There’s one week to go until the Budget and as usual, press speculation is well underway. The papers have also enjoyed the added drama of the sudden resignation of Sajid Javid as Chancellor in February and his swift replacement with Rishi Sunak.
Despite only having a month’s notice and new to the Cabinet table, Sunak is forging ahead with his first Budget on Wednesday. Yet given Javid walked out in opposition to the increasing control of No.10, its likely many fiscal changes will be driven from No.10 rather than No.11.
This Budget was meant to be an opportunity for Johnson to exercise his Government’s newly found power. Despite plans to overhaul the cautious economic approach that has underpinned the past decade of Conservative Government, the Treasury is being forced to “prioritise economic security” as the Coronavirus crisis threatens to wipe hundreds of billions off the world’s economy, and instead will likely focus on delivering the Party’s manifesto commitments.
Coronavirus aside, the pre-Budget media speculation has made clear is that one thing the Government will be judged on, is how far it is willing to go to tackle the climate emergency.
With the UK is due to host the United Nations Climate Change Conference, COP26, in November and cement itself as a world leader in the fight against the climate crisis, things have got off to a rocky start. With only 9 months to go, the Prime Minister sacked the summit President (former Energy Minister) Claire Perry O’Neill, who in return accused Johnson of not giving COP26 enough attention, with preparations being “miles off track”.
The Government regularly stresses that the UK was the first country to set climate change targets in law. Yet for many this is no longer enough and the subject of ‘green’ or ‘carbon’ transport taxes has been coming up again and again.
Is the public is waking up to the fact that green taxes may be the way forward if we are drive people to reduce their carbon footprint? And what options are available to the Chancellor?
Top of the list is fuel duty – essentially a diesel subsidy for motorists – which hasn’t risen in a decade. And what about spending? It will be interesting to see whether the Treasury commits to continue offering car grants to help people with the cost of buying an electric vehicle. The future of the freeze on fuel duty has dominated the headlines for the past week, and equally there’s been a fair amount of speculation over whether the Government will scrap the electric vehicles grants.
If we are to achieve a net-zero by 2050, it’s difficult to see how long the Government can continue to provide tax breaks for motorists driving more polluting vehicles and provide subsidies to everyone who buys an electric vehicle. Are these policies reaching their shelf life? It’s worth noting that green taxes are a way of raising cash in the short term when the Government does not have much room for fiscal manoeuvre.
Yet this also brings into question how the Government will balance this priority against its all-important ‘levelling up agenda’.
Johnson may now have the numbers on the backbenches but his MPs have shown a willingness to stand up to central Government when necessary. More than a dozen new Tory MPs representing the former ‘red wall’ in the North have written to Johnson arguing that a rise in fuel duty is at odds with his commitment to serve the blue-collar workers who “leant” him their support in the election.
Sunak and Johnson will have to carefully manage the competing interests of the Greta Thunberg/Extinction Rebellion generation, while keeping on side his new voters from whose support will be crucial to the long-term success of this Government.
Will the Budget pass the all-important test of public opinion?