This is a statist, corporatist budget — and our children will pay for it | thearticle

“What is Johnsonomics?” asked a BBC TV item just before the Budget. Soon we had the answer, as the Budget statement was delivered by Rishi Sunak: “Next year, day-to-day departmental spending

will grow at the fastest rate in fifteen years. Over the spending review period, it’s set to grow at the fastest rate since 2004. An average growth rate in real terms of 2.8 per cent —

twice as fast as the economy.” This was an extraordinary boast for a Conservative Chancellor to make. The proportion of our money being taken by the state, already very high, is to increase

further. At the moment “total managed expenditure” is 39.8 per cent of GDP. The Chancellor of the Exchequer feels it should be even more. His “Red Book” says that in 2020/21 it will be 40.3

per cent. Then the next year, 2021/22, it will rise further to 40.8 per cent.  There used to be a name for a project for us to be given less and less freedom to spend our own money, instead

facing ever more of it being confiscated in taxes and spent for us by officials. It was called “socialism”. It certainly would seem that Johnsonomics has nothing much to do with austerity.

That faltering but heroic struggle to balance the public finances has been abandoned. Instead, public borrowing will increase. The gamble is that we still won’t be forced by the

international markets into a Greek-style meltdown. That relies on economic growth, meaning that while the mountain of national debt will be even higher in cash terms, its burden as a

percentage of GDP will remain steady. But, as the impact of coronavirus makes obvious, a steadily growing economy is not something to be taken for granted. We will see huge public spending

on areas like research and development: from £9 billion a year to £22 billion. Big state laboratories will be relied upon to pick winners. There is talk of “innovation” — but the dead hand

of bureaucracy will dominate over free enterprise and inventors given the space to pursue their own wheezes. Rather as with overseas aid, the mentality is to agree to vast spending first and

then try and think what to spend it on later. The argument is put forward that a binge on spending — especially if, as we are assured, it is “investment”, such as “investing in ideas” or

“investing in infrastructure” — is bound to be good value, because interest rates are so low. The difficulty for our children and grandchildren, however, is that the debt will still be

there, but the interest rates may not continue to be low. Not all the spending is glamorous. There was also something strangely compelling about listening to the items being announced. “I

read the news today, oh boy,” sang the Beatles. “Four thousand holes in Blackburn, Lancashire. And though the holes were rather small, they had to count them all. Now they know how many

holes it takes to fill the Albert Hall.” But the Chancellor went further than the Beatles could have imagined. He pledged £500 million for each year of this Parliament to fill potholes —

“enough to fill 50 million potholes by the end of the Parliament.” He was going to “get it done”. The rhetoric was oddly effective — despite Rishi Sunak’s willingness to succumb to banal

clichés such as “a package of measures”. On a personal level, one could scarcely fail to impressed at the confident performance of this young man, so recently promoted to such a senior post.

There were some tax cuts, too. But these tended to be temporary, tinkering or gimmicky. A business allowance for one thing would be raised, for another would be curtailed. Business rates

would be lifted on small firms — but just for this year. In a victory for the_ Sun _we have duty on petrol frozen again. Scrapping the “Tampon Tax” is welcome, but pretty small beer. As is,

er, the freeze in the duty on beer. The Budget will be popular, but at this stage in the political cycle that almost amounts to an indictment. Polling will show that “tax cuts for the rich”

— whether corporation tax on company profits, stamp duty for expensive houses, or income tax for higher earners — are unpopular. So such measures were generally avoided. The point was missed

that had they been included alongside modest cuts for the less well-off, the resulting increase in economic growth would have brought wider prosperity. As Tories used to know, prosperity is

always popular. Coronavirus, as with any crisis, tends to mute criticism of the expanding state. That does suggest a caveat to the direction we are being taken in by the Budget. But it just

exacerbates a shift towards profligate, big state corporatism. The Prime Minister has described himself as a “Brexity Hezza”. We can now begin to see how expensive the results will be.