The Chancellor's horrible task ahead

5 February 2022

9:00 AM

5 February 2022

9:00 AM

Whether Rishi Sunak is prime minister or still chancellor this spring, fate is handing him a poisoned chalice. Looking back, I cannot remember a time when the British people were readier to believe that responsibility for their welfare lies in the hands of the state. Looking ahead, I see a time fast approaching when the state will appear unusually powerless to help us. The gap between what people have come to expect and what government can deliver has never been wider. And at least in part, it’s a virus that’s to blame.

The pandemic from which we’re emerging has elevated the role and power of the state, reliance upon the state, the moral justification for state intervention, and trust in the state, to levels unprecedented since the second world war. It will be Rishi Sunak’s misfortune to have to tell the voters that a government that could order them to stay indoors, pay them to stay indoors, and even tell them what they could and couldn’t do indoors, cannot now help them (for example) with their soaring gas bills. Governments, he has to explain, can certainly tide you over for a while, but they cannot permanently shoulder everyone’s household bills. The psychological transition facing the electorate, the transition from the comfort of temporary shelter, to the shock of exposure to eternal economic verities, will be a politically raw time — and, whether chancellor or PM, Mr Sunak will have to do the explaining.

I was talking about energy prices to a Derbyshire friend over the weekend: someone who thinks about things and hears what people around her are saying, but who is not a close follower of Westminster debate. She said (and partly I paraphrase) this: ‘I think that, without always being aware of it during this pandemic and lockdown, ordinary people have slipped into believing that the government and its advisers know best what to do, that we should trust and follow their advice, and that they will look after us as far they can and give generous support where needed. Sums beyond most people’s comprehension were spent on furlough. People really appreciated that. They were even surprised it could be afforded.

‘Some of us did worry about where the money was coming from, but we were told that when necessary the British government can borrow unimaginable sums.

‘I wonder,’ she concluded, ‘how possible it is to tell people, when their energy bills shoot up by more than anyone has ever experienced in their lifetime, that the government can’t help? They’ve made babies of us during lockdown. Now we’ve started to think like babies.’

Let’s face it: Covid-19 scared most of us out of our wits — scared our political leadership out of its wits too. This had two effects. Firstly, politicians were frightened (sometimes reluctantly) into taking extraordinary powers, and spending extraordinary sums. Secondly, the British people were frightened into tolerating a level of interference in our own lives that had never been demanded in peacetime before.

We invited the government into our homes, our parks, our leisure activities, our workplaces — into almost everywhere except our bedrooms. I will not detain you with lists of things the rules told us we could and couldn’t do: you know its extent. It went as far as whether or not to hug or kiss, and what to do instead of shaking hands. I am not arguing against any particular measure, but observing that government as hands-on as this cannot but infantilise people; and it went on for almost two years. And in return for the control of our lives that we handed to the state came the implicit promise that the state would look after us. In the lyrics of that song from the musical Chicago:

When they pass that basket
Folks contribute to,
You put in for Mama
She’ll put out for you.

Well, in the year ahead, here are some of the woes we’ll be taking to Mama. Not just gas but all energy costs will soar: a very substantial proportion of the outgoings of poorer–than-average families. And at a time when such burdens are being added to household expenditure, household incomes will, in real terms, be dropping — indeed, are already. Were we truly ‘all in this together’, there might at least be some sense of national solidarity in the face of national challenge, but we aren’t. Inflation (as I remember from the 1970s) is an aggressive cultural irritant, setting citizen against citizen. And inflation is politically neuralgic too: such steps as a chancellor may take to curb inflation may choke economic growth, push those with mortgages into debt. The scene is set for political anger domestically, for resentment and for public incomprehension.

It is not the case that there will be nothing a chancellor or prime minister can do; but there are, firstly, serious limits on how much more they can spend even if they want to, especially if interest rates are rising, while our own national debt needs to be serviced. Secondly, there are serious limits on how far a Conservative chancellor or prime minister will want to intervene, even if they could afford to. This is not the USSR. No Tory can condone making the state responsible for keeping down the cost or gas. Commodity price rises may be permanent. How do you withdraw support, once people have come to rely on it? Meanwhile, the task of repairing, let alone improving, our health service, will suck resources from every other area of state spending.

All Sunak’s instincts (like mine) will be for spending restraint. But he will have to explain. And his explanations will be heard by an electorate that has just finished a two-year crash course in the instrumentality of government in every nook and cranny of our lives — and the limitless ability of government to finance a rescue of millions of people when they are in trouble. I do not envy Mama.

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