Johnsonomics: What does this Budget really say about the Conservative Party in 2020
Still in its infancy, and facing a global health pandemic, this Budget was crucial for the Government. Politically it had to show those who’d lent them their vote for the first time that the Conservative Party would deliver; economically, it had to show it would not have an adverse impact on Government debt and would lead to economic growth.
People are still trying to work the Prime Minister and his Government out – is this Thatcherism 2.0 or is Johnsonism a new breed of One Nation Conservatism which sees a greater role for Government in levelling up the country?
The Chancellor spent the first 20 minutes of his Budget speech outlining the very significant measures the Government is undertaking to mitigate the impact of COVID-19 on business, particularly small businesses, and ensure the safety net is there for those in the community who’ll need it most. It has undoubtedly had an impact on the forecasts, with the Government looking to provide reassurance through a tailored and targeted approach. Business has responded positively to the Government’s significant stimulus package which many argue will, in tandem with the Bank of England interest rate cut, go a long way to protecting the economy. It will also ensure many small and medium sized businesses are able to continue to trade through difficult times with the business rates holiday, cash grants for some small businesses and support for the self-employed sending a positive and reassuring message to business owners and proving particularly popular with traditionally economically dry Tory backbenchers. There are also significant measures to support the NHS – above and beyond what had already been committed – with Rishi Sunak committing to give it whatever it needs to deal with coronavirus.
Our team have looked at some of the most important new measures announced in this Budget, and the COVID-19 related measures, we’ve considered their estimated cost or revenue over the life of the Parliament and thought about whether they’d be considered traditionally small or large Government measures. In other words, are these Budget measures typically Conservative, or bending to the left?
In reality, it’s a mix.
What’s clear is this Budget has pledged both tax cuts and some big spending. There are some revenue raising measures, but they aren’t enough to counter the very significant spend on new infrastructure, on public and community services and COVID-19 measures.
There have been suggestions that this Government is somehow morphing into a big, interventionist Government, stealing the clothes (and votes) of the left. That’s probably just a little bit too simplistic. With tax relief targeted at lower income earners and small businesses, support for greater employment as well as measures to spur innovation and encourage entrepreneurship, Johnsonism is probably a little bit closer to Thatcherism than one might think at first glance. Even traditionally dry, economically hawkish Tories are with the Government on this one.
The picture seems rather to be a mix of extra spending on frontline public services, infrastructure, with tax cuts for lower income earners, small businesses and to support employment, as well as reliefs and funds committed to spur innovation. It’s a risk. It puts a lot of trust and faith in Government to deliver key infrastructure efficiently and Government could be accused of trying to do too much to quickly but with a large majority and a whole generation of new Conservatives on the Green Benches, it’s a risk worth taking to “get it done”.
There is a reason the Conservative Party is one of the most successful Political Parties in the world: it adapts to the electorate rather than expecting the electorate to come to them. A recent poll showed that if an election were held now, 50% of voters would put a tick next to the Conservative Party, a five point gain 3 months after a resounding election win which saw the Party pick up swathes of so-called “Red Wall” seats that had always voted Labour but felt it no longer represented them. Budget 2020 is another example of a Conservative Party moving closer to the people it serves so it can win and retain power.