The Chancellor’s first Budget will be totally overshadowed by coronavirus
A NEW Chancellor’s first Budget is normally a dramatic moment, a chance for the Government to put its agenda up in lights.
But Rishi Sunak’s Budget speech on Wednesday will, as with everything else in politics, be overshadowed by the coronavirus.
The virus is moving into a new phase and the Government expect the number of UK cases to rapidly increase in the coming days and for the outbreak to take root.
One of those at the sharp end of the Government’s response to the threat predicts that the Budget might not even be the biggest story on Wednesday.
Their view is that the virus’s spread over the coming weeks will be such that, “nobody alive will have experienced anything like it”.
Though the fact that the virus spares children and only has a one per cent death rate means that the emotional toll of it will be contained.
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These circumstances mean the Budget has been scaled back. The level of uncertainty means it is unwise for it to attempt to settle the big questions on tax, spending and borrowing.
One influential Tory source tells me that: “You can’t do spectacular, interesting stuff during corona. But you can do boring and difficult things.”
The Budget will concentrate on delivering the Tories’ election promises. Inside the Treasury it has been dubbed the “Manifesto Budget”.
It will contain changes to ensure that more infrastructure projects are built outside London and the South East, there will be a “Union connectivity” project launched to better link up England, Scotland, Wales and Northern Ireland — expect Boris’s bridge to get a mention — it will green-light a slew of road projects, provide money for fast broadband and increase funding for research.
It will also curb the entrepreneurs’ tax relief that has turned from being an encouragement to take a risk on a new business to a general form of tax relief for wealthy investors.
The Budget will also seek to emphasise that, despite the undoubted, short-term disruption the coronavirus will cause, the medium-term future for the economy is pretty rosy.
Unlike with the 2008 financial crash, the economy will rebound strongly once the virus has passed.
There is, though, a big debate going on in government about how much the Government should do to help individuals and businesses through the corona downturn.
The rise in the number of people in the UK who are their own boss means there are more than four million workers not entitled to sick pay.
The Government will, almost certainly, offer these people more time to pay their taxes. But what more it should do is the subject of growing debate in Whitehall.
One of those involved in these discussions points out: “We can’t pay for the whole gig economy for the next six months.”
A minister argues that people can get an advance from universal credit within two days in urgent cases. They fear that if the Government starts paying the wages of the self-employed, then it will be hard to see where it should stop.
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They point out that a plumber who earns £1,000 a week now, will almost certainly lose money as the virus spreads. Should the State make that up?
Coronavirus will change the way we live over the next few months, at the very least.
But the challenge for the Government is to ensure that work on everything else doesn’t cease while the country tries to fight this crisis.
It still has a job of work to do to get the country ready for life outside the EU and to prepare the economy for the great changes that technology is about to bring.
Priti likely to get a wrist slap
BORIS JOHNSON is determined to defend Priti Patel, his Home Secretary, who is facing various allegations of bullying from civil servants.
Internally, he has given short shrift to those who have suggested he distance himself from her.
There is a view in Downing Street that several of the most dramatic charges against her don’t stack up.
They also claim that these concerns about Patel’s behaviour were not expressed as official complaints at the time.
They, “didn’t reach up at a formal level”, I’m told.
No10 knows, though, that it has a fight on its hands to save Patel.
One source tells me: “Yes, she can survive. But there’s no smoke without fire. It is shaping up to be quite a big struggle.”
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Part of the issue is that there is a view among senior civil servants that, given that the top civil servant at the Home Office has quit because of this row, Patel should go too.
But Downing Street know that if Patel goes, it would become harder to push reform through the system.
One of those at the heart of government tells me: “You can’t have a situation where civil servants get to determine who their Secretary of State is.”
The next hurdle for Patel to clear is Sir Alex Allan’s inquiry into whether her behaviour breached the ministerial code.
There is a quiet confidence among her allies that while she will receive some criticism from his report, she won’t be found guilty of breaching the code.
But if her former Permanent Secretary Sir Philip Rutnam really is determined to take his case to an employment tribunal, then the situation will become far more difficult for the Home Secretary.
Boris is still very hands on
THERE’S a new political divide: Do you still shake hands or have you started bumping elbows to try to reduce your risk of contacting coronavirus?
Boris Johnson is still very much a hand-shaker, as is the Health Secretary, Matt Hancock.
But some other Cabinet ministers have taken to either nodding politely or bumping elbows.
Brexit meanwhile drags on
IN the first session of the UK/EU trade talks this week, the UK side were explicit with Michel Barnier that they could not accept an association agreement or the jurisdiction of the European Court of Justice in various spheres.
As one of those close to the talks put it: “We’ve told them what we think. Their illusions are disappearing rapidly.”
The question now is whether when the EU negotiators turn up in London in less than two weeks’ time, they come with a different approach or carry on pushing these ideas.
Coronavirus could hit local elections
THE local elections in May might have to be postponed because of coronavirus.
If the UK’s response to the outbreak is still in the delay phase, continuing with the contests would go against that advice, as it would bring large numbers of people into contact with each other.
I understand this option is being discussed in Whitehall, but no decision has been taken.
But as one figure in government points out: “We postponed a General Election once because of an epidemic.”
The 2001 General Election was pushed back to June from May because of foot-and-mouth disease.
Delaying the elections – which will see mayors elected in London, the West Midlands and Manchester among other races – would be a big step, and one the Government would only take with the utmost reluctance.
The next few weeks will tell us whether it is necessary or not.
- James Forsyth is political editor of The Spectator.