I have spent more than 25 years covering budgets, because someone had to, and have learned one golden rule: for all the huff and puff, the ready reckoners and those blessed fan charts, most of what’s said evaporates from the public consciousness by the weekend. Out of all Jeremy Hunt’s promises today, only one will linger in the electorate’s memory: providing working parents with 30 hours of free childcare during term time for their babies and toddlers.
Not that you’d know. The chancellor gave it only brief airtime and got far more excited at the idea of building “12 potential Canary Wharfs”. But that’s the only policy guaranteed to light up WhatsApp groups this evening and perhaps to be remembered by many voters at the ballot box. It is also, according to the Office for Budget Responsibility, the measure that will do most to boost the economy – more than the much costlier giveaways to business. The pledge is shot through with more holes than Clint Eastwood’s cowboy hat, as we shall see, but it also contains important clues for how politics will play out between now and the next election.
Who knew? It turns out that proposing a big solution to a big problem and spending a few billion to achieve it reaches those parts of the electorate that smaller beer cannot. It turns out that even would-be technocrats such as Hunt and Rishi Sunak can do it, if they try. You can already see the outlines of a Tory offer come an election in 2024: it will be the party that straps on a suit and does deals with Joe Biden and Ursula von der Leyen. It can pull on a pair of hobnails and boot the daylights out of an Afghan teenager in a small boat. And it can also flash the cash and spend big on a couple of signature populist policies.
There is a lesson here for Keir Starmer. For months, his party has been talking about the mad monetary maths of childcare and yet it has announced only the most piecemeal of remedies. Any time actual spending comes up, the entire shadow frontbench adopts the foetal position, except even babies know better than to spout nonsense about “sound money”. The result is that Starmer’s team is playing catch-up in an area that last autumn was all theirs.
There’s plenty they can add, because the sector is in big trouble. Nurseries are closing in their thousands and pay for staff is an insult: an average salary in the sector is about £15,000 a year, while for the typical worker it is closer to £28,000. Private equity groups are buying their way into the industry and, as an academic report demonstrated last year, demanding an outsized return. Over the past decade, childcare has grown steadily more dependent on taxpayer subsidy, and fallen prey to shadow bankers who have no place in it. Besides, Hunt is only helping households where both parents work, and freezing out everyone else. Labour could produce a plan to clean out the sector and pay staff better in return for more money that will ensure parents actually get the promised 30 hours a week, rather than the fraction they typically get. Or perhaps Starmer will wait for another party to jump the queue with that idea, too.
Hunt’s offer on childcare stands out because the rest of his speech was so dire. This was a budget for growth, he assured the house, but the biggest boast he could make was that the UK will avoid an actual recession. It will just have something that feels like a recession, in the same way that that hacking cough you’ve had since Christmas isn’t Covid but still feels awful. Over the next couple of years, households will endure the biggest drop in disposable income since records began. By March 2028, the OBR predicts, Britons’ living standards will still be below where they were on the eve of the pandemic in March 2020.
As Hunt sat back down, hundreds of thousands of teachers, junior doctors, civil servants, Tube workers and BBC radio journalists were on strike in the biggest wave of industrial action for more than 30 years. Yet he had nothing to say on public sector pay, even though TUC analysis shows the typical public servant earns about £200 less a month than they did before George Osborne’s first budget in 2010. He had zero to offer on investment in the public realm, even though this winter sick people died while waiting for ambulances and children will prepare for their summer exams in classrooms that are falling apart. Perhaps he is waiting until the next budget; more likely he and his government suffer a wilful blindness on the toll taken by their party’s austerity. In one of his few jokes, Hunt referred to his age: at 56, he said, he isn’t old, but “experienced”. Well, in the part of London where I grew up, men have a healthy life expectancy of 56. I guess it depends whose experiences you want to address.
But the biggest problem of all stretches far wider than Hunt or Sunak or the Tories. It stretches across Westminster. All the main parties agree that what the economy must do is grow. Yet the economy is not growing by any more than a very mediocre rate. It has been like that since the banking crash of 2008 and nothing the chancellor announced today, not the investment zones nor the billions in tax giveaways for wealthy people or big businesses, will change that. Nor will anything up the shirt sleeves of Starmer: the respected City research firm Capital Economics has been through Labour’s plans. Its verdict? “A tight grip on public finances is likely by whichever party is in charge … Labour may struggle to do much better than the Conservatives.” In other words: we can change who’s in charge, but they won’t change what they do.
It’s high time for our politicians to wean themselves off the heady opiate of an imaginary boom. Time to face facts: the UK is a rich country that has enough money to ensure children don’t freeze and their parents don’t starve. Let us work out what our people need, in housing and healthcare and education, and provide it, by redistributing resources from those who hoard them. As Keynes said in the depths of the second world war: “Anything we can actually do we can afford.” This will be harder now that the era of nearly-free money is over, as proved by the current ructions in the banking industry. But that exposes how many of our supposedly economic battles are really political – about who gets what and who comes away with nothing. So let’s have those battles. The rest of the economic puzzle will fall into place. Or perhaps you actually like the idea of a dozen, a hundred Canary Wharfs?
Aditya Chakrabortty is a Guardian columnist and senior economics commentator. He was last week named columnist of the year (broadsheet) at the Press Awards
