News and Insights
Is the Spring Budget 2024 doing enough to convince voters?
March 7, 2024
In terms of positioning, the Spring Budget was almost a repetition of what we saw in the Autumn Statement last November: whilst the Government wants people to focus on a few headline-grabbing announcements mostly around tax cuts, inflation reduction, and investment – the Opposition is relentlessly trying to bring people’s attention to the Government’s failure to tackle the cost of living, slow growth, the technical recession, and the public services that are on the brink of collapse.
Most announcements were trailed in the media already, so there is no significant news. A 2p cut to National Insurance has been confirmed from the 6th of April, doubling down on the previous 2p cut made in November. An extension to alcohol duty, a fuel duty freeze, and more help for parents with child benefits – are the most eye-catching policies. There is also the expected “reform” of the current non-dom regime, abolished in its current form. This is a move that could potentially create problems for Labour because, without any further details on the Government’s plan, the Chancellor has effectively snitched it from them.
Is this enough?
This Budget raises some questions about the Government’s ability to resist the urge to cut taxes versus doing the right thing for the UK economy by injecting more money into public services and keeping some insurance room in the event of unexpected changes for UK finances. In the Autumn Statement last November, the Chancellor decided to spend £10bn on National Insurance cuts and a further £10bn on creating a “full expensing” capital allowance regime for business. We don’t see any similar significant measures in this Budget.
Because the Office for Budget Responsibility gave the Treasury a slightly better outlook for the economy with a 0.8% growth rate, the Chancellor decided to use it to reinforce the Conservative narrative of low taxes for working people.
The question is: are these announcements game-changing? Probably not, is the answer. A recent YouGov poll shows that voters want cost of living assistance more than increased funding for public services. On a different note, but still challenging the long-standing conviction that defines ‘Conservatism’, is low taxation, and a Conservative Home survey of party members highlights that three-quarters of them would prefer the Chancellor to use his limited fiscal headroom to boost defence spending, rather than cutting taxes.
Voters’ priorities are changing, and it is questionable whether the Government, and indeed the Opposition, can intercept this change in the electorate.
Is a May general election back on the cards?
Yesterday’s announcements are almost certainly revamping speculations of an early general election to coincide with the local elections on the 2nd of May. We know that Labour has been preparing for this eventuality, with the 8th of February as the deadline for the Shadow Cabinet to submit policy pledges to the team drafting the manifesto.
It is hard to make predictions. The reality is nobody knows. Even if Sunak was inclined to break history’s trends, which indicate that incumbent governments tend to hang in there for as long as possible, it would certainly be a bold move to call an election when the Government’s approval rate is as low as ever, in the middle of a technical recession.
By law, a general election must be held 25 working days after the dissolution of Parliament. As many people won’t be bothered with doing the maths, this House of Commons library briefing paper lists all the possible dissolutions and elections. For an election on the 2nd of May, Parliament would have to dissolve on Tuesday the 26th of March, although it’s more likely to be on the 25th of March to allow all unfinished legislation to be passed (the ‘wash up’).
Businesses must be ready for both scenarios
Most likely – if you haven’t done it yet – the window for pre-election policy consultation is closing. There might be opportunities to tinker around the edges, but the bulk of the election manifestos are agreed upon, which makes it hard to include new ideas. However, the Labour Party may welcome ideas about where they can find the money they need – now that they don’t have the non-dom tax and the extension of the windfall tax to rely on.
It is now time to look at your engagement strategies with both timelines in mind. What can you realistically achieve over the next few months? How can you position your organisation, so you are not caught off-guard in the event of a May election followed by a new King’s Speech?
Organisations should not assume anything at this stage and be ready for both scenarios, with a short as well as a medium-term strategy.
Please do get in touch if you have any questions or would like to discuss how the public affairs team can support your business ahead of the general election.
CONTACT
Carolina Gasparoli, Vice-President, London Office: carolina.gasparoli@finnpartners.com
POSTED BY: Carolina Gasparoli
