Autumn Statement: Hunt tries to appease a nation addicted to Cakeism

It all seems such a long time ago. When the Conservatives last had a leadership contest, one candidate came as close as any politician dares to admitting that he had nothing to offer but blood, toil, tears and sweat. Rishi Sunak lost. Subsequently, as unelected leader, he has had to learn fast about the realities of government as practised in Britain today.

This can best be summarised as: extend and pretend. We saw how that works this week, with an Autumn Statement that promised the biggest-ever tax cuts, while quite forgetting the even bigger tax rises less than a year ago. The rise was real; the cut an illusion. The pain in the wallet will intensify next year, as the Office for Budget Responsibility warned.

The OBR is the official body that is invited to tell us like it is, and its verdict is so uncomfortable that some future administration will surely be tempted to abolish, or at least emasculate it. For example, it now reckons that growth over the next two years together will add up to less than the total it projected after the last Budget. The Chancellor spun this into good news, that we are likely to avoid outright recession. Since net inward migration is expanding the workforce (with or without the boats), the growth per head of the population is effectively zero.

It is hard, though, not to feel sympathy for Jeremy Hunt. He has had to learn the money trade on the hoof, with no previous at the Treasury to help him. It is hardly his fault that the nation is addicted to Cakeism. We want lower taxes and higher public spending.

Never a day goes by without some organisation or other pleading for more “resources” – code for a subsidy from the public purse. Each one can sound convincing, but taken together it is the noise of a population which believes that government intervention is the answer to every economic ill. If this is really what the public believes, then an administration that tries to roll back the state is doomed to defeat. There’s a useful a primer in how these budgets are built in Politico.

We do love to complain about the dire state of our public services, and can point to our neighbours who are mostly in the same bind. The exception is the United States, which has shown its usual dynamism since Covid. There are plenty of explanations for this, but one key differentiator is the welfare safety net. You may think ours is full of holes, but look westward. Lose your job in the US and you had better find another before the money runs out. We may not much care for these politics, but our present course is as likely to produce the growth we want as wishing for continuous sunshine.

One day, some future UK administration will find that the price demanded by the money markets to carry on down this primrose path is so high that the axe will need to be taken to the public sector. How about “Do less but do it better” as a slogan? Until then, Cakeism rules, and this week it’s been delay and pretend, as usual.

A Long Time In Finance is also a Podcast, on Fridays with Neil Collins and Jonathan Ford. Get it free on Spotify or Apple apps.