Jeremy Hunt’s Mendacity

Section​ 114 notices used to be rare. They’re described as council bankruptcies: when a local authority is on the verge of making unlawful expenditure – that is, spending more than its income – its chief financial officer is required to issue a notice and the council starts, inevitably, to cut its services further and sell off assets. Central government often sends its men in grey suits to wield the knife. Council budgets were gutted during the austerity years and have never recovered, but demand for the services they provide – above all social care – has only intensified. Most councils stave off cataclysm by offering de facto crisis-only services, a fact obvious to anyone who tries to use them.

A rash of Section 114 notices in the past two years have come from councils – Croydon, Woking, Birmingham – in dire straits because of managerial incompetence (Birmingham’s £100 million IT system was five times over budget and useless) or risky property scheming. But surveys by the Local Government Association suggest that the problem is far wider: half of council leaders fear they don’t have the money to deliver statutory services over the coming year. One in five think a Section 114 notice is likely. In November, Nottingham Council issued notice of a £23 million hole in its spending, thanks to the impossibility of meeting the rocketing demand for social care and homelessness services.

Nineteen councils, including Middlesbrough, Stoke-on-Trent, Somerset, Southampton and Bradford, have been given permission to sell assets to stave off collapse. Ahead of the budget on 6 March, the chancellor’s office briefed that councils should simply stop spending on ‘“woke” projects’. But the savings from cutting such spending – some of which involves adapting services to allow disabled access – is minuscule: around 0.02 per cent of Birmingham’s annual spending. In a saner political culture, breezy malice of that kind would be Jeremy Hunt’s electoral suicide note.

Westminster budgets often look like they are setting out measures for a different country, one still lavish in its social democratic patrimony, or a nation of suffocated entrepreneurs. You could be forgiven for thinking, from Hunt’s programme, that the UK requires only a minor course correction. When the numbers are not fantastical they are laughable. Citigroup greeted the OBR’s optimism about growth with contempt: the OBR assumes British productivity will grow at 0.9 per cent; Citi sees no reason it will exceed its 0.5 per cent average since the financial crisis. That leaves a £50-60 billion black hole in the figures.

Pre-election budgets tend to defer tax rises, and Hunt’s is unsurprising in this respect. As well as the announced cut to employee National Insurance contributions, it envisions a post-election settlement of a 1 per cent limit in real terms on increased revenue spending over the next four years, and fantasises an 8.6 per cent reduction in capital spending between 2025 and 2029. ‘Levelling up’, so recently the Tory electoral watchword, has now been applied to the promise of a £242 million bung for the deprived of Canary Wharf. A couple of revenue raisers are mooted – ending non-dom status and paying private collectors to shake down those in tax debt – but much rests, implausibly, on efficiency savings and productivity boosts to be achieved by the unspecified magic of AI. As a plan, it’s as convincing as the emails from temporarily embarrassed Nigerian princes that fill our inboxes.

Nobody, including the Treasury, believes it. The miserable state of public services will require higher tax and spending commitments from whoever occupies Number 11 after the next election. Hunt’s detachment from the catastrophe in local government is symptomatic of an odd doubleness that afflicts British politics, a refusal to acknowledge the yawning gap between the country as it actually is and as it is represented in Westminster.

Were Hunt’s plans enacted, the brunt of cuts – or ‘savings’ – would have to fall outside the departments of health, education and defence, where the government has either made specific promises to maintain or boost current levels of spending or, in the case of the NHS, has signed up to a (somewhat improbable) plan to increase the size of the workforce. Yet there’s little left to cut: police numbers? Close some job centres? The government could stop shovelling hundreds of millions to Rwanda for its pointless exercise in sadism, but that doesn’t seem likely.

It is hard to know what to do with mendacity at this scale. Its smaller instances are just exercises in political self-flattery: choosing misleading GDP statistics, or making tendentious claims about the tax burden, or claiming British credit for falling global energy prices. Behind them is a more pervasive lie about whether it is possible to run an advanced society, preserving its past achievements in the eradication of misery, disease and destitution, by failing to spend any money on it. It isn’t quite that the government believes that voters are too stupid to notice the gap between description and reality, but that the reality is so bad that nobody wants to face it. The tacit compact is this: they say things we know to be lies, and we pretend to take them seriously.

Taking the budget on its own terms would be an exercise in credulous stenography, but raising even mild criticism invites accusations of talking Britain down. (Hunt accused the BBC’s ubiquitous Amol Rajan of aggressive questioning that was ‘unworthy’ of the corporation.) Since the budget is undeliverable in reality, it’s more fruitful to ask what it achieves politically. As a framework for winning an immediate election it is underpowered, perhaps the basis for a round of more eyecatching measures before an autumn ballot, by which time Britain might even be out of recession. Westminster gossip about a May election seems optimistic.

Much turns on whether the Conservative Party leadership really believes that it can, somehow, win the next election. Despite its polling death spiral, many at the top of the party believe affection for Labour is lukewarm. The budget is unusually uninterested in pensioners and attentive to working-age generations. The National Insurance cut is already morphing into a vague commitment to do away with the levy – a sad attempt to find an electoral battleground. Political leaders rarely believe they have lost until the votes are counted, and sometimes not even then.

More plausibly, the budget aims to constrain the Labour Party in its campaigning and governing. Keir Starmer may crow that the abolition of non-dom status was originally a Labour idea – but in adopting it now, Hunt has deprived Labour of one of its few tangible initiatives and a notional £2.7 billion it had hoped to gain without raising taxes. However absurd the reduced spending commitment, it sets a planning limit for 2025: the government hopes that the restraints it has imposed will dog Labour with questions about what it would cut, and render it rapidly unpopular in office. Hunt sought to reinforce fears of Labour profligacy by declaring that ‘an economy based on sound money does not pass its bills to the next generation.’

An opposition in touch with reality might respond that this is precisely what Conservative policy does: its destruction of social housing passes the bill for housing on to the next generation, subsidising landlordism through housing benefit and extortionate rates for emergency accommodation; its failure to tackle social care loads future generations with both a moral and financial bill; the intergenerational debt incurred by its abdication on climate leadership is existential. Or it could remind the government of the obvious truth that Britain’s great institutions were built by recognising that assets designed for multi-generational use are precisely what debt is for. For Starmer, that perhaps sounded too much like a commitment. He preferred to mimic George Osborne in austerian pomp: the ‘national credit card’, he declared in his response to the budget, is ‘maxed out’.

Austerity slogans constrict any future Labour government’s room to manoeuvre every time they’re cited: it’s stupid to reanimate them. This is a reminder that mendacious doubleness is a connivance of both sides of the House. Starmer can decry, as he did in his response, ‘fourteen years of stagnation’. But the diagnosis is not matched by the prescription. Labour wants at once to indict the current state of Britain while hanging on to electoral respectability by suggesting little change, merely consolidating its reputation for policy chicanery by backtracking on its proposed £28 billion green transformation fund.

Rachel Reeves, the shadow chancellor, has ruled out any increase in wealth taxes, and has dismissed the suggestion that taxes on income generated by wealth should be increased to match those levied on income from work. Like Hunt, she relies on the vague magic of productivity gains without spending, visitations from the cost-free reform fairy, peppered with jabs at those on benefits. ‘We have a comprehensive plan’ for growth, she told LBC’s Iain Dale, though if such a plan exists she has given little indication as to what it would be. It’s hard to see how anyone can fund even the basic repairs needed across the social state on the basis of growth alone – unless that magically rises to 4 or 5 per cent (last year’s was 0.1 per cent). A healthier media would press her on this question.

Reality eventually bites. Political bills come due. Fourteen years of wilful decline and stagnation can be laid against the Conservative Party. But greater bills are coming due. Failure to acknowledge the problems everyone sees around them – councils pawning the family silver, crisis-only services in health and care, crumbling buildings, unattainable housing, dead wage growth, a frayed public realm – fuels Britain’s disdain for politicians. Its most pernicious consequence may be the deep sense that nothing can be done differently, that things – in a reversal of the Blairite anthem – can never get better. It would be a good time for politicians to get real.