Just a year ago, Jeremy Hunt played Scrooge at the despatch box. In an attempt to regain market credibility following Liz Truss’s mini-Budget, Rishi Sunak’s new government announced £30 billion of spending cuts (largely pencilled in for after the election) and £25 billion of tax rises. It was a far cry from the summer leadership contest, when Truss and Sunak promised to lower the tax burden. Sunak’s argument has always been that he would cut tax – but only once some order had been restored to the public finances.

Sunak’s reticence has been unpopular with his own side. Boris Johnson attacked him for lacking a ‘grand economic strategy for growth’. With the tax burden at its highest level since 1949, other colleagues see his claims that he is a low-tax Tory as disingenuous. ‘He’s like a mafia don going to confession,’ says a former cabinet colleague. ‘He says he is sorry for what he’s done but no one believes it.’

This week’s Autumn Statement is meant to be the moment Sunak and Hunt prove the naysayers wrong. Their argument: yes, it hurt – and yes, it worked. Tight pay settlements helped lower inflation, which has given the government greater fiscal headroom so the tax cuts can begin. The question is whether the cuts amount to very much, will change Tory fortunes – or be a case of too little, too late.

Despite previous suggestions that tax cuts would have to wait until the new year, Hunt and Sunak chose to slash national insurance for the employed and self-employed. Employee national insurance has been reduced from 12 to 10 per cent – saving the average worker £450 a year. This will come into effect in January – leading to talk that Sunak wants to keep open the option of a spring election. ‘No. 10 want maximum flexibility on election timings,’ reports a senior minister. For the self-employed, class 4 contributions have been cut from 9 to 8 per cent and Class 2 NIC payments abolished. An average self-employed earner – on £28,000 – should save £350 a year.

The question is whether the cuts amount to much, will change Tory fortunes – or be too little, too late

But then comes the part that the government isn’t shouting about. Last year, Hunt chose to extend the freeze on income tax and national insurance thresholds – so workers face the hidden tax known as fiscal drag. Far more workers will end up in higher tax brackets. Add everything together – stealth tax rises and advertised tax cuts – and taxes are not falling. They are rising, albeit a bit more slowly: from £989 billion in this financial year to £1,036 billion next year. This is less than the £1,047 billion originally planned. Put together with the other measures – increasing the national living wage to £11.44 an hour and making ‘full expensing’ permanent – it is meant to give Sunak an economic-recovery narrative. Yet it’s hardly a Thatcherite revolution.

Ministers want to point towards a light at the end of the tunnel, to say that the country is on the path to lower taxation, should they win the next election. That, it is thought, could re-equip the Tories with their best electoral weapon: the promise of lower taxes.

The government is considering doing more in the Spring Budget. Under discussion are further cuts including to income tax.

This week’s changes, combined with reforms to toughen up the benefit system, bring together the bones of a growth strategy. The Office for Budget Responsibility estimates that the measures will put 200,000 people back into work over five years.

There will be critics. Ahead of the Autumn Statement, MPs complained that ‘full expensing’ is an accountancy fiddle which allows companies to deduct too many investment costs as tax write-offs. In campaigning terms, too, it’s not exactly a doorstep-ready pledge for a party in its last pre-election year. Therefore, the decision to make it the highest-priced part of the Autumn Statement – it is estimated to be the biggest permanent business tax cut in recent history – raises further questions about Sunak’s political judgment.

The argument for removing the tax penalty on capital investment is that it is a long-term decision that addresses one of the biggest drags on growth. The Institute for Fiscal Studies, the Labour party and the CBI all like the idea. It also ought to attract more overseas investment. Since Labour is unlikely to undo it, ‘full expensing’ ought to bring some certainty for investors. ‘It is a matter of doing the right thing,’ says one figure involved in the planning.

The other criticism will be that Sunak has not gone far enough. Yet those hoping for fireworks or a tax-slashing bonanza were always going to be disappointed. The Prime Minister has made much of his caution. He wants to define himself against Truss’s unfunded tax cuts and Labour’s plans for borrowing. He wishes to be seen as a pragmatic middle-way leader whose announcements make long-term sense.

It’s also the case that the economy remains fragile and options are limited. Just this week, Bank of England Governor Andrew Bailey warned that the ongoing risks from inflation were being underestimated. ‘Next year is going to be difficult on the economy,’ predicts a minister. It means some think the big opportunity to improve things was missed months ago. ‘The Budget that could really have had an impact was last spring,’ says a minister. ‘At this point it is about sending a message.’

In response, Labour’s plan is to stick to its agenda and not fall into Tory traps on benefits and tax. When Rachel Reeves addressed Labour MPs ahead of the Autumn Statement, the shadow chancellor reminded them of their key message on the economy: do you feel poorer now than you did 13 years ago? ‘The public don’t follow the Autumn Statement but they know how they feel in their pocket,’ says a Labour figure. ‘Every time a Tory politician goes on the news and says that inflation is down, people just get annoyed.’

Sunak’s bigger problem is that while the economic picture may have improved, the polls are nearly as bad for the Tories as during the Truss era. Hopes that the party conference, the King’s Speech and a reshuffle would improve their fortunes have been dashed. The Labour lead has only increased.

Sunak urgently needs to satisfy his party and give voters a reason to back him. With this week’s statement, Sunak and Hunt have finally set out a path to reducing tax and a coherent growth strategy. But, unless something changes fast, the Conservatives won’t be in power long enough to see it through.