In January 2000, Tony Blair surprised everyone with a pledge to bring the UK’s health spending up to the European average. Gordon Brown, who was the Labour chancellor at the time, was reportedly furious, exclaiming, “You’ve stolen my fucking budget.” Mr. Brown had every right to be upset. He wanted recognition for his efforts to rescue the health service and gain public support for his tax-and-spend policies. However, when NHS England released its long-term workforce plan in June of this year, there was complete silence about how the £50bn scheme would be funded. According to Paul Johnson of the Institute for Fiscal Studies, this could mean that the next 15 budgets have essentially been stolen.
The politics within the Tory party are the reason behind the veil being drawn over fiscal decisions. Rishi Sunak has held the positions of Chancellor and Prime Minister during a parliament that has experienced the highest taxation levels in the UK in the past 70 years. Sunak’s decision to freeze income tax thresholds in 2021 resulted in an additional £100bn in taxes for the Treasury.
Although Mr. Sunak aims to be seen as a tax cutter, the evidence suggests otherwise. Liz Truss, who caused a stir as a short-lived prime minister with her tax-cutting agenda, is now calling on Sunak to reduce business levies. She has gained support from Conservative MPs. However, the danger lies in Truss potentially exposing Sunak as a Tory who prioritizes “balanced budgets” over lower taxes, rather than making a political comeback.
Despite the increased tax revenue, the NHS is regressing, prisons are deteriorating, and sewage is being pumped into rivers. Sunak may be spending more on public services, but factors such as Covid, higher inflation, and a decade of spending cuts have significantly weakened the government’s ability to function effectively. In 2023, debt interest will account for nearly a tenth of government spending (£110bn), a sum larger than the budgets of every department except health. Sunak is responsible for this cost due to the persistently high inflation rates.
The Conservative electoral coalition primarily consists of home-owning voters who are retired or nearing retirement. Margaret Thatcher, despite being hailed as a tax cutter, gained more support from the working-age population. This may explain why her governments often highlighted the trade-off between taxation and welfare spending. The challenge for the Tory party, which seeks low taxes, is that older voters are not in favor of cuts to healthcare, pensions, or social care spending.
However, scrapping or significantly delaying the HS2 rail line between Birmingham and Manchester would undermine Sunak’s commitment to making “long-term decisions for a brighter future.” The prime minister could follow in Ronald Reagan’s footsteps, embracing tax cuts and accepting deficits and higher government debt ratios. In August alone, the state spent £12bn more than it received in taxes. Nevertheless, Sunak views his fiscal orthodoxy as not only standing apart from his internal party rivals but also contrasting with Labour. Without stimulating growth, Sunak risks being seen as a high-tax politician who fails to invest in fixing Britain, especially at a time when the public has higher expectations from the government than ever before. It’s no surprise that the prime minister is facing mounting unpopularity.
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