The impact of Rishi Sunak’s ‘mini Budget’ has been ruined by Partygate

In normal times, Sunak’s package would put the Tories back on track for the next general election, with a strong pitch to the red wall. Not now, writes Andrew Grice

The chancellor belatedly realised he had to help those at the bottom of the income scale (Getty)

Rishi Sunak’s “not an emergency Budget” was more significant than expected, both economically and politically. Ignore the claims the timing had nothing to do with Partygate; of course it did. At various points, I was told the cost of living package would come in August, then July, then June.

Boris Johnson had every reason to change the music on the day after Sue Gray’s final report. Ofgem, the energy regulator, provided some cover by predicting the hike in domestic bills in October, but Johnson would surely have insisted on a diversion even without it.

The chancellor belatedly realised he had to help those at the bottom of the income scale, though he should have raised state benefits permanently now instead of announcing one-off handouts. However, he confirmed that people on benefits, including pensioners, will get a (permanent) increase next April – about nine per cent – because the rise will be based on September’s inflation figure. He will not try to claw it back (as he did this year on the basic state pension), which would be toxic.

Sunak hopes his £15bn package will provide a strong enough bridge to next April’s benefits rise. But this will not be his final word on the living standards crisis. Low-income families have other pressures as well as energy bills – not least on food. He will come under enormous pressure to go further in his Budget in the autumn.

Johnson could not stop himself smiling when Sunak announced his “temporary targeted energy profits levy” to avoid using Labour’s language even as he stole its clothes. But many Tories are furious about the £5bn “not a windfall tax” on oil and gas companies. Seven cabinet ministers opposed Labour’s proposal and thought they were doing Johnson’s bidding by opposing it in public, as some Number 10 aides branded it “unconservative.”

Sunak realised, long before Johnson, that Labour was making the economic running by implying its windfall tax would be a magic cure for the crisis and pummelling the Tories daily for not implementing it. Now Labour has lost its big idea, leaving a vacuum where the party’s economic policy should be; Sunak even trumped it by raising more than twice as much as Labour’s tax would.

Tory critics think voters won’t like the spectacular U-turn and might buy Labour’s claim to have won “the battle of ideas.” But these are Westminster village arguments. In the real world, I doubt most people will remember (or even care) that the windfall tax was Labour’s idea.

The Tories have form as political magpies. At the start of the coalition government in 2010, they demanded concessions in return for implementing the Liberal Democrats’ signature policy to raise the personal tax allowance. By 2015, the Tories had shamelessly filched it and written the Lib Dems out of their own script.

COST OF LIVING: HOW TO GET HELP

The cost of living crisis has touched every corner of the UK, pushing families to the brink with rising food and fuel prices. The Independent has asked experts to explain small ways you can stretch your money, including managing debt and obtaining items for free.

• If you need to access a food bank, find your local council’s website, and then use the local authority’s site to locate your nearest centre.
• The Trussell Trust, which runs many foodbanks, has a similar tool.
• Citizens Advice provides free help to people in need. The organisation can help you find grants or benefits, or advise on rent, debt and budgeting.
• If you are experiencing feelings of distress and isolation, or are struggling to cope, The Samaritans offers support; you can speak to someone for free over the phone, in confidence, on 116 123 (UK and ROI), email jo@samaritans.org, or visit the Samaritans website to find details of your nearest branch.

Sunak portrayed his conversion to a windfall tax as pragmatism trumping ideology. Such flexibility – and ruthlessness – helps explain why the Tories have been in power for 32 of the last 50 years. But the current pragmatism also reflects a rudderless, ideology-free government divided over whether to be a low-tax, low-regulation one or a big-spending, interventionist one.

In normal times, Sunak’s package would put the Tories back on track for the next general election, with a strong pitch to the red wall, where voters lean left on the economy but right on social issues. Yet a huge stain will remain on the party while Johnson is its leader, and the black mark got even darker this week. Since Sue Gray’s report, five more Tory MPs have come out against him. Others have probably quietly sent in letters demanding a vote of confidence in him. This box set is not on its final series yet.

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But as long as the silent majority of Tory backbenchers refuse to move against Johnson, Partygate will blunt the impact of measures like Sunak’s “not a mini-Budget” that would normally reap a political dividend.

Sometimes, voters look at a party leader and see one thing they don’t like, which makes up their minds about them forever. For Jeremy Corbyn, it was his response to the Salisbury poisonings. Gordon Brown never recovered his authority after not calling an election in 2007.

Tony Blair’s stain is Iraq, though it grew with time and he still won another election after the war. For Johnson, it’s Partygate. Minds are made up: for some it’s the parties, for others the lies. Although his allies hope memories will fade by the election, opposition parties will keep the issue alive by arguing that you can’t believe a word the Tories say about anything while they are led by a liar.

I don’t think Johnson can ever remove the stain. So he will remain a drag on his party, whatever it does before the next election. If the Tories stick with him, they risk sleepwalking to defeat.