Jeremy Hunt has set a trap for Labour – but will it matter at the polls?

The chancellor deliberately backloaded the spending cuts until the last three years of the five-year planning period

Jeremy Hunt and Rishi Sunak had three audiences in mind when they drew up today’s autumn statement, in which the tax rises were the very opposite of Kwasi Kwarteng’s disastrous tax-cutting mini-Budget only 55 days ago.

Their targets were the financial markets, Conservative MPs and the voters. It seems the markets will be sufficiently reassured by the chancellor’s £25bn of tax increases and £30bn of public spending cuts.

Many Tory MPs, who still hanker after tax cuts, will find Hunt’s long list of stealth taxes – by freezing tax allowances – very hard to swallow. Right-wingers will huff and puff, but I doubt they will blow Sunak’s house down by defeating the measures in the Commons. Hunt prevented a wider backbench rebellion by both the Tory left and right by raising the state pension and benefits by 10.1 per cent next April.

Winning round the voters will surely prove much harder. For all Hunt’s attempts to blame global factors and his talk of a “recession made in Russia”, Labour’s line that the UK’s economic crisis was “made in Downing Street” will ring truer for many people.

In fact, Hunt also had a fourth target – the Labour opposition. He deliberately backloaded the spending cuts until the last three years of the five-year planning period. In contrast, health and schools will get more money over the next two years – before the general election due in 2024. Crucially, the deep cuts in overall spending will bite after the election, when spending will rise by only 1 per cent a year in real terms, instead of the 3.7 per cent originally planned.

Ministers argue that the pain has been delayed in order not to deepen the inevitable recession. But Hunt’s economic plan turned out to be highly political.

In her reply to Hunt’s Commons statement, Rachel Reeves, the shadow chancellor, rightly detected a “trap” set for Labour. At the election, the Tories will challenge Labour to say whether it would raise taxes to boost spending on services, or accept the cuts it would inherit if it wins power in 2024.

“We are going to have a rotten inheritance,” one shadow cabinet member told me. The Labour leadership’s instinct is to side-step the Tory trap. In Labour circles, there is talk of “doing a 1997, not a 1992”.

In 1997, Tony Blair and Gordon Brown promised to stick to similarly eye-wateringly tight Tory spending plans for the next two years, even though the Tories later admitted they would have breached them. Blair won a landslide. In 1992, shadow chancellor John Smith proposed higher taxes and national insurance to fund higher child benefit and pensions. New Labour figures believe the “shadow budget” was a big factor in Labour’s 1992 election defeat, though Smith’s chief adviser at the time begs to differ.

Labour won’t be pressured into answering the “what would you do?” question on tax and spending until much closer to the election. “Who knows what the next two years will bring economically,” one senior figure said.

The Tories might well have set more traps by then. Sunak has promised to lower taxes “over time”. If the economy is growing again, it is not impossible that the 2024 Tory manifesto promises to cut the basic rate of income tax from 20p to 19p in the pound. But again, I suspect Labour would not oppose the move so it did not hand ammunition to the Tories on the eve of the election.

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Hunt has stolen some of the “fair tax rises” that Labour might well have promised – such as those on unearned income. But Labour will still have some limited room for manoeuvre: for example, it would raise £3.2bn by scrapping non-domicile status and symbolically spend the money on training more NHS doctors and nurses.

Labour will be able to cut the smaller public spending cake in a different, “fairer” way – a word we will hear a million times before the election, as Keir Starmer tries to dent Hunt’s claim of “compassionate Conservatism”.

For all the hype about a return to realism after the fantasy economics of the brief Liz Truss era, Hunt indulged in some cakeism that would have made Boris Johnson proud, setting a goal for the NHS and other services of “Scandinavian quality alongside Singaporean efficiency”. He didn’t say that the Scandinavians pay much higher taxes than Britons and will do so even after the UK’s tax burden rises in 2024 to its highest level since the Second World War.

Similarly, Hunt’s election pitch was that only the Tories can provide “a strong economy and good public services”. But voters may judge otherwise at a time when their living standards continue to fall, and have longer memories about this autumn’s economic chaos than Sunak and Hunt are praying for.