You’re reading The Waugh Zone, our daily politics briefing. Sign up now to get it by email in the evening.On March 3 2020, Boris Johnson made that now infamous remark at his No.10 press conference that he was at a hospital with coronavirus patients “and I shook hands with everybody”. As Chris Whitty’s eyebrows headed northwards, the PM hastily added: “Washing your hands is the crucial thing.”Exactly one year and well over 100,000 deaths later, the PM has tried to wash his hands of most of his government’s failures on Covid. And as Rishi Sunak presented his Budget, it was clear the chancellor too wanted to present a sanitised version of his own record over the past year.There was no mention of Eat Out To Help Out, no mention of him repeatedly having to amend his furlough and other job plans, no mention of Sage’s calls for better self-isolation payments to tackle the pandemic in deprived areas. No mention either of the OBR’s warning last year that the PM’s thin Brexit deal would knock 4% off GDP, bigger even than the hit to the economy caused by the pandemic.What Sunak did have, however, was good news on lower than expected unemployment and higher than expected growth, as well as a big new package of Covid support that takes the total spending to a huge £407 billion. He also had a plan to take us to 2026: two years of tax cuts and spending rises (worth £67bn), followed by three years of big tax hikes (worth £66bn).With many Tory MPs allergic to taxes, it was perhaps no coincidence that Sunak took a big gulp of water just before he set out the sharp corporation tax increase. And although he claimed “honesty” was his watchword, he then rattled quickly through freezes in thresholds for personal taxes on income, pensions and inheritance, all effectively tax rises by stealth.There was studiously no mention of the extra £4bn in spending cuts for public services, on top of the £10bn extra announced in the spending review, and on top of many billions during the austerity years of Cameron and May (and still baked into some Johnson plans too). Treasury officials were open about this cut afterwards, but the chancellor himself clearly didn’t think it was worth a line in his speech.In one of his best Commons outings to date, Keir Starmer tried to demolish Johnson and Sunak’s fiction that this was a brand new government divorced from its Tory predecessors, pointing to the decade of cuts that have taken place since the 2010 election.With an eye clearly on Sunak becoming his regular opponent across the despatch box one day, Starmer even suggested the chancellor was personally responsible for the second wave of the pandemic – and all the economic damage that flowed from a longer lockdown – thanks to his opposition in Cabinet to a circuit-breaker in September.Starmer landed some punches on Sunak’s lack of any climate change stimulus, the total absence of social care funding or housing help. He was quick to note too that 2.4 million self-employed would continue to be excluded from government support. Jibes about the sheer self-regard of the chancellor’s Instagram game had more than the usual bite.The Labour leader was also keen to stress that for all Sunak’s talk of tax rises, the real agenda was one of tax cuts on the eve of the next election. Starmer said the proper basis for tax decisions was “the economic cycle, not the electoral cycle”. Add in all the pork barrel spending on freeports, towns funds, levelling up funds (including Sunak’s own well-heeled constituency) and this did look like a Budget with politics at its heart.But the problem for Starmer is that the electoral cycle really does matter. And the point about pork barrel spending is that it often works (look how impossible it has been to abolish Gordon Brown’s tax credits or winter fuel allowance). A cynic would suggest that the Conservatives welcome the Labour attacks because it reminds the voters of spending, not cutting. In former “red wall” seats, arguably neglected for years by all parties and Whitehall, ex-Labour voters may see this not so much as pork barrel but as payback for lending their votes to Johnson.My instant thought on seeing Sunak’s timetable for fiscal balancing today was that a 2023 general election looked more likely than ever. That’s the year that corporation taxes kick in, allowing the Tories to say they’re making the very rich pay for the aftermath of the pandemic (in a way the rich never did after the 2008 financial crisis). But it could also be the year that the “fiscal drag” of frozen personal taxes is suddenly halted.Sunak said he was “going long” on help for the pandemic recovery, yet the pressure will be to go short on the political recovery. Chatter about 2023 is rife among some Tory MPs (though with the boundary review that will net them extra seats due in June that year, maybe a September election is on the cards?).The real power of Sunak’s corporation tax hike is that it robs Labour of its own magic money tree, as much of the party’s spending plans since 2017 have been predicated on reversing the Osborne tax cuts to business. Labour would again be asked by the voters: well how will you pay for your promises then? (One small example: Starmer today said Labour would keep the uplift in Universal Credit “until a new, fairer system can be put in place”, without saying how he’d fund it).Starmer is also making a big bet that Sunak will somehow revert to Tory type. He claimed “one day we’ll all be able to take our masks off – and so will the chancellor”. But Sunak may be much smarter than that, delaying spending cuts until after an early election while taxing the richest. Tony Blair once anticipated Ed Miliband’s (and Corbyn’s) defeat by saying when a traditional leftwing party competes with a traditional rightwing party you get “the traditional result”. That result is even harder when a growth-and-spend Labour party faces a growth-and-spend Tory party.With a love of Brexit often the only thing that unites Johnson’s coalition of former Labour and traditional Tory voters, the yo-yo dieting on business tax announced by Sunak (big tax cuts for two years then a whopping rise) felt very much like a government desperate for firms to invest as soon as possible to make up for the hit to trade from the PM’s thin deal with Brussels.At least Starmer began today to spot that he could make headway by arguing for a “smarter Brexit” that better protected jobs and businesses. And although Sunak is popular now, if his own gamble on a sustained recovery is blown off course, rising unemployment and continued stagnant wages could mean big drops in Tory support. Boarded up shops on high streets could become the 2020s equivalent of derelict 1980s factories.Government incompetence is still Labour’s best shot at winning the next election, but it will also need “lockdown fatigue” to be replaced by “Tory fatigue”, a sense that after 13 or 14 years it’s time for a fresh start and a new party in power. Rishi Sunak signalled in this Budget that he’s ready to do “all that it takes” to prevent that from happening.Related...5 Announcements In The Budget That Rishi Sunak Won't Be Mentioning On InstagramRishi Sunak’s Own Well-Off Seat Prioritised For Levelling Up Cash In BudgetBudget 2021: Boris Johnson’s Brexit Deal Will Shrink UK Economy By 4%, Watchdog Says
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