Rishi Sunak’s speech offers mood music but little economic meat

Analysis: chancellor reiterates what he believes in, including himself, during address at Tory conference

After 18 months of opening the state’s chequebook to pay for the huge economic cost of the Covid-19 pandemic, the Conservative party finally got a taste of the real Rishi Sunak in his speech to its annual conference.

The chancellor’s address in Manchester was more about mood music than new policy announcements. Even the pledge to spend more helping young people find jobs after the end of furlough had already been trailed overnight.

It was, though, an encapsulation of what Sunak believes in: sound public finances, low taxation, a reliance on hard work rather than the state, the opportunities provided by Brexit, a belief in the transformative power of technology. And, of course, himself. Despite the show of loyalty to Boris Johnson, Sunak sees himself as a prime minister in waiting.

Unlike the shadow chancellor, Rachel Reeves, at last week’s Labour party conference, Sunak was under no real pressure to come up with fresh initiatives. His speech was sandwiched between last month’s mini budget announcing higher national insurance contributions to pay for the NHS and social care, and the real budget later this month when the real news on tax and spending is to be expected. The lack of meat may also have demonstrated a degree of political tact, since it left scope for the prime minister to make some headline grabbing announcements in his speech on Wednesday.

There were, however, a few clues in Sunak’s speech about where he sees economics and politics heading in the coming week, months and years.

First, there is going to be no climbdown from the government on the £20 a week cut in universal credit that will come into force this week. While admitting life was tough for young, ambitious families, Sunak said: “Is the answer to their hopes and dreams just to increase their benefits?”

That, though, might not be the right question for the millions of the UK’s working poor. An alternative would be: how will losing £20 a week affect the ability to feed your family or heat your home?

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Second, Sunak’s cabinet colleagues are going to have to do a bit of belt-tightening in the spending review that will accompany the budget. The reason is that reducing the government’s deficit is seen as necessary to deliver pre-election tax cuts.

“Yes, I want tax cuts. But in order to do that our public finances must be put back on a sustainable footing,” the chancellor said.

Third, the government clearly sees political mileage in being relentlessly upbeat. There was nothing in Sunak’s speech about closed petrol stations or supermarkets with empty shelves, but much about his “unshakeable belief” that the future will be better. Johnson is trying to frame the argument as Tory optimism against Labour pessimism, and in that respect Sunak was fully on message.


Larry Elliott Economics editor

The GuardianTramp

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