Rishi Sunak's budget: lessons learned, battles won, decisions ducked

In the delivery of the budget, more than the numbers, we heard the authentic tone of Rishi Sunak as chancellor. His emphasis on fixing the public finances shows that he won some of the battles within the cabinet of recent weeks – including those with the prime minister. The state should not borrow to pay for everyday spending nor can it allow debt to keep rising, he argued; he used this budget to show how he intended to make sure that it doesn’t.

He also – and this is clearly now part of brand Sunak – laid claim to the fairness of the coronavirus package. No chancellor would want to have grappled with the pandemic, but given that he had to do so and that his measures were among the most successful of the government’s response, those measures are now central to his argument about what he has given the country. “I said I would do what it takes," he said. “I have done and I will”.

All the same, one blight hangs over Sunak’s reputation: last summer’s Eat Out to Help Out scheme and the role it may have played in the second wave of coronavirus infections. It now looks like a serious misjudgement (and around two-thirds of UK deaths have occurred since September) – both about the health implications, and the impact on the economy of letting the virus run rampant. The inquiry – when it comes – is unlikely to be kind to the chancellor’s reputation on that score at least. It was striking that his budget did not include any measure of this sort.

Sunak is an ambitious chancellor – with an eye on the next general election

No one who saw the video published by the Treasury in the run up to the budget – with 200 shots of Sunak and only a few of the prime minister – can be in any doubt as to the chancellor's ambitions. He has said (he would, wouldn’t he) that he is focused only on being chancellor in this exceptionally difficult time; meanwhile, it has suited Boris Johnson for his chancellor to be of enough stature to take the intense heat. But the question of Sunak’s standing in the party and the country is a live one. This budget was a key test of it.

For months, there have been briefings about how Sunak wanted to use this budget to express his own view: that the government needed to return to fiscal prudence, or whatever resembles that in the age of coronavirus. He wanted to begin to turn off support and raise revenues – yes, even taxes – to begin to repair the public finances and yet to do that in time to avoid undermining the party in the next election, expected in 2024. The measures in this budget were consistent with that, but with some important delays in the start of application.

The obvious risk is that these begin to kick in just ahead of the next election. But it was probably politic not to trigger them right now given the wide opposition to such measures until the pandemic is dwindling, from those inside his party as well as the Labour opposition – and from many professional economists concerned about damage to the recovery.

Sunak has ducked some difficult political choices – for now

Emphasis on growth and science was easier territory for him. After the giveaways at the start of the speech, and the sober tax-raising kernel in the middle, he was able to deliver a rousing finale, invoking the prospects of innovation. He described a role for pension funds in providing capital for this – familiar professional territory for him – although past efforts to make this work warrants some scepticism.

All the same, this budget shows all the difficulty of the political path for Sunak. The pandemic still has too much of a grip for him to turn off support, successful though that has been. Difficult choices are kicked away for at least six months – the new date for the end of the furlough scheme and the £20 per week uplift to Universal Credit. He will find the first easier to turn off than the second given widespread political concern – in his own party, too – about the level of benefits going to the poorest people compared with other countries. But he has wanted to give a flavour of the prudence he feels should apply, even if he could not support that fully in actions.

It is in tone rather than specific measures that this budget gave us a sense of Sunak as chancellor. He will no doubt try to keep the image of the pragmatic but careful custodian of national finances as he fashions a plan for the economy and for his own political future. The most important line in his speech may prove to be the one projecting a quicker bounce back for the economy than independent forecasters previously expected. Success earns a lot of forgiveness. But his standing in the party and the country will not be decoupled completely from last year’s overenthusiastic reopening of the economy – in a glittering career, a rare mistake.