14.03.2024

Staring into the abyss

Far from Jeremy Hunt’s budget being a ‘gamechanger’, it has backfired on the Tories, writes Eddie Ford. Indeed, with Braverman, Anderson and now Hester, the government has suffered one PR disaster after another

Some Tories were desperately hoping that the 2024 spring budget would finally shift things in their favour. Looking for reasons to be cheerful, they tell themselves that the polls must tighten at some point, especially as many psephologists and pundits, based on historical precedent, have been expecting Labour’s lead to shrink - previous UK elections have often had the incumbent party experience an uplift in fortunes in the general election campaign.

But no such thing has happened, of course, since there were no real surprises. No rabbits out of the hat - except perhaps for an increase in the child benefit threshold to £60,000. Jeremy Hunt’s 2p cut in national insurance, on top of the previous 2p cut announced last autumn, was heavily trailed, as was the scrapping of ‘non-dom’ rules for residents whose permanent home is outside the UK, which will fund the cut - in the process stealing a flagship Labour policy (Sir Keir Starmer had planned to use the £2.7 billion raised from the abolition of non-dom status for public services, including the National Health Service. But it is something that Labour can happily live with, as Starmer can now endlessly mock the Tories for implementing his policies.

At the same time, the chancellor raised revenue through a number of small tax increases on vaping, tobacco, holiday home lets, business class flights, etc. This allowed him to meet his fiscal rule of reducing debt as a share of gross domestic product in five years’ time by what the Office for Budget Responsibility (OBR) described as the “historically modest margin” of £9 billion. Hunt also announced the extension of a windfall tax on oil and gas companies, leading to reports of a “heated” row with Douglas Ross, the Tory leader in Scotland - with the chancellor saying too that the government was “backing the great British pub”, with an extension of the alcohol duty freeze until February next year.

Hunt stated that his ambition was to phase out national insurance contributions for employees and the self-employed altogether, but everyone takes that with a huge pinch of salt, if only for the reason that he and the Tories will not be around to do any such thing. More to the point, the £900-a-year saved for the average worker from reduced national insurance charges is dwarfed by tax increases previously announced, thanks to the infamous ‘fiscal drag’ that will move millions of people into higher tax bands.

As most Tories gloomily conclude, especially those on the right, this is not a budget that will leave people with a warm glow and thus act as a launch pad for a general election - quite the opposite. Therefore a late election looks even more likely: one that they will have to go into with taxes at their highest level since 1948 and living standards squeezed - with the grim prospect of a fresh round of austerity after polling day. OBR calculates that Hunt’s overall plans meant that funding for councils, etc was on track to fall by at least 2.3% per year. Fairly frighteningly, both Birmingham and Nottingham councils have effectively gone bankrupt and it is estimated that 63 English councils could go the same way in the next year - and perhaps 127 in the next five years (out of a total of 317!).¹

Polls

Indeed, in yet more bad news for the Tories (does it ever end?) the budget appears to have backfired, according to an Opinium poll, with almost twice as many voters believing it will increase taxes overall, as opposed to those who think it will mean tax cuts.²

It should be noted that Opinium is one of the few polling companies that does not have Labour on a lead of 20 points or more: a recent Ipsos poll, for example, resulted in a 27% lead for Labour, causing some commentators to talk about the Tories suffering an “extinction-level event” - comparable to the 1993 Canadian election that saw the Progressive Conservative Party slump from 167 federal seats to just two. Opinium’s findings are not so dramatic, but nevertheless it shows that, compared with its previous poll taken two weeks before the budget, the Tories have fallen two points to just 25%. This is the reverse of a “budget bounce” - Labour is now on 41%, putting its lead up to 16 points.

Similarly, a new YouGov survey makes for pretty depressing reading if you are a Tory.³ Asked whether the budget is ‘fair’ and ‘affordable’, just 27% thought it was, whilst 32% thought it was the opposite. A sharp contrast to a poll taken after the 2023 autumn statement back in November - viewed as ‘fair’ by 38%, as against 23% who thought the reverse. Virtually the same split exists when it comes to ‘affordability’, with 28% saying they think these changes are affordable, compared to 33% who do not think so.

Things get more damning for the Tories when people are asked how these measures might impact on them and their families. Just 10% think the changes will make them better off, compared to 20% who think they will be worse off (the majority, 58%, feel the measures will make no difference either way). Meanwhile, when it comes to their views on the state of the economy overall, only 4% say it is in a good state, compared to 71% who say the opposite.

Finally, quite interestingly, they were asked if they prefer Labour’s non-dom tax plan over the Tory one - 52% favoured the Labour policy, compared to 21% for the Conservatives. It was also more popular amongst those who voted Conservative at the last election (38% to 29%). Labour is winning the battle of ideas, insofar as you can call it that.

Spelling more danger for Tories, between now and the general election - whether it will be held in the autumn or winter - are the May local governments, with thousands of council seats across England up for grabs. There will also be elections for regional mayors and the London assembly. Andy Street, the Conservative West Midlands mayor, and Ben Houchen, the Conservative Tees Valley mayor, are among those facing re-election, and both are symbols of the “levelling up” agenda fraudulently espoused back then by Boris Johnson (which you hear very little about nowadays). Sadiq Khan seems set for an unprecedented third term as London mayor against his lacklustre Tory opponent, Susan Hall, whose official website has only been updated twice since October.

The last time council seats were at stake was back in 2021 during the Covid pandemic, meaning that the “vaccine bounce” helped the Tories make significant gains, and Starmer was on the verge of resigning after losing the Hartlepool by-election - at least according to a new biography of the Labour leader by Tom Baldwin.⁴ Of course, this all sounds like an alternative universe, given that Labour has had a commanding lead in the polls for quite some time now.

All this means that the Tories have a long way to fall this spring. Perhaps huge losses could trigger a putsch against Rishi Sunak by Tory MPs desperate to save their skins and their jobs, with some predicting that the party could lose as many as half of its councillors up for re-election - which would represent an abject humiliation for the Tories, as they stare further into the abyss, which is definitely gazing back at them.

Gloom and doom

Capping a dreadful week, there has been the Frank Hester scandal. Having endlessly prevaricated over calling his comments on Diane Abbott racist - he said she “should be shot” and she “makes you want to hate all black women” - Tory ministers eventually caved … with Sunak refusing to return his £10 million donation and urging everyone to move on. This coming after Lee Anderson’s half-crazy attacks on Sadiq Khan for being “controlled” by Islamists and Suella Braverman saying that Islamists are “bullying” this “once great country into submission.”

Of course, having stubbornly refused to apologise, Anderson predictably defected to Reform UK, which has spooked many Tories from all sections of the party. One of the ‘five families’ on the right, the New Conservatives grouping of MPs led by Danny Kruger and Miriam Cates (the latter touted as a possible future leader), said that, while they criticised Anderson’s move for making a Labour election victory more likely, it was ultimately the responsibility of Sunak and his party to keep MPs on side.

The grouping issued a statement pointing out the obvious: “… our poll numbers show what the public think of our record since 2019”. Hence, unlike the deluded prime minister, “we cannot pretend any longer than the plan is working” and have to “change course urgently”. It is widely reported that No10 is braced for more Reform defections, which led the Daily Mail to run the rather unlikely story that Rishi Sunak could call a general election if 10 or more MPs cross over to Reform (March 12).

Piling on the pressure, the latest Redfield & Wilton Strategies survey released a few days ago showed Reform at their highest-ever level on 14% - just 10 percentage points behind the Tories on 24%, with Labour holding an 18-point lead over the Conservatives on 42%. More ominously for the Tories, the poll also revealed that 21% who backed the Tories at the 2019 general election would now support Reform. So, it seems, they are getting squeezed on both sides - although, of course, the ‘first past the post’ electoral system will prevent an army of Reform MPs getting into parliament.

As commented upon before in this publication, gallows humour abounds in the Tory Party, as increasing numbers seem to have accepted their fate. Right after the budget, the Conservative Party’s great and good assembled at the Guildhall in London to hear Sunak address the 50th anniversary dinner for the Centre for Policy Studies think tank. One person attending called the event the “most opulent funeral I’ve ever been to”. Another said that they had noticed a big upsurge in Conservative special advisors and CPS staff applying to join the exclusive Carlton Club - primarily in the hope of using it to network for another job. So far, 61 Tory MPs have announced that they are standing down before the election, including Theresa May, adding to the general sense of the decks being cleared ahead of a possibly calamitous and historic defeat.

No wonder that one Tory MP, directly after Sunak’s Guildhall speech, said: “We’re stuffed”. Another member of the ‘five families’, Grassroots Conservatives, described the party as “burnt toast”, which offered “nothing for working people” and just made “things better for the rich” - all exemplified by Jeremy Hunt’s budget. For them, as revealed in a leaked WhatsApp message, the Tories deserve to lose the next election.

It is almost impossible to see how the Tories can stage anything like a comeback from this situation ... unless Sir Keir and his team hit their own omnishambles.