Have a dish on Rish. The chancellor’s summer stimulus has something for everyone prepared to consume for their country. His promise of £10 a head discount on eating out is an imaginative gimmick that will make headlines and help reignite the chilled ovens of the hospitality industry.
Yet again Rishi Sunak has shown the combination of gravitas and soft political skills that make him such a potent operator in an administration not overly graced with substantial figures. His speech was pitch perfect, demonstrating both that he understands the unique nature of the moment yet is still unafraid to deliver less welcome political messages.
His call for people to rise above their fear of the virus and join the national recovery was imparted with a seriousness too often lacking from Boris Johnson’s bluff optimism. Small wonder, then, that many already see him as a threat to his leader. But for now the chancellor is Mr Johnson’s greatest asset.
On Wednesday, Mr Sunak presented a substantial and imaginative economic statement focused almost entirely on saving the UK from mass unemployment. It comes with a hefty £30bn price tag, on top of more than £150bn of existing fiscal measures. The scale of government support has been breathtaking and yet, this is still something of a holding position.
For the simple truth is that no one yet knows how deep a recession the UK is heading into or how severe the levels of unemployment are going to be, because no one can yet be sure of the next stages of the pandemic. A serious second wave, of the kind many scientists fear, will undo much of the good done by this package.
Mr Sunak’s insistence on winding down the furlough scheme by October seems defensible in July — and he is right to say that for critics there will never be a good time to end it. Similarly, his warning that the country must eventually return to sustainable public finances shows that Mr Sunak has not lost his ideological bearings. But he also knows that by the time of the Autumn budget, political and economic reality may force him into a different stance. Even if the furlough ends, a new employment support scheme may need to take its place.
Nonetheless, this package is a well-focused plan to limit job losses and help the most vulnerable people and sectors. He has long been obsessed with saving the hospitality sector and the temporary VAT cut (from 20 per cent to just 5 per cent) plus his meal discount plan offer £4.6bn to stimulate demand. The sector is crucial not only for its existing jobs and businesses but also because it has traditionally offered a lifeline to those losing jobs in other industries.
The £9.4bn support for job retention after furlough, and other measures to increase work placements, apprenticeships and training, is tightly focused on the next few months: Mr Sunak’s aim is to encourage employers to keep faith with staff and the future in the hope that the worst is over by next year. The calculation is that substantial action to restore confidence quickly will save more pain and expense later. While the £2bn “kick-start scheme” offering government funds for six month work placements is strikingly similar to Labour’s “future jobs fund”, introduced after the financial crisis, Treasury insiders are keen to point out that this programme is significantly larger.
The infrastructure spending, including up to £3bn on green investments are in line with existing government plans. The temporary cut in stamp duty on the first £500,000 of any house purchase is something to please his own side, but is also designed to maintain confidence in the housing market through increased transactions — regardless of the substantial of deadweight cost in the £3.8bn measure.
In his peroration, Mr Sunak talked of the defining moments of politics and the readiness to meet the challenge. Business failures and job losses are inevitable and the chancellor may be forced to recalibrate once more. But few can say he has not risen to the challenge so far.
Ultimately, however, Mr Sunak’s — and Mr Johnson’s — big bet is that restarting the economy could not wait for further falls in infections. The country must hope the government has correctly judged the balance between saving the economy and defeating the pandemic. If they have, this package will go a long way to rebuilding confidence. But it is on that call that both Mr Sunak and his leader will finally be judged.
