The Tories have recognised the public spending crisis – and ignored the climate crisis

Editorial: For all his Budget triumphalism, the chancellor could not disguise his failure to deal with the transcendent question of climate change

For a man not so long ago compared unfavourably to a children’s television presenter, the new chancellor gave a remarkably grown-up performance. Much of the Budget was smart politics and smart economics. Such was the audacity of its commitment to public spending that even Jeremy Corbyn struggled to find fault with it.

There were, to be clear, grievous flaws in the chancellor’s plans – especially its abject failure to face up to the climate change emergency – but in conventional economic terms, he did what he needed to do.

The chancellor skipped the usual self-satisfied overtures about the Conservatives’ achievements to date, and the macroeconomic outlook. The first is irrelevant; the second unknowable until coronavirus and Brexit are resolved.

Instead, the key message Rishi Sunak hammered away at was that he would do “whatever it takes” to support the economy at this juncture. A total boost of £30bn will be injected into the economy this year, some £12bn of it allocated to the NHS, the self-employed and hard-pressed businesses to get through coronavirus. As if to pre-empt his critics, Sunak went as far as to offer a blank cheque to the NHS in the coming years, whether it amounts to “millions or billions”. As coronavirus has the potential to put an already struggling economy into a tailspin, Mr Sunak’s bravery has been widely welcomed. This is no time for anyone to be fussy about fiscal rules.

And so they were almost casually jettisoned. The “old” rules – dating back only as far as Sajid Javid’s brief chancellorship and the 2019 Conservative manifesto – are in abeyance, and there will be a review and some consultations before fresh ones are announced. They will be looser, as Mr Sunak hinted, because we now live in a world of low interest rates. He did not explain how such an insight did not occur to any of his predecessors, seeing as interest rates have been at record lows for more than a decade. Nor did he apologise to the Labour Party for claiming that they would run the economy regardless of a fiscal framework. Mr Sunak is still a politician, after all.

The extent of the fiscal revolution now being undertaken should not be underestimated. Even though it is probably more timid than Labour would have attempted, the scale of the borrowing over the next few years is substantial by any measure. According to the independent Office for Budget Responsibility, even without the special measures associated with coronavirus, Britain’s public finances have come full circle since George Osborne unleashed the “age of austerity” on the nation in 2010. Boris Johnson’s eagerness to spend vast sums on public infrastructure has pushed the moment at which Britain’s Budget will be balanced well into the second half of the 2020s, if not beyond.

According to the OBR, the Budget “completes the reversal of the cuts to real departmental spending per person undertaken by the coalition government ... The capital spending turnaround is more dramatic still – the coalition government’s early cuts will have been almost fully reversed this year. Spending is set to be around a third higher at the end of our forecast than in 2010-11”.

It is not quite three months since we had a general election in which the most frequently asked question was: “How will you pay for it?” Now that question seems to be in poor taste. Behind the bitter rhetoric, there is remarkable consensus about what the public finances should be about: supporting an economy with huge problems and risks in the short term, and investing record amounts for the longer term. The OBR agrees that these new infrastructure schemes – from high-speed broadband to high-speed trains – will have a much-needed positive impact on the UK’s dismal record on productivity and competitiveness. Post-Brexit, such gains will be more precious than ever.

Mr Sunak’s was a deeply political Budget, and one that cheered his Conservative colleagues. He scrapped a planned fuel duty increase, froze duties on alcohol, reduced national insurance, raised the national living wage to beyond £10 an hour in the coming years, and announced what the OBR described as the largest fiscal boost for 30 years. There was something for every corner of the kingdom: the A303 tunnel at Stonehenge; the Llanymynech-Pant bypass; £10m for research and development to decarbonise the Scotch whisky industry; a “multi-modal transport hub” at Stoke-on-Trent station; long-term funding settlements for West Yorkshire, Southampton and Nottingham; more money for peat bogs; business rates relief for shops, pubs, guest houses and night clubs; and of course that £2.5bn war chest to fix potholes.

Yet the chancellor could not disguise his failure to deal with the transcendent question of climate change. Long after Brexit and the coronavirus have been consigned to the history books, we will still be trying to limit the danger human activity is doing to life on earth. That is the overarching emergency.

At a time when the public finances are coming under increasing strain, there was much scope to raise some money by curbing environmentally damaging activities. A modest reform to energy levies – hiking the price of gas – and tweaks to the archaic “red diesel” scheme were among the only green gestures Mr Sunak saw fit to undertake. Instead, he announced some £27bn worth of roadbuilding (another 4,000 miles of carriageways); kept petrol and diesel duty on hold for a year (at least); and left subsidies for electric car ownership, air passenger duty and other green levies all unchanged.

Politically, this was a smart Budget. At its close, Mr Sunak styled it “a people’s Budget from a people’s government”. Under the cover of the coronavirus emergency, the government has presented not so much a Labour or One Nation Budget as much as the first blatantly populist one. If that helps to redistribute opportunity and prosperity from the richer regions to the “left behind” behind ones, it might have much to commend it. Yet it also leaves many public services badly underfunded and refuses a real change of direction on the environment – not so smart.