With less than a month to go, the Chancellor Jeremy Hunt will be in his office finalising the “scorecard” setting out the details of his March 15 Budget. He was brought in as a stabilising force to reduce inflation and bring down spending commitments. He certainly isn’t the first – and won’t be the last – with that particular job description. With inflation still in double digits – but falling – don’t expect many giveaways come the Budget. Indeed, the Treasury insists it must be a dull affair.
So keen is the Chancellor to keep spending under control that he is attempting the near-impossible: reigning in Michael Gove. The Levelling Up Secretary has been stripped of the powers to approve spending of up to £30 million without Treasury approval. Gove is often a fan of the ‘announce now, pay later’ approach to decision-making – having been particularly famed for this approach whilst Defra Secretary. However, it seems his announcement to spend £30 million on improving ‘substandard housing’ caught the Treasury off guard, causing Hunt to clip his wings. Such internal fighting could seriously delay any policies coming out of DLUHC.
This hasn’t deterred others from sticking out their hands to the Treasury, Ben Wallace, Defence Secretary, has been on the airwaves stating that his department needs £8bn – £11bn just to “stand still”, in order to combat inflation’s effect on procurement spending. Wallace is in a very strong position with his popularity sky-high, especially amongst Conservatives, and with the war in Ukraine ramping up again, he has a very good reason for seeking the money. Moreover, he has publicly commented on the soon vacant NATO Secretary-General job. Having been forced to deny rumours he threatened to resign over defence spending, could the allure of this big job give him the courage needed to make the threat a possibility if he doesn’t get his way? But Hunt also has good weapons in his armoury. The people’s priorities are the economy and the NHS, and to spend loads of money on defence would require cuts elsewhere or higher taxes.
Energy bills are – yet again – also waiting to detonate in the face of the Chancellor. Come 1st April the Energy Price Guarantee (EPG) – the Government’s capping of energy unit rates – will rise by £500 to around £3,000 a year for the average household. Come 1st April other various energy bill support schemes are either ending or decreasing, meaning the average energy bill will significantly rise. The timing of this bill rise could not be worse so soon to the May local elections. Energy UK, Martin Lewis and dozens of consumer groups have called on Hunt to act – not least because wholesale electricity prices have fallen to an extent that the cost of continuing the cap at £2,500 would cost only a fraction of previous estimates. But so far, Hunt has held firm.
All of this is to say nothing of the increasingly febrile mood on the Tory benches. Conservatives are frustrated at the refusal to countenance tax cuts, stirred up by both Boris Johnson and Liz Truss murmuring in the background.
In the weeks ahead, the Chancellor will come under increasing calls to spend money here, there and everywhere. Improving houses, investing in defence, and helping voters deal with higher energy bills all seem smart politics. But so is a relentless focus on driving down inflation. At the moment it seems the Chancellor will favour the latter approach, but if colleagues continue to take aim at him, how long can he hold his nerve?