Jacob Stokes | Europe and Eurasia Fellow
On 11 March in the British House of Commons, Conservative Party politician and Chancellor, Rishi Sunak, delivered Boris Johnson’s first budget as Prime Minister. ‘Budget 2020’ runs contrary to decades of Tory economic policy, promising huge government investment and mass borrowing. The budget is so un-Tory like, some have suggested it points to a shift in ideological direction for the party.
For the last four decades, the Conservative Party has followed an economic doctrine known as Thatcherism. Margaret Thatcher had more belief than most in the power of the free market. Prime Minister from 1979-1990, Thatcher favoured a ‘small-state’ approach, opting for spending cuts, the privatisation of state-owned assets, deregulating industry and reduced government borrowing in hopes of balancing the budget.
Tory leaders since have followed in Thatcher’s footsteps, with the last 10 years of Conservative Party budgets in particular outlining severe austerity measures – hence why the recent big state, big spending and big borrowing budget flaunted by Sunak last month comes as such a shock. However, while Budget 2020 certainly feels more Jeremy Corbyn than Margaret Thatcher, it is not the result of an ideological shift in Conservative Party policy. Rather, Johnson has been forced into an ‘anti-Tory’ Tory budget in the hopes of addressing three key problems.
First, the one-two punch of Brexit and COVID-19 has left the British economy in near dire straits. Britain was already showing signs of stagnating as a result of Brexit uncertainty weeks before coronavirus had begun to take its toll on the economy. GDP growth declined by 0.1 per cent in February and since the lockdown almost a third of businesses have had to reduce staff numbers, with projections estimating the UK economy could shrink by as much as 25 per cent. The shift to big spending was more one of pragmatism; now is not the time for Johnson to stick to the Tory script and double-down on austerity and higher taxes.
Second, a budget grounded in public spending and infrastructure investment allows Johnson to hold on to the traditional Labour seats the Conservative Party picked up in the December election. Boris Johnson’s “Get Brexit Done” campaign resonated with Leave voters, many of whom live in traditional Labour Party strongholds in the north and central parts of England. These are working class areas and the livelihoods of many residents rely on government investment and infrastructure spending. In the end, the capture of so many Labour seats made the need for a bigger budget unavoidable.
Third, the budget is equipped with all of the populist sentiments that the Prime Minister loves to sell. Voter-friendly sectors are receiving the biggest slice of funds with the National Health Service handed £6 billion (AU$12 billion) along with “whatever resources it needs”, as promised by the Chancellor. The budget also outlined a raise in the minimum wage, relief for pensioners, and £5 billion (AU$10 billion AUD) for faster broadband.
However, services less important in the psyche of British voters have been largely ignored. The criminal justice system has been left severely underfunded, while there is little support for childcare organisations and preschools. The budget also fails to set out any clear strategy to fight the climate emergency. The Chancellor did outline initiatives to combat air-pollution and announced a tax on plastics, yet these initiatives are offset by a massive £27 billion (AU$54 billion) road-building scheme which conflicts with the governments climate commitments by prioritising transport for gas-guzzling automotives over low-carbon transport such as electric cars and public transport.
Yet, while the general public appears more than happy to see Boris Johnson splash the cash, the promise of such lavish spending is eye-watering by Tory standards and is causing tension within the Party.
Former Prime Minister Theresa May led the charge of Conservative MP’s apprehensive about the huge amount of public spending in the budget. May pleaded for “restraint and caution”, saying the budget risked destroying the Tories reputation for sound economic management. Sunak’s predecessor, Sajid Javid, who resigned as Chancellor just a month before the budget was delivered, is another high profile name to express concerns over the impact the budget will have on national debt.
Although COVID-19 warranted large investment in the public health sector, the £1 trillion budget could be dangerous for Britain and the Tory reputation in the long run. Government debt already sits at over 85 per cent of GDP and the budget is likely to push Britain’s total debt to £2 trillion by 2024.
Having an ex-Prime Minister and ex-Chancellor speak out against the budget is not a particularly good sign for Boris Johnson. While his populist agenda and bloated rhetoric may have won votes in the election, it is unlikely to gain him the ongoing support of the party. Most Conservative Party MPs are happy enough to look the other way on the Prime Minister’s budget this time around and convince themselves it’s a one-off in a time of crisis. But if Johnson doesn’t start to follow the Tory script, he may not be so lucky next time.
Jacob Stokes is the Europe and Eurasia Fellow for Young Australians in International Affairs