Was Jeremy Hunt polishing an autumn Budget turd?

Shall we run through (some) of those tax rises? There’s a lot being accomplished here

It’s the national bushtucker trial, organised by Truss-Kwarteng Productions and presented by Jeremy Hunt. In it, the nation is being asked to crawl through a stinking tunnel full of beetles, spiders and cockroaches to get to the rotting remains of what was served up at the former PM’s leaving do.

But unlike Matt Hancock, he of the £400,000 fee for going AWOL from parliament while this national nightmare has been playing out, we get to pay for the privilege. I’m a Briton: get me out of here!

Hunt, doing his best impression of a 1950s bank manger, tried his best to put a good gloss on it. His boss and his cabinet chums cheered and patted him on the back. But, really, he was trying to polish a turd.

Britain’s brutal downturn is “a recession made in Russia,” he claimed, while indulging in a sad attempt at whataboutery, where Britain is contrasted unfavourably with whichever country his special advisors can dig out of the Treasury’s big book of places where they’re also having the odd problem.

But the painful truth is that while Germany and Italy now might have higher inflation, the UK economy is smaller than it was pre-pandemic. The US is more than 4 per cent bigger and the Eurozone is better than 2 per cent to the good. That’s whatabouttery too, but it’s rather more pertinent.

Hunt was, of course, trying to deflect attention from from the fact that the £55bn fiscal black hole he was trying to plug was put on his desk by Truss and Kwarteng, the dismal duo of directors behind Britain’s national economic movie nightmare.

Shall we run through (some) of those tax rises? There’s a lot being accomplished here by what’s known as “fiscal drag”. So the 45p top rate, which used to come it at £150,000, will in future kick in at £125,140. Why the extra £140? Who knows or dares to dream? This won’t actually raise much but it serves a a spoonful of “we’re all in it together” sugar to make the medicine go down. Tough medicine.

Income tax thresholds will be frozen until April 2028. Got an employer who’s been nice and pushed your earnings above £50,000? Bad luck. You’re in the 40p tax bracket. The Tories have fetishised holding headline tax rates. But the thresholds being frozen will push an awfully large number of people into the next bracket up at a time when inflation is taking a big bite out of their spending power.

True, if you earn £50,000 you’re in fairly good shape, at least if your mortgage is fixed for next couple of years. But £50k is going to look like a lot less in six years time, which is when the thresholds are (in theory) next due to be raised.

Did I mention energy support is being reduced so bills go up to £3,000 in April? True, this will all have the effect of reducing demand in the short term, easing the task of the Bank of England when it comes to controlling inflation. Fiscal policy and monetary policy will not longer be working against each other as they were under Liz Truss. But what about beyond that?

There were also changes to capital gains and inheritance tax, and national insurance, all with aim of raising money. But we are still protecting the vulnerable, Hunt declared. And yes, benefits will rise in line with September’s inflation figure (10.1 per cent). Extra energy support will be made available to the poor. The triple lock on pensions will be retained – but a review of the pension age is due and what’s the betting it hits 70 before too long?

There’s also sting in the tail for benefits claimants. Some 600,000 people will be dragged into meet with “job coaches”. Want to bet that those “coaches” will be told to punish those who don’t agree to work the night-shift at the local chicken factory, even if they’re vegetarians with children to look after?

The expansion of the windfall tax on the energy industry (to 35 per cent) will be cheered. But that’s about the only thing to cheer in terms of tax. And then there are the spending cuts. Hunt found some extra cash for health (of course) while promising “Singaporean efficiency” for a service that is already pretty efficient by international standards. So the song remains much the same.

He also threw a financial bone to education, presumably in the hopes of preventing a good chunk of the nation’s multi-academy trusts from going bust. That, by the way, is a very real threat.Other departments are going to have to find cuts as a freeze blows in from the arctic.

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Except, here’s where it gets interesting. Over the next couple of years, during which time Britain is expected to be in recession, Hunt has actually made things a little looser than might have been expected. His tax rises get him £20bn, but spending will actually be higher – to the tune of nearly £5bn. By 2028, however, the tax rises increase to £30bn with roughly £20bn from cuts coming in.

Now you could argue that kicking the can down the road like this makes sense. We’re already in recession, according to the Office for Budgetary Responsibility, which is once again getting lots of love from the government. Combining tax rises with immediate spending would make a bad situation worse. Setting out a pathway for fiscal consolidation in future also restores the credibility the UK had with the financial markets – before Hunt’s predecessor destroyed it at the stroke of a pen.

That’s one way of looking at it. But you could just as easily argue that this is a very nasty piece of political game-playing. This is Hunt saying to his likely successor, Labour’s Rachel Reeves: “Here’s another tunnel filled with nasties for you to deal with on your own. Do you want me to call Matt Hancock for you? Have fun!”

What, were you expecting any better from a party that still refuses own up to the part it played in creating this mess?