Tory MPs are already obsessing over the next election – but they have bigger issues in the present

It is not what the tax schedule looks like but the damaging headlines over NHS pay that the Conservatives need to concentrate on, writes Andrew Grice

Boris Johnson has fires to fight over NHS pay (PA)

Only 15 months after the general election, MPs are already obsessing about the date of the next one. Many Tories interpret Rishi Sunak’s decision to delay corporation tax rises to 2023 as a signal the contest will be held in April or May that year before the increases bite fully.

I’ve spoken to some Tories who have convinced themselves the company profits tax hike will not be needed because the chancellor’s huge tax breaks for firms who invest will spur a boom that starts to fill Treasury coffers. That is wishful thinking. Sunak will need the £17bn-a-year revenue from the corporation tax rise because he is determined to start repairing public finances battered by the coronavirus pandemic.

But the Conservative super-optimists dream of a spring 2023 election on the back of even higher growth than the whopping 7.3 per cent forecast for 2022 – and before the sluggish growth rates of 1.7 per cent, 1.6 per cent and 1.7 per cent predicted for the following three years.

We can hardly blame MPs for thinking about the election date; unlike most of us, they are on fixed-term contracts. Officially, Boris Johnson is too; the Fixed-term Parliaments Act of 2011 would mean a 2024 election unless MPs decide otherwise. But the government will repeal the law in a bill to be included in the Queen’s Speech in May, giving Johnson a free hand on when to go to the country.

The hopes of those excitable Tory MPs have been raised further by a YouGov poll showing that 55 per cent of the public believe the Budget was “fair” and giving the Tories (45 per cent) a thumping 13-point lead over Labour (32 per cent). But they shouldn’t get carried away. A more reliable barometer – an average of the polls – shows a four-point Tory lead on the 16 surveys taken in February.

Although the vaccine rollout has clearly given the Tories a boost, I suspect the voters’ Budget verdict will be less favourable when they digest the insulting 1 per cent pay rise for NHS workers proposed by the government. This will surely cut through more than any Budget measure. Demands for a U-turn will test the mettle of Sunak and Johnson.

The chancellor will not want to buckle. But the prime minister might, especially if – or should I say when – Marcus Rashford is on the case. I also look forward to the footballer’s campaign to make permanent the £20-a-week uplift to universal credit, when millions of families are about to lose it in September.

The Tories might have got away with their miserly attitude to nurses, doctors and other NHS staff in normal times, but it looks hypocritical after they clapped for carers with the whole country. Perhaps the NHS pay review body will get them off the hook by recommending a higher rise in May; it should.

The damaging headlines over NHS pay highlight the Budget’s Achilles heel: the impression of a return to austerity. Sunak and Johnson deny it. But our “honest” chancellor did not tell us about a £4bn cut in day-to-day public spending, which will be £16bn lower by 2024-25 than projected before the pandemic.

The NHS wage row throws a much-needed lifeline to Labour, which was divided over whether to support an immediate rise in corporation tax before it did not materialise. The pay issue unites Labour, puts the party on the public’s side and provides at least some evidence for Keir Starmer’s claim that the Tories haven’t really changed. (I think the corporation tax hike confirms they have changed, and that Starmer will need to revisit his strategy, though he can make hay while the NHS sun shines).

Johnson might ban what he calls “the A-word” and Sunak might declare the Tories are “the party of public services” but what matters is whether voters feel it. As well as seeing public services under pressure, their incomes will be squeezed. The Resolution Foundation think tank warns that earnings will be 4.3 per cent (or £1,200 a year) lower in real terms by the middle of the decade than predicted before the pandemic.

This will hurt people in the red wall. Their tax bills will rise in 2022, a year before the contest now mooted by the Tories’ early election brigade. The red wall provides another reason why some ministers believe the election will be in the spring of 2024. Coronavirus has delayed the great “levelling up” the Tories promised in 2019.

Sunak nodded to it in the Budget but Whitehall officials privately describe the concept as still very sketchy. Tory MPs representing these areas are twitchy, fearing Sunak’s decision to make fiscal responsibility a dividing line with Labour will deny them the big money needed to make a tangible improvement in their constituencies. As one told me: “Unless our high streets look very different by the election, we are screwed.”

Despite the flurry of speculation about an early election, Johnson might well need all the time at his disposal to retain the support of those he admits only “lent” him their votes in 2019. That points to a 2024 election.