We may well see a spending spree from the next Tory PM

3 Jul 19

Tory leadership contenders are falling over themselves to lavish money on public finances. Guardian columnist Gaby Hinsliff asks if they can put the money where their mouths are.  

Conservative conference

 

Ten years ago this summer, George Osborne formally ushered in the age of austerity with his first emergency budget.

The pain was only supposed to last five years but has dragged on now for two parliaments, and could spread well into the next decade if the incoming Conservative leader sticks rigidly to manifesto promises on balancing the budget.

But all the signs are they won’t, and that’s been one of the hidden stories of this Tory leadership contest.

While the spotlight has been on Brexit, or candidate confessions of snorting cocaine at parties, under the bonnet there has been a significant shift in attitudes towards public finances.

Once upon a time, ambitious Tories wooed the grass roots by promising to curb waste and cut taxes.

This time, however, they’re falling over themselves to spend money, despite signs that the economy may be starting to shrink under the strain of Brexit.

From the start, Boris Johnson, Michael Gove and Dominic Raab all promised extra funding for schools, a flashpoint at the last election in several marginal seats the Tories failed to win.

Jeremy Hunt has vowed to double defence spending, Sajid Javid pledged 20,000 more police officers, Matt Hancock wanted to raise the minimum wage, and several candidates advocated more housebuilding; meanwhile, Raab and Johnson simultaneously promised tax cuts likely to cost billions.


'Treasury jaws may have dropped at the scale of promises being made in times of economic uncertainty, but for some candidates political necessity trumps such misgivings.'


Treasury jaws may have dropped at the scale of promises being made in times of economic uncertainty, but for some candidates political necessity trumps such misgivings.

So how far can local government trust these offers of jam tomorrow?

The electoral reality, at least, is clear. A decade ago when the Tories first came to power, polling found most voters did think Britain should tighten its belt.

But the pendulum has now swung back, with research last year suggesting a majority even of Tory voters thought the cuts had gone too far.

Ever since Jeremy Corbyn’s Labour party wiped out their governing majority in the snap election of 2017, Tory MPs have been warning they need a more upbeat story to tell, and last year the British Social Attitudes survey found 60% of all voters agreeing it was time to ‘increase taxes and spend more on health, education and social benefits’.

(Note, would-be Tory leaders have been markedly quieter about the touchy subject of benefits, or the knock-on effect many in local government say universal credit has had on rent arrears and homelessness.)

Hence Theresa May’s declaration last October that a decade on from the banking crash, “people need to know that the austerity it led to is over and that their hard work has paid off”.

She was setting the scene for a 2019 Spending Review that was widely expected to turn on the taps; if a Brexit deal could be done by March, that would free up some of the cash the Treasury had been hoarding in case of a ‘no-deal’ exit, paving the way for a feelgood post-Brexit giveaway in the autumn. Unfortunately for Mrs May, none of that went to plan.

Her Spending Review is on ice, pending a new leader, and while she is understood to want to unveil some of her giveaways before she leaves at the end of July, it seems her successor may not want to wait even that long.

Since the post-Brexit bonus some contenders seem to be counting on doesn’t technically exist yet, the rhetoric may be running ahead of economic reality.

But it’s clear many Tory MPs are desperate to put austerity behind them before facing Corbyn at a general election – and that any new Tory leader can’t risk disappointing them.

A decade on, the political wind has evidently changed. Now comes an anxious wait to see if the money follows.

Gaby Hinsliff is chairing at the CIPFA conference in Birmingham next week. 

  • Gaby Hinsliff
    Gaby Hinsliff

    Guardian columnist, political editor at The Pool and author of Half a Wife

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