations to become a “science superpower” is ready to meet the urgent need for laboratory space cover the Oxford-Cambridge arc. The South, it seems, is not an economic priority.

But that was the disciplined budget of a tailor who cuts his coat to fit his economic and political garb. What was there was largely welcome, but the government must rely on forces largely beyond its control to improve the economic picture ahead of the election. The five-year debt targets were only just met last year, the tax burden remains historically high and the prolonged freezing of income tax thresholds will eat up household budgets.

The government is building the only case it can: that Britain’s troubles stem from global shocks and that the nation is back on track after a rash comic interlude with reliable adults at the helm. This is the narrow path to victory or just an easy defeat that Tory strategists have long identified.

It remains very steep, but Sunak and Hunt gave their group a reason to stay on it. Conservatives will look at this budget and conclude that strategy is back in the hands of professionals. It poses a challenge to those who advise Labor leader Keir Starmer not to offer too concrete a vision of how his party would improve things. Because when the next election comes down to a managerial battle, it’s Sunak who is the known force.

The concern for the country is that while there was much to applaud, little did much to change the UK’s lackluster economic trajectory.

Hunt has given Tories reason to trust the plan. An amateur hour administration looks like a professional outfit again. But the real economy offers voters, and by extension the Tories, little reason for optimism.

After 13 years and umpteen upheavals, their only strategy is like the plea for “one more season” by a football manager who has lifted his team out of the relegation zone. Fans need to consider whether more of the same is worse than an unsafe alternative. But sometimes benefits lie in low expectations.

robert.shrimsley@ft.com