Rishi Sunak’s Budget hammers home the Tory Covid narrative

Success in politics often comes down to a talent for storytelling and the one that matters most right now is the story of the pandemic.

There are other tales this government wants voters to believe. There is the Brexit story, the green recovery and the levelling-up story. There is the one about being the party of sound finance. In his Budget, Rishi Sunak sought to weave a plausible line around each of these. But there is one strategic imperative: the Tories have to win the narrative of the crisis.

To talk to any opponent of this government is to feel their rage that Boris Johnson is “getting away with it”. At the start of the crisis few would predict any way back from presiding over Europe’s highest death toll. This government has made a lot of mistakes; mistakes that have cost thousands of lives and ruined livelihoods.

But happily for the prime minister there is an alternate version. Yes, there were mistakes, but as it battled with a problem it had not created, the government took extraordinary steps to protect people’s livelihoods — paying wages, saving businesses and then getting the country vaccinated quickly. This is the story Sunak sought to hammer home on Wednesday, and the signs are increasingly that this is the version being accepted by those not already viscerally opposed to this government.

Conventional political wisdom holds that the government is enjoying a vaccine bump in popularity. This is true, but it is only part of the bigger picture. The policy that really kept the government afloat through its numerous missteps, was the furlough scheme. Other measures were also vital and there were some big holes in the safety net. But for the families of the 4.7m on furlough, this was the sign of a government protecting them through the crisis.

It is furlough that made Sunak the government’s star player in this crisis. Critics may point out that it was he who wanted to kill the policy last autumn, but the chancellor is a quick study. Where once he cavilled at the cost, now he is taking no chances. This was a Budget to seal the narrative.

His fiscal response was unimpeachable. He would be “going long” with an extra £59bn of economic support over the next year. The political power of furlough (and other support) was embraced and extended till September as part of a vast and sustained jobs-support package.

But this is only one of Sunak’s stories and each of the others look shakier. His second is of the Conservatives as the party of sound money, which is no easy sell when borrowing is set to hit £355bn or 16.9 per cent of gross domestic product.

Sunak has made clear the public finances must be repaired even if the recovery rightly demands that must be delayed. Wisely, the pain is delayed but it is substantial, an extra annual £25bn in tax by the middle of the decade via an eye-watering rise in corporation tax in two years’ time and a freezing of income tax allowances over the same period. The tax burden will be the highest since the late 1960s. The business tax rise is far enough away to be altered before it fully kicks in but it is utterly unaligned with the Brexiter vision of Britain as a low-tax, low-regulation inward investment magnet.

There is even more pain to come but the chancellor is hemmed in by other manifesto commitments and the Tory conversion to an anti-austerity party. The hawkish but nimble Sunak did nod to political realities when he noted that restoring the public finances would be the work of “many governments”. A quick study, indeed.

But still — so far, so good, tactically speaking. From here it gets a little more tricky. The next story is of a government that will build back better, investing for growth and levelling-up the left-behind regions and towns. That remains an admirable but undefined policy. Sunak did his best with a series of totemic but economically inconsequential policies of Whitehall job relocation, regional baubles and freeports. All good ideas, but some sites were overly political and too dispersed to gain critical mass. At times this looked less like a Budget than a campaign to re-elect the Tees Valley’s Tory mayor.

And all the policies to boost investment cannot mask one stark figure. The predictions for growth in the years from 2023 are stuck at around 1.7 per cent. All the effort, all the policies, the 130 per cent investment allowances to front-load business activity before the corporation tax rise kicks in, are still not expected to deliver significant economic growth, certainly not enough to counteract the long-term effects of the pandemic and Brexit. None of which is going to ease the fiscal burden.

The green story is also left looking a little thin. There is the already announced investment in green technology but no sign of readiness to use the tax system to clean up the nation’s consumption.

Beyond all this is the continuing Brexit dislocation and a looming rise in unemployment once furlough ends, albeit now at a less fearful level than initially expected. But these are problems for tomorrow’s Sunak. Tactically, this Budget was on point for the immediate challenge. Opposition hopes that the pandemic would sink the Tories look forlorn. Sunak and Johnson are prevailing in the story that matters above all others.

Post-pandemic, the rest of the economic narrative may quickly look more threadbare but the Conservatives still have a story and so far it is sticking.

robert.shrimsley@ft.com