We will never hear the end of Rishi’s tax cut

The bean-counters squared up in the Commons today. Chancellor Rishi Sunak delivered a terse spring statement which contained three major bombshells. And he was answered by Labour’s shadow chancellor, Rachel Reeves, who unfurled a few surprises of her own.

Sunak gave an upbeat assessment of Britain’s economy but warned that our growth is about to be clobbered by Putin’s Ukraine adventure. Sunak expects inflation to peak at 7 per cent, or more. That’s effectively a huge pay-cut for every citizen, not just those in work, and it may nudge us closer to a recession. But he kept the R-word to himself.

Sunak seems to enjoy being liked and he was in a hurry to get the depressing stuff out of the way. Then he revealed the tidings of hope and joy that will have the nation dancing in the streets. He raised the National Insurance contributions threshold by £3,000. He cut fuel duty by 5p, effective from 6 p.m. tonight, (guaranteeing a quiet afternoon for key workers in petrol stations). And he promised to lower income tax by 1 per cent by the end of 2024. 

Reductions in income tax are very rare indeed and Sunak is making the most of his generosity by announcing it well ahead of time. For the next two years, the Tories will use every opportunity to trumpet this reform even before it has passed into law. We’ve got two years of it ahead of us. Two long years listening to ministers bang on about a benefit they haven’t yet delivered. You could describe that as disingenuous. But Sunak would probably call it ‘an uplift to our messaging efficiency’.

Reeves set about demolishing Sunak’s recovery plan. She kicked off with some neo-Dickensian rhetoric about ‘pensioners drifting into poverty’ and ‘mums skipping meals’ so that their children can scavenge stale crumbs from the floor. Then she demanded to know why Sunak had ignored Labour’s fiscal masterstroke – a windfall tax on Shell and BP to cream off their unexpected takings from the oil price spike. A total of £2 billion, she said, was sitting there waiting to be siphoned off for the benefit of hard-pressed families.

Then she hit her stride. She pointed out that Sunak’s golden giveaways will be offset by tax increases elsewhere. She likened his double-think to Alice’s Adventures in Wonderland and she suggested that he occupies a parallel universe, ‘Sunakland’, (a witty coinage which her colleagues are bound to adopt.)

‘Curiouser and curiouser,’ she said, as she probed the Chancellor’s inability to distinguish a tax cut from a tax hike. ‘Has down become the new up?’ she asked. And she tried to rationalise Sunak’s inverted logic by quoting Humpty Dumpty’s famous declaration: ‘When I use a word, it means just what I choose it to mean.’

It’s quite a feat to add a tincture of literary amusement to a spring statement. But it has to be said that Reeves lacks the manner of a natural comedian. Her rhetoric can be plodding, methodical and colourless. She’s more a battering ram rather than a ballerina. But she’s very droll too and her Rishi in Wonderland quips got the Tories laughing along with her, despite themselves.

Then she showcased a new aspect of Labour policy under Keir Starmer. Drum roll, please. All rise for the National Anthem. Yes, Labour is now four-square behind Britain’s armed forces. Reeve criticised the chancellor for last year’s 10,000 reduction in the numbers of personnel.

‘Labour will support whatever is needed to keep our country safe,’ she said, patriotically. That’s almost as rare as an income tax cut: a Labour MP reflecting the views of traditional Labour voters.

Sunak got up to return the serve. His smile was full of simulated gratitude. ‘At least the party opposite thinks we should have an army!’